Usage of Low-Cost Entrant and the Impact on Firm Performance: An Empirical Analysis of Private Security Firms in Nakuru County, Kenya

The private security industry in Kenya has grown steadily to meet rising demand for security services, yet the resulting competitive pressure has pushed many small firms out of the market. Efforts by these firms to target price-sensitive clients while still delivering essential security services have translated into thinner earnings, which in turn has depressed guard wages, limited investment in modern equipment, and constrained operational efficiency. The cumulative effect has been poor service delivery, delayed response to alarms, loss of property and cash in transit, and the collapse or deregistration of several firms. This study therefore examined the effect of low-cost entrants on the performance of private security firms in Nakuru County, Kenya, focusing specifically on pricing strategies, operational capacity, and cost management. The study was anchored on the balanced scorecard model and supported by price signaling and systems theories. A descriptive research design was adopted, targeting the 23 small private security firms and 235 management-level employees drawn from the finance, operations, and marketing functions. The Yamane formula was applied to derive a sample of 148 respondents, and primary data were collected using a structured questionnaire and analyzed with SPSS version 27 using descriptive, correlation, and regression techniques. The results showed that pricing strategies, operational capacity, and cost management each had a positive and statistically significant effect on firm performance, with operational capacity emerging as the most influential factor, followed by cost management and then pricing strategies. The study concluded that the effective integration of operational capacity, cost management, and strategic pricing enhances the performance of private security firms operating amid low-cost competition. It is recommended that firms invest in operational capacity, strengthen cost-control measures, and adopt value-based pricing strategies, and that policymakers foster a regulatory environment that supports fair competition and long-term sustainability in the private security sector.