Application of Differentiation Strategy on the Profitability of SMEs (Evidence from Western Province in Sri Lanka)

Differentiation strategy is being used fully or partially by many enterprises operated in the Small and medium scale. Adaptation of differentiation strategies supports the SMEs on their sustainability. The study aims to investigate the influence of the differentiation strategy on the performance of the enterprises in terms of profitability and sustainability. 750 sample enterprises were selected using stratified random sample throughout three districts secretariats in western province in Sri Lanka. Primary data collection methods were used along with descriptive and inferential techniques. Confirmatory factor analysis along the structural model has been used. The Study highlights the differentiation towards profit maximization. Enterprises can focus much on green concerns in differentiating the products as the alternatives for obstacles faced through finance and resources. Better understanding of differentiation with sustainable values would distinct the product in earning competitive advantage as well as business existence.