Generic Strategies and Operational Performance of Manufacturing Cement Companies in Kenya.

Abstract

In an organization, performance is affected by various factors. The performance of the cement industry in Kenya has been adversely affected by the challenge of inadequate employee training, inefficiency, not meeting the targets, inadequate employee development and reduced sales volume. Cost leadership, differentiation and focus strategies are used in enhancing the organizational performance. This current study was to determine the influence of generic strategies on performance of manufacturing cement companies in Kenya. The specific objectives were to examine the influence of cost leadership strategy, differentiation strategy and focus strategy on performance of manufacturing cement Companies in Kenya. Theories guiding the study included; Porter's Competitive Business Strategy Typology, Configuration theory, Result-based View Theory, and Miles and Snow typology. The current study used descriptive research design. The unit of analysis was Cement Companies in Kenya. The unit of analysis was 7 manufacturing Cement Companies in Kenya that include; Bamburi Cement Limited, Mombasa Cement Ltd (MCL), East Africa Portland Cement Company, Savannah Cement Limited ,ARM Cement Limited and National Cement Company . The observation unit was the employees working with these companies. Therefore, the target population was 454 managers of the targeted manufacturing firms. Stratified sampling method was used to group respondents into departments in order to ensure representativeness of all the cases. Simple random sampling method was used to select the respondents. Therefore, the sample size was 189 which represented a 41.6% of the total population. Data was collected using self- administered questionnaire which was on the basis of drop and pick later method. Reliability and validity of research instruments was ascertained. Data was analyzed by means of descriptive as well as inferential statistics. The study found that cost leadership strategy, differentiation strategy and focus strategy had a positive significant influence on the performance of cement manufacturing companies. The study concluded that a firm following a cost leadership strategy offers products or services with acceptable quality and features to a broad set of customers at a low price. A differentiation strategy enables firm to create a product/service, which is considered unique in some aspect that the customer values because the customer’s needs are satisfied. Focus strategy allows cement companies to concentrate on promotional resources on the sectors that match their quality advantage. The study recommended that the cement companies should diagnose their changing cost economics all the way from the raw materials stage to the final price paid by the ultimate consumer. Cement companies should exploit different ways in which they can make the products and services unique. The cement companies should get to know as much about their customers as they can so that they can anticipate what their customers want, how they want it, when they want it, and most importantly, how they can solve it for them.