Competitive Strategies and Performance of Selected 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 competitive strategies on performance of selected Cement Companies in Kenya. The specific objectives were to examine the influence of cost leadership strategy, differentiation strategy and focus strategy on performance of selected Cement Companies in Kenya. Theories guiding the study included; competitive advantage theory, resource based view theory, open systems theory and dynamic capability theory. The current study used descriptive research design. The unit of analysis was 6 Cement Companies in Kenya that included; 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 744 employees. 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 260 respondents which represented a 34.9% 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 instrument was ascertained. Data was analyzed by using descriptive as well as inferential statistics. The study found that cost leadership strategy, differentiation strategy and focus strategy had a positive significant effect 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 their 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 of economics all the way from the raw materials stage to the final price paid by the ultimate consumer. Cement companies should exploit different ways to make the products and services unique. The management of cement companies should get to know management of their customers so that they can anticipate what customers want, how they want it, when they want it, and most importantly, how they can solve it for them. The current research would be of significance to the Cement Manufacturing companies’ leadership as it would help them in the management of the firms which would influence greater firms performance.