Growth Strategies And Perfomance Of Selected Milk Processing Companies In Kenya

ABSTRACT

Business organizations strive to grow and increase their sales and profits. Growth is imperative and not an option as such turning a small company into a big one is never easy. Therefore, companies have to adopt suitable growth strategies to boost performance. The stiff competition among the various milk-processing firms in Kenya has led to collapse of some of diary firms. In efforts of growing and increasing profitability, companies in the milk-processing sector have adopted various growth strategies. This study sought to establish the effects of growth strategies on the performance of selected milk processing companies. The study was guided by the following objectives; to investigate the influence of market penetration strategy on performance of milk processing companies, to evaluate the effect of diversification strategy on performance of milk processing companies, to assess the effects of product expansion strategy on performance of milk processing companies and to determine the effects merger or acquisition strategies that influence the performance of the Milk processing companies in Kenya. The study was confined to the 34 Milk Processing Companies in Kenya. Since the total population is small, the researcher used census as the sampling technique. The study employed both descriptive and explanatory research design to achieve the research objectives. The study carried out a survey of all the 34 dairy companies listed by the Board of Kenya. The participants of this study were the operations managers who were selected by non-probabilistic sampling method. Data was collected by use of questionnaires with both open ended and closed questions. Statistical Package for Social Sciences (SPSS) model was used for data analysis. Quantitative data was analyzed by the use of measures of central tendency and dispersion to give the general picture about dispersion as well as the frequency distribution of data. The Cranach’s alpha as calculated through SPSS. Mean Cronbach’s value of 0.912 was obtained. This result was greater than the threshold 0.7 and the items were therefore considered as reliable. Inferential statistics in form of linear regression model was used to establish the relationship that exists between the growth strategies and performance of milk processing companies. The findings were presented in pie charts, frequency tables and percentages. The study concluded that Merger or Acquisition strategies ha a significant effect on the performance of the company. The study also concluded that market penetration strategies such lowering prices and a price-setting practice has a significant effect on the performance of milk processing companies. The study also found out product diversification has a positive impact on the performance of companies. In conclusion, the researcher concludes that market expansion strategy has a significant influence on the performance of milk processing companies in Kenya. Therefore the study shows that milk processing companies in Kenya should use more growth strategies in order to enhance their performance and this is based on the strong relationship between focus strategy at (0.456) correlation and performance of milk processing companies. The study recommended that milk-processing companies should expand their market by selling existing product to existing customers, selling existing products to new customers, selling new products and more through new delivery approaches as a market expansion approach.