Influence Of Strategy Formulation On Performance Of State Corporations In Kenya

ABSTRACT

Management uses strategy formulation to measure negotiated performance goals. Formulation of strategy occurs at corporate, business and functional levels. Strategy formulation is anchored in what way to exploit the power and eliminate obstruction that inhibit sharing and creation of innovative information, thus proper formulated strategy enhances output in public institutions through enhanced profitability, efficiency and competitive advantage. Challenges faced in strategy formulation are a result of executives lacking knowledge in strategy management thus firms assume that executives are strategies just from the onset of their employment. Main study objective was to establish the influence of strategy formulation on performance of State Corporations in Kenya. This was supported by four specific objectives derived from operationalization of strategy formulation. Target population comprised of managers of 187 State Corporations. A sample of 128 managers were picked. Primary data was collected by using questionnaires. Descriptive statistics was used in preliminary analysis of data. Inferential statistics was used to establish predictive equation and tests its combined and individual significance. Results revealed that in terms of leadership, top management makes decisions in consultation with employees and there is delegation of authority and responsibility. It was revealed that in terms of mission and vision my organization possess a formal mission to pursue its objectives and also organization focuses on what really matters to the stakeholders. Firm resources indicated that firm are a learning organization and has a well understood culture by employees embedded in values. Environmental scanning key aspects were ethic and tribal inclinations, cultural practices and management uses various sources of information to scan the environment and level of annual budget allocation to the organization and population growth rate. The predictive model was fit for prediction as the explanatory power was 80.3 percent. The predictive model was both overall and individually significant. Environmental scanning had the highest positive influence on performance followed by leadership which had negative influence on performance, firm resources have positive influence and mission and vision statement. The study concluded that State Corporations need to embrace leadership, mission and vision, resources and environmental scanning so as to improve their performance. The established predictive model should be used for foresting performance in State Corporations. More emphasis should be placed on environmental scanning and leaderships as they are key indicators of strategy formulation. Manager should embrace strategy formulation so that firm performance could be improved. Policy makers should put more emphasis on strategy formulation aspect as it has important impact on firm performance. Comparable studies should be carried out in other sectors and results be compared for generalization purposes.