Strategy evaluation and control among dairy processing firms in Kenya

Abstract

Today's rapid changing business environment is calling for an innovative approach to strategic management. Research reveals that unsuccessful implementation of strategies and lack of strategy evaluation mechanisms leads to underperformance of companies. Though the importance of strategy evaluation has been recognized by most authors, Brown and Agnew (1982) note that evaluation and control is a very challenging and complex undertaking for most organizations. Therefore, strategy evaluation and control has become an emerging area of concern to most organizations today and can no longer be ignored. According to an industry competitiveness study carried out by TNS (2004), small and medium scale firms are mostly affected by changes in the environment due to their capacity challenges yet they have the potential to move to the next level and contribute more to industry growth. For the Kenyan dairy industry to grow and develop, small dairy processing firms must become medium while medium firms need to get large and finally large companies must move to mega stage. This growth and expansion requires the adoption of strategic management by all sizes of firms which include critical aspects of strategy evaluation and control. This study therefore sought to bridge the existing knowledge gap by establishing how strategies are evaluated and controlled within dairy processing firms in Kenya and the challenges these firms face during strategy evaluation. The population of this study consisted of all dairy companies operating in Kenya and listed by Kenya Dairy Board (KDB). KDB (October 2008) had listed 34 dairy processors which included small, medium and large companies. Primary data sources were utilized to collect the relevant data for this study through a questionnaire. Out of 34 targeted respondents, this survey interviewed 21 firms, 3 were not operational and 10 declined to participate in the interviews. It was found out that, all the 21 companies interviewed do not achieve all their documented strategies. This is line with the findings of the literature review where several studies conducted in different countries have yielded the same results. According to 63% of these firms, lack of understanding of strategy evaluation and control is the key challenge facing them while lack of financial resources to develop and implement strategy evaluation and control systems was also cited as a key challenge by 52% of respondents. From these findings, this study concludes that dairy processing companies need to take a different strategic orientation where strategy evaluation and control becomes a central theme for building competitiveness and improving performance. Key areas to start with would be to start committing resources to strategy evaluation and control systems; investing in the right strategy and evaluation structures; exposing/demystifying and involving key stakeholders in strategy evaluation and control; and incorporating strategy evaluation and control in strategic planning. Key limitations included non-response and unavailability of key respondents. The study recommends that researchers in strategic management can take the topic of strategic evaluation and control further by conducting a case study on one of the dairy processing companies in Kenya. This study has been organized into 5 chapters. Chapter one gives an introduction, chapter two looks at the literature review, chapter three gives the research methodology, and chapter four discusses the findings while chapter 5 gives a summary of the findings and recommendations