The Strategic Management Practices of Shipping Companies in Kenya

Abstract

This study was designed to document strategic management practices within the shipping industry. The study had two main objectives: 1 To establish the strategic management practices within the shipping companies in Kenya. 2 To determine whether the kind of strategy being used by the shipping companies in Kenya is related to performance. To achieve these objectives primary data were collected using structured questionnaires with close- ended and open-ended questions. One questionnaire per Shipping line was administered to the Chief Executive Officer (CEO) or a senior Manager. A drop and pick later approach was adopted. On many occasions the researcher discussed the contents of the questionnaire with the respondents. The data were analyzed with the aid of SPSS software. Simple descriptive statistics were used to present this data. Relationship tests were done to determine the influence of strategy on performance. Marin-Whitney U test was used to determine any significant differences between subgroups. Except for the importance attached to corporate Leadership during strategy implementation, and the problem of availability of funds during strategy implementation, the findings did not reveal any significant difference between Vessel owning companies and Non Vessel owning companies (NVOCCs). The objectives of this study have been met. The shipping companies in Kenya practice Formal Strategic Management in various forms, which include annual, Developmental and Complete Strategic Management. Strategies are mainly developed through deliberate Managerial intent as well as imposed by agencies or forces external to the organization. The Managerial intent of Strategy development within the shipping companies in Kenya is characterized by planning view of Strategy and the notion of logical incrementalism. Well-articulated explicit strategies have positively impacted on the performance of shipping companies in Kenya. Written strategies, which are proactively conceived and well communicated within the organization, tend to improve overall performance of these companies. Strategies which come as a result of planning and deliberate learning through doing and innovation yielded better performance. Strategies which are largely dependent on one individual in the organization and which come as a result of doing things the way they have always been done adversely affected performance. The findings of this study, further revealed that shipping companies have been successful over the last five years, recording above average levels of performance thus making the industry attractive. This is contrary to the literature review that the shipping industry is in turmoil due to over capacity, fragmentation and politicization of the industry that made it lack adaptability and remain stagnant. This contradiction could be attributed to environmental and time context Based on the findings of this study we would like to recommend that shipping companies in Kenya broaden their focus on strategic issues beyond their current focus on marketing strategies. Generic Strategies of cost, differentiation and focus should be used to define the fundamental options since they form the basis of competitive advantage. Grand strategies based on these generic strategies should then be used to provide basic direction for strategic action.