Effect of strategy formulation on performance of Chemelil sugar company in Kisumu county, Kenya

Abstract

Purpose of the study: The study sought to examine the effect of strategy formulation on performance of Chemelil sugar company in Kisumu County in Kenya.

Research Problem: The performance at Chemelil sugar company has been incompatible with the company's envisage strategic development plan. The company posted a loss of Ksh 821 million in 2018, which was an increase compared to the loss of Ksh 767.25 million incurred in 2016 (Auditor-General Financial Statement CSC 2018/2017 & 2015/2016).

Research Methodology: The study adopted the descriptive research design. The target population were heads of departments in Chemelil Sugar Company. The study conducted a census on all the 60 departmental heads. Self-administered questionnaires were used to collect data and analysis were carried out using descriptive and inferential statistics.

Findings: The correlation analysis indicated a statistically significant association between strategy formulation and performance. The model summary indicated that 27.4% of the variation in organizational performance can be explained by strategy formulation. The regression results showed that strategy formulation is significantly and positively related to performance (β= .689, t=.774, p =.046)

Conclusion: The strategy formulation includes strategic direction, corporate strategy, business strategy and functional strategy. In addition, it was concluded that a unit increase in strategy formulation increases performance by 0.689 units while holding all other factors constant.

Recommendations: The study recommended strategic direction, corporate strategy, business strategy and functional strategy can be adopted to enhance performance. In addition, it was recommended the company should use the available knowledge to document the intended direction and the actionable steps to reach its goals.