Growth Strategies and Performance of Milk Processing Firms Registered with Kenya Dairy Board, Kenya
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Date
2023
Authors
Njogu, Joseph Kimiti
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta university
Abstract
The Kenyan milk processing companies are currently facing intense competition from
local and regional brands from across East Africa. This is primarily attributed to many
players venturing into the sector to get a market slice to share. Thus, for milk
processing firms to survive, they have to employ growth strategies that increases their
performance and competitive edge. In the context of Kenya, the proportion of
marketable milk is estimated at 70%, with 56% of this milk being sold in informal
markets (Mbaya, Maina, Namusonga, 2021). Large dairy manufacturers control
approximately 85% of milk sales through formal channels. The limited access to
narrow markets poses a challenge to the performance of small dairy processors.
Despite Kenya's milk processing industry ranking well in the African market, many
processing firms continue to face performance-related challenges. Therefore this
study sought to investigate the growth strategies and performance of Kenyan milk
processing companies licenced by the Kenya Dairy Board. In particular, the study
aimed to analyze how cost leadership, differentiation, focus, and products
diversification strategies affect the performance of Kenyan milk processing
companies. The study was anchored on Porter’s Competitive Advantage Theory,
Goal-Setting Theory, Diffusion Innovation Theory, and The Balance Score Card
Method. The study adopted a descriptive survey research design. It collected data
using structured questionnaires from respondents. A census study targeting managers
of all the 35 milk processing firms that were operational between February 2017 and
February 2021 and registered with Kenya Dairy Board, was conducted. The data
acquired was analysed utilizing descriptive and inferential statistics. Frequencies,
percentages, means, standard deviations and cross-tabulations were computed to
summarise the data. To test the predictive nature of the independent variables, the
study used a regression analysis model. The regression results indicated that cost
leadership strategy, and product diversification strategy had no significant influence
on the performance of Kenyan milk processing companies. The results also showed
that differentiation strategy and focus strategy had a significant positive partial
influence on the performance of Kenyan milk processing companies. The study
concludes that differentiation and focus strategies are significant predictors of Kenyan
milk processing companies’ performance. Based on the research findings, the
researcher recommends that the management of Kenyan milk processing companies
should develop and invest in sound strategies to drive the growth of milk processors
from a local scope to national and eventually global. The researcher also recommends
that the boards of the individual milk processing companies should spend a lot of
money on managers' and employees' knowledge acquisition about how to successfully
adopt and implement various growth strategies in order to create competitive
advantage in the sector. The researcher also recommends that the Kenya Dairy Board
should have adequate engagements with the respective firms in designing suitable
policies and strategies to sustain the milk processing industry’s expansionary
programs.
Description
A Research Project Submitted to the School of Business,
Economics & Tourism in Partial Fulfillment of the
Requirement for the Award of Degree in Master of
Business Administration (Strategic Management),
Kenyatta University
Keywords
Growth Strategies, Milk Processing Firms, Kenya Dairy Board, Kenya