EFFECT OF STRATEGY IMPLEMENTATION ON ORGANIZATION PERFORMANCE: A CASE STUDY OF KENYA TEA DEVELOPMENT AGENCY HOLDINGS
CAROLINE M. GITONGA
A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI
DECLARATIONI declare that this is my original work and has not been presented for award of degree in any other university.
Student: Caroline M. Gitonga
This proposal has been submitted for presentation with my approval as the University Supervisor
Dr. Winnie Njeru
Department of Business Administration,
School of Business,
University of Nairobi
DEDICATIONI dedicate this work to my loving husband who sacrificed a lot both morally and financially to ensure that I complete this programme, my daughter for her patience, my parents for their motivation to fully exploit my potential, my siblings for encouragement and prayers. To all I say, thank you!
ACKNOWLEDGEMENTThe process of this master’s proposal writing has been wonderful learning experience which was coupled with both challenges and rewards. The completion of my study opens a new beginning and a step forward for my endeavors. Glory is to God for giving me the strength, grace and the resources to complete this study. I am indebted to all those who offered encouragement and advice as I worked on this proposal. Special thanks to my supervisor Dr. Winnie Njeru for his invaluable advice. The most sincere and heartfelt gratitude to my husband who encouraged me throughout this period and offered his good guidance, may God bless you abundantly. I am indebted to my parents, brother and sisters, and all my friends for their support and encouragement. I register my appreciation to all those who in one way or another made a contribution to my life during this period.
TABLE OF CONTENTS TOC o “1-3” h z u DECLARATION PAGEREF _Toc518638608 h iiDEDICATION PAGEREF _Toc518638609 h iiiACKNOWLEDGEMENT PAGEREF _Toc518638610 h ivTABLE OF CONTENTS PAGEREF _Toc518638611 h vLIST OF TABLES PAGEREF _Toc518638612 h viiLIST OF FIGURES PAGEREF _Toc518638613 h viiiLIST OF ABBREVIATIONS AND ACRONYMS PAGEREF _Toc518638614 h ixOPERATIONAL DEFINITION OF TERMS PAGEREF _Toc518638615 h xABSTRACT PAGEREF _Toc518638616 h xiCHAPTER ONE PAGEREF _Toc518638617 h 1INTRODUCTION PAGEREF _Toc518638618 h 11.1Background of the Study PAGEREF _Toc518638619 h 11.1.1Strategy Implementation PAGEREF _Toc518638620 h 21.1.2Firms Performance PAGEREF _Toc518638621 h 21.1.3Kenya Tea Development Agency (Holdings) Limited PAGEREF _Toc518638622 h 31.2Research Problem PAGEREF _Toc518638623 h 41.3Research Objective PAGEREF _Toc518638624 h 61.4Value of the Research PAGEREF _Toc518638625 h 6CHAPTER TWO PAGEREF _Toc518638626 h 7LITERATURE REVIEW PAGEREF _Toc518638627 h 72.1Introduction PAGEREF _Toc518638628 h 72.2Theoretical Framework PAGEREF _Toc518638629 h 72.2.1.Resource Based View Theory PAGEREF _Toc518638630 h 72.2.2.Systems Theory PAGEREF _Toc518638631 h 82.2.3.The Consistency Theory PAGEREF _Toc518638632 h 92.2.4.Organization Leadership PAGEREF _Toc518638633 h 92.2.5.Organization Culture PAGEREF _Toc518638634 h 102.2.6.Strategy Communication PAGEREF _Toc518638635 h 102.2.7.Resource Allocation PAGEREF _Toc518638636 h 112.3Empirical Review PAGEREF _Toc518638637 h 122.4Critical Review of the Literature PAGEREF _Toc518638638 h 132.5Research Gaps PAGEREF _Toc518638639 h 132.6Summary of Literature Review PAGEREF _Toc518638640 h 142.7Conceptual Framework PAGEREF _Toc518638641 h 14CHAPTER THREE PAGEREF _Toc518638642 h 17RESEARCH METHODOLOGY PAGEREF _Toc518638643 h 173.1Introduction PAGEREF _Toc518638644 h 173.2Research Design PAGEREF _Toc518638645 h 173.3Target Population PAGEREF _Toc518638646 h 173.4Sample Size and Sampling Technique PAGEREF _Toc518638647 h 173.5Data Collection Instruments PAGEREF _Toc518638648 h 183.6Data Collection Procedure PAGEREF _Toc518638649 h 183.7Data Analysis and Presentation PAGEREF _Toc518638650 h 19REFERENCES PAGEREF _Toc518638651 h 21APPENDICES PAGEREF _Toc518638652 h 26Appendix I: Questionnaire PAGEREF _Toc518638653 h 26
LIST OF TABLESTable 3.1: Sample Size PAGEREF _Toc458692620 h 17
LIST OF FIGURESFigure 2.1: Conceptual Framework PAGEREF _Toc458692620 h 14
LIST OF ABBREVIATIONS AND ACRONYMSANOVA-Analysis of Variance
GoA-Government of Kenya
KTDA-Kenya Tea Development Agency
MDGs -Medium Development Goals
RBV-Resource Based View
SPSS-Statistical Package for Social Scientists
TEMEC-Tea Machinery and Engineering Company
UoN-University of Nairobi
OPERATIONAL DEFINITION OF TERMSStrategic planning: it refers to the attempt to prepare for all eventualities by abstraction and thus to account for the complexity and the dynamics of the environment and entails the need to build alternative future scenarios and configurations (Kraus, Reiche and Reschke, 2008)
Organization factors: it is the set of important assumptions that members of an organization share in common and involves attitudes and behaviours that characterize the functioning of a group or organization (Pearce and Robinson, 2005)
Strategic leadership: it refers to a leader’s ability to anticipate, envision, maintain flexibility and to empower others to create strategic change in an organization (Hitt et al 2007)
Resources: it refers to the financial capabilities (financial capital that organizations use to formulate and implement strategy), physical assets, human resource, attributes of groups of individuals, the organization’s planning, structure, controls, culture, reputation and informal relationships among groups in the organization (Barney and Hersterly, 2011)
ABSTRACTStrategy implementation is the turning of plans and strategies into actions so as to accomplish set goals and objectives. The implementation of a strategic plan is of more importance than the coming up with strategies. The strategic plan is the roadmap that a business needs to pursue following a laid out strategic direction and the laid out objectives so as to be success and add value to the customer. When an organizations’ strategies are not implemented successfully, a gap is created that makes it difficult to achieve success. The general objective of the study is to determine the effect of strategy implementation on organization performance in Kenya with regard to KTDA Holdings. The specific objectives of the study are to; assess how organization leadership, organization culture, strategy communication and resource allocation affects performance of Organizations in Kenya. The research design to be adopted will be descriptive survey design. The population of the study comprises of all the 207 KTDA holdings managers. The sample size will be 62 managers which comprises of 5 executives, 17 top level managers and 40 middle level managers. The study will use primary data which will be collected through self-administered questionnaires to the KTDA holdings management. Data will be analyzed using statistical package for social sciences based on the questionnaires. Data will be analyzed using frequency distribution (tables and charts).
CHAPTER ONEINTRODUCTIONBackground of the StudyStrategy is a unifying theme that gives coherence and direction to the decisions of an organization. It guides the organization to superior performance by helping establish competitive advantage. Strategy acts as a vehicle for communication and coordination within the organization. The goal of strategic management is to build and maintain sustainable competitive advantage and create stakeholders wealth (Ndumia 2010). Strategic management process involves strategy formulation, implementation, evaluation and control (Pearce & Robinson, 2005). It’s been noted that good strategies will fail if not properly implemented. Developing a good strategy is one thing and implementing another, implementation the same has proved to be a nightmare to some managers. According to Gekonge (2009) failure in implementation will automatically render good strategy useless. Strategy implementation is a crucial and important process in strategic management. In order to be successful organizations need to effectively implement their strategies to enhance their performance.
This study is based on the resource based view theory, system theory and consistency theory. According to Hrebiniak, (2006), the Resource-based view is grounded in the perspective that a firm’s internal environment, in terms of its resources (tangible and intangible resources) and capabilities, is more critical to the determination of strategic action than is the external environment. Resource dependency theory is concerned with how the external resources of an organization affect its behavior, it argues that in order to survive, an organization must acquire resources (Pfeffer & Salancik, 1978). Systems theory informs us that all the parts must fit properly for the system to work as intended. . According to systems theory, a firm’s success depends on the interdependence, interrelation and synergy between the various subsystems. Consistency theory asserts that, there must be consistency between attitudes, behaviors, and attitudes within the organization. Lack of consistency in the organization causes discomfort so that an individual attempts to ease the tension by adjusting attitudes or behaviors in order to once again achieve balance or consistency, (Davenport, 1993).
According to Kihara, Bwisa and Kihoro (2016) the strategy implementation process determines whether an organization excels, survives or dies depending on the manner in which it is undertaken by the stakeholders. Strategy implementation process involves placing objectives, strategies, and policies into action through the development of programs, budgets, and procedures. Strategy formulation precedes implementation making implementation a key part of strategic management.
Strategy ImplementationHuse ; Gabrielson (2004) define strategy implementation as the methods by which strategies are operationalized or executed, it focuses on the processes through which strategies are achieved. Most mangers would rather participate in the formulation of a strategy rather than the implementation. This is because the success of strategy is not assured (Elwak, 2013). Organizations are experiencing challenges in implementing their strategies. According to Johnson (2004), 66 percent of corporate strategy is never implemented. The problem seems to lie in the middle of strategy to performance gap, with a more likely source being gap in formulation to implementation process. Report companies realize only 63 percent of the financial performance promised by their strategies. (Mankins ; Steek, 2005). According to Kaplan ; Norton (2005) strategy to performance gap in part is attributed to the fact that 95 percent of a company’s’ employees are not aware of or do not understand their company strategy.
Strategy implementation requires active involvement of managers at all levels of the organizations. It’s an action-oriented human behavioral activity that calls for senior-level leadership and key managerial skills (Schaap, Stedham & Yamamura, 2008). Success in today’s commerce requires new managerial attitudes that emphasize the use of global markets, strategic flexibility and the ability to accept and harness change (Hitt, Ricart and Nixon, 2007). Strategy implementation comprises of a series of sub activities which are primarily administrative with the purpose of determining how resources of the organization must be mobilized to accomplish its strategy in a cohesive manner. The organizational management team that perform this task play a big role in determining whether an organization performs to its potential. According to Smith ; Sandstrom (1999) the business leaders should be perceived by employees to be taking the lead in implementing their strategic plan since strategy implementation is a key strategic issue.
Firms PerformanceThe design, implementation and use of performance management system have been the subject of a wide number of studies (Kaplan ; Norton, 1992; Neely, 2005). Performance is the ability of any organization to maximize the available resource to maximize financial and operational position within the minimal cost as possible and minimal human capital. It’s critical to measure performance so as to know whether the organization is achieving full benefits from the strategies it’s implementing and thus achieving the shared purpose. According to Johnson ; Kaplan (1987), organizations are considering a set of financial and non-financial indicators to measure and manage performance. By use of non-financial indicators, organizations would be encouraged to look at the longer term, link decision making process to strategy and promote learning across subsidiaries and business units. (Ittner ; Larcker, 2003; Kaplan ; Norton, 2000).
With separation of ownership and control (Fama ; Jensen, 1983) and distinction between direction and management, some boards appear almost exclusively concerned with reviewing and formulating strategy. Yet shareholders and other stakeholders are primarily concerned with results rather than rhetoric and paper plans. Aspirations are noble but its outcomes that people can see, smell, taste and feel. (Coulson- Thomas, 2013). This makes it clear that adoption of measuring performance system is of essence if the organizations are to remain relevant in the dynamic business environment.
Kenya Tea Development Agency (Holdings) LimitedKenya Tea Development Authority (KTDA) was established under a statutory legislation on 20 January 1964 under Legal Notice No. 42 Section 190 of the Agricultural Act (Cap 318 of the Laws of Kenya) replacing Special crops Development Authority. The authority took over management of small-holder tea from multi-national tea companies. In 1991, the parastatal reform strategy paper listed KTDA among other strategic parastatals to be privatized. On 30th June 2000 KTDA was transformed into a private company, Kenya Tea Development Agency Ltd and registered under company Act. There were 45 small holder factories at the time of privatization in 2000. In 2010 the group adopted a holding structure with the formation of KTDA (holdings) Ltd and KTDA (Management Services) Ltd, the subsidiary in charge of the factories management, (KTDA Strategic Plan, 2016).
KTDA (Holdings) Ltd is mandated to offers extension tea services, transport from the firms to the factories, tea processing and product marketing for all tea farmers. The Agency took over the assets and liabilities of the Authority and also its mandate but under new terms entered into with the independent tea factory companies it manages. Currently KTDA (Holdings) Ltd is owned by 66 corporate shareholders, who are KTDA’s affiliated tea-producing factories. KTDA (H) Ltd provides management and other services through its various subsidiary companies under a management agreement with the factory companies. KTDA (H) Ltd has had various diversification initiatives in its endevour to enhance sustainable value for its shareholders. The initiatives have increased revenue opportunities for the shareholders, (KTDA Strategic Plan, 2016).
KTDA (H) Ltd through diversification has eight subsidiaries which are as follows; KTDA Management Services Ltd; that was established to manage the 65 tea processing factories through management agreements with the respective Factory Companies. Majani Insurance Brokers Ltd undertakes insurance and brokerage services. Chai Trading Company Ltd undertakes all matters relating to tea trading and warehousing. Kenya Tea Packers Ltd undertakes tea blending and packing for local and export markets. Recently it has ventured into water bottling (Maisha brand). Greenland Fedha Limited is a micro-finance institution aimed at providing a variety of financial services to tea farmers and KTDA (H) affiliates. KTDA Power Company was set to develop small hydro power projects across the tea growing regions. Tea Mechinery and Engineering Company (TEMEC) was established to provide a modern workshop for fabrication and assembly of tea machinery and agency services for the tea factories. Lastly KTDA foundation subsidiary which is a non-profit charity that focus on corporate social responsibilities. During its period of existence, the growing of tea by small-scale sub-sector in Kenya has attained a niche in the global tea trade, (KTDA Strategic Plan, 2016).
Research ProblemOrganizations, either private or public, are increasingly embracing the practice of strategic management in anticipation that this would translate to improved performance. However, challenges facing the effective strategic management are the implementation of the strategy relating to the unpredictable nature of policy agendas, shifting attention of some actors involved in the strategic management, lack of commitment to strategic management, lack of rewards and incentives during and after the implementation of strategic management practices, constraints in funding and partnership management etc. The relationship between implementation and performance is influenced by which measures the firm has come up with as key indicators; thus the internal measurement systems used will have an effect on organizational performance at the individual and organizational levels (Levenson, Van der Stede, & Cohen, 2006).
In the United Kingdom, Andrews, Boyne & Walker (2011) did a research on Strategy implementation and public service performance. The findings, suggests that public organizations need to achieve a fit between strategic orientation and style of implementation if higher levels of performance are to be attained. In the Netherlands, Langereis (2015) did a research on the link between strategy and performance of municipalities in the Netherlands. The research clearly showed the presence of strategic orientations used by municipalities in the Netherlands. The findings indicate that organizational performance of municipalities is influenced by economic, social-cultural, and ecological capital.
In Africa, Aremu & Oyinloye (2014) did a research on the relationship between strategic management and firms’ performance in Nigerian banking industry. The findings of the study revealed that strategic management affected organizational performance. In Zimbabwe Winfred (2016) did a research on the impact of organizational culture and strategy implementation on commercial bank performance in Zimbabwe. The results of the study show that culture and strategy implementation have a statistically significant and positive impact on commercial bank performance.
In Kenya, Mwangi (2017) studied the relationship between strategy implementation and performance in KTDA managed factories in Kenya. The finding from the study was that the most significant factor influencing performance is resource utilization, followed by leadership, culture and lastly training and development. The study is not exhaustive on the factors affecting performance. Hence the study will bridge that gap and also concentrate on the KTDA (H) Ltd and the subsidiaries which are autonomous.
Njagi ; Kombo (2014) studied the effects of strategy implementation on performance of commercial banks in Kenya. The findings were that there is a moderately strong relationship between strategy implementation and organization performance. They suggested that for strategic management to improve organization performance all steps in the implementation process need to be effectively designed and carried out. Only 44.8% variation in performance is explained by strategy implementation, thus indicating there are other factors which influence performance. The researcher advocates for such a study to be carried out in other industry. This study seeks to explore a different sector that is tea industry.
Muriuki ; Kavale (2015) examined the determinants of strategic plan implementation in Chai Trading Company Limited (CTCL). From the study, the researcher established that strategic plan implementation is dependent on Strategic Human Resource Management, strategic competitiveness, organization culture and corporate leadership at CTCL. The study concluded that there is significant relationship between the variables hence recommended that more efforts in manpower planning to nurture strategic human resource resulting in better competitive edge. This study concentrated on one of KTDA (H) subsidiary. This study aims to cover the holding company and all its subsidiaries, this will give us a broader view of the parent company. However, no specific study has being conducted on the effect of strategy implementation on performance of KTDA (H) Ltd, due to this research gap, the study intends to answer the question, does strategy implementation affect performance of KTDA Holding Company?.
Research ObjectiveThe objective of study will be to determine the effect of strategy implementation on performance at Kenya Tea Development Agency.
Value of the ResearchThe study will give insight to the practitioners in the industry into understanding strategic management process as the findings will form the base line of strategy formulation and successful implementation. Management at Kenya Tea development Agency Holding Company will be in a position to evaluate its strategies and realign them so as to derive the best results intended from proper implementation of the same. Again, the study will enable the company to consider involvement of other Tea stakeholders and investors who can be of great help in management and performance monitoring and evaluation.
The study findings will be used by the policy makers who monitor the day to day operation of the tea sector across the country. The policy makers issues guidelines and regulation which govern the tea farming, harvesting, transporting, processing, sales and marketing and distribution of the Tea products. They include the ministry of Agriculture from both the national government and specific counties where Tea is grown. Kenya Tea Growers Association will also consider the research findings to evaluate the strategic plans which are developed and implemented by KTDA (H) Ltd.
The study also aims to be a source of guidance to employees as to what is expected of them and what to expect from the employee for successful strategy implementation. The study also equips the employee with the strategy knowledge and other elements needed for successful strategy implementation.
This study will be useful to fellow researchers and academician who might be interested in pursuing further research in the same area. The study will help them understand the effect of strategy implementation on Organization performance in Kenya.
CHAPTER TWOLITERATURE REVIEWIntroductionThis chapter reviews the literature from other studies who have carried out their research in the same field of study. The specific areas covered here are theoretical underpinnings, strategy implementation practices, empirical review and finally the measures to mitigate the challenges of strategy implementation as well as conceptual framework.
Theoretical FrameworkFor the purposes of this study, two theories on implementation of strategy are reviewed to form its conceptual basis. Strategy implementation can be explained through several theories which include resource based view theory, open systems theory, and consistency theory.
Resource Based View TheoryAccording to Wernerfelt (2004) resource based theory focuses on the internal weaknesses and strengths of a firm and shows the way processes are managed and the firms resources deployed and allocated. According to Barney (2003), the resource based perspective in a contemporary view looks at the firms elements including the communication and structure existing within the team of players who are to coordinate the information communicated to them and the key players’ commitment to the firm so as to ensure that the proper implementation of a strategy happens. Diversification of a firm resources is one such important strategy. The diversification of a firm can be said can be said to be the way in which managers identify firm resources that are unique and make a decision on the areas these resources will be utilized to take the firm to greater strategic heights.
According to Barney (2003), resources are of value if they can help a firm increase the value it adds to its customers. This can be done if differentiation is increased or the cost of production is decreased. If resources cannot meet this condition, this results to competitive disadvantage for the firm. Resources that can be acquired by one or only a few firms are referred to as rare resources. If a resource is available to a few or many companies the result is competitive parity. If a firm has rare or valuable resources it can be able to achieve temporary competitive advantage. The resource should also be costly for a rival firm to substitute or imitate incase the firm wants to achieve and sustain its competitive advantage. The resource is of no value if the firm is not organized in a way that it can capture value from the resource. Only the organization that is able to exploit the rare, valuable, imitable resource can gain a sustainable competitive advantage.
Human resources are made up of skill ability, intelligence, knowledge, training, employees training, organizational resources planning processes, organization culture, information systems, patents, trademarks, copy rights and databases (Barney, 2003). RBV theory points out that resources are the means by which firms exploit external opportunities and neutralize threats. Organization is one of the factors relevant to this study because it shows that the company should be organized to exploit these resources in order to have successful strategy implementation towards organizational performance. The theory will be of importance to the researcher in understanding how resources utilization influences performance of KTDA holdings. According to Montgomery (2004), the effective utilization of a firm’s strategy is dependent on how the firm utilizes and exploits the existing resources. The RBV model acknowledge the major role played by resources in assisting firms achieve better organizational performance.
Systems TheoryThis theory is a way of thinking and analyzing management thus it is less of a management methodology. According to the theory, firms just like organisms consists of many components that should work in harmony so that the whole system can succeed. According to systems theory, a firm’s success depends on the interdependence, interrelation and synergy between the various subsystems. Employees who are the most important component of the firm make up different important subsystems in a firm. Work groups, individual employees, facilities, business units and departments can be said to be significant component systems of a firm. Inter-relationships and interdependence are significant components of the systems theory. Humanity is designed to be social and thus the interdependence existing between groups and employees translates in to the framework of systems theory. Employees rely on the managers, companies and each other to give them assistance, training and guidance while doing their job. A firm that emphasizes on positive employee relations will maintain a firm’s culture that will see staff openly ask questions and seek advice from their co-workers and managers which reinforces and facilitates the interdependence of work groups, individuals and departments (Senge et al., 1994).
According to this theory organization should support the implementation of its strategy through giving appropriate people the task of implementing the strategy, improve the needed capabilities and skills in the firm by training and capacity building. The theory will be of important to the researcher in understanding the effect development and training has on KTDA holdings performance.
The Consistency TheoryAccording to this theory, firms are effective because they have cultures that are strong and highly consistent, well integrated and well-coordinated (Davenport, 1993). The behavior of employee is set in a set of well-known values and the followers and leaders always reach an agreement even if they might have views that differ (Block, 1991). This consistency is a significant source of internal integration and stability that is from a high degree of conformity and a common mindset (Senge, 1990). According to this model creating an organizational culture and work climate that is conducive will successfully support strategy implementation. The theory will be of important to the researcher in understanding the effect of culture on performance in KTDA holdings factories. A culture that is very receptive will always support strategy implementation and hence better performance.
Leadership is basically the process of persuasion, where an entity/leader induces a group/team to pursue certain objectives. Effective or rather successful leadership involves reorganizing the organizational architecture in a way that inspires employees with the appropriate knowledge to set off value-enhancing proposals (Kouzes ; Posner, 2010). Anyango (2013) in her work highlights an environmental scanning analysis that shows leadership as that, which should manage/lead the basics like inflation, people among others. Anyango (2013) argues that, strategic leadership should make sure that culture and values within an organization are suitable for satisfying key success factors. She adds that, this should guide environmental-value-resources (E-V-R) congruence. However, she also noted that, leadership is not always completely involved in the strategy implementation process because of the many other activities involved which have been delegated. Therefore, limited leadership involvement could slow down the success of strategic management in an organization.
Kouzes and Posner (2010) highlights that, to implement strategy effectively, the senior executives/top management must not take for granted the lower level managers since they have similar perceptions of the strategic plan and its implementation, its fundamental rationale, and its urgency. As an alternative, Kouzes and Posner, (2010) argues that, senior executives/top management must assume lower level managers don’t, so senior executives/top management must convince employees of the validity of their ideas. Marginson (2012), argues that, honest commitment by leaders include an devotion to the full and methodical process of strategic planning which must end in implementing programs and services and commit allocations to achieve the objectives of the strategic plan at a point that is achievable for the organization and more so the level of activity.
Organizational culture alludes to the leadership style of managers, how they spend their time, what demands they ask of employees, what they focus consideration on, how they make decisions (Ansoff, 2009). Apart from that, organizational culture that is the dominant norms, values and beliefs, both the conscious and unconscious symbolic acts in use by leaders for instance; dress codes, job titles, informal meetings with employees etc. (Ansoff, 2009). According to Ateng (2009), Organizational culture is placed amongst the fundamental issues, since the cultural dimension itself is critical to all aspects of organizational behavior. He argues further that, if strategy implementation is going to realize its full success of radically improving the way enterprises’ do business, alternating of the organizational culture have to be well thought-out as an fundamental part of the process. Since systems cannot be developed not withstanding of the people that will be supervising and operating the systems. One of the most important reasons why a number of process strategy implementation projects do not accomplish the echelon of success the organization anticipates, is for the reason that the functional manager probably did not address the issue of organization culture change.
Amongst the major hurdles in strategy implementation is probably the cultural and behavioral in nature; this includes the impact of bad combination of activities and weakened feelings of commitment and ownership (Ansoff, 2009). Marginson (2012) contends that strategy implementation changes either from a process of a successful team commitment in the course of a coalitional form of decision-making, or as a product of complete coalitional participation of implementation team via a strong corporate culture. During the adoption of the organizations cultural model that accentuates a lower-level employee participation in both strategy implementation and formulation there is separation of “thinkers” and “doers”. It generally attempts to implement strategy by means of infusion of corporate culture all through the firm. The cultural model negates and challenges the fundamental aims from the economic standpoint of a firm.
At a glance, the implication that communication elements ought to be stressed in the implementation process appears to be a simple task. Even if past studies suggest that communication is an important success factor within strategy implementation (Lucey 2013), argues that, communicating with employees relating to issues related to the strategy implementation is often delayed pending the changes have already crystallized. In this regard, majority of organizations are tasked with the hurdles of lack of institution of a two-way-communication plan that allows and solicits questions from employees about issues relating to the formulated strategy. Besides the inability to seek questions and feedback, lack of communications occasion more harm since the employees are not aware of the new tasks and activities to be performed by the affected employees, new requirements, and, in addition, cover the reason behind changed circumstances (Alexander, 2009).
Lares-Mankki (2014) analyzed the effects of top management’s practices on job satisfaction, employee commitment, and role uncertainty through conducting a survey of 862 insurance company workers. In this study, five management practices were analyzed that is; encouraging creativeness, creating and sharing an organizational goal, providing support for employees, acting as a role model, and allowing employee participation in making job-related decisions. The study results highlighted that there exist a strong relationship between top management’s actions and employees’ attitudes and perceptions.
Resource AllocationIn an environment that is dynamic, firms should seek to continually acquire, develop and upgrade their capabilities and resources so as to maintain their growth and competitiveness (Montgomery, 2004). The RBV model suggests the firm resources are the major determinants of the firm performance and can affect the achievement of a sustainable competitive advantage by the firm (Hoffer & Schendel, 2006). According to Hoffer and Schendel (2006), resources are inclusive of the firms capabilities, firm attributes, knowledge, organizational processes and assets, etc. that the firm controls that allow the firm to achieve and implement the strategies that can help the organization improve its efficiency and effectiveness in RBV, the major problem is the identification the characteristics of the firm resources that cannot be imitated by competitors. If the firm resource can easily be imitated by the competition, then the advantage cannot be in existence for long (Barney et al., 2003). According to Dierickx and Cool (2009) described the way the sustainability of a firm’s position hinges and easily the firms resources can be imitated, substituted and imitability is linked to the resources accumulation process characteristics which include resource efficiencies, casual ambiguity, resource erosion, interconnectedness and compression diseconomies. According to Thompson and Strickland (2006), a firm should provide enough financial resources that will allow the execution of a strategy because for a strategy to be successfully executed, enough funds should be available.
Empirical ReviewImplementing a strategy, according to Pearce and Robinson (2009), is the process through which a set of agreed work philosophies is translated into functional and operational targets. Kotter and Best (2006) support this position when they state that implementation addresses the who, where, when and how, and it is thus the tactic that drives the strategy of the company. According to Hussey (2000), implementation follows a six step process namely, envision, activate, install, ensure, and recognize. He further states that the implementation of strategy remains one of the most difficult areas of management. Its success depends both on the selection of an appropriate strategy and converting that strategy into action.
Hussey (2000) explores the subject of successful strategy implementation by introducing the concept of “soft” and “hard” aspects of implementation. He argues that there are soft and hard elements which need to fit together if the strategy is to be implemented. The soft elements comprise the behavioural dimensions while the hard elements comprise the analytical dimensions to the process of making and the subsequent implementation of strategy. He contends that the issue then becomes one of creating a strategic fit between the soft and hard elements and organizational variables. To be successful, the strategic plan must have the support of every member of the firm. This is why the top office must be involved from the beginning. A company’s leader is its most influential member. For effective implementation of strategy, there is need for adequate leadership in the organization. This will ensure that all the organizations effort is united and directed towards achievement of the organizations goals (Pearce and Robinson, 2005).
It is important that the culture of the organization be compatible with the strategy being implemented. Roy (2004) argues that corporate culture is one of the important attributes characterizing the management of excellent organizations. Such organizations achieve a fit between their strategies and culture. Lack of this fit can lead to resistance that in turn may frustrate the strategy implementation effort. The strategy to be implemented should be realistic in relation to available resources. Human capital is an important resource in the organization, therefore training and development is very important for improved performance. Such training is important for enhancing ability to develop and strategy implementation. In order to enhance effective strategy implementation, there is need to have adequate administrative process and procedures in place.
Critical Review of the LiteratureAs demonstrated in the preceding literature review, strategy implementation is elevated as a determinant of success or failure that is deeply connected to the formulation process, and the functioning of the organization. However, in spite of its relevance, implementation is by far the least studied and documented stage in the strategy process according to Hitt et al. (2007). In general, studies in the field place formulation and implementation at the same level in the strategy process, as if being one continuous stage, while evidence and logic suggests that although highly intertwined, they are two very different phases. Similarly, the secondary source in the Kenyan context referring to implementation of strategic plans is scanty especially within the precincts public governance. General literature also suggests that implementation could be a major determinant of the organizational performance (Hitt et al., 2007). In the eventuality of two firms implementing the same strategy the resultant performance is likely to be different. This might be explained once again in terms of resources and capabilities, and the uniqueness resulting from their distinctive use and development over time. Although resources might be the same, the resultant objective will anyway differ in terms of performance and eventually in terms of quality. A strategy, thus, produces different performance according to the characteristic functioning of the organizations that is determined by its unique use of resources and capabilities. These unique resources have hardly been exhaustively investigated and documented by any research for comprehensive analysis and dissemination. This has resulted to theoretical frameworks with a widening consistency-variance providing a prelude to knowledge disharmony.
Research GapsStrategy implementation in organizations is a research area that cuts across different fields of social sciences including strategic management, organizational theory, and organization development. According to Hitt et al (2007), the result of this intertwined complexity is rightly construed to activate a comprehensive investigative endeavour to bring forward a universal model concerning reality and ideal-think underpinning the concept of strategy implementation. Despite heightened interests on formulation unlike implementation of strategies, there is an evident geographical bias when deciding most studies? operational scopes. As a result, most of the generalizations regarding strategy implementation are based on populations extracted from developed economies and advanced organizational set-ups as opposed to small and developing contexts. This augurs well for a subjective reference but adds little value if objectivity and exclusivity are the bases for deductions. It is this argument that informs the design of this study where none of the same has been conducted with the intent of adding diversity to existing subjective knowledge. The choice of KTDA as study location and variable scope is embedded on the ideals of fair inclusion and geographical representativeness which are key ingredients towards universal theory formation. Based on proposed design and methodology on the target population, it is highly anticipated that this study will induce a renewed debate and further researches on relationship between an organization’s institutional factors and optimality in strategic plan execution.
Summary of Literature ReviewThis chapter has reviewed literature on the extent to which organization leadership, organization culture, strategy communication and resource allocation affect organization performance. It reviewed relevant theories, outcomes, suggestions and workable solutions that seek to address strategy implementation in KTDA holdings.
Conceptual framework is defined as an element of the scientific research process in which a specific concept is defined as a measurable occurrence or in measurable terms that basically gives a clear meaning of the concept (Cooper ; Schindler, 2010). According to Mugenda and Mugenda (2010), a conceptual framework is a pictorial presentation of the association between dependent and independent variables. The Conceptual Framework of this study was comprised of the independent variables and the dependent variable as shown in figure 2.1:
Monitoring and evaluation
Policies and Guidelines
Monitoring and evaluation
Policies and Guidelines
Independent Variables Dependent Variable
Smooth flow of information
Smooth flow of information
Internal Business Processes
Internal Business Processes
Figure 2.1: Conceptual FrameworkCHAPTER THREERESEARCH METHODOLOGYIntroductionThis chapter discusses various stages that will be followed in completing the study. It provides a general framework for the procedures and techniques that will be used in data collection and analysis under the following sub-headings: the research design, target population, sampling size and sampling procedures, data collection instruments, data collection procedures, and data analysis techniques.
Research DesignThe research will be carried out in KTDA holdings in Kenya. Orodho, (2003) defines research design as the scheme outline or plan that is used to generate answers to research problems. This study will adopt a descriptive research design. A descriptive study is one which information is collected without changing the environment. It will also be conducted to demonstrate relationships between variables and may involve interactions with people or surveys. Cooper and Schindler, (2006) further explain that a descriptive research design is one of the best since it is accurate and current facts are exhibited through data collection in human contexts. Gray (2004) argues that descriptive design portrays an accurate profile of persons, events or situations by describing existing conditions and attitudes through interpretation. The study therefore will consider descriptive research design to be the most appropriate in establishing the relationship between strategy implementation and performance of KTDA holdings.
Target PopulationTarget population is the specific population about which information is desired. Mugenda and Mugenda, (2003) define a population as a complete set of individuals, cases or objects with some common observable characteristics. Welman and Mitchelle, (2005) further define target population as full set of cases from which a sample is taken. Gray, (2004) argues that the target population should have some observable characteristics to which the researcher intends to generalize the results of the study. The study will target all employees working in KTDA holdings. The population of interest will be all 207 KTDA holdings managers.
Sample Size and Sampling Technique
Sampling is the procedure of selecting elements from a given population that specifies the type of sample to be used. From the population frame, the required number of respondents was selected in order to make a sample. According to Cooper and Schindler (2006), a sample of at least 30 elements (respondents) must exist for generalization purposes. Other research scholars argue that sample size selection to a great extent is judgmentally decided. The study will apply stratified random sampling and purposive sampling. The total number of respondents will be 62 as 30% of the target population as shown in table 3.1. According to Mugenda and Mugenda (2003), a sample size of 10-30% of the total population is adequate for a study in descriptive research.
Table 3.1: Sample SizeOrganization Population Sample Size (30%)
Executives 16 5
Top Level Management 57 17
Middle Level Management 134 40
Total 207 62
In order to select samples from the population, the study will use stratified random sampling technique. The purpose of using this technique will be to ensure that a proportionate number of respondents are selected from the target population. The study will divide the population into stratas which constitutes population from all KTDA holdings subsidiaries. Stratified random sampling will then be used to select the respondents from all KTDA holdings subsidiaries. Stratified random sampling technique produces estimates of overall population parameters with greater precision and ensures a more representative sample is derived, (Gray 2004).
Data Collection InstrumentsThe main tools of data collection will be questionnaires which will be self-administered to the selected respondents. The researcher will design a questionnaire to gather extensive data and incorporates a five point Likert rating scale. This will enable the researcher to assess respondents’ attitudes towards strategy implementation and performance by asking the respondents how strongly they agreed or disagreed with series of statements / factors. The questionnaires will have both open and closed ended questions. Questionnaires will be also useful since they establish the number of people who hold certain beliefs and hence possible to gauge public opinion on an issue, (Flick, 2002). Using questionnaires in the research will enable direct response and feedback from the respondents that can be collected within a short period of time and in an easier manner.
Data Collection ProcedureData collection will start with the researcher obtaining a letter of authorization to collect data and a letter of introduction from University of Nairobi before embarking to the field. The researcher will then seek consent from the KTDA holdings Management. Appointments with the target respondents will be sought in order to get permission to carry out the study at the KTDA holdings offices. After permission is granted, administration of the questionnaires will begin and it is proposed to take about two weeks duration to complete the exercise. This will be made possible through the help of 2 research assistants who will be carefully selected on the basis of their ability to interact well with the respondents and their ability to understand issues. They will be taken through each question in the questionnaire for the purpose of clarification on the issues that they do not understand. There will be prior booking of appointments before administering questionnaires.
Mugenda and Mugenda (2003) argue that piloting refers to pre-testing of a research instrument by administering it to a selected sample which is similar to the actual sample which the researcher plans to utilize in the study. Piloting will be done in order to assess the clarity of items, validity and reliability of the instruments. The pilot study will be conducted to the employees who will not form part of the study.
Data Analysis and PresentationThe data generated by questionnaires will be checked, edited organized and coded by computer to reduce the mass of data obtained into a form suitable for analysis. The coded data will then be analyzed using Statistical Package for Social Science (SPSS) version 21. Both descriptive and inferential statistics will be used in analyzing data. Inferential statistics enables precise and informed conclusions that can be generalized about a population. This will entail frequencies and percentages, means and standard deviations and regression analysis. Prior to data analysis the questionnaires will be coded based on a five point Likert scale used in the questionnaire. The findings obtained will be discussed and forms the basis for the research findings, conclusion and recommendations.
The relationship between performance and various strategy implementation determinants will be illustrated by the following equation.
Y=?+?1X1+ ?2X2+ ?3X3+ ?4X4+
Y= Organization Performance
= constant (intercept)
= Slope (gradient) showing the rate at which the dependent variable is changing for each unit change in the independent variable.
X1= Organization Leadership
X2 = Organization Culture
X3= Strategy Communication
X4 = Resource Allocation
= Error term
Analysis of variance (ANOVA) will be used to test the impact of independent variables on the dependent variable. The ANOVA tests the model’s acceptability and how it fits. Analysis of variance shows regression display information about the variation accounted for by the model and the residual information about the variation that is not accounted by the model. In ANOVA, if significance value F ; 0.05, then it means that the model is not acceptable and variation illustrated by the model is by chance. However, if significance value of F ; 0.05, then it means that the model is acceptable and variation showed in the model is not just by chance.
Data will be presented inform of frequency distribution tables and figures. This will facilitate description and explanation of the study findings. Regression analysis will be utilized to test the relationship between strategy implementation and performance of KTDA holdings and it will describes how the dependent variables are numerically related to various independent variables.
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APPENDICESAppendix I: QuestionnaireMy name is Caroline Gitonga a student in UON taking a course in Master of business administration in strategic management. This academic questionnaire is prepared purposely to assist in collecting data relating to effect of strategy implementation on performance of KTDA holdings. As one of the key identified respondents/informants, you are hereby requested to complete it. Any information given with respect to this request shall be treated with strict confidentiality and will only be used for the intent aforementioned.
Thank you for your anticipated kind response.
Instructions: Kindly tick (?) where appropriate.
Female ( ) Male ( )
21-30 ( )
31-40 ( )
41-50 ( )
51-60 ( )
Over 60 ( )
Level of Education
PhD ( )
Master’s Degree ( )
Bachelor’s Degree ( )
Diploma ( )
Certificate ( )
Length of service
< 2 Years ( )
2-5 Years ( )
6-9 Years ( )
10-13 Years ( )
>13 Years ( )
Organization Leadership and Organization Performance
Indicate the extent to which the following organization leadership factors/elements influence organization performance on a scale of 1-5 where;
Strongly agree (SA)-5, Agree (A)-4, Neutral (N)-3, Disagree (D)-2, Strongly Disagree (SD)-1
Statement SA A N D SD
Organization leadership creates a conducive environment for implementation of the strategic plan Organization leadership creates enabling environment for career development There is enabling environment for self-expression KTDA staff are well trained KTDA staff are competent KTDA leadership evaluates implementation of strategies There is timely delivery of set targets The set objectives are attainable In your own opinion briefly explain how issues of organization leadership can be improved to enhance organization performance
Organization Culture and Organization Performance
Indicate the extent to which the following organization culture factors/elements influence organization performance on a scale of 1-5 where;
Strongly agree (SA)-5, Agree (A)-4, Neutral (N)-3, Disagree (D)-2, Strongly Disagree (SD)-1
Statement SA A N D SD
Organization culture influence strategy implementation KTDA staff are flexible and adaptable when changes are necessary The organization, have clearly defined goals that relate to strategy implementation Employee attitudes enhances strategy implementation The organization mission and vision enhances strategy implementation Strong culture embraced by KTDA helps in strategy implementation There is tolerance of new ideas and this enhances strategy implementation There is always teamwork within the organization Strong organization values enhances strategy implementation In your own opinion briefly explain how issues of organization culture can be improved to enhance organization performance
Strategy Communication and Organization Performance
Indicate the extent to which the following strategy communication factors/elements influence organization performance on a scale of 1-5 where;
Strongly agree (SA)-5, Agree (A)-4, Neutral (N)-3, Disagree (D)-2, Strongly Disagree (SD)-1
Statement SA A N D SD
There is strategy communication system in place There is strategy communication policy in place Strategy communication systems influence strategy implementation Adequate strategy communication improves performance Strategy implementation is communicated on timely manner There is clear strategy communication channels in place Strategy communication system in place is well understood by all employees Strategy communication system is interactive In your own opinion briefly explain how issues of strategy communication can be improved to enhance organization performance
Resource Allocation and Organization Performance
Indicate the extent to which the following resource allocation factors/elements influence organization performance on a scale of 1-5 where;
Strongly agree (SA)-5, Agree (A)-4, Neutral (N)-3, Disagree (D)-2, Strongly Disagree (SD)-1
Statement SA A N D SD
The organization allocates sufficient financial resources for strategy implementation Strategy implementation has led the organization look for resources of competitive advantage The organization provides for proper utilization of physical resources that are available The organization has well trained human resources to support strategy implementation The organization monitors and audits all resources allocated The resources allocated are utilized as per the set objectives Proper resource management led to successful strategy implementation KTDA Holdings resources were sufficiently available to facilitate strategy implementation In your own opinion briefly explain how issues of resource allocation can be improved to enhance organization performance
Indicate the extent to which you agree with the following organization performance factors/elements on a scale of 1-5 where;
Strongly agree (SA)-5, Agree (A)-4, Neutral (N)-3, Disagree (D)-2, Strongly Disagree (SD)-1
Statement SA A N D SD
Strategy implementation has increased organization profitability Strategy implementation has increased sales volumes Number of employees has increased with time There is increased customer satisfaction There is increased stakeholders returns Products uptake by customers has increased The is major business expansion within the organization Customer base has increased In your own opinion briefly explain how issues of organization performance can be improved