Effect of growth strategies on the performance of food manufacturing firms in Nairobi County, Kenya

Abstract

This study sought to examine the effect of growth strategies on the performance of food manufacturing firms in Nairobi County, Kenya. The objectives of the study were: to establish the effect of market penetration on organizational performance, to determine the effect of market development on organizational performance, to examine the effect of product development on organizational performance, to establish the effect of diversification on organizational performance and finally to determine the combined effect of market penetration, market development, product development and diversification on organizational performance. The study was guided by the Strategic Management model. This study adopted a correlational research design and a cross sectional survey design. The study population comprised of all food manufacturing firms in Nairobi County, Kenya. Proportionate stratified sampling method was adopted to determine the sample units. The study used primary data. The data was collected using questionnaires. The data collected was analyzed using descriptive statistics which included frequencies and percentages, mean and standard deviation. Simple Regression model was used to test hypotheses HA1 to HA4.Pearsons correlation was used to measure the relationship among the study variables. Multiple Regression was used to test hypothesis HA5. Analyzed data was presented using tables. The study found that: market penetration has a positive and significant effect on organizational performance, market development has a positive and significant effect on organizational performance, product development has a positive and significant effect on organizational performance, diversification has a positive and significant effect on organizational performance and finally the combined effect of market penetration, market development, product development and diversification positively and significantly affect organizational performance. The study concluded that growth strategies have a positive and significant effect on organizational performance hence it was recommended that higher levels of these growth strategies would result in higher levels of organizational performance. The study also recommended that future research should adopt longitudinal research design in data collection and replication of the study in other industries and countries since this study only focused on cross sectional research design in food manufacturing firms in Nairobi, Kenya. The study further recommended the need for future research to cover other factors related to inorganic growth strategies including mergers and take overs that can have an effect on organizational performance to a larger extent since the factors used in this study could only explain organic growth strategies as per the Ansoff Matrix