You are on page 1of 42

RESEARCH TOPIC

COMPETITIVE STRATEGIES, ORGANIZATIONAL AUTONOMY, STRATEGIC POSITIONING AND PERFORMANCE OF KENYAN STATE CORPORATIONS

BACKGROUND

Organizations, whether for profit or non-profit, private or public have found it necessary in recent years to engage in strategic thinking in order to achieve their corporate goals.

Factors such as competitive strategies, organizational autonomy and environment in which organizations operate have a significant effect on their performance.

Managers should thus have a keen understanding of their organization’s strategic situation.

CHAPTER ONE:

INTRODUCTION

COMPETITIVE STRATEGIES

A strategy is the outcome of some form of planning, organized process for anticipating and acting in the future in order to carry out an organization’s mission (Baulcomb, 2003).

Strategy refers primarily to business strategy; which specifies how a business unit will achieve and maintain competitive advantage within an industry (Bunker and Wakefield, 2006).

The people who drive strategy in organizations are seen to be visionaries, entrepreneurs and innovators.

CHAPTER ONE: INTRODUCTION (contd.)

ORGANIZATIONAL AUTONOMY

Autonomy, to an extent is explicitly or implicitly recognized when creating state owned corporations or enterprises

Organizational autonomy of state-owned corporations has been a focal point of public debate, in any country. as an independent legal body.

Autonomy or discretion of State-Owned Enterprises (SOE) management vis-à-vis supervising state authorities is a function of the bargaining power of the two sides, which depends on several factors for each side.

CHAPTER ONE: INTRODUCTION (contd.)

STRATEGIC POSITIONING

Strategic positioning is outward-focused, more fully recognizing the competitive and market environment within which an organization operates (Hendrick, 2003).

Positioning defines an organization’s specific niche within its sphere of influence (Kiamba, 2008).

Strategic positioning is a useful approach when an organization needs to more clearly distinguish itself or to have a greater impact (Hodges and Mellett, 2003).

CHAPTER ONE: INTRODUCTION (contd.)

ORGANIZATIONAL PERFORMANCE

According to Richard, Devinney, Yip and Johnson (2009), organizational performance encompasses three specific areas of firm outcomes: (a) financial performance which includes profits, return on assets, return on investment); (b) product market performance such as sales, market share, and (c) shareholder return.

Mahapatro (2010) observes that organizational performance is the ability of an organization to fulfil its mission through sound management, strong governance and a persistent rededication to achieving results.

CHAPTER ONE: INTRODUCTION (contd.)

Kenyan State Corporations

State corporations (also known as government parastatals or public corporations) are quasi government agencies linked to government ministries or departments.

The state corporations in Kenya are established by a statute or an Act of parliament in pursuance of government policy or various Acts with reference to State Corporation Act Cap.446 (Directorate of Personnel Management, 2006).

These corporations make a surplus in order to sustain themselves while meeting their objectives (Directorate of Personnel Management, 2006).

CHAPTER ONE: INTRODUCTION (contd.)

RESEARCH PROBLEM

Competitive strategies are critical to managerial process that involves a sequence of analytical and evaluative procedures to formulate an intended strategy and the means or process of implementing it while staying competitive (Johnson and Scholes, 1999).

Its benefits are competitive advantage through matching firm capabilities and competencies to the external environment, effective decision making, optimal allocation of resources and long-term prosperity of the organization (Hodges and Mellett, 2003).

CHAPTER ONE: INTRODUCTION

(contd.)

Interrelationships between Competitive strategies,

organizational autonomy and strategic positioning have a strategic impact and contribute to performance of Kenyan State Corporation.

A study by Mwema (2008) inferred that 78% of the Kenyan public corporations were unable to self- sustain their operations due to internal inefficiencies that required pragmatic restructuring.

This study therefore is aimed at documenting the relationship between competitive strategies and performance of Kenyan state corporations as moderated by organizational autonomy and intervened by strategic positioning.

CHAPTER ONE: INTRODUCTION

(contd.)

RESEARCH OBJECTIVES

The main objective of the study will be to investigate the influence of organizational autonomy and strategic positioning on the relationship between competitive strategies and performance of Kenyan state corporations.

Specific Objectives The specific objectives will be:

To determine the extent to which competitive strategies influence the performance of Kenyan state corporations.

CHAPTER ONE: INTRODUCTION (contd.)

To establish the moderating effect of

organizational autonomy on the relationship between competitive strategies and performance of Kenyan state corporations.

To determine the intervening effect of strategic positioning on the relationship between competitive strategies and performance of Kenyan state corporations.

To determine the combined effect of competitive strategies, organizational autonomy and strategic positioning on the performance of Kenyan state corporations.

CHAPTER ONE: INTRODUCTION

Value of the Study

(contd.)

The research findings are expected to contribute

to a better understanding of strategic management

implementation with a bias to stakeholder’s theory.

To researchers and academicians, this research will provide an insight and understanding of the organization performance practices adopted by State Corporation in Kenya.

The research will also provide an opportunity for

researchers to investigate the effectiveness of the learning models adopted by parastatals.

To Policy Makers (State Corporation Advisory

Board, Inspectorate of State Corporations, and Board of Governors in State corporations) this study will improve the policy making capacity and also

apply innovation in policy implementation

CHAPTER ONE: INTRODUCTION (contd.)

Overview of the Final Report

This study will be organized in to five chapters, chapter one starts with a clear background of the level of competitive strategies application, organizational autonomy and environment and how they link to performance of Kenyan state corporations.

Research problem, objectives and value of the study are also discussed in the chapter. Chapter two is concerned with the review of pertinent literature.

It covers both theoretical and empirical literature.

CHAPTER ONE: INTRODUCTION (contd.)

Chapter three comprises methodology of the study presenting a description of how the study will be approached. It presents the plan of the research, that is, the research design, how data will be collected and from whom, and the data analysis technique that will be adopted to analyze the data in order to generate the findings of the study.

CHAPTER TWO: LITERATURE REVIEW

Theoretical Foundation

This study reviews the following theory pertinent to competitive strategies, organizational autonomy, environment and performance.

Stakeholder Theory

Stakeholder theory begins with the assumption that value is necessarily and explicitly a part of doing business.

It asks managers to articulate the shared sense of the value they create and what brings its core stakeholders together (Drazin and Howard, 1984).

CHAPTER TWO: LITERATURE REVIEW (contd.)

Resource-Based View and Dynamic Capability Theories

“The resource-based view of the firm” (the RBV) was put forward by Wernerfelt (1984) and subsequently popularized by Barney’s (1991) work.

Many authors (Zollo and Winter 2002; Zahra and George 2002; and Winter 2003) made significant contribution to its conceptual development.

The essence of the RBV lies in the emphasis of resources and capabilities as the genesis of competitive advantage: resources are heterogeneously distributed across competing firms, and are imperfectly mobile which, in turn, makes this heterogeneity persist over time (Penrose, 1959; Mahoney and Pandian, 1992).

CHAPTER TWO: LITERATURE

REVIEW (contd.)

Structural Contingency Theory

The study applies structural contingency theory to explain the contingent factors influencing the differences in autonomy between types of organizations and performance in the Kenyan state corporations.

Structural contingency theory posits that environment, strategy, technology, people, work- orientation culture, and management determine organizational forms (Baulcomb, 2003).

It also proposes that the fit between such organizational determinants and organizational forms will lead to organizational performance.

CHAPTER TWO: LITERATURE REVIEW (contd.)

COMPETITIVE STRATEGIES

Competitive strategies emerged in the year 1985, when Porter discussed the basic types of competitive strategies firms’ possess (low-cost, Differentiation and focus) to achieve sustainable competitive advantage.

Sustainable competitive advantage is the prolonged benefit of implementing some unique value-creating strategy not simultaneously being implemented by current or potential competitors along with the inability to duplicate the benefit of this strategy.

CHAPTER TWO: LITERATURE REVIEW (contd.)

Business strategy is concerned with identifying and exploiting the resources and capabilities of the firm in the market place for gaining competitive advantage and superior financial performance (Hambrick and Cannella, 1989).

Ansoff and McDonnell (1965) suggested a matrix with four strategies i.e. penetrating the market, product development, market development and diversifying.

This strategy can offer the firm the advantage to use emergent or distinctive competencies (Hendrick, 2003).

CHAPTER TWO: LITERATURE REVIEW (contd.)

ORGANIZATIONAL AUTONOMY

Organizational autonomy is the capacity of organizations to govern themselves.

This is a characteristic that only a few government agencies can have and it is difficult for other organizations to imitate since it needs the supporting laws.

Gongera (2007) concluded that organizations with autonomy were more likely to be effective than those with little or no autonomy.

CHAPTER TWO: LITERATURE REVIEW

(contd.)

STRATEGIC POSITIONING

Porter (1980) suggested that there are three types of competitive advantages through strategic positioning a company can own: low cost, differentiation and focus.

The domination through costs strategy is specific to organizations which produce and sell standardized products.

Boyne (2001)implies a growing attention to maintain this advantage in front of the competitors.

This strategy gives the organization a domination power exactly because of the uniqueness of the product’s characteristics or services.

CHAPTER TWO: LITERATURE REVIEW (contd.)

COMPETITIVE STRATEGIES, ORGANIZATIONAL AUTONOMY, STRATEGIC POSITIONING AND ORGANIZATION PERFORMANCE

Competitive strategies, organizational autonomy and strategic positioning have a strategic impact and contribute to organization performance (Burnes, 1996).

The organization is shown as one of a number of competitors in an industry; and to a greater or lesser degree these competitors will be affected by the decisions, competitive strategies and innovation of the others (Burnes, 1996).

CHAPTER TWO: LITERATURE REVIEW (contd.)

These inter-dependencies are crucial and consequently strategic decisions should always involve some assessment of their impact on other companies, and their likely reaction (Burnes, 1996).

Hodges and Mellett (2003) have demonstrated that an increase of organizational autonomy has been accompanied with an expansion of regulation and control: public sector organizations received more autonomy.

The strategic positioning of an organization includes the devising of the desired future position of the organization on the basis of present and foreseeable developments, and the making of plans to realize that positioning (Boyne, 2001).

CHAPTER TWO: LITERATURE REVIEW (contd.)

Summary of Previous Studies and Knowledge Gaps

Study

Focus

Findings of the study

Knowledge Gaps

Findings/Contributions of the current study

Kotter (1996)

Role of strategic planning process in repositioning and transforming private organization.

Strategies help marshal and allocate an organization’s resources into a unique and viable posture based upon its relative internal competencies and anticipated changes in the environment.

Empirical knowledge exists in Kenyan public sector on the role of strategic planning process in repositioning and transforming the public corporations

Empirical evidence to show competitive strategies application within positive state influence and strong managerial leads to higher performance

Boyne (2001)

Relationship between planning and performance in public service

Formality and completeness as the basis for measuring strategy by most researchers

Effect of level of implementation in strategic planning

Show level of competitive strategies application as it influences Kenyan state corporation performance

Aosa (1992)

Empirical investigation of aspects of strategy formulation and implementation within the Kenyan private sector

A positive relationship between strategy and performance

Empirical knowledge of relationship between strategy implementation and performance in the Kenyan public sector

Strategy formulation and implementation in private sector can be replicated in Kenyan state corporations within levels of positive environment to maximize on performance

Arasa (2008)

Strategic planning, employee participation and firm performance in the Kenyan insurance sector

There is a strong link between strategic planning and firm performance

Isolating the effects of context and time periods

Managerial autonomy must consider State influence in Kenya state corporation

CHAPTER TWO: LITERATURE REVIEW (contd.)

Summary of Previous Studies and Knowledge Gaps contd.

Mwema (2008)

A strategic model of Kenyan Public Corporation Self- sustainability

He found that 78% of the Kenyan public corporations were unable to self-sustain their operations due to internal inefficiencies that required pragmatic restructuring

He specifically affiliated anomalies to poor work ethics, rigidity in management, misallocation of resources, and structural inefficiencies but failed to take in to account the external environment influence

Internal environment relies on external environment and competitive strategies for Kenyan state corporations performance

Odundo (2012)

Environmental context, implementation of strategic plans and performance of state corporations in Kenya

The study revealed that for commercial state corporations, political goodwill and support has a significant effect on the relationship between the extent of implementation of strategic plans and performance of state corporations

Empirical evidence exists between effective strategic planning and implementation and organization performance

Both external and internal environmental factors must be supplemented by competitive strategies to result in maximum Kenyan State corporations performance

CHAPTER TWO: LITERATURE REVIEW

(contd.)

CONCEPTUAL FRAMEWORK

H2 Organizational Autonomy •Percentage of government ownership •Number of board members Corporate Performance Competitive strategies •Market
H2
Organizational
Autonomy
•Percentage of
government ownership
•Number of board
members
Corporate
Performance
Competitive
strategies
•Market
Strategic
development
H3
H4
Positioning
•Product
Financial indicators
•Return on Sales
•Return on Assets
Non-financial
indicators
•Employee
•Cost leadership
satisfaction
development
•Differentiation
•Customer
•Penetration
•Focus
satisfaction
•Diversification
H1
Independent
Moderating
Intervening
Dependent
Variable
variable
Variable
Variable

CHAPTER TWO: LITERATURE REVIEW (contd.)

RESEARCH HYPOTHESIS

Emerging from the relationship in the conceptual model in figure 2.1 the following hypothesis have been formulated:

H1

There is a significant relationship between competitive

strategies and performance of Kenyan State

Corporations.

H2

The organizational autonomy has a significant

moderating influence on the relationship between competitive

strategies and performance of Kenyan State

Corporations.

H3

Strategic positioning has an intervening influence

between competitive strategies and the organizational

autonomy on performance of Kenyan State

Corporations.

H4

There is a combined effect of competitive strategies,

organizational autonomy and strategic positioning on the

performance of Kenyan

State Corporations

CHAPTER TWO: LITERATURE REVIEW (contd.)

Summary of Objectives and Corresponding

Hypotheses

Objectives

Hypotheses

 

Objective One:

To determine the extent to which competitive strategies influence the performance of Kenyan state

H 1

There is a significant relationship between competitive strategies and performance of

corporations.

Kenyan State

Corporations.

Objective Two:

H 2

The organizational autonomy has a

To establish the moderating effect of organizational autonomy on the relationship between competitive strategies and performance of Kenyan state corporations.

significant moderating influence on the relationship between competitive strategies and performance of Kenyan State Corporations.

Objective Three:

To determine the intervening effect of strategic positioning on the relationship between competitive strategies and performance of Kenyan state

H 3

Strategic positioning has an intervening influence between competitive strategies and the organizational autonomy on performance

corporations.

of Kenyan State

Corporations.

Objective Four:

H4: There is a combined effect of competitive

To determine the combined effect of competitive strategies, organizational autonomy and strategic positioning on the performance of Kenyan state corporations.

strategies, organizational autonomy and strategic positioning on the performance of Kenyan State Corporations

CHAPTER THREE: RESEARCH METHODOLOGY

PHILOSOPHICAL ORIENTATION

There are two main epistemological research philosophies. These are positivism and phenomenology.

Hussey and Hussey (1997) states that positivism is founded on the belief that the study of human behaviours should be conducted in the same way as studies conducted in the natural sciences.

This study is approached from a positivism philosophy point of view. The positivism school of thought is based on the philosophy that only one reality exists though it can only be known imperfectly due to human limitations and researchers can only discover this reality within the realm of probability (Reichardt and Ralli, 1994).

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Research Design

Donald (2006) notes that a research design is the structure of the research, it is the ‘‘glue’’ that holds all the elements in a research project together.

The study will be carried out through a census survey. Census survey research design collects data from every member of the population being studied rather than choosing a sample.

A census survey is ideal in this study because data is being collected at one point in time involving all the organizations of interest i.e. Kenyan state corporations.

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

POPULATION OF THE STUDY

The study will select all the state corporations

currently in Kenya. These corporations are

classified into: revenue collection; cultural and

social services; development or promotional

agencies; commercial; regulatory; educational

& professional; and research institutions.

Currently there are 187 state corporations in

Kenya (Taskforce on Parastatals Reform Report ,

2013).

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Sectoral Categorization of Kenyan State Corporations

Sector of State Corporation

Population

Tertiary Education and Training Corporations

19

Regional Development Authorities

12

Service Corporations

29

Training and Research Corporations

19

Public universities

15

Regulatory Authorities

31

Commercial/Manufacturing Corporations

37

Financial Corporations

25

Total

187

Source: Taskforce on Parastatal Reforms Report (2013)

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

DATA COLLECTION

The study will use primary data which will be largely quantitative and descriptive in nature. The questionnaire will be designed to solicit data on competitive forces that shape competition in an industry

Gall et al., (1996) points out that, questionnaires are appropriate for studies since they collect information that is not directly observable as they inquire about feelings, motivations, attitudes, accomplishments as well as experiences of individuals.

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Respondents will be presented with descriptive statements in a 5-point Likert scale on which they will be required to rate by scoring the extent to which they perceived a particular statement is descriptive of the force in the corporations.

The questionnaires will be administered through drop and pick method and respondents targeted will be Chief Executive Officers of these state corporations.

The study will also use secondary data sources available at the office of the Inspectorate of State Corporation.

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

OPERATIONALIZATION OF STUDY VARIABLES

This section deals with the Operationalization of study variables, along with other components of the conceptual framework. The independent variable is the competitive strategies of the state corporations in Kenya.

The dependent variables are: financial performance, customer and employee satisfaction survey of the state corporations.

The independent variable will be operationalized by the percentage of market development, product development, penetration and diversification by the Kenyan state corporations.

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Operationalization of Study Variables

Variable

Operational Definition (Indicators)

Measure

Dependent Variable

 

ROS: Ratio of Earnings Before Interest and Tax To Sales

Data will be obtained direct from organization records

 

Organization Performance

ROA: Ratio of Earnings Before Interest and Tax to Total Assets

Data will be obtained direct from organization records

Employee Satisfaction Index: Employee Satisfaction Index achieved from the conducted survey

Data will be obtained direct from organization records

Customer Satisfaction Index: Customer Satisfaction Index achieved from the conducted survey

Data will be obtained direct from organization records

Independent Variables

Competitive strategies

Organization ability to do market development, product development, penetration and diversification of their activities.

Likert-type scale

Moderating variable

Organizational autonomy

Percentage of government stake in the organization and the number of board members on the management committee

Likert-type scale

Intervening variable

Strategic positioning

Operating efficiency, competitive pricing, forecasting market growth, product quality control, customer service, brand identification, surviving special geographic markets and capacity to manufacture specialty products

Likert-type scale

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

DATA ANALYSIS

After data collection, the filled-in and returned questionnaires will be edited for completeness, coded and entries made into Statistical package for social sciences (SPSS version 18).

This will ensure that the data are accurate, consistent with other information, uniformly entered, complete and arranged to simplify coding and tabulation. With data entry, the data collected will be captured and stored. Descriptive and inferential analysis will be conducted. Descriptive analysis will involve the use of frequencies in their absolute and relative forms (percentage).

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Mean and standard deviations will also be used as measures of central tendencies and dispersion respectively.

Regression and correlation analysis will be used to assess the strength of the relationships between the specified variables.

Various statistics will be extracted and interpreted with respect to the various models. Inferential analysis will be done to determine the effect of organizational autonomy, competitive strategies and operating environment on performance, thus, testing the hypotheses of the study.

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Summary of Regression Models, Analysis and Interpretation of Results

Objective

Hypothesis

Analysis techniques

 

Interpretation

Objective One:

H 1 :

Competitive strategies

Multiple Regression analysis

 

The closer R

To determine the extent to

have a significant

Y= α + β 1 X 1.

+ β 2 X 2. + β 3 X 3. +

approaches ±1,

which competitive

effect on performance

β 4 X 4 + ε

then a

strategies influence the performance of Kenyan state corporations.

of Kenyan State Corporations

Y= performance of Kenyan Corporations α= constant (intercept) X 1= is the composite index of

State

relationship exists. If (R 2 ) value is significant,

 

product development X 2-= is the composite index of

then the relationship is

market development X 3= is the composite index of

significant

penetration X 4= is the composite index of

diversification β 1- β 3- are the coefficients

ϵ-is the error term

Objective Two:

H 2

The organizational

Multiple Regression analysis

 

The closer R

To establish the

strategies and performance

autonomy has a

Y= α+ β 1 X+

β 2 Z+ ε

approaches ±1,

moderating effect of organizational autonomy on the relationship between competitive

of Kenyan state corporations.

significant moderating influence on the relationship between competitive strategies and performance of Kenyan State Corporations.

α =constant ( intercept) β 1= the coefficient relating the independent variable, X, to the outcome, Y, when Z = 0, β 2 = the coefficient relating the

moderator variable, Z, to the outcome when X = 0, β 3 =The regression coefficient for the interaction term which provides an estimate of the moderation effect. ε= Error term

then a relationship exists. If (R 2 ) value is significant, then the relationship is significant

CHAPTER THREE: RESEARCH METHODOLOGY(contd.)

Summary of Regression Models, Analysis and Interpretation of Results contd.

Objective Three:

 

H 3 Strategic

positioning has an

Multiple Regression analysis

The closer R

To determine the intervening effect of strategic positioning on the relationship between competitive strategies and performance of Kenyan state corporations.

intervening influence between competitive strategies and the organizational autonomy on performance of Kenyan State Corporations.

Y= α+ β 1 X+ β 2 Z+ β 3 XZ+ ε α =constant ( intercept) β 1= the coefficient relating the independent variable, X, to the outcome, Y, when Z = 0, β 2 = the coefficient relating the intervener variable, Z, to the outcome when X = 0, β 3 =The regression coefficient for the interaction term which provides an estimate of the intervening effect. ε= Error term

approaches ±1, then a relationship exists. If (R 2 ) value is significant, then the relationship is significant

Objective Four:

 

H4:

There is a combined effect

Multiple Regression analysis

The closer R

To determine the combined

of competitive strategies,

Y= α + β 1 X 1.

+ β 2 X 2. + β 3 X 3. + ε

approaches ±1,

effect

of

competitive

organizational autonomy

Y= performance of Kenyan

ϵ-is the error term

State

then a

strategies,

organizational

and strategic positioning

Corporations

relationship

autonomy

and

strategic

on the performance of

α= constant (intercept)

exists. If (R 2 )

positioning

on

the

Kenyan State

X 1= is the composite index of

value is

performance

of

Kenyan

Corporations

competitive strategies

significant, then

state corporations.

X 2-= is the composite index of

the relationship is significant

 

organizational autonomy X 3= is the composite index of strategic positioning β 1- β 3- are the coefficients

THANK YOU