EFFECT OF GROWTH STRATEGIES ON THE COMPETITIVENESS OF FIRMS IN KENYAN CEMENT INDUSTRY: A CASE STUDY OF EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED

JOHN KIPYEGON RONO

Abstract


The business environment within which the cement producing firm East African Portland Cement Company Limited (EAPCC) operates has been vibrant and turbulent. Several changes that have had implications on EAPCC and other players in the industry have been witnessed in the past and are expected to influence companies’ actions in the medium and long-term. The study seeks to get an insight, understand and be able to describe the attitudes and opinions on the growth strategies and their effect on competitiveness of firms in respect to the modern-day challenges such as the increased demand for cement. This research was guided by the following objectives: effects of product development, market development, market penetration and the degree of diversification on the competitiveness of companies in the Kenyan cement industry. The study adopted descriptive research design. The sample size for the study was 150 participants which is approximately 10% of the total population of 1472. To address the research questions, primary data was collected by use of questionnaires and complemented by that obtained from various secondary sources. The data was analyzed by editing the raw data to free it from inconsistencies and incompleteness. The data was coded to establish how possible answers would be treated by assigning numerical values to them. The study found out that that growth strategies had enhanced increased efficiency and increased the company’s market share. However, the respondents were neutral on whether the growth strategies had enhanced increased production capacity, quality of the products and whether the company has been able to retain its key markets. The study concludes that the number of products and services the company have were not enough to keep it at a competitive edge in the volatile industry. The study also concludes that market development and diversification strategies have a positive effect on the competitiveness of EAPCC.  The study recommends that the company should increase its products and diversify more as this would position it in a more competitive edge. The study also recommends that the company should continuously adopt modern technology in product development so as to enhance competitiveness of the organization.

Key Words: Growth Strategies, Firms Competitiveness


Full Text:

PDF

References


Aghion, P. & Howitt, P., (1992), A Model of Growth through Creative Destruction. Econometrica 60, 323 – 351

Alavi, M. & Leidner, D. E. (2001), “Review: knowledge management and knowledge management systems: conceptual foundations and research issues”, MIS Quarterly, 25 No. 1, pp. 107-36.

Andersen, E.S. (2004): Økonomiens Konger: Joseph A. Schumpeter. Jurist- og Økonomforbundets Forlag, København.

Anderson, C., R., & Zeithaml, C., P., (1984). Stage of the product life cycle, business strategy, and business performance. Acad. Manage. J. 27, 5–24.

Ansoff, H.I., & McDonnell, E. (1990), Implanting Strategic Management (2nd Ed.), Prentice-Hall, New York, NY.

Ansoff, H.I.(1957). Strategies for diversification. Harvard Business Review, September-October .p.113-124

Aosa E., (1992). “Marketing and Strategy”. Marketing Review, August

Armstrong, A. and Hagel III, J. (1996) The real value of on-line communities, Harvard Business Review, 74, 3, 134-141.

Barney, J. & Clark, d. N. (2007). Resource-Based Theory. Creating and Sustaining Competitive Advantage: Oxford University Press.

Barney, J. (1991). Firms resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

Beamish, P., W., Karavis, L., G., Lane A, & Ivey, C., (1999). “The relationship between organizational structure and export performance”. Management International Review, 39 (1),37-54.

Becker, G. S. (1962): Investment in human capital: A theoretical analysis, Journal of Political Economy, 70:9-49.

Bloodgood, J.M., Sapienza, H.J., & Almeida, J., G., (1996). The internationalization of new high-potential U.S. ventures: antecedents and outcomes. Entrep. Theory Pract., 61–76 (Summer).

Bowman, C., (2003). “Formulating Strategy”, In Faulkner and Campbell (2003), The oxford Handbook of Strategy: A strategy overview and Competitive strategy (ed.), Vol. 1

Brockhaus, R.H. (1982). The Psychology of the Entrepreneur. In Encyclopedia of Entrepreneurship, ed. C.A. Kent, D.L. Sexton, and K.H. Vesper. Englewood Cliffs, NJ: Prentice Hall.

Brüderl, J., P. Preisendörfer, R. Ziegler.?( 1992). Survival chances of newly founded business organizations. Amer. Sociol. Rev. 57(2) 227–242.

Carman J. M., and Langeard E. (1980), “Strategic Management Journal”, Vol. 1 (1), 7-22

Casson SA, Chilley PM, Topping JF, Evans IM, Souter MA, Lindsey K. (2002) The POLARIS gene of Arabidopsis encodes a predicted peptide required for correct root growth and leaf vascular patterning. Plant Cell 14:1705-21.

Colombo, M.G and Grilli, L. (2005), «Founders' human capital and the growth of new technology-based firms: a competence-based view», Research Policy, 34, 795- 816.

Davidsson, P., & Delmar, F. 1997. High-Growth Firms: Characteristics, Job Contribution, and Method Observations. Paper presented at the RENT XI Conference, Mannheim, Germany.

Delmar, F. (1997). Measuring growth: methodological considerations and empirical] results. In R.

Dinopoulos, E. and Thompson, P. (1998). Schumpeterian growth without scale effects. Journal of Economic Growth 3, 313–35.

Donckels & A. Miettinen (Eds.), Entrepreneurship and SME Research: On its Way to the Next Millennium (pp. 199-216). Aldershot, England: Ashgate.

Drejer, I. (2004): Identifying innovation in surveys of services: a Schumpetarian perspective. Research Policy 33, 2004, p. 551-562.

Dyer and Blair Investment Bank (2012). Kenya Cement Industry Brief, December,

Eisenhardt, K.M., & Schoonhoven, C., B., (1990). “Organizational growth: linking founding team, strategy, environment, and growth among U.S. semiconductor ventures, 1978–1988”. Adminstration Science Quarterly. 35, 504–529.

Ernest O, (1999), Lawrence Berkeley Laboratory Review, National Laboratory Environmental Energy Technology Division, July 1999, Office of Energy Research, U.S.A.

Fox-Wolfgramm, S., J., Boal, K., B., & Hunt, J., G., (1998) “Organizational Adaptation to Institutional Change: A Comparative Study of First-Order Change in Prospector and Defender Banks”, Administrative Science Quarterly 43, 87-126.

Ganotakis, P. and Love, J. (2010) The Innovation Value Chain in New Technology Based Firms: Evidence from the UK. Journal of Product Innovation Management. Forthcoming.

Geringer, J., M., Tallman, S., & Olsen, D., M., (2000).Product and international diversification among Japanese multinational firms. Strategic Management Journal, 21, 51-80.

Golder, P.N., & Tellis, G.J., (1993). Pioneer advantages: marketing logic or marketing legend. J. Mark. Res. 30, 158–170.

Hambrick, D., MacMillan, I., & Day, D., (1982). “Strategic attributes and performance in the BCG matrix: a PIMSbased analysis of industrial-product business”. Acad. Manage. J. 25, 510–531.

Hanson, G., Mataloni, JR., & Slaughter, J., (2001), “Expansion Strategies of US Multinational

Hanson, G., Mataloni, JR., & Slaughter, J., (2001), “Expansion Strategies of US Multinational Firms”, Booking Trade Forum, 245 (245-294)

Hawking, S. (1996). "The Illustrated A Brief History of Time" (Updated and expanded ed.). New York: Bantam Books, p. 15.

Hessel J, Terjesen S (2008). Entrepreneurial Carrier Capital, Innovation and New Venture Export Orientation.

Hitt, M., A., Hoskisson, R., E., & Kim, H., (1997). International diversification: effects on innovation and firm performance in product-diversified firms. Academy of Management Journal, 40(4), 767-798.

Hofer, C.,W., & Schendel, D., (1978). Strategy Formulation: Analytical Concepts. St. Paul, MN: West Publishing.

Hussey. J., (1990) Maximizing Business Growth through Strategic Customer Relationships Management Centre Europe, Rue de 'Aqueduc 118, 1050 Brussels, Belgium

Johnson, G., Scholes, K & Whittington, R., (2006). Exploring Corporate Strategies,, 7th edition Prentiance Hall publishers London: UK.

Johnson, G., Scholes, K., & Whittington, R., (2006). Exploring Corporate Strategy, Prentiance Hall, 7th Enhanced Media Edition,

Kanter, R., M., (2000). The Change Masters: Innovation and Entrepreneurship in the American Corporation. Sinon & Schuster, New York: USA.

Karlof, B., (1989), Business Strategy, a Guide to Concepts and Models, Macmillan Press Ltd., London and Bassingstrock.

Kazmi, A., (2002) Business Policy and Strategic Management. Second Edition, Tata McGraw Hill.

Keegan, W., (1999), Global marketing Management, 6th edition, Upper Saddle River, NJ, Prentice Hall.

Keegan, W., (1999), Global marketing Management, 6th edition, Upper Saddle River, NJ,

Kenya National Bureau of Statistics (2012) Economic Survey

Kinyua, N., W., (2007) Strategic responses by the cement manufacturing companies in Kenya. Unpublished MBA Project, University of Nairobi.

Kombo, D. K., & Tromp, D. L. (2006). Proposal and Thesis Writing: An Introduction. Nairobi, Kenya

Kotler, P., & Armstrong, K., (1996). Principles of Marketing. 7th Edition. Englewood Cliffs, NJ: Prentice-Hall.

Kraaijenbrink, J., Spender, C., & Groen, J. A. (2010). The resource –based view: A review and assessment of its critiques. Journalof Management, 36 364-381

Kumar, N., (1994). “Determinants of export orientations of foreign production by U.S multinationals; an inter-country analysis”. Journal of International Business Studies, 1, 141-156.

Li, T., (1999). “The impact of the marketing – R&D interface on new product export performance: A contingency analysis”. Journal of International Marketing, 7 (1), 10-33.

Low, M. B., and MacMillan, I. C. (1988). Entrepreneurship: Past Research and Future Challenges. Journal of Management, 35, 139-161.

McClelland, D.C. (1961). The Achieving Society. NY: Van Nostrand.

McClelland, D.C. and winter, D.G. (1971). Motivating Economic Achievement. NY: Free Press

McDaniel, B. (2005). A Contemporary View of Joseph A. Schumpeter’s Theory of the Entrepreneur. Journal of Economic Issues, 39 (2).

McDougall, P., P., & Oviatt, B.M., 1996. New venture internationalization, strategic change, and performance: a follow-up study. J. Bus. Venturing 11, 23–40.

McDougall, P., P., Shane, S., & Oviatt, B.M., (1994). Explaining the formation of international new ventures: the limits of theories from international business research. J. Bus. Venturing 9, 469–487.

Miller, D, (1986). “Matching strategies and strategy making: process, content, and performance”. Human Relation; 42:241-60.

Miller, V., V., & Crespy, C., T., (1987), Business Strategy Taxonomies: A Critical Assessment of their Empirical Base and their Statiscal Derivation, Paper presented to the strategic Management Society, Boston, MA.

Mintzberg, H., (2003), The strategy Process- Concepts, Contexts Cases, 2nd edition.

Moen, O., (1999). The relationship between firm size, competitive advantages and performance revisited. International Small Business Journal 18 (1), 53-72.

Montgomery, C., A., (1985). Product- market diversification and market power. Academy of Management Journal, 28 (4), 789-798.

Mugenda, A., & Mugenda, O., (2003). Research methods; quantitative and qualitative approaches. Africa Center for Technology (ACTS), Nairobi Kenya

Namiki, N (1989). The impact of competitive strategy on export sales performance: An exploratory study. Mid- Atlantic Journal of Business, 25(6):21-38.

Nunnally, J.C. (1978). Psychometric Theory, (2nd ed.). New York: McGraw-Hill.

Ohmae, K, (1985), Triad Power: The coming Shape of Global Competition, The Free Press:

Papulova, E., & Papulova Z. (2006), Competitive strategy and competitive advantages of small and midsized manufacturing enterprises in Slovakia, E-Leader, international leadership and networking conference, Slovakia.

Pearce, J., A., & Robinson, R., B., (2005) Strategic Management: Formulation, implementation and control, McGraw-Hill. NY: USA.

Popper, K. (1963), Conjectures and Refutations, Routledge, fifth edition 1989, London.

Porter , M., E., (1990). The competitive advantages of nations. New York: Free Prees.

Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press.

Porter, M. E., (1980). Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press.

Porter, M., (1986), Competition in Global Industries, Boston, Harvard Business School press.

Preece, S.B., Miles, G., & Baetz, M., C., (1999). Explaining the international intensity and global diversity of earlystage technology-based firms. J. Bus. Venturing 14, 259–281.

Robinson, K., C., (1999). “An examination of the influence of industry structure on eight alternative measures of new venture performance for high potential independent new ventures.” J. Bus. Venturing 14, 165–187.

Robinson, W.T., & Fornell, C., (1985). The sources of market pioneer advantages in the consumer goods industries. J. Mark. Res. 22, 305–317.

Robinson, W.T., Fornell, C., & Sullivan, M.W., (1992). “Are market pioneers intrinsically stronger than later entrants?” Strategic. Management. J. 13, 609–624.

Rogers, E., M., (1962). Diffusion of Innovations. Free Press, NY.

Roos, G. and Roos, J. (1997), “Measuring your company’s intellectual performance”, Long Range Planning, Vol. 30, No. 3, p. 325.

Rugman, A., & Verbeke, A., (2004), “A Perspective on Regional and Global Strategies of

Sandberg, W., R., & Hofer, C.W., (1987). Improving new venture performance: the role of strategy, industry structure, and the entrepreneur. J. Bus. Venturing 2, 5–28.

Saunders, M., Lewis, P., & Thornhill, A. (2003). Research method for business students, (3rd ed.). New York: Prentice Hall.

Scheleider, K., & Meyer, M., (1991) Strategies for Growth, Maturity, Recovery and Internationalization.Routledge: London. UK.

Schuler, T. (2000), “Social and human capital, the search for appropriate techno methodology”, policy studies Vol 21 No. 1, pp. 25-35.

Schultz, W. T. (1961): Investment in Human Capital, American Economic Review, 51:1- 17.

Sekaran, U., (2003), Research Methods for Business; A skill Building Approach. Pearson Publishers, London: UK

Shane, S., and Cable, D., (2003). Network ties, reputation and the financing of new ventures. Management Science,48(3): 364-381.

Swedberg, R. (2000). Entrepreneurship. The Social Science View. Oxford: Oxford University Press.

Tsai, W.M., MacMillan, I.C., & Low, M.B., (1991). Effects of strategy and environment on corporate venture success in industrial markets. J. Bus. Venturing 6, 9–28.

Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5 1-25

Young, N., (2009). Understanding the Research Process and Methods. An Introduction to Research Methods. Las Vegas: Acts Press.

Zima, Peter V. (2007). What is theory? Cultural theory as discourse and dialogue. London: Continuum (translated from: Was ist Theorie? Theoriebegriff und Dialogische Theorie in der Kultur- und Sozialwissenschaften. Tübingen: A.Franke Verlag, 2004).

Zou, S., & Stan, S., (1998). The determinants of export performance: A review of the empirical literature between 1987 and 1997. International Marketing Review, 18/5, 336-356.


Refbacks

  • There are currently no refbacks.