Effect of Strategic Management Practices on Export Value Addition in the Tea Subsector in Kenya

Abstract

Tea is the second most popular non-alcoholic beverage in the world after water. Tea is the leading foreign exchange earner in Kenya, contributing to about four (4%) percent of the country’s Gross Domestic Product (GDP). The general objective of this research was to study the effect of strategic management strategies on export value addition in the tea subsector in Kenya. Specifically, the study sought to evaluate the effect of market promotions practices, partnerships, product diversification, cost leadership and technological innovation practices on value addition for Kenyan tea exports. The study used a descriptive survey design. The target population comprised of 107 tea factories, 75 tea packers and 72 tea exporters from which the target and accessible population was drawn. A sample size of 256 employees was selected randomly from the top and middle management employees. The sampling frame for this study consisted of all the top and middle management employees of all registered tea factories, tea exporters and tea packers in Kenya. Two questionnaires were administered to randomly sampled employees in the cadres of senior management and middle management. Questionnaire was the main instrument of data collection which underwent pilot study to test the validity and reliability of the research instrument. Primary data was therefore the main source of data. After collecting data through questionnaires, it was prepared in readiness for analysis using statistical package for social sciences (SPSS) to generate descriptive and inferential statistics. Data was summarised using percentages, mean and standard deviation while F-test was used to test the hypothesis. All the analysis was done using SPSS statistical package. The study findings indicated that the Kenyan tea subsector was not adequately practicing relevant management strategies such as market promotion, business partnerships, product diversification, cost leadership and technological innovation that would help grow exports tea value addition. Regression results indicated that strategic management practices (market promotion, business partnership strategy, cost leadership and technological innovation were statistically significant in explaining export value addition of tea subsector in Kenya. From the study, it is possible to conclude that the Kenyan tea subsectors has not put in place robust strategic management practices in the form of marketing promotion, strategic business partnership, product diversification, cost leadership and technological innovations that would boost tea value addition. The study recommends that the Kenyan government should help the Kenyan tea players (tea producers, tea packers and tea exporters) in adapting some of these practices of which some are too costly for individual firms to adapt.