Strategic Determinants of Organizational Performance of Maize Seed Companies in Kenya

Abstract

A number of new seed entrepreneurs were established in Kenya, however, the majority of them fail to achieve the required business growth and competiveness. As a result, they remain small and producing less quantities of seed failing to meet the market demand for improved maize seed. This study sought to establish the strategic determinants of organizational performance. Specifically the study evaluated the influence of cost structures, product quality, product pricing strategy, production strategy and distribution strategy on organizational performance of maize seed companies in Kenya. The study adopted a cross-sectional survey research design to collect data from the target population which comprised of maize seed companies in Kenya. The sampling frame of the study was the registered maize seed companies at the Seed Trade Association of Kenya which was the unit of analysis while the respondents were the managerial employees within the seed companies and key seed experts in Kenya. Primary data was obtained by administering questionnaires to four employees within each seed company. The four employees were randomly selected from the production, marketing, finance and warehousing departments. Interviews were conducted with key seed experts that were selected through snow balling and judgment technique. The collected data was analyzed using SPSS software. Factor analysis was done to establish the appropriateness of the questionnaire constructs. Both descriptive and inferential statistics were used. Inferential statistics included the use of bivariate analysis and the study used the Pearson correlation coefficient. The study also ran a multiple regression model in order to establish the influence of cost structures, production strategy, product quality, pricing strategy and distribution strategy on organizational performance of maize seed companies. The results of the study indicated that cost structures, product quality, product pricing strategy, production strategy as well as seed distribution strategy had significant influence on organizational performance of maize seed companies in Kenya. The optimal regression model showed that cost structures, product pricing and seed distribution strategies were statistically significant as joint explanatory variables for organizational performance. Although the seed companies implemented some effective strategies that slowly enhanced seed sales and grow revenue in year 2014, they still faced some challenges in achieving set profit targets as well as failure to contain total business expenses. The results showed that it is possible to conclude that seed companies implemented some effective product quality, product pricing, production and seed distribution strategies that led to slight growth in seed sales and revenue performance in 2014. It is concluded that there were limited effective and sound management strategies and policies on cost structures as total expenses as a percentage of revenue continued to grow, hence reducing profitability. It is therefore, recommended that particular attention should be directed towards analysis of cost structures and streamlining them in order to minimize total expenses and grow revenue which would result in higher profit wedge and enhanced organizational performance. It is also recommended that strategies to grow sales and revenues should be enhanced in order to both meet farmers’ seed demand and achieve business growth.