Strategic Factors and Performance of Tea Industry in Kenya

Abstract

The global tea industry is lucrative and competitive, turning in billions of dollars annually but the prices small holders’ tea producers receive fail to reflect the high quality of their produce. In Kenya, Tea industry has not been competitive. As a result, the earnings have not been commensurate with tea production efforts which have often attracted the wrath of farmers to the extent of tea picking boycotts, uprooting of tea bushes, destruction of factory property and even threatening the lives of tea industry managers. This phenomenon is attributed partly to the fact that the small-scale producers market their tea in bulk; semi-processed products and therefore fails to attract premium prices for their produce. As result strategic interventions are required for the tea industry to remain competitive. This study intended to examine strategic management practices that can determine performance of tea industry in Mount Kenya region so that it can remain competitive. The specific objectives were to determine how value addition, cost reduction strategies, technology innovations, market strategy and strategic implementation related to the performance of the tea industry in Mt Kenya region in Kenya. The study was guided by value chain theory, Theory of Diffusion of Innovations, cost leadership theory, Industrial marketing theory and M’cKinssey’s 7S framework theory. The descriptive and explanatory research design was used. The target population was 117 management teams comprising of regional management team, regional accountant, operations manager, production manager, auditor, production managers, factory accountants, training managers and field coordinators. The study conducted a census and thus all the 117 respondents were included in the study. Reliability was examined using pilot study and internal consistency test. Regression coefficients revealed a positive and significant relationship between value addition strategy and performance of the tea industry (β=0.987, p=0.000). It was found a positive and significant relationship exists between technology innovation strategy and performance of the tea industry (β=0.887, p=0.000). Further, the regression coefficients revealed a positive and significant relationship between cost reduction strategy and performance of the tea industry (β=0.978, p=0.000). The regression coefficients showed a positive and significant relationship between marketing strategy and performance of the tea industry (β=0.844, p=0.000). In addition, the regression coefficients results indicated that a positive and significant relationship exists between implementation strategy and performance of the tea industry (β=0.909, p=0.000). The study recommended that tea factories should provide incentives for research and development on adoption of newest technology in the market to support cost reduction and improve quality. Efforts should be put to ensure technological innovation is aggressively and continuously adopted across the board in tea industry in Kenya. Factory management need to create enhanced and effective marketing strategies which can enable the farmers get higher income due to better prices for their tea. It is recommended that tea industry continue to create sustainable business linkages and collaborations with the worldwide market so as to get better prices for the farmers. In general, new knowledge brought is that value addition strategy, technology innovation strategy, cost reduction strategy, marketing strategy and implementation strategy can determine 84.1% variations in the performance of the tea industry in the Mount Kenya region.