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

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Presentation on theme: "RESEARCH TOPIC COMPETITIVE STRATEGIES, ORGANIZATIONAL AUTONOMY, STRATEGIC POSITIONING AND PERFORMANCE OF KENYAN STATE CORPORATIONS."— Presentation transcript:

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

3 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.

4 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.

5 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.

6 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).

7 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.

8 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).

9 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).

10 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.

11 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.

12 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.

13 CHAPTER ONE: INTRODUCTION (contd.) Value of the Study 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

14 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.

15 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.

16 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).

17 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).

18 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.

19 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.

20 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).

21 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.

22 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.

23 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).

24 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).

25 CHAPTER TWO: LITERATURE REVIEW (contd.) Summary of Previous Studies and Knowledge Gaps StudyFocusFindings of the studyKnowledge GapsFindings/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 periodsManagerial autonomy must consider State influence in Kenya state corporation

26 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

27 CHAPTER TWO: LITERATURE REVIEW (contd.) CONCEPTUAL FRAMEWORK Competitive strategies Market development Product development Penetration Diversification Organizational Autonomy Percentage of government ownership Number of board members Corporate Performance Financial indicators Return on Sales Return on Assets Non-financial indicators Employee satisfaction Customer s atisfaction Strategic Positioning Cost leadership Differentiation Focus Intervening Variable Independent Variable Dependent Variable H2 Moderating variable H1 H3 H4

28 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: H1There is a significant relationship between competitive strategies and performance of Kenyan State Corporations. H2The 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. H4There is a combined effect of competitive strategies, organizational autonomy and strategic positioning on the performance of Kenyan State Corporations

29 CHAPTER TWO: LITERATURE REVIEW (contd.) Summary of Objectives and Corresponding Hypotheses ObjectivesHypotheses Objective One: To determine the extent to which competitive strategies influence the performance of Kenyan state corporations. H 1 There is a significant relationship between competitive strategies and performance of Kenyan State Corporations. Objective Two: To establish the moderating effect of organizational autonomy on the relationship between competitive strategies and performance of Kenyan state corporations. H 2 The organizational autonomy has a 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 corporations. H 3 Strategic positioning has an intervening influence between competitive strategies and the organizational autonomy on performance of Kenyan State Corporations. Objective Four: To determine the combined effect of competitive strategies, organizational autonomy and strategic positioning on the 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

30 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).

31 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.

32 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).

33 CHAPTER THREE: RESEARCH METHODOLOGY(contd.) Sectoral Categorization of Kenyan State Corporations Source: Taskforce on Parastatal Reforms Report (2013) Sector of State CorporationPopulation Tertiary Education and Training Corporations19 Regional Development Authorities12 Service Corporations29 Training and Research Corporations19 Public universities15 Regulatory Authorities31 Commercial/Manufacturing Corporations37 Financial Corporations25 Total187

34 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.

35 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.

36 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.

37 CHAPTER THREE: RESEARCH METHODOLOGY(contd.) Operationalization of Study Variables VariableOperational Definition (Indicators)Measure Dependent Variable Organization Performance ROS: Ratio of Earnings Before Interest and Tax To Sales Data will be obtained direct from organization records 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 VariablesCompetitive strategies Organization ability to do market development, product development, penetration and diversification of their activities. Likert-type scale Moderating variableOrganizational autonomy Percentage of government stake in the organization and the number of board members on the management committee Likert-type scale Intervening variableStrategic 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

38 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).

39 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.

40 CHAPTER THREE: RESEARCH METHODOLOGY(contd.) Summary of Regression Models, Analysis and Interpretation of Results ObjectiveHypothesisAnalysis techniquesInterpretation Objective One: To determine the extent to which competitive strategies influence the performance of Kenyan state corporations. H 1 : Competitive strategies have a significant effect on performance of Kenyan State Corporations Multiple Regression analysis Y= α + β 1 X 1. + β 2 X 2. + β 3 X 3. + β 4 X 4 + ε Y= performance of Kenyan State Corporations α= constant (intercept) X 1= is the composite index of product development X 2-= is the composite index of market development X 3= is the composite index of penetration X 4= is the composite index of diversification β 1- β 3- are the coefficients ϵ -is the error term The closer R approaches ±1, then a relationship exists. If (R 2 ) value is significant, then the relationship is significant Objective Two: To establish the moderating effect of organizational autonomy on the relationship between competitive strategies and performance of Kenyan state corporations. H 2 The organizational autonomy has a significant moderating influence on the relationship between competitive strategies and performance of Kenyan State Corporations. Multiple Regression analysis Y= α+ β 1 X+ β 2 Z+ 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 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 The closer R approaches ±1, then a relationship exists. If (R 2 ) value is significant, then the relationship is significant

41 CHAPTER THREE: RESEARCH METHODOLOGY(contd.) Summary of Regression Models, Analysis and Interpretation of Results contd. Objective Three: To determine the intervening effect of strategic positioning on the relationship between competitive strategies and performance of Kenyan state corporations. H 3 Strategic positioning has an intervening influence between competitive strategies and the organizational autonomy on performance of Kenyan State Corporations. Multiple Regression analysis 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 The closer R approaches ±1, then a relationship exists. If (R 2 ) value is significant, then the relationship is significant Objective Four: To determine the combined effect of competitive strategies, organizational autonomy and strategic positioning on the 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 Multiple Regression analysis Y= α + β 1 X 1. + β 2 X 2. + β 3 X 3. + ε Y= performance of Kenyan State Corporations α= constant (intercept) X 1= is the composite index of competitive strategies X 2-= is the composite index of organizational autonomy X 3= is the composite index of strategic positioning β 1- β 3- are the coefficients ϵ -is the error term The closer R approaches ±1, then a relationship exists. If (R 2 ) value is significant, then the relationship is significant

42 THANK YOU


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