Growth Strategies and Performance of Dairy processing Companies in Kenya: A case of New Kenya Cooperative Creameries

Abstract

The dairy industry has the potential to transform the country by creating jobs, increasing food security and nutritional quality, and reducing poverty. This potential has however been hampered by poor performance of milk processing companies as signified by domination of the market by raw milk hawkers who control more than 50% of the market. Kenya footprint in the global dairy industry is also quite small. It is in this regard that this study sought to assess the influence of growth strategies on performance of milk processing companies with a specific focus on the New Cooperative Creameries’ (New KCC). The specific objectives of the study were to: assess the influence of product development strategy on the performance of the New KCC, assess the influence of market development strategies on the performance of the New KCC, examine the influence of integration strategies on the performance of the New KCC, and examine the influence of diversification strategies on the performance of the New KCC. The study was guided by the Balanced Scorecard model, Igor Ansoff Growth Matrix, and the Theory of the Growth of the Firm. It employed the descriptive design and targeted the population of 171 middle and senior management staff working at the New KCC Nairobi Branch. A sample of 97 respondents was selected using the stratified random sampling technique where the population was divided into three strata namely: Operations (n= 42), Administrative (n=25), and Sales (n=30). Questionnaires were used to collect data from the middle managers while interview guides were used to collect data from senior managers. The interviews were conducted via telephone due to concerns over the Covid-19 pandemic. Quantitative data was analysed using percentages, frequencies, means, and the multiple linear regression method while qualitative data was analysed using the thematic content analysis technique. Findings showed that there wide application of product development and vertical integration growth strategies at the New KCC. However, market development and diversification growth strategies were less popular. The use of product development and diversification strategies did not have a statistically significant influence on company performance. The use of market development strategies had a statistically significant and negative influence on performance while integration strategies had a statistically significant and positive influence. The findings led to the conclusion that product development and diversification growth strategies do not have a significant influence on the performance of dairy processing companies in Kenya. On the other hand, market development growth strategies have a negative influence on performance while integration strategies have a positive influence. Based on the findings, the study recommends that managers should create awareness and promote new products for the product development strategy to have a significant impact on performance. They should also increase promotion in new markets and add the number of products sold in these markets for the market development strategy to have a positive influence on performance. Managers of dairy processing companies should also strengthen their relationship with farmers and other prayers above and below them in the production chain in order to enhance the impact of integration strategies. The processors should also forge partnerships among themselves to enhance growth of the industries.