CORPORATE LEVEL STRATEGY AND PERFORMANCE OF COFFEE INDUSTRY IN NAIROBI METROPOLITAN, KENYA

Abstract

Coffee was the main traded commodity after tea globally until the 1990s. It is the most consumed beverage after water and tea. Although it remains a valuable traded commodity in the global market its competitiveness has made coffee exports from various countries shrink. The general objective of this project was to evaluate effects of corporate level strategy on performance of coffee industry in Nairobi Metropolitan Area, Kenya. Nairobi Metropolitan is composed of Nairobi, Kiambu, Machakos and Kajiado counties. Specific objectives included examining effects of divestment, product development, market development and strategic partnerships on the performance of coffee industry in Nairobi Metropolitan region. The research was guided by Product Life Cycle Theory, The Real Options Theory, Resource Dependence Theory and New Trade Theory. The research adopted descriptive research design. Stratified random sampling method was applied to select samples from coffee stakeholders. The target organizational population consisted of 157 coffee members drawn from 15 coffee millers, 84 coffee dealers, 11 commercial marketing agents, 14 private warehousemen, 4 management agents, 22 grower marketers and 7 commercial warehousemen. Respondent target population comprised of 2 top most managers which translated to 314. The number of elements in each stratum was obtained by proportional allocation. Two top most managers from each institution were selected hence the total sample size was 122 from Yamane (1967) formula. Questionnaires were used for data collection. Pilot study was conducted to identify potential deficiencies and problematic areas in research instruments before implementing the real study. Reliability analysis was conducted for all variables in the study by Cronbach’s Alpha (α) value. Multiple regression model was used to test significance of influence of independent variables on the dependent variable. Statistical Package for Social Sciences (SPSS) version 28 was used in data analysis. Findings showed product development contributes significant effect on the performance of coffee industry (β=.463, p=005), strategic partnerships significantly affect performance of coffee industry (β=.665, p=002), divestment insignificantly affected performance in coffee industry (β=.360, p=165), with a weak insignificant effect of market development of the performance in coffee industry (β=.097, p=567). Recommendations are; the companies should allocate more resources for innovation, research and development, companies to continuously form alliances with relevant players in coffee industry to ensure that they expand to every region of target market, the company’s management should ensure that all non-performing assets are disposed of and should implement the best market penetration strategies and take initiative in regard having competition from the rivals.

Key Words: corporate level strategies, product development, strategic partnerships, divestment and market development