Relationship between Strategic Management Practices and Performance of Agro-Veterinary Based Industries: A case Study of Highchem Agro-Veterinary Division

Relationship between Strategic Management Practices and Performance of Agro-Veterinary Based Industries: A case Study of Highchem Agro-Veterinary Division

Ephraim Ndarathi¹ & Samuel Thiongo²

^1,2,School of Management and leadership,

^1,2 Management University of Africa. P.O Box 29677-00100, Nairobi, Kenya.

DOI: https://dx.doi.org/10.47772/IJRISS.2023.7012043

Received: 11 November 2023; Accepted: 15 November 2023; Published: 01 January 2024

ABSTRACT

The general aim of this study was to examine the relationship between strategic management decisions and performance in HighChem Agro-veterinary Division. The objectives of the study were to establish the effect of strategic innovation on performance of the Agro-veterinary industry; to investigate the impact of effective cost leadership on the performance of Agro-veterinary based industry; to examine how product differentiation affects the performance of Agro-veterinary based industry; to establish the effects of resource allocation on of the performance of Agro-veterinary based industry. The study has been anchored on three major theories. These theories are the Porter’s framework of competitive advantage; Resource-based theory and blue ocean theory. The study adopted a descriptive cross-sectional analysis. The study’s target population comprised of HighChem Agro-Veterinary Division employees and their distributors. The sample size used was 98 respondents who were selected conveniently. Online questionnaires were used for data collection which had both open and closed ended question. Linear regression was used to establish the relationship between the study variables. The study concluded that strategic resource allocation decisions and cost reduction strategies positively affects the performance of HighChem Agro-Veterinary Division while, strategic innovations and product differentiation negatively affected the performance of HighChem Agro-veterinary Division. Consequently, the study recommended that HighChem Agro-Veterinary Division should continue with its cost reduction strategies as well as its strategic resource allocation decisions while re-looking at its product differentiation and strategic innovation techniques.

Keywords: Agro-Veterinary, Performance, Strategic management Practices

INTRODUCTION

Strategy links the external business environment to the internal environment. Strategy entails the moves that an organization undertakes to produce the desired outcome. The management’s role is to craft these patterns of moves to enable the growth of the business by attracting new customers, improving the company’s financial and market performance, and earning a competitive edge. Therefore, a strategy entails how a company’s management will outcompete its rivals, build a loyal clientele, improve production, enhance the supply chain, efficiency in human resources, sales, and marketing, and improve performance in distribution. Despite the various conflicting definitions in strategic management, there has been a consensus on the core activities involved in the approaches. A study by Stonehouse et al. (2004) is in agreement with most definitions and regards strategic management as a composition of theories and frameworks for use by managers in the long-term future planning concerning a company.

Strategic management can be regarded as “the art and science of creating, execution, and evaluating decisions that enable an organization to achieve its goals.” Companies need strategies because they aid senior management in setting direction, using focused effort, Clarify and define the firm, and providing uniformity or guidance in respect to the environment. Strategic management is a combination of different activities aiming to provide a unique combination of values critical for an organization’s competitive advantage (Hendry, Kiel, & Nicholson, 2010). Therefore, strategic management is a process that depends on an organization’s internal and external factors. Organizations have embraced the process of strategic management to achieve some strategic goals by incorporating various actions and activities from various groups within an organization.

Strategic management entails distinct practices that an organization undertakes to achieve its goals. These practices entail formulating an organization’s mission, purpose, philosophy, and goals. The company must be certain that it does not disappoint its customer by focusing on its areas of strength. The company also shows its internal conditions and capabilities through its profile. To beat the competition, a corporation must examine its external environment, which includes competitive and general contextual elements. They accomplish this by devising tactics to outperform the competitors. In the current times, strategy is an important ingredient in business organizations that is lacking in most organizations (Kazmi, 2008). Thus, strategy emerges as a master plan for all business organizations that ensures their goals are achieved within specified time frames. Therefore, for an organization to engender a sustainable competitive advantage, it should embrace a specific strategy.

Strategic innovation is an important part of strategic management. It is the process of developing new ideas or methods that lead to greater efficiency, effectiveness, and value creation within an organization. While there are many different ways to innovate, one common method is through the use of new technology. The use of new technology can improve efficiency by streamlining processes or by providing new capabilities (Kariuki, 2014). An innovation culture also helps organizations develop innovative products and services by promoting a mindset that encourages creative thinking in personnel. Change management is another way organizations can innovate through strategic management because it allows them to adapt quickly to changing conditions when necessary. Finally, integration of all employees is an effective way for organizations to innovate because it creates synergies among employees from different departments who may not otherwise work closely together if they were working separately under different leadership structures or within different departments at any given time (Alosani & Yusoff, 2020).

Strategic resource allocation is the process of determining how much money, people, and time goes into each activity in an organization. It’s important because it helps companies make investments based on their goals—and that’s why it’s called strategic. The three main components of a strategic resource allocation plan are training of personnel, waste management, and leadership (Ndanu, 2020). These three types of resources can be used to achieve any number of goals or outcomes for an organization. For example, in order to produce a product, an organization needs the right employees, equipment, and materials. The organization can choose to use its own employees or hire outside labor. In addition, it needs tools and technology that will support its goals in order to facilitate production.

Training resources can be used to develop employees’ skills so that they are able to perform the jobs they have been given. This strategy could mean hiring new employees with new skills or retraining existing staff to make them more effective at their jobs. Waste management resources are used to reduce costs by recycling materials that would otherwise be thrown away. Waste management can also help companies achieve environmental goals. For example, if a company wants to reduce its carbon footprint by making its products without plastic packaging or Styrofoam trays, waste management might be able to help them do so using recycled materials instead. Leadership resources should be allocated according to the needs of each department within an organization—not just overall company performance (Carmeli & Tishler, 2004). For example, if sales are struggling but customer service is doing well, then leadership should allocate more money and time toward sales. A company must consider all these factors when making decisions about how best to allocate its resources.

Cost leadership is a strategic management approach that focuses on reducing the cost of products and services, thereby leading to lower prices. The strategy is most effective when the company has a high cost, low price elasticity, and small market share (Acquaah & Yasai-Ardekani, 2008). The first step in cost leadership is to reduce costs by reducing the cost of raw materials, labor, and other inputs. The second step is to increase market share by lowering prices and selling more units per customer. The third step is to increase scale by increasing production volume or the number of employees. This measure will allow the company to reduce its costs per unit even further, hence increasing profit margins.

Product differentiation strategy is a method used to differentiate a company’s products from those of competitors. It involves determining the features of a product that are unique and differentiating compared to competitors and then deciding how these differences will be communicated to consumers. Product differentiation strategy primarily focuses on quality, size, and packaging (Dirisu, Iyiola, & Ibidunni, 2013). The first step in identifying these characteristics is to conduct research into what consumers want in their products. This measure includes asking people about their needs and wants and gathering information about competitors’ products through surveys or focus groups. The next step is to determine what makes a product more appealing than its competitors. In order for this differentiation strategy to work effectively, it must support the overall business strategy. For example, if your company’s overall goal is to reduce costs by producing more cheaply made goods than competitors, then it makes sense for them to produce smaller items with fewer components that require less labour per unit cost.

The Agro-veterinary industry in East Africa plays a critical role in the agricultural sector by promoting animal health and enhancing food production. Research has shown that effective strategic management practices, such as product differentiation, cost leadership, and innovation, significantly contribute to the performance of agro-veterinary-based industries in East Africa which is a growing market which according to Euro monitor International (2019), with a projected value of over $1 billion by 2025. However, there is a lack of research on the relationship between the adoption of strategic management practices and the performance of firms in the agro-veterinary-based industry, particularly concerning HighChem Agro-Veterinary Division (HAVD). HAVD is a leading agro-chemical and veterinary products firm in Kenya and East Africa. Despite facing fierce competition from local and international companies, HAVD has not been adequately studied in terms of how it integrates and applies strategic management practices. Therefore, there is a significant gap in research that should address the relationship between strategic management practices and the performance of HAVD.

According to the 2030 Kenya Vision (2007), for a country to achieve its economic goals, the agriculture sector must grow significantly. An increase in the country’s population and the subsequent increase in food demand have led to the need for increased food production. High food production demands appropriate fertilizers and pesticide use to ensure that the supply meets the demand in the food market. These changes have pushed the government to increase its investment in the agricultural sector by allowing technological development because the industry is critical in economic growth. Research by FAO (2017) reveals that 26% of Kenya’s GDP comes from the agricultural sector. About 70% of the country’s rural population practice agriculture, while 40% of the total country’s population is employed in the agricultural sector. In Kenya, the key players in the agro-veterinary industries are led by big companies like Monsanto, Syngenta, Dow AgroSciences, HighChem, Twiga, Coopers, Osho, Ultravetis, and Bayer, whose share in the country’s agrochemical market is around 36% (Mutukaa, 2007).

Various authorities in Kenya strictly control the Agro-veterinary business. Agrochemicals Association of Kenya (AAK), the umbrella organization in Kenya for pesticide manufacturers, repackers, formulators, distributors, importers, farmers, and users, is tasked with providing responsible pest control alternatives for excellent agricultural output, public health, and environmental protection (Agrochemical Association of Kenya, 2022). Other regulators of Kenya’s Agro-veterinary industry are the PCPB, PPB, DVS, and VMD. The industry is also grappling with the challenge of fake products. Competition in the Agro- veterinary industry is intense due to the number of registered agrochemical firms and dealers (Mutukaa, 2007). Due to these challenges, Agro-veterinary firms must innovate their products, technologies, processes, and marketing methods.

Due to this industry’s high competition, firms must develop strategic management practices to differentiate itself and gain a competitive advantage. Some of the strategies they can employ are the use of new technologies developed at the manufacturing stage, like new formulations or packing designs. They can also gain a competitive edge through effective cost reduction techniques and efficient resource allocation. Performance in this industry is mainly measured by sales growth, gross and net profits, customer retention, efficient allocation and utilization of the available resources, and environmentally friendly practices, among others.

Nowadays, organizations are facing highly competitive and uncertain markets which are also volatile due to quick changes in technical progress; so, the management concentrates on developing a competitive edge. The resources and competitive positioning of a company determines its growth (Parnell, Spillan, & Mensah, 2014). The profit a corporation derives from its resources and skills is determined by its ability to build, sustain, and utilize the returns to that competitive advantage. Due to fierce competition and the arrival of complementary products from China and India, Agro-veterinary enterprises in Kenya have faced a variety of obstacles, resulting in a fall in sales. This reduction is the result of Agro-veterinary enterprises witnessing a shift in consumer expectations, the proliferation of generic goods in the market, and increased price rivalry within the industry.

In addition, while studies have conducted research on strategic management practices and their influence on performance, a considerable number of these have been carried out in developed countries, with little empirical research undertaken in the African context. This highlights the need for studies focused on African markets to provide evidence for industries, policymakers, and practitioners on the effectiveness of adopting strategic management practices in the Agro-veterinary industry.  Furthermore, previous research on the Agro-veterinary industry in Africa has focused mainly on smallholder farmers using agrochemicals, neglecting the role of strategic management practices in improving performance. Therefore, this research seeks to address this gap by investigating the relationship between strategic management practices and the performance of Highchem Agro-Veterinary Division.

The study’s goal is to fill the literature gap on the relationship between strategic management practices and firm performance in Agro-veterinary-based industries with a case study of Highchem Agro-Veterinary Division. Providing evidence-based studies on the effectiveness of strategic management practices will help industry players in identifying and adopting relevant strategies to improve performance.

The study sought to establish the relationship between strategic management practices and organizational performance in HighChem Agro-Veterinary Division. Specific Objectives were;

1. To establish the effect of strategic innovation on the performance of the HighChem Agro-Veterinary Division.
2. To investigate the effect of cost leadership on the performance of the HighChem Agro-Veterinary Division.
3. To evaluate the effect of product differentiation on the performance of the HighChem Agro-Veterinary Division.
4. To determine the effect of resource allocation on the performance of the HighChem Agro-Veterinary Division.

With the following research question;

1. What effect does strategic innovation have on the performance of the HighChem Agro-Veterinary Division?
2. Which extent does cost leadership on the performance of the HighChem Agro-Veterinary Division?
3. What is the of extent product differentiation on the performance of the HighChem Agro-Veterinary Division?
4. To what degree does resource allocation have on the HighChem Agro-Veterinary Division?

The significance of this study is that the findings from this study will add more knowledge to the realm of strategic management practices. The results of this study will benefit the top management of the HighChem Agro-Veterinary Division in evaluating the effects of strategic management decisions on the company’s performance. The top management in this organization will benefit from the study since they will use it to improve their strategies and make them more effective, which will attract more customers and increase profits for the business.

The study also has significant implications for future entrants in the industry because they will have access to information about how strategic practices affect business performance, which will enable them to make informed decisions about whether or not they should enter this industry. The future entrants will gain a better understanding of what is happening in the industry through the lens of strategic practices because they will know how strategic practices affects an organization’s performances. Finally, it will help these new entrants understand how to implement those practices in their organizations.

Other stakeholders in the industry will also benefit from the study findings by putting the importance of SMP in limelight in this sector for better understanding. These stakeholders include policymakers, regulatory bodies, future entrants in the industry, and other existing Agro-veterinary companies. The study will be significant to scholars and academicians since it will add new insights into the existing knowledge pool and help identify gap areas for further research.

LITERATURE REVIEW

Theoretical Review

Porters Five Forces of Competitive Position Analysis 

The Porter’s five forces is not a theory but an important framework for the evaluation and assessment of the competitive positioning of an organization. This framework was proposed by Professor Michael Porter (1979) who emerges as one of the forerunners of strategic management as a legitimate academic field. The competitive advantage idea was advanced by him. The bedrock of this framework is the premise that five forces interact to determine a market’s competitiveness and appeal. Porter’s five forces can be used to figure out who is better off in a particular business scenario. This information aids in understanding the stability of a firm’s current competitive stance as well as the position it sets to join in future. This idea can impact choices on whether to join a given market, whether to shoot up capacity in production or service in an industry, and how to create competitive advantages, which aids businesses in understanding the elements determining profitability in a particular industry. The framework comprises the following forces; a barrier to entry, buyers’ bargaining power, supplier power, the threat of substitutes, competition in the industry. This strategy is primarily employed to help these businesses choose a place in the market where they can protect themselves from forces of competition that can work in their favour (Porter, 1980).

According to Porter, a company can create a generic competitive strategy of cost leadership or differentiation that pushes a company to perform better after its value chain activities are properly configured and coordinated (Porter, 1985). In order to achieve above-average profits while maintaining prices that are below the average of an industry, a firm must become the lowest-cost producer of a product. In order to charge customers a greater price, a differentiation strategy requires persuading them that a product or service surpasses those provided by competitors with regard to performance, quality, and brand. A focus strategy uses either a differentiation strategy or a cost leadership plan in a small market segment. Porter continues by asserting that a business must decide between a differentiation strategy and a cost leadership approach. Being “trapped in the middle” of the two will probably lead to failure. In this study, companies in the Agro-veterinary industry must use the appropriate strategy to realize or achieve their desired goals. They can either choose cost leadership where they can focus on reducing their production costs so they can gain higher margins or manage lower prices than their competitors. Agro-veterinary companies can also adopt the differentiation strategy by adopting new technologies and being innovative to come up with unique and improved products to have a competitive edge. This framework demonstrates how Agro-veterinary companies can adopt strategic management practices to grow the performance of the firm.

One of the shortcomings affecting this theory is that Porter also makes a bold claim that the structure of an industry, without considering stage in development or technological sophistication of that industry, determines how profitable a firm is likely to be. The framework fails to consider that in many instances, government regulation and legal action also play an important role in determining profitability and performance in an industry.

Empirical Literature Review 

Strategic Innovation and performance 

Ogundeji and Kinyua (2019) concluded that innovation activities have a positive impact on market share for SMEs in Kenya. In the banking sector, Sibanda et al. (2018) indicated that innovation adoption and implementation lead to better organizational performance in Uganda’s banking industry. In the pharma sector, studies by Ibrahim et al. (2020) point to the empirical evidence of strategic innovation contributing to the performance of firms in the Sudan. Kenya had studies in agribusiness, health sector, and mobile money. In the study by Obiero et al. (2019) on agribusiness, strategic innovation increased the performance of firms in terms of net profits and market share. In the healthcare sector, Njuguna and Wanjau (2017) found that firms that adopt telemedicine and mobile health significantly improve patient healthcare outcomes. In the mobile money sector, the study by Ogutu (2019) established that firms that adapt to the advancement of technology will have a competitive advantage and improve their performance.

According to Kariuki (2014) found that strategic innovation positively influences organizational performance. This innovation is mostly in product, service, marketing, and human resources. This study emphasizes the importance of firms investing in research and development which this firm can use to anchor their performance through innovation in strategies. In contrast, the present study will conduct research in a highly competitive Agro-veterinary industry, unlike the study above, which was conducted in a one-firm-dominated industry.

Strategic Resource Allocation and Performance 

According to Ndanu(2020), private universities in Kenya performed significantly better when they had access to resources like technology, human capital, networking, and intellectual capacity. The research used a cross-sectional descriptive survey approach, with 153 respondents chosen from a target population of 31 universities in Kenya using a stratified random sampling technique. ICT managers, faculty deans, registrars, and human resource managers were the respondents that were specifically targeted. The primary data collection method utilized semi-structured questionnaires. The results of this study will only be applicable to private learning institutions at the university level and will not be applicable in other commercial fields like the Agro-veterinary industry or manufacturing, which have different objectives from those of learning institutions.

Muriuki and Mukulu (2019) investigated the impact of resource allocation practices on performance in Kenyan SMEs. The study found that strategic resource allocation significantly influenced performance and that SMEs that effectively allocated resources had higher performance. One of the challenges of the resource-based approach in strategic management and performance is that there is no sufficient empirical literature to support the theory. It is clear that more empirical research is needed in the field of strategic resource management so that it can clearly estimate the effect of resources and capabilities on organization performance as well as capture the multi-dimensionality of performance.

Cost Leadership and Performance 

In East Africa, Kinyua et al. (2020) investigated the influence of cost leadership strategy on market share and profitability in Kenyan manufacturing firms. The study found that effective implementation of cost leadership strategy significantly influenced market share and financial performance. Ngari and Obere (2018) explored the impact of cost leadership strategy on innovation capability and performance in Kenyan SMEs. The study found that effective implementation of cost leadership strategy facilitated innovation capability and contributed to improved performance in the SME sector. Onyango et al. (2015) examined the relationship between cost leadership strategy and performance in Ugandan manufacturing firms. The study found that firms that effectively implemented cost leadership strategy had higher financial performance and market share than those that did not.

Finally, in Kenya, Gathigi and Ndirangu (2017) investigated the impact of cost leadership strategy on performance in Kenyan firms. The study found that firms that successfully implemented cost leadership strategy had higher financial performance and market share than those that did not. Muriuki and Mukulu (2016) explored the role of cost leadership strategy in promoting innovation and performance in Kenyan SMEs. The study found that effective implementation of cost leadership strategy was positively associated with innovation capability and contributed to improved performance in the SME sector. Kabiru and Karanja (2015) examined the relationship between cost leadership strategy and performance in Kenyan manufacturing firms. The study found that effective implementation of cost leadership strategy significantly influenced financial performance and market share.

Product differentiation and Performance 

Studies Conducted in North Africa, Lahmar et al. (2020) investigated the impact of product differentiation on performance in Tunisian manufacturing firms. The study found that firms that effectively differentiated their products had higher financial performance and market share than those that did not. Izeghwan and Okolie (2019) explored the relationship between product differentiation and performance in Nigerian manufacturing firms (p.60). The study found that firms with high levels of product differentiation had higher financial performance and market share than those that did not. Berrag and Zeroual (2017) examined the role of product differentiation in promoting competitiveness and performance in Algerian manufacturing firms. The study found that firms that effectively differentiated their products had higher competitiveness and financial performance than those that did not.

Also, in Central Africa, Ngosso and Mbogning (2019) investigated the impact of product differentiation on performance in Cameroonian firms. The study found that firms that effectively differentiated their products had higher financial performance and market share than those that did not. A study conducted in Nigeria assessed the influence of product differentiation as a competitive advantage tool on manufacturing companies’ organizational performance using Unilever Nigeria Plc as a case study (Dirisu, Iyiola, & Ibidunni, 2013. This research employed a survey research design. Data was gathered through surveys and a sampling of respondents. According to the investigation, there is quite a high positive correlation between organizational success and product differentiation. By improving the organization’s ability to improve its products, product differentiation will help it draw in more customers and consumers. The outcome of the regression analysis showed that, as a strategy for competitive advantage, product differentiation has a favourable and significant impact on the performance of firms in Nigerian manufacturing enterprises.

Summary and Research Gaps

The study identifies several research gaps that require further investigation. Firstly, the study was conducted in a single company and may not be generalizable to other organizations. Future research could adopt a comparative case study approach to examine the relationship between strategic management decisions and organizational performance across multiple companies. Secondly, the study did not explore the impact of strategic management decisions on employee outcomes, such as job satisfaction and motivation. Future research could investigate the relationship between strategic management decisions and employee outcomes to provide a more holistic understanding of the impact of strategic management decisions on organizational performance. Thirdly, the study did not examine the role of digital technologies in shaping strategic management decisions and organizational performance in the HighChem Agro-Veterinary Division. Future research could explore the impact of digital technologies, such as big data analytics and artificial intelligence, on strategic decision-making and organizational performance. Fourthly, the study did not examine the impact of environmental and social sustainability initiatives on strategic management decisions and organizational performance in the division. Future research could investigate the relationship between sustainability initiatives and strategic management decisions and organizational performance. Finally, the study did not explore the role of employee participation in strategic decision-making and its impact on organizational performance. Future research could investigate the impact of employee participation in strategic decision-making on organizational performance outcomes.

Conceptual Framework

Figure 1: Conceptual Framework

METHODOLOGY

The study adopted a cross-sectional descriptive research design. A cross-sectional survey enables the generalization of conclusions of a greater population during a study (Cooper & Schindler, 2003). The total target population was 166 respondents of HighChem agro-veterinary division employees and their distributors. In order to select the respondents for the study, stratified sampling was used because the general population is heterogeneous.  The 98 respondents made up the sample, which was conveniently chosen, and a 10% error margin with a 90% confidence level was taken into account. To collect the data, stratified random sampling was used. The sample was first separated into strata according to Kenya’s eight regions. The Nairobi region, Mid-Rift, North-Rift, South-Rift, Kitale, Coast, Narok, and Mount Kenya were included.

The researcher selected a strategy that provided high generalization, explanatory power, accuracy, with minimal costs, speedy execution, and administrative ease. Therefore, self-designed both open-ended and closed-ended questionnaires were utilized to gather the study’s data. Questionnaires provide in-depth responses to challenging problems (Mugenda, 2003). It simultaneously gives a fair stimulant to large numbers of people, surely, while also giving the research a straightforward accumulation of data. There were three sections to the questionnaire. The respondents were questioned about their backgrounds in Section A, about strategic management decisions or practices in Section B, and about the performance of the HighChem Agro-Veterinary Division in Section C.

Prior to administering the questionnaire to the respondents, the study ensured that the queries were reviewed to ensure clarity and that any form of ambiguity is eliminated. This was tested through pilot testing. This involved subjecting the questionnaire to a small number of respondents. The main objective of undertaking a pilot study was to evaluate the viability of the techniques that is to be replicated on a large-scale study. Pilot testing is crucial activity that aids a researcher in determining if the respondents understand the questions asked or whether there are any ambiguous or sensitive questions to the respondents or organization. The study was carried out in the Nairobi branch which was the parent branch and has the highest sample size.

Prior to the start of the study, the researcher sought a letter of introduction from the Management University of Africa (MUA) to request National Commission for Science, Technology and Innovation (NACOSTI) to permit him undertake the study. The next step involved contacting the management of HAVD where the researcher detailed the purpose of the study. Once permission is granted, the researcher drew up a list of potential interviewees and later booked appointment with the respective respondents. The interviewees were sensitized of the essence of the inquiry and the possible significance of the study to the institution. The respondents were assured of anonymity and more importantly, the assurance that the information collected was purely for academic use only.

To ensure they are thorough, accurate, and consistent, the questionnaires were revised and sanitized. To assure accountability of the number of questionnaires that were sent, the obtained data was first coded. The study considered SPSS and MS Excel which was used to edit the data. Frequencies and percentages were used to assess the data in Section A in order to compile a background summary of the respondents. Data was evaluated for parts B and C utilizing descriptive quantitative techniques including mean, frequencies, and percentages.

This information enabled the determination of a nexus between organizational performance and strategic management decisions in Kenya’s Agro-veterinary sector using a regression analysis.

FINDINGS

Level of Strategic Innovation

The study sought to know the extent to which a branch has adopted strategic innovation. Respondents were supposed to rate their respective branches on a Likert scale of 1-5 where one is smallest value and 5 is the highest. Four indicators had been given to measure strategic innovation. The results are presented below in Table1

Table 1: Extent to which strategic innovation has been adopted 

On average, all the four indicators namely, use of new technology, encouraging innovation culture, upholding change of management and integration of all employees were given a ranking 4. Overall, the HighChem Agro-Veterinary Division was given a score of 4 and an average mean of 3.7529. This is to mean that the respondents were satisfied with how strategic innovation has been promoted by the management of HighChem Agro-Veterinary Division.

Level of Strategic Resource Allocation

The research equally sought to establish the extent to which the branches have adopted strategic resource allocation using a Likert scale of 1-5 where 1 is the minimum and 5 is the maximum rating. Four indicators were used to rate strategic resource allocation in the respective branches in order to obtain the average rating of HighChem firm. Strategic resource allocation indicators provided to the respondents were continuous training of personnel, efficient waste management, effective leadership and seamless production operations. The results are presented in Table2 highlighted below.

Table 2: Extent to which strategic resource allocation have been adopted

All the four indicators of strategic resource allocation were given a rating of 4 by the respondents. However, the indicators had different means but close to each other. The obtained mean was as follows; 3.5662, 3.4939, 3.9397 and 3.8313 respectively. The average score for HighChem Agro-Veterinary Division translated to 4 with mean of 3.7078. Equally, the respondents manifested their satisfaction to adoption of strategic resource allocation by HighChem Agro Veterinary Division.

Level of Cost Reduction Techniques 

The study further sought to determine the extent to which a branch has adopted cost reduction strategies and leadership using four indicators namely; cost reduction strategies, efficient pricing of products, establishing broad customer base and achieving economies of scale in productions. The indicators were rated based on a Likert scale of 1 to 5 where 1 is the minimum and 5 is the maximum. The ratings are presented in Table3

Table 3: Extent to which cost reduction strategies have been adopted

Each indicator was given a score of 4 with means of 3.6024, 4.000, 4.0723 and 3.9157 respectively. The average mean of the firm was obtained as 3.89785 with a rating of 4, meaning that the respondents are contented with the cost reduction strategies adopted by the firm.

Level of Product Differentiation

Extent to which company has adopted product differentiation was also explored on a Likert scale of 1- 5. One representing the lowest rating while five is the maximum rating that can be awarded. Enhanced product quality, appropriate sizing and unique packaging, appropriate advertising and competitive product pricing were the indicators used to rate interventions adopted for product differentiation. The results are tabulated in Table 4 below.

Table 4: Extent to which product differentiation have been adopted

The rating for all the four indicators was found to be 4 with mean averages of 3.875, 3.8554, 3.7108 and 4.0723. The average mean for product differentiation was found to be 3.8765 and an average rating of four. A rating of 4 is indicative that the respondents were okay with interventions made by HighChem Agro-Veterinary Division to differentiate her products in the market.

Level of Performance

The rating of the dependent variable in this study, which is performance, was also sought. The rating was guided by a Likert Scale of 1- 5 where one is no extent and five is very great extent. The performance variable was an index of all those metrics that are used as indicators of growth, namely; increases in revenues growth in market share, profit growth, new product development, reduced cost, operation efficiency and competitive advantage. The results are presented in Table 5.

Table 5: Performance Rating 

All the seven indicators of performance of the firm were given a rating of four with the following mean; 3.5422, 3.7711, 3.8795, 3.5663, 3.7590, 3.9759, and 3.9390. The average rating of HighChem firm was 4 and a mean of 3.7761. A score of 4 can be translated to mean that the respondents are satisfied to a great extent the performance of HighChem Agro-Veterinary Division.

Pearson’s Correlations Analysis

Pearson Correlation analysis was conducted to confirm the existence and the nature of relationships between the variables. Correlation analysis will help us achieve our respective objectives. The results of the Pearson Correlation are presented in the Table 6.

Table 6: Pearson Correlation Analysis Results

The Pearson correlation analysis was carried out between the dependent variable and all the independent variables. The correlation analysis was repeated in a piecemeal between the dependent variable and each independent variable alone. This was done to ascertain the accuracy of the correlation analysis. As shown in the table above, there exist both negative relationships between the dependent variable which is performance and the independent variables namely, strategic innovation, strategic resource allocation, cost leadership and product differentiation. Pearson correlation analysis was used to achieve our research objective. The correlation analysis produced a coefficient of 0.6178. A coefficient of 0.6178 can be interpreted that there is exist a fair positive relationship between resource allocation and performance. Therefore, resource allocation positively affects the performance parameter of HighChem Agro Veterinary Division. The results conform to the existing body of literature as it collaborates the results of Ndanu (2020), and Carmeli & Tishler (2004).

Chapter Summary

The first objective was to establish the effects of strategic innovation on the performance of HighChem Agro-Veterinary Division. This is confirmed through the use of correlation analysis as presented in Table 4.12 above. The results showed that there exists a negative relationship between Strategic innovation and Performance. According to the authors, the negative relationship is due to cost considerations where the innovations being invented tend to be cost intensive and as a result, the connection between the two turns out negative. However, a limitation with the findings of these studies is that the organization the study focused on are not profit-making entities which brings a different dimension when profit motive is not considered.

 The second objective was to establish the effect of cost leadership on the performance of HighChem Agro-Veterinary Division. A correlation analysis using the Pearson correlation coefficient was carried out to capture the effect of cost leadership on Performance. The Pearson correlation coefficient obtained was 0.9679. A Pearson correlation Coefficient of 0.9697 means that there exists a strong positive relationship between the two variables. With these results, it can be inferred that cost leadership strategy positively affects to a large extent the performance firm and more specifically, in this case, it positively affects HighChem Agro-Veterinary Division. The findings collaborate the findings of (Acquaah & Yasai-Ardekani, 2008) and (Munaworah, Sunarsi, & Haque, 2021).

The third objective was to establish the effect of product differentiation on the performance of HighChem Agro-Veterinary Division. The objective was achieved by carrying out a correlation analysis using Pearson Correlation Coefficient as outlined in methodology. The Pearson Correlation Coefficient obtained was -0.2871, which can be interpreted as a weak negative relationship. Consequently, it can be concluded that product differentiation impacts negatively the performance of a company. However, the negative effect is weak. The findings contradict the existing body of literature as observed in the findings of Dirisu, Iyiola, & Ibidunni (2013) (p.34), Mosakowski (1993); Nolega, Oloko, William, & Oteki (2015). Acquaah and YasaiArdekani (2008) collaborates the findings of this study that product differentiation affects negatively the performance of a company. This is due to the cost considerations where product differentiation becomes expensive negatively affecting the performance of the company

The fourth objective was to establish the effects of resource allocation on the performance of HighChem Agro-Veterinary Division. The objective was achieved by carrying out a correlation analysis using Pearson Correlation Coefficient with a result of 0.6178. This means there is a fair correlation between strategic resource allocation and performance of Highchem Agro-Veterinary Division. This collaborates the existing body of literature. The study found that effective resource allocation practices contributed to improved competitive advantage and that firms with high levels of competitive advantage had higher performance.

CONCLUSIONS & RECOMMENDATIONS

Conclusion

The study concluded that Strategic resource allocation practices and Cost reduction strategies adopted by HighChem Agro-Veterinary Division have positively affected the Company’s performance.

Based on the findings, the study also concluded strategic innovations and product differentiation negatively affected the performance of HighChem Agro-Veterinary Division which is contra to the existing body of literature.

Additionally, the study concluded that HighChem Agro-Veterinary Division has adequately adopted strategic innovation, cost reduction strategies, strategic resource allocation, product differentiation features and obtained satisfactory performance as guided by the respondents’ assessment.

Recommendations 

On the aspect of strategic innovation, the study recommended that the company should evaluate the stakeholders understanding of strategic innovation and the way it has been implemented. Studies earlier carried in the Literature review out have shown a direct correlation between the two variables, it will be important to establish the disconnect between the independent and the dependent variables in this case.

Regarding Cost reduction, the study recommended the establishment of efficient pricing of products, establishing broad customer base and ensuring there is economies of scale in production to better improve cost reduction strategies, which will ensure the company enjoys a competitive edge on low production cost while maintaining quality of the products.

In respect to Resource allocation, the study suggests that the management of HighChem Agro-Veterinary Division should promote continuous training of personnel, efficient waste management, effective leadership and seamless production operations to ensure resources are optimally allocated to the production process to obtain efficient utilization of the available resources.

Lastly on Product differentiation, the stakeholders’ assessment of the extent to which the company has adopted Product differentiation was found to be very good with a score of 4, which is a contradiction with the correlation results. The expected results with would have been a positive effect on performance but this not being the case there is need to re-evaluate indicators used to measure the two variables.

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