International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue VIII, August 2020 | ISSN 2454–6186

The Influence of Cost Leadership Strategy on the Performance of Tea Processing Factories in Murang’a County, Kenya

Mbaru Regina Wairimu¹, Dr. Caleb Kirui²

^1,2Department of Management Science, School of Business, Kenyatta University, Kenya

Abstract: In today’s rapidly changing economic and business environments tea factories in Kenya compete for customers, revenue, market share with products and services that meet customer’s needs. The Kenyan tea producing industry has been in decline since 2000 which culminated in closure of most of the tea estates. Tea processing factories in Murang’a County, Kenya in particular faces unprecedented challenges; a shift in consumer demand and habit, a changing climate, resource constraints and mechanization of farming are converging to put pressure on an industry. Therefore, this study aimed at investigating the influence of cost leadership strategy on the performance of tea processing factories in Murang’a County, Kenya. This study employed a descriptive survey design. The study targeted 9 tea processing factories in Murang’a County, Kenya. The total number of the respondents was 407 comprising of managers and support staff. The study used stratified sampling method and simple random sampling technique to select the respondents. Quantitative data was analyzed using descriptive statistics. The study established a positive and significant relationship between differentiation strategy, cost leadership strategy and focus strategy on organizational performance. The study established a positive and significant relationship between cost leadership strategy and organizational performance. The study concluded that cost leadership strategy focus on resource organization. The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. The study recommended that the tea factories should offer a lower price entry with a product offering a competitive advantage in terms of quality. Carry out Research and Development (R&D) breakthroughs to advance technology for less expensive production or distribution.

Keywords: Cost Leadership Strategy, Organizational Performance

I. INTRODUCTION

The dynamism of the environment implies that the organization has constantly redesigned their strategies in order to remain competitive. These organizations need to adjust to the environment for them to achieve their goals and objectives (Pearce & Robinson, 2012). According to Huse and Gabrielson (2014) globalization, competition and technological changes in the environment have in the recent past forced organizations to adjust their ways of doing things. The adoption of a clear strategic perspective in organizations is one of the factors that affect the performance of these organizations.