Effect Of Growth Strategies On Performance Of Telecommunication Firms In Kenya

Abstract

Despite presence of numerous empirical strategic management studies, the study on the correlation between growth strategies and performance of a firm has yet to draw a definitive conclusion on whether companies can stay oriented or diversify into various businesses. Therefore, the main objective of the current research was to assess the effect of growth strategies on telecommunication sector firm performance. The specific objectives were to; determine the effect of diversification strategy on performance of firms in the telecommunication industry in Kenya; analyze the impact of market penetration strategy on the performance of Kenyan telecommunications firms, determine the effect of product development strategy on the performance of Kenyan telecommunications firms, and determine the effect of market development strategy on the performance of Kenyan telecommunications firms.. The study adopted the Ansoff’s market growth theory, resource based view as well as the agency theory. This research used a descriptive survey design. Population of the research were the 62 telecommunication firms in Kenya while the unit of observation was the marketing manager in each firm. This study used primary data obtained using questionnaires and administered via Google forms. Data was analyzed using both descriptive statistics like mean as well as standard deviation and inferential statistics which included correlation and regression analysis. The research discovered a significant positive association between diversification strategy, product development strategy, market penetration strategy, market development strategy and performance of telecommunication firms in Kenya. Its regression analysis found that the collective usage of growth strategies was responsible for 45.6 percent of the variations in performance of these companies. Growth strategies are critical methods for organizations to adopt in their efforts to increase their performance levels, according to the result of this research. Based on the findings, diversification strategy had the largest impact on performance followed by market penetration while market development and product development strategy had the least influence on performance of telecommunication firms in Kenya. It is therefore, recommended that managers and shareholders of the firms that are yet to adopt growth strategies should adopt them to remain competitive and profitable in this turbulent business environment. It is also suggested that telecommunications company executives develop sound policies to guide them when pursuing growth strategies.