Effect of Stakeholder’s Involvement in Strategy Formulation and Implementation on Organizational Performance, Among Tea Warehousing Companies in Mombasa County, Kenya

Abstract

Businesses world over are today more concerned about their future survival as the environment become more and more erratic by day. The intensity of competition, new entrants, availability of substitutes and more so the effect of globalization are some of the environmental factors that prompts dynamic business survivors to quickly modify and implement new strategies to counter the changes in the environment as they occur. This study focused on stakeholder involvement in strategy formulation and implementation, and its effect on organizational performance among tea warehousing companies in Mombasa County in Kenya. It established that tea warehousing business was a rapidly growing sector as more tea producers and traders outsourced their warehousing function to third party warehousing service providers as reflected by more than 1/3 of the companies that were less than 15 years old in tea warehousing business. The new entrants constrain the subsector, prompting players to develop survival strategies that become the lifeline of their organization. The research attempted to establish the extent of stakeholder involvement in strategy formulation and implementation, and the effect that this had on the organizational performance. Primary data collected indicate that stakeholder involvement had a strong positive correlation to performance. This is despite the fact that there was moderate stakeholder involvement in strategy formulation and implementation. Those organizations that had higher stakeholder involvement also had relatively higher performance index than those with lower involvement. The study therefore concluded that there was an above average stakeholder involvement in strategy formulation and implementation among the tea warehousing firms in Mombasa County and this impacted on organizational performance. With the ever increasing environmental change and the growing importance of entrepreneurship among the organizational staff who are knowledgeable and feel more motivated when involved in strategy formulation, the study recommends a higher staff involvement in strategic matters in the organization as this would enhance their commitment and ownership to strategy implementation culminating to improved organizational performance. In a rapidly changing business environment, strategy making process need to be so flexible as to be able to adapt to different situations as they emerge.