Strategic Responses to Changes in the External Environment and Organizational Performance of Commercial State Corporations in Kenya

Abstract

Due to the changes in the technology advancement, globalization, intense competition and economic reforms in the country, there is need for the organization to develop strategies in order to adopt to environmental dynamisms. The external environment which is ever-changing requires strategic responses from the organization so as to ensure sustainability and performance. The objectives of the study is to identify factors affecting commercial state corporations in Kenya; to find out the strategic responses that commercial state corporations in Kenya employ in reaction to the external environmental changes and to establish the effect of strategic responses on organizational performance of commercial state corporations in Kenya. The study adopted a cross-sectional descriptive deign. The target population was 33 Kenyan commercial state corporations .Primary data was collected using questionnaires. The collected data was analyzed using SPSS by the use of multi-regression analysis and presentation was done using Tables and Figures. With a response rate of 81.8% the study found out that external micro and macro environment are significant factors affecting commercial state corporations. The most significant strategic responses included staff retrenchment, collaborations with local firms, new product development and downsizing. Staff retrenchment significantly influenced organizational performance. Collaboration has a significant impact on organizational performance. Innovation has significant effect on performance. Downsizing has a significantly influenced performance. The study concludes that external micro and macro environment are significant factors affecting commercial state corporations‟ .The study recommendations were that senior management team of all Kenyan commercial state corporations in Kenya should consider adopting lowering the price of their products and extending to new markets in response to changing business environment. Policy makers including the National Treasury and the Central Bank of Kenya need to improve on the fiscal and monetary policies in place