Strategic Management Practices, External Environment and Performance of Real Estate Companies in Nairobi, Kenya

Abstract

The objectives of this study were to; establish Strategic Management Practices adopted by real estate companies in Nairobi, establish the moderating effect of the External Environment on the relationship between strategic management and performances of firms and establish the practice of external analysis by these companies. Today, the business world has been reduced to a global village where at a glance, vendors can scan, see and pursue opportunities all over the world. This is enhanced high level of technological advancement and has exposed business practitioners. There is no business that operates in an island and there is no idea that after implementation remains in a cocoon. The current external environment for doing business is becoming more dynamic and turbulent day and night. Strategic management practice aims at gaining a strategic fit. It therefore incumbent upon planners of businesses to be cognizant of the dynamic changes in consumer behavior, supply trends, economic trends, competition, socialcultural dynamism, political systems, technological and legal business procedures changes and monitor and make flexible decision based of the trends of these factors, otherwise, all efforts to success through planning may topple to failure. The data used was collected from a random sample of fifty percent of the total population using questionnaires. Information collected was on the demographic characteristics of the study population, strategic management practice and performance of these firms. Quantitative data was collected and descriptive statistics used for analysis. The research findings were that most of the firms under study practiced strategic management but did not put much effort on external analysis and hence poor performance. It was found that strategic planning is not enough to attain a firm’s desired level of output; rather planning to fit in the external environment can help. The conclusion of this study was that most of the real estate companies were experiencing poor performance due to lack of planning in the context of their external environment and emphasis was put to the firms to use the environment as a mirror during their planning. The study recommended that real estate firms in Nairobi and other parts of the world should put more wait on external analysis during planning and establish flexible plans that will be reviewed over time as they check and adapt to changes in the external environment.