Perceived Influence of Backward Integration Strategy on Organizational Efficiency in the Cement Industry in Kenya

Abstract

The steady, timely and adequate supply of quality raw materials in the right quantity required for the production process is key to achieving organizational efficiency. Manufacturing organization’s overall performance depends heavily on effective management of raw materials. The study sought to establish the perceived influence backward integration has on organizational efficiency in the companies that manufacture cement in Kenya. The study was based on two theories: Resource Dependence Theory (RDT) and Transaction Cost Theory (TCT). Descriptive survey research design was used in this study. The population for this study was the eight cement-manufacturing companies in Kenya. This study adopted the primary method for collecting data through the questionnaire method. The questionnaires were administered using the drop and pick later basis. The study targeted top and middle level managers from eight cement companies as respondents. From each company, questionnaires were administered to quality control, production, finance, marketing and procurement departments and chief executive officers. The collected data were quantitative in nature and thus were analyzed using inferential and descriptive statistics. The study carried out a regression analysis with the study establishing that perceived backward integration strategy was highly adopted by cement manufacturing companies. The perceived influence of backward integration strategy on organizational efficiency was positive and statistically significant. The positive influence implies that improved perceived backward integration leads to improved perceived organizational efficiency of the cement-manufacturing firms. Based on the findings, the study concluded that backward integration strategy was highly adopted by cement manufacturing firms in Kenya. The study further concludes that the perceived influence of backward integration strategy on organizational efficiency was statistically significant. Cement manufacturing firms can thus enhance their efficiency through the adoption of backward integration strategy. Based on the findings, the study recommends that management of manufacturing firms to pursue backward integration strategy aggressively in order to enhance their efficiencies. The firms should integrate with firms on the upstream end of the supply chain from the cement-manufacturing firms