Strategic Management Practices And Performance Of Small And Medium-Sized Enterprises In Kitui County, Kenya

ABSTRACT

Globalization in today’s era of information and technology has significantly affected the business environment. Firms, therefore, must take planned measures in order to grow and maintain their businesses and also make the necessary changes and adjustments to gain competitive advantage. Small and Medium Enterprises-sized (SMEs) in Kenya and the world in general, play a major role in improving the economy. The main problem, however, lies with small entities that lack the capacity and financial resources to implement strategic management practices. The main objective that the study was to attain is to investigate the strategic management practices and performance of small and medium enterprises in Kitui County, Kenya. The study was guided by the following specific objectives: To establish how services delivery, the adoption of ICT and customer service affects the performance of small and medium-sized enterprises in Kitui County, Kenya. The study used a descriptive research design. The study adopted the stratified random sampling and targeted 442 SMEs in Kitui Town, which have the necessary structures to implement strategic management practices. The sample size was 111 small and medium sized enterprises, 30 per cent of the target population. Data was collected using primary and secondary sources. Questionnaires were the main source of primary data and Cronbach’s Alpha was used to test the validity and consistency of the research instrument. Data analysis was done using Statistical Package for Social Sciences (SPSS) and descriptive statistical tools were used for presentation. The study found that service delivery, ICT and customer service have a positive and significant effect on the performance of small and medium-sized enterprises in Kitui County, Kenya. Based on the findings of the study, it was concluded that small and medium enterprises in Kitui County, Kenya have adopted strategic policies or practices. However, they were being affected by factors such as economic, political, environmental, and technological factors, as well as, competition. The study likewise concluded that most SMEs in Kitui Town have adopted the various strategic management policies and practices such as Market Strategy, Service Delivery, Product Pricing, Cost Control, Customer Service, Product and Service Innovations, ICT etc. The main goal of this is for them to attain a competitive advantage. It was further concluded that most of the SMEs in Kitui County appreciate the financial and non-financial indicators of performance. The study concluded that performance of SMEs based on the financial and non-financial indicators has been largely influenced by the adoption of strategic management practices. The study therefore, recommends entrepreneurs to place their focus on services offered to customers and should maximize on use of Information Technology in their business operations.