PHD 17% Levy

BUSINESS GROWTH STRATEGIES AND PERFORMANCE OF SELECTED
TEA FACTORIES IN KENYA: THE MODERATING ROLE OF

ORGANIZATIONAL RESOURCES
OMOSA MOTONGWA HENRY
A RESEARCH THESIS SUBMITTED TO BOARD OF POST GRADUATE

STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF DOCTOR OF PHILOSOPHY IN BUSINESS ADMINISTRATION
(STRATEGIC MANAGEMENT), OF THE SCHOOL OF BUSINESS AND
ECONOMICS, DEPARTMENT OF BUSINESS ADMINISTRATION, KISII
UNIVERSITY.
APRIL, 2022
DECLARATION AND RECOMMENDATIONS
Declaration by Candidate
This Thesis is my original work and has not been presented in any other institution for an
award.
Signed: ________________________________Date_________________________
OMOSA MOTONGWA HENRY
DCB/10270/15
Recommendation by Supervisors
This Thesis has been submitted for examination with our approval as the University
supervisors.
Signed _____________________ Date _________________

Dr. James Muya, PhD.
Senior Lecturer,
Department of Business Administration
School of Business and Economics
Kisii University.
Signed ____________________ Date _________________

Dr. Stella Omari, PhD.
Senior Lecturer,
Department of Business Administration
Kisii University.
Signed ________________________ Date _______________
Dr. Charles Momanyi, PhD.

Lecturer,
Department of Business Administration.
Kisii University.
ii
COPY RIGHT
All rights are reserved. No part of this thesis or information herein may be reported,
stored in a retrieval system or transmitted in any form or by any means electronic,
mechanical photocopying, recording or otherwise without the prior written permission of
the author or Kisii University.
ii
DEDICATION
To my Wife Damaris Araka, my Son Gaddiel, and my Daughters: Beth, Christabell,
Dottie, and Precious for your support, love, encouragement, and understanding during the
many days I was busy withthisresearch.To my Mother, Mary Nyarangi Omosa: May God
enrich you for your motivation.
iii
ACKNOWLEDGEMENT
I, first, praise our Heavenly Father for blessing me with an opportunity and the ability to
acquire an education. I have witnessed His rich blessing this far. This study was made
possible, due to the support and guidance of my supervisors: Dr. James Muya, Dr. Stella
Moraa Omari, and Dr. Charles Momanyi. I thank you most sincerely for your tireless
efforts. I am grateful to all respondents in the research sincetheir contributions supported
the research and thesis writing. Special thanks to Mr. William Bii, the regional operations
manager for Kericho highlands region. To the teaching fraternity at Kisii University,
especially the School of Business and Economics, your words of encouragement and
pieces of advice were crucial. I also thank my friends for the moral and financial support
they accorded me and all those who contributed to this work in one way or another.
iv
ABSTRACT
Tea factories which Kenya Tea Development Agency manages face challenges
ofexecuting business growth strategies leading to poor performance hence a public
outcry. This research assessed the moderating role of organizational resources in the
relationship between business growth strategies and performance of selected tea factories
in Kenya. The objectives of the research were to; determine the influence of product
diversification strategies, establish the influence of market development strategies, find
out the influence of market penetration strategies, establish the influence of product
development strategies and establish the moderating role of organizational resources on
the association between business growth strategies and performance of selected tea
factories in Kenya. This research was based on the Ansoff Matrix theory alongside
Resource Based View; Market Based View and Agency theories. This study used
positivism research philosophy and descriptive research design was used. KTDA operates
within seven regions which comprise 69 factories managed by 1506 staff. This research
purposively sampled Kisii and Kericho Highland regions and its population was 701 from
which 364 were sampled using Yamane’s formula. The simple random technique was
used to sample specific respondents. To collect data, a self-constructed questionnaire was
usedand before the actual data collection, the tools were pilotedin Aberdare Ranges
region at Kagwe and Theta Tea Factoriesto testtheir reliabilitywhose general coefficient
was 0.903, Cronbach’s Alpha coefficient was used. To test face validity, reviews of peers
and content validity through researchers and supervisors were used. Analyses of data
wereconducted using descriptive statistics, including means, percentages, and
frequencies, and standard deviation. Pearson product-moment correlation coefficient was
used to establish the strength of the association while simple linear regression and
hierarchical multiple regression were used to estimatethe association between variables.
Analyzed data were presented using graphs, tables, and charts. Research results showed
thatstrategies of business growth bear a positive influence on the performance of a firm.
The findings further indicated a significant moderating role of organizational resources
on the association between business growth strategies and firm performance. The
research made the conclusion that tea factories use strategies of business growth to
improve performance. The research also concludes that tea factories use a number of
organizational resources to achieve success. The proposed model produces best results
when individual strategies are employed by utilizing organizational resources. This study
recommends that policy makers in tea factories must allocate enough resources in order
to implement business growth strategies for maximum firm performance.
v
TABLE OF CONTENTS
DECLARATION AND RECOMMENDATIONS..........................................................ii
COPY RIGHT...................................................................................................................ii
DEDICATION..................................................................................................................iii
ACKNOWLEDGEMENT...............................................................................................iv
ABSTRACT........................................................................................................................v
TABLE OF CONTENTS..................................................................................................ii
LIST OF TABLES...........................................................................................................vii
LIST OF FIGURES..........................................................................................................ix
LIST OF APPENDICES...................................................................................................x
LIST OF ABBREVIATIONS AND ACRONYMS........................................................xi
CHAPTER ONE
INTRODUCTION.............................................................................................................1
1.1 Background of the Study 1

1.2 Statement of the Problem 16
1.3 Objectives of the Study 17
1.3.1 General Objective 17
1.3.2 Specific Objectives 17
1.4 Research Hypotheses 18

1.5 Significance of the Study 19
1.6 Scope and Justification of the Study 20
1.7 Limitations of the Study 21
1.8 Assumptions of the Study 21
1.9 Operational Definition of Key Terms 22
CHAPTER TWO
ii
LITERATURE REVIEW...............................................................................................23
2.1.1Ansoff Matrix/ Model 23
2.1.2 Market-Based Theory 26
2.1.3 Resource Based View Theory 28
2.1.4 Agency Theory 31
2.2 Empirical Literature Review 32

2.2.1 Product Diversification Strategies and Organizational Performance 33
2.2.2 Product Development Strategy and Organizational Performance. 38
2.2.3 Market Development Strategy and Organizational Performance 45
2.2.4 Market Penetration Strategy and Organizational Performance 51
2.2.5 Organizational Resources and Firm Performance 56
2.3Summary of Research Gaps 61

2.4 Conceptual Framework 72
CHAPTER THREE
RESEARCH METHODOLOGY...................................................................................74
3.1 Research Philosophy 74

3.2 Research Design 75
3.3 Study Area 75
3.4 Target Population 76
3.5 Sampling Design and Sample Size 77
3.5.1 Sampling Frame 77
3.5.2 Sampling Procedure and Sample Size 78
3.6 Data Collection 80
3.6.1 Instrumentation81
3.6.1.1 Validity of Research Instrument 81
3.6.1.2 Reliability of Research Instrument 81
3.6.2 Data Collection Procedures 83
3.7 Data Analysis and Presentation 83
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3.8 Ethical Considerations 87
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND DISCUSSIONS...............................….88
4.1 Response Rate 88

4.2 Data Cleaning and Screening 88
4.2.1 Analysis of Data Entry Errors 89
4.2.1.1 Analysis of Outliers 89
4.2.1.2 Analysis of Out of Range Values 89
4.2.1.3 Analysis of Missing Data 89
4.3 Demographics of the Respondents 90

4.3.1 Profile of Respondents 90
4.3.2 Region of Factory 93
4.3.3 Business Growth Strategies 93
4.4 Descriptive Analysis 94
4.4.1 Product Diversification Strategy 94
4.4.3 Market Development Strategy 103
4.4.4 Market Penetration Strategy 108
4.4.5 Organizational Resources 112
4.4.6 Descriptive Statistics Results on Firm Performance. 116
4.5 Exploratory Factor Analysis......................................................................................119
4.5.1 Principle Component Analysis (PCA) for Product Diversification 121

4.5.2 Principle Component Analysis (PCA) for Product Development 122
4.5.3 Principle Component Analysis (PCA) for Market Development 124
4.5.4 Principal Component Analysis (PCA) for Market Penetration 126
4.5.5 Principle Component Analysis (PCA) for Organizational Resources 128
4.5.6 Principal Component Analysis (PCA) for Firms Performance 130
4.6 Inferential Analysis 132
4.6.1 Diagnostic Tests for Regression Assumptions 132
4.6.1.1 Multicollinearity Test 133
4.6.1.2 Normality Test 133
iv
4.6.1.3 Linearity Test 135
4.6.1.4 Autocorrelation Test 136
4.6.1.5 Homoscedasticity Test 136
4.7 Regression Analysis 139
4.7.1 Product Diversification Strategy and Firm Performance 140
4.7.2 Product Development Strategy and Firm Performance. 142

4.7.3 Market Development Strategy and Firm Performance146
4.7.4 Market Penetration Strategy and Firm Performance 148
4.7.5 Business Growth Strategies and Firm Performance 152
4.8 Business Growth Strategies, Organizational Resources and Firm Performance154
4.8.1 Organizational Resources, Product Diversification and Firm Performance 155
4.8.2Organizational Resources, Product Development and Firm Performance 158
4.8.3 Organizational Resources, Market Development and Firm Performance 160
4.8.4 Organizational Resources, Market Penetration, and Firm Performance 162
4.8.5 Organizational Resources, Business Growth Strategies and Performance of
Selected Tea Factories 164
4.8.6 Proposed Model of Business Growth Strategies and Firm Performance as
Moderated by Organizational Resources 170
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS...173
5.1 Summary of Findings 173

5.1.1 Product Diversification Strategy and Performance of Selected Tea Factories
173
5.1.2 Product Development Strategy and Performance of Selected Tea Factories 174
5.1.3 Market Development Strategy and Performance of Selected Tea Factories 174
5.1.4 Market Penetration Strategy on Performance of Selected Tea Factories 175
5.1.5 Moderating Role of Organizational Resources on the Relationship between
Business Growth Strategies and Performance of Selected Tea Factories 176
5.2 Conclusion 177
5.3 Recommendations of the Study 179
v
5.3.1 Recommendations for Policy and Practice 179
5.3.2Implications on Theory 180
5.3.3 Suggestions for Further Studies 181
REFERENCES..............................................................................................................182
APPENDICES................................................................................................................210
vi
LIST OF TABLES
Table 2. 1:Summary Of Research Gaps............................................................................65

Table 3. 1 Showing Target Population..............................................................................77
Table 3.2sample Size.........................................................................................................80
Table 3.3 Reliability Results..............................................................................................82
Table 4.1: Response Rate..................................................................................................88
Table 4.2: Demographic Characteristics Of The Respondents..........................................91
Table 4.3: Region Of Factory............................................................................................93
Table 4.4: Business Growth Strategies..............................................................................93
Table 4.5: Descriptive Statistics Results Of Product Diversification Strategy ................95
Table 4.6: Descriptive Statistics Results On Product Development Strategy.................100
Table 4.7: Descriptive Statistics Results On Market Development Strategy..................104
Table 4.8: Descriptive Statistics Results On Market Penetration Strategy ....................109
Table 4.9: Descriptive Statistics Results On Organizational Resources ........................113
Table 4.10: Descriptive Statistics Results On Firms Performance..................................117
Table 4.12: Factor Analysis For Product Development..................................................123
Table 4.13: Factor Analysis For Market Development...................................................125
Table 4.14: Factor Analysis For Market Penetration.......................................................127
Table 4.15: Factor Analysis For Organizational Resources............................................129
Table 4.16: Factor Analysis For Firms Performance.......................................................131
Table 4.17: Multicollinearity Test...................................................................................133
Table 4.18: Normality Test Table (Skewness And Kurtosis Results).............................134
Table 4.19: Linearity Test Results...................................................................................135
Table 4.20: Testing Autocorrelation................................................................................136
Table 4.21: Results On Correlational Analysis...............................................................138
Table 4.22a: Effect Of Product Diversification Strategies On Performance...................141
Table 4.22b Anovaa..........................................................................................................141
Table 4.22c Coefficientsa.................................................................................................142
vii
Table 4.23a Model Summary..........................................................................................143
Table 4.23b Anovaa..........................................................................................................144
Table 4.24b Anovaa..........................................................................................................147
Table 4.25b Anovaa..........................................................................................................150
Table 4.26b Anovaa..........................................................................................................152
Table 4.27b Anovaa.........................................................................................................157
Table 4.28b Anovaa..........................................................................................................159
Table 4.29banova.............................................................................................................161
Table 4.30b Anovaa..........................................................................................................163
Table 4.31b Anovaa..........................................................................................................166
Table 4.31c Coefficient...................................................................................................167
Table 4.32: Summary Of Hypotheses Testing Results....................................................169
viii
LIST OF FIGURES
Figure 2.1: A Conceptual Framework...............................................................................72

Figure 4.1: Histogram......................................................................................................134
Figure 4.2: Homoscedasticity Plot Chart.........................................................................137
Figure 4.3: The Relationship Of Organizational Resources On Business Growth
Strategies To Firm Performance Using Ansoffs’ Matrix.....................171
ix
LIST OF APPENDICES
Appendix I: Letter of Introduction..................................................................................210

Appendix II: Research Questionnaire..............................................................................211
Appendix III: Research Permit........................................................................................218
Appendix IV: List of KTDA Managed Factories in Kenya............................................219
Appendix V: KTDA Bonus Trend Report 2015-2020 (Ksh)..........................................222
x
LIST OF ABBREVIATIONS AND ACRONYMS
EPZA: Export Processing Zone Authority

GDP: Gross Domestic Product
KTDA: Kenya Tea Development Authority
BSC: Balanced Score Card
FMCG: Fast Moving Consumer Goods
RBV: Resource Based View
TBK: Tea Board of Kenya
TRFK: Tea Research Foundation of Kenya
WTO: World Trade Organization
FAO: Food and Agriculture Organization
CFA: Confirmatory Factor Analysis
KMO: Kaiser-Meyer-Olkin
ML: Maximum Likelihood
ANOVA: Analysis of Variance
PD: Product Diversification
PBGM: Proposed Business Growth Model
SMEs: Small Medium Enterprises
ROA: Return on Assets
RO: Return on Equity
OM: Operations Management
GSE: Ghanaian Stock Exchange
JSE: Johannesburg Security Exchange
SD: Standard Deviation
MBV: Market Based View
NACOSTI: National Commission for Science Technology and Innovation
xi
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The effectiveness and performance of firms is influenced by a number of aspects,
specifically processes, structure of organizations, and external environments (Hrebiniak &
Joyce, 2015). It has been stressed that an environment with competition is important in
planning and implementing business strategies. Researchers indicate that tact is an organic
process that keeps changing and bears marks of unpredictability (Hamel & Prahalad, 2012).
Thompson and Strickland (2018) found out that the structure of an organization impacts the
choice of business strategies. The growing of organizations is determined by three main
factors-strategic directions taken by the manager, available resources, and the nature of a
firm. Storey (2014) says that development of a firm is strong-minded by the environment of
the organization resources of the business owner and the decisions made. According to
Kuratko et al, (2011), the business owner as a result, has to use both tactical and strategic
abilities to increase firmperformance. It has been stated that entrepreneurs must plan on how
to deal with uncertain realities that might distress how their business performs (Carland et
al, 2014). It is, consequently, essential for growing firms to find out the important set of
connections with the environment (Murray, 2011).
Mintzberg (2018) opines that entrepreneurial activities of all sizes do some type of strategic
management. Business enterprises use strategy to compete successfully. Strategic verdict
making is at the heart of the organization environment co-alignment procedure so greatly
1
emphasized in both the business policy and business theory. The most extensively pursued
growth strategies in manufacturing firms are those intended to achieve growth in production,
distribution, sales and profits. Continuing growth means growing sales and a chance to take
advantage of the practice curve to reduce the cost of product sold (Wheelen & Hunger,
2016).
Organizations have in the modern years been strained to fit down their procedures and
appraise their communal plan in a rejoinder to unbendable struggle ensuing from changes in
business surroundings and overture of competing policies (Ng’ang’a, Namusonge, & Sakwa,
2016). Organizations are subject to the changes in the outside business environment and
therefore tailor their business into these manufacturing firms that supplement their
contributions. Demands made by influential shareholders may sometimes compel an
organization to diversify.
It has been asserted that business institutions spread to generate upbeat spill overs because
the cost of assets in business is improved due to investing in an additional business firm
(Foss and Christensen, 2014).Different business institutions may embrace unrelated
diversification approaches with an intention to improve their performance. Diversifying
products includes packaging, resizing existing products, adding new products that are being
manufactured or marketed, and branding. Diversifying products offers a business
entityspiritedbenefits according to Njuguna, Kwasira, and Orwa (2018). Diversifying
products as a business plan is a compulsory approach for business entities to exploit in
2
making their markets wide. It has further been indicated that diversifying products improves
enterprise profitability (Kariuki, 2016).
Business growth strategies are aimed at attracting larger market share. The main strategies
of growth are development of products, diversification, market development and
penetration of the market (Boone, 2017). A number of strategies have been implemented
within these; such as promotion, technology, product innovation, pricing and market
expansion strategies. The huge number and large range of growth strategy decisions
requisite to strategize and convey a service are made from the strategic level to the
operational levels.
The effect of innovation in production enables organizationsto grow and
retaincompetitive placenot contestable in strategies of product innovation. Products need
to be given new structures and completely rehabilitated for retaining strong market
incidences. According to Fraccastoro, Burton, & Biswas, 2014, pricing strategies can
achievejointshort-range and long-range objectives. Short-range ends include: reducing
inventory, creating interest in a product and awareness, increasing how savings and value
are perceived, and mounting store traffic and sales. Marketing executives design
approaches to make sure that their products are availed in required amounts and at the
appropriate place and time. Decisions are made on how to distribute,involve,
warehousing, transportation modes and selecting of market channels, inventory control,
and order processing. Promotion strategies include the diverse ways that a firm uses to
persuade and inform targeted clients to purchase what they have produced (Foss,2014).
3
Corporate directional strategies that are widely pursued are those planned to achieve
growth in sales, assets and profits margins. Ongoing growth enhances growth in sales and
leads to reduction in the price of products sold (Wheelen & Hunger, 2016). The
intentions behind the steady growth of bank financial services are to increase the wealth
of the stakeholders (value per share of stock) and management expects to expand
employee benefits and higher salaries (Rose & Hudgins, 2018).
Firms use growth strategies to outline the elementary ladder that they plan to follow in
order to achieve their goals. The literature indicates that organizations can have a strategy
or many strategies, and that these strategies exist at corporate level, business level and
functional level (Earl and Khan, 2014). Strategy helps to match external environment
with the firm’s internal capabilities. Strategy crafting is therefore largely predisposed by
top manager’s perception of their organization’s environment. Organizations, even those
within the same industry operate in unique environment (Mintzbergetal. 2018).
Thompson and Strickland (2017) observes that a firm’s plan helps management to create
successful organizational performance and that strategy is a management’s game plan for
the business. They further observe that without a strategy, there is no-cohesive action
plan; no conventional course to follow and no roadmap to manage produce the projected
results.
Marinelli (2015) points out that most firms believe business growth strategies as part of
the traditions of value making. Business growth plans permit organizations to venture
4
into different business lines, operate in several economic markets and widen their
markets and products. Foss and Christensen (2014) agree that different organizations may
embrace diverse business growth plans with the aim of improving performance. Njuguna,
Kaswira, and Orwa (2018) asserts that key business growth strategies engaged by firms
particularly in the manufacturing sector can be advanced from the Ansoff Model which
includes strategies on diversifying products, strategies on developing products, strategies
on developing a market, and strategies on penetrating a market.
Developing a market is taking products and finding different markets which is achieved
via opening hitherto excluded segments of the market, new channels of marketing and
distributing products, and entry into fresh geographic markets. Additionally, it comprises
actions intended to realize competitive advantage and above average results by the way
ofclever and selection based on fact among alternatives leading to such advantage. In
addition, it provides an opportunity for exploiting organizational resources in order to
determine its set objectives and goals (Shane, 2000).
Researchers claim that the reason for developing of a firm's marketing plan is to defend,
build, create, and preserve its competitive benefit (Owomoyela, et al, 2013). Some of the
strategies that have been used in market development include Blue Ocean strategy and
Base of Pyramid strategies. According to Kim and Mauborgne (2005) first described
Blue Ocean strategy as a way of taping into uncontested market and avoiding
unnecessary competition within the industry, it involves creating demand in a new market
instead of competing for the existing demand in the market, what they referred as Red
5
Ocean where companies viciously fight each other for the same market. According to
Kim and Mauborgne (2005) Base of the Pyramid strategy involves expanding into market
of low income earning economic class. This strategy involves creation consumption
capacity for the poor within the economy.
To market is also not immobile but significantly vibrant. The cause for this is that the
market is continually shifting and changing; there are, at all times, emerging issues for
firms to give attention to. Accordingly, those who market should of necessity improvise
novel and diverse solutions to confront problems (Varadarajan, 2010). The solutions are
grounded on strategic processes that are official or unofficial, intuitive or planned in a
manner that firm managers go about looking for and implementing the best approach to
contend in their trade setting (Weber & Polo, 2010). Firms, in different settings, majorly
plan, develop, and implement their own strategies of marketing founded on the business
environment in which they function. But strategies of marketing generally fall under the
four Ps: Product, Packaging, Promotion, and Placing (Ebitu, 2014).
Market development involves growing what is sold by selling existing products into fresh
markets previously looked at as not profitable for the firm; this approach enables firms
get an increased number of consumers for products and services they currently put on
offer. Such an approachcould beattained by entry into new geographical markets,
generating fresh product designs like packaging, to using differentdistribution channels or
creation of new market segments by offering different prices (Young et al., 1989).
According to Ebitu (2016) marketing strategy is an approach in which you provide a
6
quality product that meets client wishes, offering realistic prices and involving oneself in
widely distributing and supporting it with effective strategies of promotion. Marketing
strategies are an important precondition of industry's ability to make strong its share of
the market and minimizing the influence of competitive market environment.
An effective market strategy needs to tell an industry the position they wish to take in the
long-term; and this is the reason it is frequently stated that a market plan is a process
without end. Market plans are perceived as the marketing rationality through which firms
hope to realize their marketing goals. In a firm, there is no event in which the marketer
should not make correctchoice son the four building blocks of the marketing mix: i.e.
promotion, distribution, place, price, and product, by use of market plans. These major
components need to be harmonized and moved into combined working plans if the
products have toperform better when beingmarketed. Itencompassesparticularapproaches
for selling, budgets, selling mix, and targeted markets. The modern world market has
made organizations to look at internationalizing their activities and events as a method of
competitiveness in the market. Marketing strategies have become
anappropriateinstrumentgloballyindustriesto stay alive in a market environment that is
competitive and become robust. The goals of a firm need to be looked at, specifically on
satisfying customers growing sale volumes at profit making (Mehdi, Sied& Jamshid,
2013).
Suitable and an effectively implemented marketing strategy is needed to guide
productively the distributing ofresources available of an organization’s approaches of
7
marketingandcapabilities in pursuing desired objectives (Frances & Stephen, 2006; Chris,
2006; Michael, 2002; &Michael, 1997). Today, clients aremoreinformed and the
worldbusiness context is a very composite one. For a business to satisfy the varying
needs of customer’s businesses need toacknowledgewhat they need and this is where
marketplanning starts. In order for a business to stay alive in a modern competitive
market, it must plan to meet customer needs well and effectively viamarket approaches.
Market penetration strategy includes enticing new customer for the product. It also
focuses on cumulative sales of an existing product or service in the market. This is
achieved through conducting intensive distribution, competitive pricing and promotion.
Market Penetration can be a means of growing and enlargement by the firm and it
involves introducing new products into the market sector (Moore, 2014). Schroder (2015)
maintains that penetrating a market involvingmaking more sales of current products in
hitherto existing markets presents the smallest risk. Such a plan, according to Gardetti
(2015) is aimed at achieving market supremacy by way of gaining a rival’s clients,
enticingthose who do not use, and to haveexisting customers topurchase more
(Gardetti,2015).
It also includes introduction of new ideas into a firm’s current market. This approachwill
apply to an organizationthat offers fresh products to surviving market. Market
development involves growing sales by selling an existing product into a new market that
was initially considered non-profitable for the firm, a strategy that enables organizations
to get more clients/consumers for the products offered currently. This approach can be
achieved by creating a new market segment by offering different prices, using new
8
distribution channels, entering into new geographical markets, or creating new product
dimensions like packaging (Young et al, 2018). Some of the strategies that have been
used in market development include Blue Ocean strategy and Base of Pyramid strategies.
With regard to developing products, strategic firms vary what they produce for the
current market. For example, a firm might try to change packaging novel instructions of
the same products belonging to the current market. Developing of goods is perceived as
one of the ways of strategic progress, since the objective of business owners is presenting
products that are novel into existing markets. Such a planmay require development of
diverse abilities and needs developing of improved products to be availed to existing
selling points at all times (Jain, 2017). Taking a plan like this may need looking at the
following: market inquiries, development and innovation on design of products and their
productionmethodsand comprehensive attention on client needs and wishes, and to follow
varying in the same, via endless market studies in line with client choices.
Diversification growth strategy involves selling new products to new markets. This type
of strategy requires a company to plan carefully avoid the risks of venturing in unknown
markets. A company using this strategy needs to conduct market research to regulate if
clients-in the innovative market-will like the fresh products (Smallboneetal, 2015). The
strategy of diversification proposed by Igor (1957) involves developing very fresh
products and vending them in new markets that the organization was not working in,
while market expansion entails selling the prevailing product into a new market. On
diversification, a business tries to increase the scope of her sales through entering
9
freshmarkets with new products which may be related to older products or which do not
resemble older ones. An approach like this is looked at as part of the most risky strategies
in comparison with the three previous approaches, since firms wish to enter new markets
with new products with no familiarity and complete information of the new products and
markets. Accordingly, firms need to have clear ideas founded on particular research
studies with attention on novel products and markets, and to do an honest assessment of
risks and dangers to appropriately balance profits and risks. Since it is considered risky, it
is gratifying, which agrees with the principle that claims that if the risk is greater, the
income expected will be greater too (Murray, 2016).
1.1.1 Organizational Resources
Resource Based View of the firm indicates that resources that are measured and
maintained by the firm enable the firm to attain superior performance (Barney, 2017).
According to Wang and Mahoney (2015), training and developing human resource makes
them to be more specific to the firm’s activities and therefore not of much use to the
competitor thus making it incomparable. Rivals cannot easily duplicate human skills and
experience acquired by a firm and this enhances a firm’s profitability (Lazear, 2016)
Baker and Sinkula (2016) noted that technology is key in ensuring a firm’s higher
performance than competitors. Firms that embrace technological advancement in the
production of products attain higher performance in revenue generation (Paladino, 2016;
Merlo &Auh, 2016, &Tajeddini, 2013). Firms that employ technology have superior
performance because it enables them to produce unique products through product
10
innovation, research and development, which are hard to copy (Altindag, Zehir &Acar,
2013).
David (2009) asserts that organizations have at least four types of resources financial,
physical, human, and technological which assist them achieve desired objectives. The
human resource is critical during the design and administration of strategic plans
(Thompson, et al.2016). It is used to gain competitive advantage together with adequate
allocation of physical resources to facilitate successful implementation.
A firm’s resources are technology, people, and materials (Mankiw,1998). The ever-
extending extent of globalization, constantly increasing productivity, the rising intricacy
of information, the extended environment sensitivity, the swelling speed of innovation in
technology, the rising worker hopesand competing for closer collaboration all increase
the need for different organizational routines and how peopledo their work (Cloke &
Goldsmith, 2002).
Firms, therefore as a matter of urgency need immediate responsiveness, flexibility,
agility, and a greater sensitivity level to the emerging of future trends and directions. A
firm’s assets and properties might be classified into two classes. Firstly, transformed
resources including materials available plus information referring to the state of changes
to be instituted because of change of the process. Secondly, converting resources like
physical infrastructure, equipment, and employees, which help in transformation, but
their condition remains intact as a result of the conversion process (Slack,
11
Chambers&Johnson, 2004). According to Naylor (1996), Operations Management (OM)
is concerned with operations, creation, as well as managing of systems of transformation
that allow the input of different resources which ultimately give results such as products
and services to meet customer wishes, the core of firm performance. Services and goods
are produced using resources(Moyo,2013).
Carlson (2004) indicates, from a resource-based view (RBV), that organizational strategy
theories acquire competitive benefits through controlling resources internally. A firm
manages internal factors and their effect on management by way of keeping up with
available resources and making sure that the resources are made use of correctly and
responsibly. To the extent that management plans, organizes, leads, and controls
resources in an effective manner, a firm should be able to survive any factor that might
affect it. A key concern founded on the resource-based view, according to Sermon, et al
(2007) is that interest should be focused on important differences in resource availability
and their strategic reorganization in an organization. Resources are a basic component of
organizational capacity.
The Resource Based View of organizations holds that not all of an organization’s
resources produce superior performance but only specific kinds managed and owned by a
firm (Barney, 2007). Wang and Mahoney (2009) found out that to learn through training
and development practices in an organization makes human resources to be more specific
and potentially not of much use to a rival and in this way makes it inimitable which leads
to higher market shareholding than competitors. Human resources referred to here is the
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one in the form of ability, experience, knowledge, and skills that workers of a firm
possess. Tactical skills and knowledge acquired by a firm cannot be duplicated easily by
competitors, because they are embedded in human experiences and abilities of a firm
which lead to profitability (Lazear, 2009). It has been noted that for some time,
technology was seen as the origin of startingnew activities through risk-taking and strong
pro-activity resulting in an organization’s improved performance than business rivals
(Baker &Sinkula, 2009). Organizations which focus on technological progressionvia
research, innovation, and development generate performance that is above average
(Tajeddini, 2010; Merlo & Auh, 2009; &Paladino, 2009).
Organizations which use technology perform better since they trust in acquiring of novel
technologies for innovation of products, development and research which enable firms to
manufactureexceptional goods that are difficult to duplicate (Altindag, Zehir,& Acar,
2010). Wernerfelt (2011) concludes that resources including human capital and
technology are foundationalto generating greater performance.
Resources with value, rareness, inimitability and non-substitutability remain a relevant
and valid conceptual foundation for competitive advantage for organizations. The
organizational resources, capabilities and processes should be configured in a way that
ensures average utility so as to differentiate the organization from peers and confer
external competitiveness to the organization to secure sustainable competitive advantage
(Mahasi, 2016).
13
1.1.2 Firm Performance
The performance of an organization is the degree to which an investment gives profits
and is directly associated with an entity’s value creation (Murimiri, 2015). Ordinarily,
organizations strive for superior results, competitive advantage, and influence.
Performance can be defined as meeting a goal (Boru, 2015). It is the success of a given
task restrained against present known standards. Its measure is used to evaluate the
relative success of a firm. There have been various methods of measuring the
performance of a firm. There are those that measure profitability, others liquidity, asset
utilization and debt utilization. In the setting of an institution, Rosenberg (2018) gives
five bases of evaluating an organization. This is breadth of outreach, depth of outreach,
ability to meet obligations, financial sustainability and efficiency. It is very important to
keep evaluating performance to make sure that the institution remains viable and achieves
both short term and long-term goals. Firms are in business to succeed. Letting (2012)
noted that the efficiency and effectiveness of an organization influences its performance.
The extent of a firm’s success is measured by its profit margins among other traditional
performance measures.
Lusthaus, et al. (2014) asserted that efficiency, effectiveness, relevance and financial
viability are key in assessing performance of processing firms. Moseng and Bedrup
(2013) indicated that a company’s performance can be evaluated by efficiency,
effectiveness and adaptability. Sink and Tuttle (2014) provided a model for measuring
performance of processing firms. The model consists of product quality, levels of
productivity, efficiency and effectiveness, quality of work life, profitability and
14
innovation. Mjos (2012) noted that increase in overall revenue, creation of new products;
improvement of customer service, reduction in organizational costs and improvement of
work productivity are some of the objective measures to performance assessment.
1.1.3 Tea industry in Kenya
The agricultural sector is an important component in Kenya’s growth economic and
social development. Currently, tea contributes immensely to the country’s economy
(Ministry of Agriculture Report, 2017). In 2018, Kenya produced 399 metric tonnes of
tea, thus earning the country approximately US $ 970 million in forex earnings,
representing about 0.26 ofoverallincome from exports, and approximately0.04 of the
Gross Domestic Product (Tea Board of Kenya, 2018). The tea industry is domiciled in the
Agriculture Ministry. The industry is structured through the tea manufacturing factories,
Tea Board of Kenya, Tea Research Foundation of Kenya, the trading, the producers and
the blending and staffing formations.
Kenya Tea Development Authority has categorized tea farming in Kenya into seven
regions. The zones include; Region 1that covers the Aberdare Ranges, Region 2 that
covers Aberdare Ranges, Region 3 that covers Mt Kenya, Region 4 that covers Mt.
Kenya and Nyambene Hills, Region 5 that covers Kericho Highlands, Region 6 that
covers Kisii Highlands and Region 7 that covers Nandi and Western Highlands. Kenya
Tea Development Authority is a government corporation with the duty of enhancing the
development and fostering expansion of the tea sector. KTDA has grown to 69 factories
spread across forty-seven counties starting with a single factory that served 19,000 tea
15
growers on only 4,700 hectares of tea. The factories comprise of 380,000 growers who
have cultivated 92,800 hectares of tea (Wachira, 2013).
1.2 Statement of the Problem
Effectively implementing of businessgrowth of business in firms leads to higher
performance (Hrebiniak,& Joyce 2016; Kagwiria, 2014). Plans on growth of business
bearanimportant and positiveinfluence on the performance afirm (Ojwaka & Deya, 2018).
Business growth approachesoffer plans of action in order to increase an organization’s
output, profits, efficiency, and sales (Matthews &Scot, 2015). Plans on growth of a business
givedreams of where a business intends to be and how it expects to realize its goals and
objectives. Pearlson and Saunders (2016) explains that it is the form by way of which a firm
makes known its objectives and works with an aim ofrealizingthem.
The tea industry in Kenya is a significant agent in the country’s advancement of agriculture.
Nevertheless, factories thatare managed by the Kenya Tea Development Authorityperform
belowpar especiallyin the paying of bonuses to farmers. In the year 2017/ 2018, the bonus
earnings dropped by 26.7 billion. This is a ten percent drop from previous earnings (KTDA,
2019). Research(Rose & Hudgins, 2018; Kariuki, 2016; Njuguna, Kwasira, & Orwa, 2018;
Ng’ang’a, Namusonge, & Sakawa 2016) found out manufacturers of teain Kenya have
experienced a downward trajectory bonus payments. The bonuses paid by the factories have
been dwindling year after year (Ombaka et al, 2015; Ojwaka & Deya, 2018; Wainaina,
Mbeche, Njihia & Otulia 2017).
16
Past research shows a positive connection between strategies on growth of businesses and
performance of firms (Ojwaka & Deya, 2018; Kagwiria, 2014; Pearlson & Saunders, 2016;
Hrebiniak& Joyce 2016; & Matthews & Scot 2015).Research related to this (Muriuki,
2016; Gesimba, 2015; &Maina, Mugambi,&Waiganjo, 2018) agrees that business growth
strategies have a positive association to performance of organizations. But no study has
considered the moderating role of organizational resources and performance of tea
factories. Muriuki (2016) studied categories of business growth plans but he did not give
attention to Ansoff’s Matrix. Thisstudy, consequently, assessed the association between
business growth strategies and how selected tea factories in Kenyaperform. The
moderating role of organizational resources.
1.3 Objectives of the Study
Objectives of this research were;
1.3.1 General Objective

The study assessed the relatioship between business growth strategies and performance of
selected tea factories in Kenya. The moderating role of organizational resources
1.3.2 Specific Objectives

The research was based on the following particular objectives;
(i)To determine the role of product diversification strategy on performance of selected
tea factories in Kenya.
(ii) To establish the role of product development strategy on performance of tea factories
in Kenya.
(iii) To find out the role of market development strategy on performance of selected tea
factories in Kenya.
17
(iv) To establish the role of market penetration strategy on performance of selected tea
factories in Kenya.
(V) To establish the moderating role of organizational resources on the relationship
between business growth strategies and performance of selected tea factories in
Kenya.
V(a) To establish the moderating role of organizational resources on the relationship
between product diversification strategies and performance of selected tea
factories in Kenya.
V(b) To determine the moderating role of organizational resources on the relationship
between product development strategies on performance of selected tea factories
in Kenya.
V(c) To examine the moderating role of organizational resources on the relationship
between market development strategies and performance of selected tea factories
in Kenya.
V(d) To examine the moderating role of organizational resources on the association
between market penetration strategies and performance of selected tea factories in
Kenya.
1.4 Research Hypotheses
H01: Strategies of product diversification have no statistically significant role on
performance of selected tea factories in Kenya.
H02: Strategies of product development have no statistically significant role on
18
H03: Strategies of market development have no statistically significant role on the
H04: Strategies of market penetration have no statistically significant role on the
H05a Organizational resources have no statistically significant moderating role in the
association between business growth strategies and product diversification and
performance of selected tea factories in Kenya
H05b Organizational resources have no statistically significant moderating role in the
association between product developmentstrategies and performance of selected
tea factories in Kenya
H05c Organizational resources have no statistically significant moderating role in the
association between market development strategies and performance of selected
H05d Organizational resources have no statistically significant moderating role in the
association between market penetration strategy and performance of selected tea
factories in Kenya
1.5 Significance of the Study
This investigation is important to stakeholders in the tea industry in Kenya. It will provide
information on adding value and how this might be looked at in the Kenyan context. Those
who make policies, especially Ministry of Agriculture and Tea Board of Kenya might use
results obtained in this research to address core issues surrounding value addition. The
government, through the results of this research can appreciate the significance of
19
partnerships in the tea sector in promoting export value and product demand, which also
help the country expand its processing capabilities. Further with good performance the
government is guaranteed of substantial tax revenues from these tea factories. Tea exporters
who have predominantly over the years relied on exports of bulk teas can be guided
accordingly by the study to make a business shift to value added tea exports which can
increase their tea income accordingly. This will make a lot of economic sense to the
seasoned and new exporters among other interdependent parties.
The management of the tea sub-sector can also get value from the answers of the study as it
comes handy in recognizing gaps which need to be filled in order to control strategies that
reduce value addition. The results provide a blue print for the future researchers by acting as
a reference base for the researchers and other scholars who may be interested to study on
matters business growth strategies and their association with performance not only in the tea
sectors but also in other industries within the economy
1.6 Scope and Justification of the Study
Kericho and Kisii Highlands as tea growing zones in Kenya share a number of identical
features including soils, rainfall patterns, altitude, and other climatic similarities, which
make the two regions different from other tea-growing regions in Kenya. Secondly,
thousands of families in the two regions depend on tea as a main source of income;
thousands work on tea farms as tea pickers or as other staffs and others own tea as a main
source of income as small-scale farmers. This study will bear significant economic
implications on these individuals as tea pickers or as small-scale farmers. The study assessed
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the performance of the factories for the last ten years (2008-2018). This range in period is
considered appropriate because it accommodated the changing performance patterns and
strategies in the firms. Structured questionnaires were used to obtain data for this study.
1.7 Limitations of the Study
Those who respondedin the research werehesitant to fill out the questionnaires given the
radical management reforms at that time. The researcher addressed this limitation by
obtaining a letter of introduction from the University, NACOSTI and approval from KTDA
regional management for data collection and gave respondents time to fill the questionnaires
with assurance that the data were purely for research purposes. Some of the respondents
were not available due to their busy schedules and nature of their work. The researcher
dropped the questionnaires to the factory unit managers’ office and picked them after two
weeks as agreed by the respondents.
1.8 Assumptions of the Study
There was an assumptionthat all those who responded did so to all survey questions fairly
and according to their capabilities. The investigation assumed that business growth
strategies significantly influenced organizational performance among the tea factories in the
areas of study. The study assumed that the firms practice business growth strategies aimed at
improving the demand for their products. It was further assumed that the selected business
growth strategies, which included: product diversification, market development, market
penetration and market penetration were the dominant growth strategies used by most of the
tea factories in Kenya.
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1.9 Operational Definition of Key Terms
Growth strategy It is an on-going process that controls and evaluates the business in
the industry in which a firm is involved. It assesses its rivals and sets
goals and approaches to meet existing and potential rivals.
It is a plan to enter into a new product or product lines,new markets,
Diversification strategy or new services, involving substantially diversetechnology,
knowledge, and skills.
Market development Identification and development of new market segments for current
Strategy products. A plan on market development targets non-buying clients
in currently targeted segments.
Market penetration The successful selling of a product or service in a specific market. It
Strategy is measured by the amount of sales volume of an existing good or
service compared to the total target market for that product or service
Organizational performance This is the quantity and quality of output of a firm,
profitability,market share and growth rate.
Organizational resources These are factors of production that an organization has at its
disposal to aid in goals achiement. They include physical, financial,
human, and information resources.
Product Development This is the whole process of coming up with a completely new
Strategy product or service to meet market demand
Product diversification The development, marketing and delivery of one or more products
Strategy that expand an institution’s existing product offering
Tea processing firms KTDA owned factories involved in production of tea leafs in Kenya
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CHAPTER TWO
LITERATURE REVIEW
2.1.1Ansoff Matrix/ Model

The Ansoff Matrix, proposed by Ansoff (1957), is a business plan that holds the view that
for a firm to advance its presentation, it is vital to realize market and products advancement
by the way of four approaches which are contingent on whether or not an organization or a
product was in the past or in the present in the market. In his view, two scopes were
measured in which one measurement was on the basis of a product beingcurrent, and the
other measurement looked at markets as existing or new. The four core approaches of
growth are; product ordinarily comprises selling more of current products in existing
markets poses the bottommost risk (Schroder, 2015). The approach aims at dominating a
market through gaining a rival’s clients, enticing non-users and having present
diversification, market development, product development, and market penetration. These
strategies of growth present diverse extents of risks and need for investment. Penetrating a
market which clients to buy more products (Gardetti, 2015).
With regard to developing of products, strategic firms try to produce a variety ofproducts
forcomparableexistingmarkets, for example, a firm might try to changenew recipes of same
products or package sizes of the present market. Developing goods is looked at asa formof
strategic growth, since the objective of any business is to availnew products in existing
markets at present. An approach similar to this may need development of diverse
capabilitiesand might require developing of improved products, which might be offered to
existing markets (Jain, 2017). To adopt such a planmayneedone to look at the following:
23
market inquiries, development and innovation in designing products and their
productionmethods, andin depth attention on customers’ needs and desires, and to follow
changing in the same, through constant market studies in line with what clients prefer.
On business diversity, the matrix indicates that a firmmakes an attempt to increase the size
of her sales through entering fresh markets with fresh products which maybe related to older
products or might have no resemblance with older products. A plan like this one is looked at
as one of the riskiest compared to other three approaches identified, since organizations
want to enter fresh marketplaces with new products and no experience and complete
familiarity of the new products and markets. As a result, firms need to have clear ideas
founded on specific research focusing on new products and markets, and to carry out honest
evaluation of in-built risks and dangers for appropriate equilibrium between profits and
risks. Since it is riskiest, it mightbe gratifying, in line with the principle that states that the
bigger the extent of risk, the higher the anticipated proceeds (Murray, 2016).
Jain et al (2017) indicate that Ansoff’s model has proven its efficiency in strategic
operations in identifying opportunities of business growth via product matrix/market and it
is still extensively used by marketers, and is considered among the best tools of strategic
analysis meant to find out marketing prospects. Each organization must be able to identify
present and future opportunities of marketing in the market founded on a company’s
available internal human/logistic/other resources. No organization/company can depend on
her present products and markets at all times. In this regard, organizations/companies have
to develop marketing strategies to make use of suitable marketing prospects to a company's
24
technical, physical, and human, resources (Azzam et al, 2011). McCarthy (2010) indicates
that Ansoff’s model includes four approaches meant to deal with market opportunities and to
utilize the same opportunities based on product/market matrices.
Researchers (Prahalad, 2010; George, 2017) observe that Ansoff’s model can be utilized as a
strategic gap-analyzing model. It is a method made simple but also a technical one that
assists organizations in their strategy clarification, which is relevant to current market
towards finishing their planned targets. The planned targets are the difference between the
location an organization wants to be in the days to come and the status quo.
Organizations/companies keep seeking to reduce the gaps by adopting strategies that lead to
realizing desired goals to close gaps. It is in this context that Thomas (2013) observes that
gaps are not a negative case, but are positive because they represent organizational goals and
aspirations. He adds that some organizations/companies put gaps in their varied activities in
order to encourage their workforce in order to achieve without exaggeration so that they do
not adversely affect workers’ capabilities and mores.
Ward (2017) criticized this matrix by indicating that it does not take into account all the
essentials that can affect a market, which if considered will significantly and positively
affect growth of the firm. If it is used on its own, Ansoff’s matrix might mislead. It does not
factor the activities of business competitors and the capability ofthe rivals to counter moves
into other businesses. In addition, it does not factor the risks and problems of changes to the
business-as-usual activities. An organization thathopes to enter new markets and create new
products, or both, must find out if they have agreeable stakeholders, flexible structures, and
25
transferable skills. He, in addition, criticizes this model on the logic of newness. Logical
issues are with regard to interpretation of newness. If there is an assumption that a newer
product is actually new to the firm, in a majority ofcases, new products might concurrently
take the firm into a new, unfamiliar market. In such cases, one of Ansoff’s quadrants,
diversifying, is redundant. The alternative is, if a fresh product fails to take the firm to new
markets, the grouping of new products into new markets might not always equal to
diversification, in the sense of entering entirely unknown business models.
This theory is relevant and forms the basis of the current study. The theory classified two
aspects; one aspect has a basis on the product being either fresh or present and the other
aspect looks at market as fresh or present. The study objectives were developed from the
two dimensions, which gave rise to the four main strategies of growth, which comprise
product development, product diversification, market penetration, and market development.
2.1.2 Market-Based Theory

The theory argues that organizations diversify so that competitiveness in corporate strategy
is enhanced. If the strategy is enhanced, the organization’s value will go up. This will help in
making a choice on the market combination for products, where the firm employs her plan.
The approach helps to design a structure and a plan of a firm with a basis on market
assessment of the industry (Breen & Bill, 2014).
Competitive strategies are concerned with instituting and defending strategic positions in the
market. These require deep understanding of; its chosen position in the market in terms of
ability to exploit natural economies of scale and scope; its approach to differentiating itself
26
in the market from its competitors; it’s essential cost position; and economic drivers of the
firm/industry. Competitive advantage refers to the delivery of superior value to
customers/clients and economic value to firms/companies. In this way, competitive strategy
is generally understood as a positioning of the firm/company in her markets and thus it is in
many cases referred to as the Market Based View (MBV) or the market positioning view.
This is contrary to the Resource Based View (RBV), which focuses on the distinguishing
nature of resources and capabilities required to reinforce and give rise to competitive
advantages.
Gardetti (2015) criticises the market-based view theory because it does not place the MBV
at the focal point of making strategies, leaving the inner side of the firm to work as a black
box. Some, as a result, use the RBV to place the firm, rather than the market/industry, at the
core of making strategies. Makhija (2013) indicates that when conditions in the market are
in a state of flux, the firm/industry’s possessions are most likely to be the principal elements
of value of a firm. Nevertheless, a contrary view is that when markets are in a state of flux, it
helps to shape a coherent and a prioritised vision of change using a market-driven sense of
the essential drivers of supply and demand for an application to the global health care
market (Drouin et al., 2018). A main criticism of this line of thought is that it views things
from a single side, which only includes the structure of the firm/industry but leaves out
operations inside a firm. Further to that, access of resources can be different within one
firm/industry and not all resources are similar (Barney, 2012).
This theory is applicable to this study because it forms the basis of diversification strategy
variable. It explains the concept of diversification strategy, which indicates that a firm will
27
enjoy company strategic competiveness. If this is attained the industry/firm value will go up.
The theory underpins the first objective of this research, which isdiversifying
productsstrategy on performance of tea processing factories in Kenya.
2.1.3 Resource Based View Theory

It is a framework propounded by Penrose (1959) and advances the thinking that business
variety is driven by exploiting some organization-specific resources accrued in the past. To
perform in that organization, thus, is combining resources, so that there is advancement of
the theory of organization. This framework, further, clarifies that the development of an
organization might be limitedby existingprospects due to a set of an organization’s making
power source. This is the basis of Resource Based View witha basic objective that the type,
guide, amount, and features of business resources have first to be looked at in the selection
and establishment of plans leading to sustainable competition to realize competitive rewards.
The framework focuses on the economic rationale of organizations in existence (Conner,
2018). It helps researchers to understand the organizations as value creators unlike focusing
on value appropriative in traditional methods. The resource-based theory has several related
branches, which have dynamic capabilities and core competencies (Williamson, 2014).
There are several corner stones of competitive advantage, which have been identified by
Peteraf (2015) they include imperfect mobility of strategic resources, heterogeneous
competitors, future competition of assets and before the competition to overcome the
economic rents.
28
This theoretical position indicates that every firm is a combination of distinctive capabilities
and resources. Properties of an organization can be classified into three; administrative,
corporal, and human and they should be extraordinary, unparalleled, valuable, and non-
similar to enable an organization reach maintainable competitive benefit (Barney, 2015).
The progress of a corporation needs a solidity between developing the resources already in
existence in a company and development of those that might be new (Andreu, Claver&Quer,
2018). RBV leans towards firms ‘sustainable competitive advantage, because it emphasizes
utilization of its special resources. Companies own abilities that may be mutually used in
the firms’ business sub-units by moving them from one business set up to other business set
ups and in this way achieve synergy and as a result give a firm a benefit. Abilities of firms
are a compound package of knowledge and skills that have accumulated through time and
are put into use through procedures that permit corporations organize operations and utilize
their resources (Day &Nedungadi, 2014).
Corporations making use of strategies that are related in diversification can perform better
than those using strategies that are unconnected with regard to diversification (Hitt,
Hoskisson, & Kim, 2017). The degree of extraordinary performance of a firm in respect to
diversification depends on its capability to allocate resources. An unrelated diversified
corporation might not have resources suitable to all its business sub-units. Specifying
resources in a corporation’s assets might bring competitive power that is maintainable-to
their owners relative to possible competitors. Additionally, it may create a challenge more so
on a corporation’s capability to transfer the resources in question to newer
applications(Montgomery & Wernerfelt, 1988). This might imply that an organization, in
29
some cases, will not utilize sustainable resources in new undertakings, particularly in cases
the said new undertakings need properties not the same as what the corporation has.
Penrose’s (1959) idea of competitive benefit failed to see how corporations make
sustainable competitive advantage, but it instead assumed a framework for seeking for
profits. Secondly, researchers have regarded RBV as a theoretical position that is immobile
because it does not look at the basic issues of how resources needed for the future may be
made, or how today’s stocks of rare, significant, imperfectly inimitable, and improperly
maintainable resources could be restored in an unbalanced scenario (Priem & Butler, 2013).
Williamson (1985) thinks that in spite of resources being made using contracts because of
their asset specificity, it is in some cases not possible to contract in market dealings.
Chatterjee and Wernerfelt (2013) criticized RBV for its abstractions. In their view, it lacks
rationality operationally. Just like Porter’s Five Forces Model, RBV is incapable of
accounting for competitive benefit for corporations in extremely strong markets. The
distinctive path dependents on resources which could be leveraged across product lines that
may be related and give higher returns. For example, touchable resources are not flexible
since they cannot be made use of in similar corporations. Consequently, if a corporation has
extra physical capability, it is highly not likely that it can involve herself in related
expansion. Some physical properties are inflexible in their use; but those that are flexible
may be restricted in their use. Abilities like managerial knowledge bear the power to make
value when shared between and among companies (Miller, 2016).
30
The framework was applicable in this research as it holds the view that performance of the
firm is largely dependent on unique organizational resources (Barney, 2015). It links to the
moderator variable of this study, which are organizational resources. It interrogates the
various growth strategies that can be used by a firm by optimizing available organizational
resources in order to enhance corporate strategic competiveness.
2.1.4. Agency Theory

Jensen and Mackling (1976) proposed this theoretical framework. The framework claims
that the departure between the entrepreneur andthe firmmanager will, in most cases, be
overshadowed by the going up of prices due to nonexistence of arrangement of interest
between the entrepreneur and the managers. The agency charges will include observing
manager’s work, spending to create an organization’s structure to lower objectionable
managerial actions and spending coming from situations in which managers may decide
withno approval from shareholders. Onesignificantproposal of the agency problem is in
relation to an organization's investing plan (Jeen, 2016). Stakeholders, in most cases, prefer
high profile risks with high returns, but in contrast, management prefers low risk-low return
profiles since they personally havefears of job losses. Expansion can provide inspiration for
managers by way of investment and ownership. Hence, the emphasis is on optimizing
behavior and not on performance evaluation of financial outcomes (Jensen, 1986; Jensen &
Meckling, 1976).
This theory is one of the oldest theoretical frameworks in management and economics
research (Wasserman, 2016; Daily, Dalton & Rajagopalan, 2013). It describes problems that
arise in organizations due to separation of entrepreneurs and managers and puts emphasis on
31
reducing of this challenge. It makes a contribution to application of different governance
approaches to control agent action in businesses held in partnership.
Those who criticize this framework interrogate the impartiality of economic association
between the agent and the principal. The framework adopts a contract arrangement
between agents and principals for an unknown limited or unlimited future period. In
addition, it makes an assumption that contracting may possiblyremove the challenge of
agency, but practically, it faces interferences like rationality, fraud, costs of transactions,
and asymmetry in information (Jean, 2015). The concern of investors in the organization is
to have maximum profits, but their part is minor in the organization. The duties of directors
include monitoring managers but their other responsibilities are not clearly defined. The
framework looks at managers as opportunists and therefore ignore their skills.
This research is grounded in the idea that owners of tea, havegiven themanaging of their
own factories to KTDA, i.e. agents, who willprocess andmarket products of tea. KTDA
employsdifferent workers with differentabilities which if harnessed rightly will result in
optimal performance of the tea industry and will eventually benefit the tea farmer. The
framework relates to the variable ofa firm’s resources as the moderator and the variable of
firm performance of this research.
2.2 Empirical Literature Review
This section describespast literature as per objectives of this study. Various scholars’ works
were reviewed in terms of methodology, theory, and conclusions.
32
2.2.1 Product Diversification Strategies and Organizational Performance
A strategy on product diversification is pursued when companies/firms have chances
entrenched in market organizations and technology and opportunities for development in a
company’s primary business. This implies that firms/companies expand into other lines of
businesswhen once combining their places in their basic interest, they still have resources
that are underutilized which they can use in areas of low opportunity (Chandler, 2012). It is
expected that diversification of products might increase financial gains via effectual utilizing
of resources of an organization across many markets (Clarke, 2015).
A study was conducted (Morris et al, 2017) about the outcome of product diversification
relatedness on the performance of an organization in property-liability insurance
organizations where they tested the net outcome of product diversity approaches in the
United States. The study found that relatedness, negativelyaffectedpresentation of accounts.
The understanding penalty was robust to improvements for potential indignity bias; it
existed for new diversifying organizations and it bore a differentinfluence on mutual
insurers and stock. Additionally, it was discovered that related diversifying, especially on
resizing products, is largely accountable for diversification consequences found in previous
studies. In contrast, unrelated diversification had no association with accounting
performance.
Carolina & Marco (2018) carried out a research on diversifying and performance of
professional service companies/firms. They examined effects of product brand breadth and
diversification on firm performance among professional service firms. Trademark Portfolios
33
of 47 United States-based management consulting companies/firms in the 2015 to 2016
period were analyzed. The study used cross-sectional research design. Panel regression was
used to analyze the data. It was established that professional service firms in many instances
provide product diversification whenever they remain pure-service providers and
additionally that performance was positively related to strategies of specialized narrow
product brands.
Muzammal and others (2014) carried out a researchon firm performance and diversification
in Pakistan. The research analyzed the relation of diversification and performance of
Pakistani firms in which a sample of 8 undiversified and 8 diversified listed firms of KSE-
100 index from year 2014 to 2009 were tested. In the study, firm performance was measured
by the paneling data analysis. Results of the study in regression analysis showed that there
was no multi-collinearity between variables tested. Diversified firms were riskier than
undiversified firms. However, diversified firms had higher advantage than undiversified
strategic industries/firms. Therefore, undiversified firms have greater returns due to less
proportion of risks.
Oyedijo (2012) carried out a researchabout significance of product-market diversification
approaches on organization’s financial development and how firms perform in Nigeria. The
research was on how some companies in Nigeria performed in specialization, relatedness or
otherwise and mixed product-market approaches. Observations were made that
organizations which adopted related/unconnected diversification approaches performed
better and developed quicker than those with growth planswhich attempted to follow both.
34
For data analyzes, this study used mixed methods, includingANOVA and correlations,
multiple regressions, and independent sample test and Scheffe Ad Hoc tests. Findings of the
research were thatan important positive association existsbetween related methods of
diversification methods and financial performance.
Additionally, findings indicated that related diversification has superior financial
performance when it is compared to unrelated diversification. The findings additionally
indicated that a slight association existed between unrelated and mixed diversification
methods and an upward increase of sales and performance in terms of finances. On
regression analyses in the study, it wasindicated that related diversification bears a
significant influence on performance. The conclusion of the research was that, in
organizations in Nigeria, growth of sales and financial performance are affected-
significantly-by the diversificationtechnique used. The recommendation of the research was
that Nigerian firms which seek for supportable rapid progress and superior performance
must adopt related product-market diversification strategies or embracespecializing
approaches but not two strategies concurrently.
Deonanan (2014) studied the effect of diversification as a corporate planon performance,
financially, of industrial organizations in South Africa. The research, conducted using a
quantitative technique, sought to measure financial performance of organizations listed on
the industrial division of the Johannesburg Securities Exchange (JSE) for the years 2010 to
2013. Companies that met the standards for presence in the sample for the study were 39
companies and they were characterized as focused, either fairly or extremely expanded. To
35
measure the financial performance, companies were compared using different pointers like;
market return, average assets, and return on average parity. Two of the three hypotheses
were not statistically significant and the differences in the average/mean performance
measures were due to sampling errors. One of the performance measures (return on assets)
indicated that the difference in the average/mean performance was statistically significant.
Pair wise judgments revealed that there were significant differences between highly and
moderately expanded companies and between temperately diversified and focused
companies. The average difference between focused and highly diversified companies was
not statistically significant. Consequently, moderately diversified companies performed
better than highly diversified and firms/companies.
Muriuki (2017) analyzed the connection between product diversification and financial
performance as being mixed and inconclusive. The research compared various studies
conducted on product diversification. It was found out that product size had a positive and a
negative effect on performance. These results show statistical significance between firm
performance and product diversification. Some research studies, however, fail to find a
positive connection between the extent of related product-size diversification and profits and
stability of returns. Conversely, few studies suggest an opposite result and argue that
unrelated diversified firms in terms of product quantity, quality and package size performed
better than related firms. Not all increases in product size led to improved performance and
vice versa. The literary analysis recommended for further studies on various ways of product
size diversification and their effect on general firm performance.
36
Other experts conducted an investigation on the effect ofdiversification of product methods
on how non-monetary organizations listed with the Nairobi Securities Exchange (NSE)
perform(Njuguna, Orwa, & Kwasira, 2018). Related and unrelated diversification were
theindependent variables andperformance of a corporation was the dependent variable.
Descriptive correlation is the survey used in the research and a census of 45 non-financial
companies was adopted. Data were obtained by administering a semi-structured
questionnaire on 135 managerial staff of departments. Findings showed considerable
positive association existsbetween a corporation’s performance and product diversification.
The researchers concluded that product diversification methods are important for broadening
a corporation’s markets(Njuguna, Orwa, & Kwasira, 2018).
Odhiambo (2016) carried out a research on implementation of strategies and how tea
factories in Kericho County perform. The research aimed at determining strategy
implementation practices adopted by various tea factories in Kericho County as well as how
they compare with their performance. The study is based on the resource based view
framework and the systems theory. 32 management staff were sampled for the survey
census. Primary data was obtained via questionnaires and were analyzed usingdescriptive
methods and results presented using frequencies and percentages. The research found that all
factories embraced and apply certain strategy operation practices like product stamping,
packaging and product development but the degree of strategy implementation varies across
factories.
37
Hossain (2015) conducted a literature review on open innovation in medium-sized and small
enterprises in Kenya. The study was meant to examine current results on open innovations in
small and medium enterprises in order to incorporate research results and to make specific
future research interest items. The findings indicated that empirical studies are mostly based
on presentation of broad data and many other studies encounter difficult analyses of data
based on statistics (basically numerical). Research studies are mostly conducted in Europe
with some in China and Korea; studies in North America are very few. Open innovation, it
was discovered, improves how small and medium enterprises (SMEs) perform. The study
stated that minimal studies have been conducted on resizing of products as part of product
diversification approaches among corporation’s world over. However, related models and
theoretical approaches for managers are not adequately established in the literature.
Kimeu (2017) studied the association between firm performance and product diversification
among MFIs in Kenya. The study focused on 32 MFIs within the county of Nairobi. A
descriptive research design was used in the investigation founded on the resource based
view theoreticalframework. Primary data were obtained through administering structured
questionnaires through drop-and-pick-later method. The data were analyzed using
descriptive statistical methods. It was established that product size improved product
performance of the firms and product size reduction retrogressed product demand.
2.2.2 Product Development Strategy and Organizational Performance.

Ansoff (1957)asserts that product development strategy refers to the procedure of scheming,
generating, and marketing novel products/services to benefit clients/customers. It is,
occasionally, referred to as fresh product enlargement and the process has a focus on
38
evolving methods for guiding procedures involved in receiving newer products in markets.
This is as reaction to the fact that lifecycles of products reduces every year and customers’
demands; on the other hand, it is increasingly dramatic. With the necessity to address
customer needs, increased difficulty of designing of inventions and quickly shifting
technology, selecting the correct set of product development strategies is important to the
long-term success of corporations. This is the reason there is need to associate product
development approaches with market adoption procedures in the path to a corporation’s
performance. Approaches to product development might include alteration of current
products or their presentation or formulating of completely new goods and services which
satisfy newly defined client needs or market niches.
A research was carried out on effects of product development of different firm performance
procedures like secretarial effectiveness, corporate growth, and stock market rates of return
in which descriptive research design was adopted and based on the RBV framework. 21
service industry organizations in India were assessed. Results indicated that direct
significance of development on an organization’s presentation were relatively small and
benefits from expanding were likely indirect (Geroski, 2015).
Haeussler (2018) did a research on strategic associations of development of products among
high technology of new corporations with the role of technology competencies in UK and
Germany. The study was conducted using a biotechnology database of corporations and it
sought to establish how fresh corporations maximized benefits of alliances while on the
other hand reducing risks. To test hypotheses necessitated measuring capabilities of
39
technology, alliance range, and development of products by HTNFs. The research assessed
biotechnology corporations in Germany and the UK-the two countries are the best
developed and also have the largest biotech industries in the European continent. Oral
interviews were carried out with 118 and 162 British and German firm respondents
respectively who accepted to be part of the study. The response rates were 47% and 34% for
Germany and the UK respectively. In analyses, Haeussler adopted descriptive statistics to
define correlations among variables in the research. Findings indicated that specializing in
new corporations’ technological investments could help management use associations more
productively. The findings were constant on a diversity of diverse model stipulations and
when accounted for the endogeneity of associations.
Maurice and Scholastica (2016) addressed the effect of development of products and
innovation on performance of firms in Nigeria. Data for the study were collected from
operation heads, marketing heads, and those heads who had been involving themselves
remarkably in development of products and innovation processes.185 re-usable
questionnaires were filled out by a research group of 120 corporations. Interpretation and
analysis of findings of the investigation was done by use of the Likert model and SPSS
version 24 through regression, factor, and reliability analyses. The results showed that the
influence of the development of products on a corporation’s performance was greater in
Nigeria specially when customers see innovationof products as stronger, unique, and more
satisfactory. Creativity of the innovation procedures exerts a positive effect on growth of
products and on performance of a firm.
40
Ahmand, Mallick, and Schroeder (2017) analyzed novel product development in which they
focused on the influence of product features and development practices on performance in
Africa. The research was based on two dominant new product development practices, which
included concurrent product development process and integrated product development. The
study was anchored on organizational information processing theory. The study was based
on 266 new product development assignments from three firms/industries which include
electronic and machinery and automotive, across nine countries in Africa. From the study,
there was no evidence of any direct impact of process concurrency/team integration on
overall new product development performance. Instead, there was evidence of negative
effect of the integration between project intricacies and team integration on overall fresh
performance of product development. Further to that, the study found no indication of direct
negative effect of product uncertainty/complexity on overall new product development
performance as indicated in the literature. However, it found evidence of a direct positive
relation between product complexity and new product performance.
McAdam and Keogli (2016) investigated the association between companies’/firms'
financial performance and their understanding of product development in Uganda. The study
employed a correlation research design. A population of 43 manufacturing firms in Uganda
was used and data sources were both secondary and primary. Primary data were elicited
using semi-structured questionnaires. It was found that firms' preference for development
was vital in the competitive settings toget larger competitive benefits.
41
Kilika and Koks (2016) carried out research to propose a theory which would be associated
with development of product approaches; market adoption and firm performance in Kenya.
The study had a basis in the resource-based view of an organization, Igor Ansoff’s Matrix
Model, and the Diffusion of Innovation Theory. The research acknowledged gaps in past
studies and proposed a combinedmethod to features of adopting a market and its effecton
approaches on development of products. The research recognized the necessity of studies, as
this association was indirect, assessing the moderating result of adopting market features,
which may not advance conceptual but also advance appreciation of the association more
relevantly.
The findings indicate that future studies need to embrace such acombinedmethod to carry
out studies in environments studied less to find out the association between developing of
product plans and adopting market characteristics and eventually its influence on
performance of a corporation. This is understood to create a future practical research agenda
item, whose aim is to respond to some crucial queries, for example, the influence of
adoption of market features on developing of product plans and the association between
development of product approaches and the performance of a firm.
Mbithi, Rambo, and Muturi (2015) carried out a research about the result of methods of
development of products on how sugar firms in Kenya perform. The research explored the
effects of novel product development on a corporation’s performance indexes. Two
indicators developmentof products approaches, which were improvement of existing
products and development of new product were used as independent variable pointers. On
42
the other hand, performance measures were total output profitability, turnover, capacity
utilization, and sale quantities. Sugar industries (in Kenya) were identified as the empirical
contexts for the research since it is thought that they have a key role in the agriculture sector.
Results of the research showed that introduction of newer products other than sugar itself is,
to an important extent, insignificant, while improvement of current products has modifiedvia
repackaging and rebranding. The performance that resulted was positive in turnover of
output and quantities of sold sugar; they found utilization of capacity moderate, and after tax
profits showed inconsistent outcomes. They found that performance responsive to product
improvement processes, but poor in introducing fresh products as maximization was yet to
be made actual. Implied in the study findings is a depiction of the central need for
actualizing of new products to consumers to exhaust corporation capacities. The context of
the study was the sugar industry but the current study is on the tea factories in Kenya.
A research on the effectof development of product practices on competitiveness of tea from
Kenya in the global market was conducted (Maina, Mugambi, and Waiganjo (2018). Cross-
sectional survey approach was adopted and a population of one hundred and eighty-nine
officers of the East African Tea Association participating in tea sales in Mombasa was
targeted. Purposive and stratified sampling methods were adopted to sample managers
representing the large and small-scaleproducers. To collect data, questionnaires were used,
whose analyses were conducted by the use of SPSS. Results depicted a weak positive
association between strategic development of product practices and competitiveness. The
conclusion of this research was that attractiveness of tea from Kenya at the world market
43
was impacted by additionalperipheraldynamics other than strategic development of product
practices.
Kinyanjui (2015) conducted a study on the response of Kenyan companies/firms to
globalization in which he surveyed manufacturing firms in Nairobi and Athi-River. The
study involved a total of 47 firms in two areas. A descriptive research resign was used. The
research was to establish the techniques put in place by firms to remain competitive in the
global market. He used questionnaires which were distributed through drop and pick later
approach to collect data which were analyzed via descriptive statistical methods. The study
established that majority of the organizations have varied products, market, and production
processes. It was found out that the firms come with fresh products, improve existing ones,
or adopt fresh technology to improve effectiveness.
Maina, Mugambi and Waiganjo (2018), using a cross-sectional survey design, examined the
impact of practices of development of products on competiveness of tea from Kenya in the
world market. The research targeted one hundred and eighty-nine officers of the East
African Tea Trade Association (EATTA) who take part in auction of tea in Mombasa.
Stratified and purposive sampling approaches were used through which managers were
sampled to represent all types of producers, i.e. major and minor. The actual sample was got
using Slovin’s Formula (1960). Primary data were collected using structured and
unstructured questionnaires.
44
Reliability and validity of the data collection tools were determined by a preliminary study
conducted before the actual research. To determine internal consistency, Cronbach’s
Coefficient Alpha (α) was used. SPSS version 24 was used to generate inferential and
descriptive statistics which were used to analyze collected data. The study derived Pearson
correlation coefficient (r), and used coefficient of determination (R2) to measure the extent
of variation among the variables. The results of the research showed a weak positive
association of 31.0% between strategic development of product practices and
competitiveness. The research further showed that a 1% change in strategic product
development practices brought down competitiveness of Kenya’s tea in the world market by
0.089 units. It was concluded that competitiveness of Kenya’s Tea in the world is affected
by factors other than strategic development of product practices in the production chain.
2.2.3 Market Development Strategy and Organizational Performance

Zott and Amit (2017) researched on the fit between an organization’s product marketing
approach and her business design. They collected data from a sampled group of
organizations which were public in the United States of America and Europe between April
2015 and May 2015. 170 firms were sampled based on their business design features and
product market plans. The researchers analyzed the data via the confirmatory factor analysis,
descriptive statistics, and partial least square regressions. The research collected data sets
and established that novelty-centered business approaches-joined with product market
approaches that insist on diversity, cost leadership, or first market entry improves how an
organization performs of a firm. Data showed that product market strategies and business
models are in majority ofcases complements, not substitutes (Zott& Amit, 2017). The
45
research did not, however, address how business designs change and specifically, how they
change jointly with the product market strategies of the corporation.
Dzisi& Ofosu (2014) conducted a study on market development approaches and the
performance of SMEs in Ghana. This study assessed the consequence of market
development approaches on how medium and small firms in Ghana performed in regard to
their brand awareness, profit margins, and market shares. The data for the study were
collected via a survey methodology where 363 SMEs were picked from a total population of
900 using a stratified random sampling procedure. The study results indicated that strategic
marketing approaches were drivers of organizational positioning in dynamic contexts, and
that they help to increase development of newer products and services for markets already in
existence.
Other results of the study show that SMEs in Ghana mainly use old forms of marketing to
reach possible customers and to entrench their products. A matter of interest however is that,
only few of them use modern methods in marketing products/services and so the SMEs
should in this way adopt more recent technological marketing approaches including mobile
marketing to improve performance. These results provide important insights for decision
makers and those who own SMEs on the relation between strategic marketing and
performance of SMEs in a globalized yet developing economic context.
Ge and Ding (2015) studied the interceding effects of an organization’s competitive
strategies in the market development performance association in which they used correlation
46
coefficients, descriptive statistics, and reliability of the constructs having average scores on
the three competitive approaches. On the basis of 371 corporations in China, data suggest
that three dimensions of market positioning apply diverse effects on competitive strategies
and performance. Out of them, client positioning bears the strongest relationship with
competitive approaches and performance of the market.
Findings of structural equation analysis showed that the intervening outcome of competitive
strategies is essentially uncovered in approaches to innovation, the most important aspect in
creating greater worth for the corporation in upcoming markets (Ge & Ding, 2015). Even
though this research gave stimulating results into comprehension of the market orientation-
performance association in China, it depended mostly on the lonecrucial inform of strategy
for collecting data, which might be the cause of a halo effect-common method variance. In
addition, the research was more subjective with regard to processes of performance, and
finally it did not scrutinize the probable effect of environment on the market orientation-
performance association.
Chisangaet al (2014) carried out a study on the influence of development of the market on
competition in the regional sugar sub-sector in which Zambia, Tanzania, Kenya, and South
Africa, were researched and read the paper later at pre-ICN conference. The research-mainly
reviews-established that reformist liberalization of world markets might probably lead to
increase in competitiveness in the local sugar sector as corporations try to increase their
capacities so that they are able to trade worldwide. The research, also, indicated that while
corporations have strategically placed themselves in markets characterized by investment,
47
and business motivations, competitive aftermaths in the region are likelier to be influenced
by protectionism. The research, however, fell short of studying similar industries in other
countries in the African continent.
Anil and Yigita (2014) studied the connection between a corporation’s performance and
market development approaches with particular focus on corporations enlisted in the
Istanbul stock exchange. The design adopted was descriptive research design and it assessed
the result of packaging of products, branding and pricing as market development approaches
on both existing and upcoming markets. The study indicated that the relationship between a
corporation’s performance and market development approaches in developed countries
looks like a reversed U curve. It actually increases the medium value and then exhibits a
drop in performance. But, they concluded that pointers of the association between market
development approaches and performance of a firm of first world nations differ from the
pointers of third world nations because of the effect of labor factors, government and
market, business relations, political economic, and production variables.
Muga (2016) investigatedthe influence of market development methods and how multi-
national pharmaceutical companies in Kenya perform. The research sought to determine the
approaches adopted by the 22 multinational pharmaceutical companies operating in Kenya;
their performance and the influence of these plans on how these firms perform. The research
used semi-structured questionnaires to elicit data whose analysis applied descriptive and
inferential statistics. The research established that the multinational pharmaceutical
48
companies operating in Kenya have excellent performance in employee training, customer
satisfaction, sales growth and profitability.
To achieve best results in the new market, these multinational pharmaceutical companies
have made some necessary changes, which comprise reducing prices, increasing established
distribution channels like KEMSA and MEDS to their regular distribution network,
inventing pleasant means of paying for their products and changing packaging of products.
The implemented market development strategies showed positive contribution towards
sales, new customer acquisition and profitability though Base of the pyramid market
development strategy showed likely hood of decreasing employee motivation and
innovation. This study did not get into the details of how the identified market development
strategies are implemented; it will be prudent for more studies to be done to for better
understanding on how the market development strategies are implemented by the respective
multinational pharmaceutical companies and advice on areas that need to be improved so as
to get maximum benefit in improving performance of pharmaceutical companies.
Ojwaka and Deya (2018) investigation about the effect of market development methods on
firm performance amongprinting businesses in Nairobi, Kenya. The major goal of the
research was to establish theeffectof market development approaches on firm performance
of printing companies in Nairobi, Kenya. The researchtargeted two hundred and forty-nine
registered printing companies asportrayed by the Kenya Department of Registrar General.
The research was conducted using a descriptive research design, adopted random sampling
49
design to sample twenty-five printing firms, and stratified sampling to sample 75 corporate
heads from 25 printing companies in Nairobi.
They used sheets for collecting data and questionnaires to collect data whose analyses were
done via inferential and descriptive statistics. Results showed that strategies on market
development bear a positive substantial association with a firm’s performance of
commercial printing companies in Nairobi. The research recommended that corporate heads
and other major investors in printing should apply the range of market development
approaches underscored in improving firms’ performance. A further recommendation was
that commercial printing corporations need to capitalize on studies of current market
tendencies, incessant development of skills for workers and new technology supportive
infrastructure to make sure that there is effective and successful implementation of the
highlighted growth strategies.
Mbithi, Muturi,& Rambo (2015) conducted a research on the role of development of product
approaches in sugar corporations in Kenya in which a total of sixlarge-scalesugar-processing
corporations in Western Kenya were included in the investigation. The study used a
descriptive design and questionnaires to obtain data analyzed via inferential and descriptive
statistics. Results revealed that a market development approach might impact a corporation’s
capability utilization by 8.6% and sales volume by 5.6%. A suggestion from the research
was that since the level of importance on the results was low, corporations need to think
about dissimilar reasons that might add to performance in sugar corporations apart from
development of market strategies.
50
A research was conducted by Mwau, Oloko &Muturi (2016) on the effect ofstrategies of
market development onfirm performancein the insurance sector in Kenya. Strategies on
development of markets essentially via new geographical areas was seen to impact the
performance of insurance organizations in an undesirable manner. The research
recommended that organizations have to be very careful in making choices of markets to go
into if they are to perform with an exception of those enjoying loyalty from solid brands.
Normally, organizations with low-grade brands might not add value if they open diverse
divisions at once and they might end up spending part of the profits obtained from their head
offices. On strategies of market development, the research made a recommendation that
firms need to look for it with much alert since it is understood to negate the performance of
an organization especially in the insurance sector.
2.2.4 Market Penetration Strategy and Organizational Performance

A strategy to penetrate a market includes increased sales of existing products to an existing
market. This is in making efforts to procure bigger market shares than a firm’s rivals.
Accordingly, to penetrate a market offers firms a chance to increase their sales and revenues.
It is looked at as the least risky approach of the four in Ansoff’s Matrix. Growth can be seen
as something for which a majority of firms strive, irrespective of their size. Small
corporations wish to get big, while big ones want to get even bigger. Actually, corporations
need to grow at least yearly so that they might accommodate the improved expenditure that
develops as time goes by. With time, wages increase, in addition to costs of employment
benefits rising considerably.
51
Corporate growth, nevertheless, refers to different things to different corporations. There are
many considerations a corporation may use to measure development. Because the main
objective of many organizations is profits, majority of them will measure progress in terms
of revenue, net profit, and other financial outcomes. Other organization owners may use one
of the following benchmarks for determining their growth: improved market share, sales,
physical expansion, number of workers, and success of a product line. Eventually, growth
and success will be evaluated by how well an organization does in relation to the goals it has
set for itself (Baker, 2018).
Mehdi, Sied,& Jamshid (2013) carried out a study on corporation performance, marketing
approach and financial schemes alignment among Iranian Pharmaceutical corporations.
Iranian general pharmaceutical manufacturers listed in the Tehran stock market were
researched from 2006 to 2010.We determined marketing approaches they used via Slater
and Olson taxonomy and their financial tactics established by computing theentire threat and
the total return of sample firms for five years on the basis of the rate of risk and return in the
frame of a 2 × 2 matrix. For business performance three, profitability indexes including Q-
Tubin (Rate of market value to net asset value), ROA (Return on Asset), ROE (Return on
Equity) have been tested.
To analyze data, one-way ANOVA as a group of statistical models within marketing
approaches considering financial plans as independent variable and the three performances
was used. The study established that tactical arrangement between marketing and finance
has an important effect on profits of companies resulting in the rise of all their profitability
52
indexes. The research made a conclusion that those who manage need not consider decisions
with regard to marketing approaches independent of their financial strategies.
Kumar (2018) conducted a study on global expansion strategies of Japanese companies;
capability building through sequential entry. The research focused on 61 companies in
Tokyo, which dealt with manufacturing. It was indicated that companies with more Vertical
business group (VBG), line of business (LOB), and horizontal business group (HBG), have
greater advantage. On an abstract level, one could think of expansion as investment, which
naturally has some risk and is supposed to bring a return. Of course, it has been found to be
much more complex than investment decisions. The research concluded that expansion
decisions do not only depend on the financial status of the company, it is a strategic
decision, related to a firm’s objectives and mission. It is difficult to establish the present
value or future value of a company. The value of a company is determined by the product
and not by the time. Expansion is less liquid than investment. Buying or selling of a set-up
takes more time than an investment “buy or sell” event.
Davis (2014) conducted a study on the general performance results of market penetration
strategies in the manufacturing SMEs in Ghana. In his study, he found out that those
firms/organizations could be grouped into four groups constructed absolutely in light of the
competitive methods that they embrace: differentiation, focus, cost leadership, and stuck in
the center, focus. In expression of financial progress, the four organizations were seen to be
significantly particular from each other. It was observed that focus category
companies/firms experienced the best earnings burgeon, followed by cost leadership,
53
differentiation, and then stuck in the middle groups. As far as profit for general resources
were concerned, the performance contrast was not critical among the four companies/firms,
while the most elevated return was in the cost leadership.
Njomo and Oloko (2016) carried out a research on penetration of market plansand firms
performance in the soft drinks business in Kenya. Stratified random sampling design was
used to randomly sample one hundred and sixty soft drink firms. After data collection,
analysis was done using inferential and descriptive statistical approaches. Correlation
analyses were applied to regulate the direction and strength of the linear association between
the variables. Findings show that market penetration plans have an association with firm
progress. Penetration pricing approaches were negative and did not bear a strong effect on
the growth of a firm. Approaches on promotion, on the other hand, were key since they
positively affect an organization’s growth, distribution channels do not directly affect a
firm’s growth since it has a negative association hence businesses have to add on
distribution channels and integrate other plans to achieve firm growth. The relationship
result indicated a weak positive association between product improvement plans and a
firm’s growth. It was suggested that all the methods are a condition for firm growth and they
complement one another.
Gacheo, Thuo &Byaruhanga (2016) conducted a study on approaches to penetrate markets
and competitiveness among mobile telecommunication service providers in Kenya. The
population in the study was the sales department staffs among the companies. Descriptive
research design was used in which data were obtained through the administration of
54
questionnaires, which were analyzed using descriptive and inferential statistics using SPSS
version 24. It was found out that strategies to penetrate a market had a direct effect on
competitiveness of a firm in the sense that penetration rates that are higher imply enhanced
performance because the organization can create and maintain profits that are prominent
than the norm for that corporation.
Mokaya (2012) studied the influence of approaches of penetrating markets on firm
performance in the airlines sector in Kenya in which he sampled Kenya Airways. He used a
research design referred to as explanatory design and he found out the following: Within the
general segmentation-targeting-positioning, Framework in a company, and positioning plays
a fundamental role in marketing strategies, since it links market analyses, segment analyses
and competitive analyses to internal corporate analyses. The measures of performance that
affect marketing penetration approach at the firm include; increase in revenue, increase in
products, employee turnover, and increase in assets.
Karanja (2014) carried out a study on the influence of marketing capabilities and distribution
plans on performance of MSP intermediary organizations in Nairobi County of Kenya.
Descriptive and explanatory cross-sectional survey design were adopted in which the
research established that superior marketing capabilities and the choice of distribution
strategies contribute significantly to performance of MSP Intermediary organizations. Based
on the findings obtained, it was established that the composite effect of marketing
capabilities and distribution strategies further enhanced the performance of MSP
intermediary organizations.
55
Kimaru (2018) carried out research to find out the influence of plans on market penetration
on organizational development of steel industries in Kenya using a cross-sectional survey
design and its population consisted of steel industries and firms in the Kenyan market. The
target population was the key players of the 100 companies dealing with roofing products,
steel beams, and long products as per data from KAM database. In the study, questionnaires
were administered on the respondents to collect primary data, and data was summarized and
analysis done using descriptive statistics. The research established that market penetration
strategies influence organizational growth of firms in the steel industry. It was also noted
that the companies in the steel industry use a mixture of strategies, which include market
promotion and enhancing distribution channels promotion and advertising pricing and
diversification. The study concluded that the penetration strategies are highly effective in
any organization as growth is dependent on them. This is reflected in the market share
attained by some steel manufacturing companies, increased profits and increased production.
2.2.5 Organizational Resources and Firm Performance

The Resource Based View (RBV) theoretical view of a corporation argues that not all of a
corporation’s resources generate greater performance, but only certain types that controlled
and owned by the organization (Barney, 2017). Wang and Mahoney (2016) hold the position
that learning through development and training practices in a company makes human
resources to be more specific and potentially not of much use to the rival making it
inimitable and leading to higher market shareholding than the competitor’s. Human
resources is usually in the form of experience, knowledge, ability, and skills rooted among
workers of a firm. Rivals might not duplicate tactical knowledge acquired by a firm easily,
56
since it is implanted in human skills and the experience of a firm, which leads to profitability
(Lazear, 2016).
Lei’s (2017) research on network relationship and performance of firms among
manufacturing firms in China indicates that networking gives a company high performance
when it assists to recognize how other companies’ resources can be utilized to progressively
enhance the value of their products/services. Additionally, a correlation analysis pointed out
that a firm’s reputation positively affects both the price and sales of the product/services.
The conclusion of the research was that there is a higher likelihood that highly reputable
firms would not only sell their products fast, but they can also sell the products at higher
prices than less reputable ones; so reputation is profitable. The most vital value of reputation
is that competitors cannot easily duplicate it from the firm that has acquired it; rather,
reputation can only be worked for, making it unique for much better performance. However,
the study utilized secondary data only, which the present study considers insufficient; hence
the use of secondary and primary data in the proposed study.
Rahman, Haque& Ahmad (2015) conducted an exploratory study on the influence of
customers as resources on how mobile phone service providers in Malaysia perform. The
study focused on the effect of customer perception and service on organizational
performance. They used a descriptive research design to conduct the research. A cross-
section of 2 mobile phone service providers was included in the study with 210 sales staff
forming the study respondents. The study showed that customers utilize company reputation
to establish quality and value of intangible services that the firm provides to clientele. The
57
study recommended further studies in other sectors on the effect of other organizational
resources like financial, human resource and human capital on the performance of a firm.
Rhee and others(2016) investigated the influence of technology on how SMEs in South
Korea perform. The research focused on technology as a resource and how it affects
performance of an organization. The study main theory was the resourced based view
theory. The target population was the 61 established SMEs in Seoul. The survey study
linked technology to greater corporation inventiveness. This, it has been observed, has to do
with focusing a corporation’s energies on developing and employing resources to produce
extraordinary products and or services for sustainability of competitiveness and also
performance. The conclusion made was thatan important positive association existsbetween
performance and technology in small scale enterprises in Korea. A further finding was that
investing in studies or research and development requires evaluating of benefits and costs
before deciding whether to adopt a given technology or not. The study used correlation
analysis.
Ahmed & Othman (2017) conducted a study on a conceptualization mediation study on the
association between a corporation’s resources and how a firm performs among commercial
banks in Pakistan. The study proposed ten research propositions tested with the help of a
proposed theoretical framework. The study was underpinned by the Resourced-based view
theory. The study used descriptive research design. It was established that the performance
of banks in Pakistan are experiencing difficulties due to the weak internal factors within the
institutions to create domestic savings and foreign capital. The study recommended that for
58
efficient bank performance, there is need to maximize the value of shareholders and
shareholders have kept interest in the bank’s operations. To increase organizational
performance of banks, it was recommended that the banks should pay equal attention to
organizational internal factors more especially resources as well as external factors like
economic, consumers and competitors.
Gakenia (2015) carried out a study on a corporation’s resources and how mobile phone
firms perform in Kenya. The study objectives included determining how human capital
affect performance of the companies, establishing how technology competencies affect
performance of the mobile phone companies, measuring the controlling effect of
environmental factors on the relation between firm resources and how mobile phone firms
perform in the country-Kenya and to find out the mediating result of competitive advantages
on the relation between an organization’s resources and performance levels of mobile phone
companies. The study had a target population of 381 with a sample of 170 from four firms in
Kenya. We adopted stratified random sampling and collection of data was done by use of
self-administered questionnaires. Analyses were done via descriptive and inferential
statistics. Results were that human capital bears a positive substantial influence on how
mobile phone corporations perform. Added to that was that, technology was found to be
important in explaining the variance of performance of mobile phone firms.
Wainaina et al(2017) conducted a study on the effect of a corporation’s resources on how
ISO-certified corporations in Kenya perform. The investigation was founded on the Total
Quality Management-TQM-theoretical position in which cross-sectional survey design was
59
used. They collected data from 282 ISO certified corporations by use of questionnaires and
from financial statements of 27 ISO qualified corporations which had been sampled.
Descriptive statistics analyzed proportions of the variables and a multiple regression model
was adopted to estimate the result of a corporation’s resources on the performance of ISO
qualified corporations. The results indicated that plentiful corporation resources bring down
performance. The recommendations of the study were that the management of ISO qualified
corporations need to employ limited organizational resources available efficiently and train
their workers in managerial abilities in order to improve performance.
A literature review oncorporation resources, external environment, innovation, and company
performance in Kenya was conducted by a group of researchers (Ombaka,
Machuki&Mahasi, 2015). They sought to explain the reason for why organizations in the
same industry and market vary in their performance. Specific areas studied were factors that
have fractional explanations to variation in corporation performance which might include
corporation resources, external environment and invention. From literature, it was found out
that organizational resources have a direct influence on performance. Though, this effect is
subject to other elements that are key among them the outside environment and invention.
The elements considered were found to have self-governing effect on performance.
However, their role in this respect remains negligible, in both conceptual and empirical
terms. The study then proposed a conceptual model that could guide a research investigation
on the effect of outside environment and innovation on the connection between
organizational resources and performance.
60
Mwaiet al (2018) conducted a research on the effect of a corporation’s resources on a firm’s
effectiveness. The research utilized explanatory and descriptive research designs. The study
population was 35 registered private firms, with a sample of the 75 project heads in Kenya.
Questionnaires were used for data elicitation while data analyses were done through
inferential and descriptive statistics. Conclusions drawn were that fundraising initiatives and
how resources are distributed to various strategic undertakings and operations determine the
extent of efficiency in the corporation process. Labor force empowerment, negatively
though, considerably influenced process efficiency. Recommendations from the study were
that there is need to develop a non-governmental organizational effectiveness ranking metric
to allow the grouping of non-governmental organization’s into groups based on extents of
effectiveness in achieving their particular missions and approaches. The study recommended
further detailed study on why fundraising efforts in non-governmental organization’s do not
considerably influence stakeholder satisfaction.
2.3Summary of Research Gaps
Various researchers have conducted studies to find outthe association between product
diversification and performance of an organization. Study results indicated mixed findings
since some indicated positive associations, others negative, and others nonlinear
associations. In addition, research on product diversification has given a lot of attention to
developed countries and therefore a gap exists on knowledge on the effect of diversifying
productson performance in the tea farming, processing, and marketing sector. Except Campa
(2002) who established that non-diversified companies do better than those firms that are
diversified indevelopingthe economy of Kenya. Additionally, statistical tests used in the
61
research may not apply to upcoming economies corroborating the finding that diversified
organizations are riskier than those that are not diversified. Byraising a query previously
raised by Rumelt (1974): as such this research was an attempt to address a research gap by
measuring the influence of diversification of product strategies on tea firms in Kenya.
In regard to product development strategy, several researchers have identified a possible
important influence of product development strategies on firm performance (Muchele and
Kombo, 2019; Rono, 2015; Ittner & Larcker, 2011). The past research did not, however,
show the influence of product development strategies on performance in tea processing
firms. In addition, these studies did not factor how a number of product development
processes, extent of firm innovation and amount of research/consultation PD processes will
influence performance of selected tea firms, in Kenya.
Review of literature on market development strategies shows that offering current products
in new markets thus focusing activities on market opportunities and competing situationscan
improve an organization’s performance. Developing of fresh markets for a product might be
an appropriate tactic if the organization’s main strengths are associated to the more specific
product than to its experience with a particular segment of the market( Machuki, 2012).
Studies further indicate that market development allows firms to leverage some of their
traditional strengths by recognizing new uses. Usually, changes in selecting media,
promotional appeal, and distribution, is a sign of implementingthis approach(Pearce &
Robinson, 2011).However, this studies didn’t investigate the elements of market
development such as cost of marketing, number of products on offer and frequency of
62
advertising and how they influence performance of tea firms which the current study seeks
to investigate. Variousresearchers also established the place of strategies on market
penetrationon firmperformance. Enhancing the use of the present product in the present
market would enhance penetrating of markets(Pearce & Robinson, 2012).
Sije and Oloko (2013) studied the association between performance and penetration of
SMEs in Kenya. Their research established strong positive association between performance
of SMEs and penetration strategies. But, the current study set to establish the role of plans
on market penetration on how a selection of tea factories in Kenya perform with a critical
focus on penetration pricing, number of market segments targeted and level of product
differentiation.
Organizational resources were shown as important determinants of performance of a
selection of tea factories in the country. Studies conducted showed that through
development and training practices in the firm make human resources to be more specific
and potentially not of much use to the rival making it inimitable leading to higher market
shareholding (Wang & Mahoney, 2016). According to Lei’s (2017), networking gives a
company high performance when it assists to recognize how other companies’ resources can
be utilized to progressively enhance the value of their products/services. But, this research
did not study the part of financial resources, human capital endowments, technological
resources, extent of market on how these roles moderate the association between business
growth approaches and how selected tea factories in Kenya perform.
63
From the literature reviewed on business growth approaches and how selected tea factories
in Kenya perform, it is clear that in all the research reports studied, no study has been done
to find out theinfluence of business growth approaches and how selected tea factories in
Kenya perform. Further, there is, further, inadequateresearch results on studies carried out
on the controlling role of organizational resources between business growth strategies and
performance of selected tea factories. Based on the background presented here, this
researchsought tofind out the possible relationship to plug the gapthat past research has left
by researching the influence of diversification of product strategies, strategies on market
development, penetration of market strategies,strategies on product development, and the
role of organizational resources on the association between business growth approaches and
how selected tea factories in Kenya perform.
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Table 2. 1:Summary of Research Gaps
RESEARCHER (s) MAIN OBJECTIVE RESEARCH FINDINGS RESEARCH GAPS FOCUS OF THE
CURRENT
STUDY
Carolina C. & Marco Diversification, branding Service firms always benefit from  The research does not relate To establish the
S. (2018) and performance of diversification when they remain other diverisfication effect of product
professional service pure-service providers strategies directly to diverificiation on the
firms in The USA Performance is positively related to performance but how it performance of tea
a strategy of specialized narrow should be applied factories in Kenya
brands  The study compared broad with organizational
and narrow branding resources as a
 The study used secondary moderating variable
data
The effect of product The study established that there was  The study did not point out To establish the
Njuguna, Kwasira & diversification strategy a significant positive association the forms of product effect of product
Orwa (2018) on performance non- between product diversification and diversification strategy and diversification on the
financial firms listed at firm performance how they affect performance performance of tea
the Nairobi Securities factories in Kenya
Exchange, Kenya. with organizational
resources as a
moderating variable
Odhiambo (2016) Strategy implementation All factories embraced and apply  The study did not point out To establish the
and performance of certain strategy implementation the effect of strategy on effect of product
major tea factories in practices like product branding, performance diversification on the
Kericho County, Kenya. packaging and product development  The study had generalized performance of tea
but the degree of strategy findings processing firms in
implementation varies across Kenya with
factories. organizational
resources as a
moderating variable
Kimaru (2014) Effect of product The study established that product  The study was not clear on To establish the
diversification on the branding and other product the other product effect of product
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financial performance of diversification strategies had a diversification strategies diversification on the
microfinance companies positive effect on the performance of  The effect of product performance of tea
in Kenya the firms. diversification was not factories in Kenya
clearly brought out with organizational
resources as a
moderating variable
Bansah et al (2015) The effect of branding on  Customers recommendation are  The study focused on To establish the
consumer buying geared towards their favorite branding and consumer effect of product
behaviour of Ghana brand and this increases sales buying behaviour while the diversification on the
textile fabric users in Ho  Customers are loyal to their current is on performance performance of tea
Municipality of Ghana favorite brand  The context of the study is in factories in Kenya
 Branding positively affects sales textile industry in Ghana with organizational
while the current is the tea resources as a
sector in Kenya moderating variable
Morris et al (2017) Effect of diversification  Related diversification  The study was an empirical To determine the
relatedness on firm especially on product resizing is review effect of product
performance in the US largely responsible for the  A comparative study on diversification on the
insurance industry diversification penalty relatedness and unrelated performance of tea
 Unrelated diversification has no diversification was done factories in Kenya
relation to accounting
performance
Scholarstica&Maurice Impact of product  Impact of product development  The study was an empirical To assess the effect
(2016) development and on organizational performance study which relied on of new product
innovation on was higher in Nigeria when secondary data development on the
organization consumers perceive product  The variable relationship was performance of tea
performance of firms in innovation as stronger, more conditional factories in Kenya
Nigeria favorable and more favorable
and more unique
 Creativity/quality of the
innovation process exert
66
positive influence on product
development and performance
especially in developing
economies
Ahmand, Mallick& Analysis of new product  There is no direct impact of  The study compared process To assess the effect
Schroeder (2017) development focusing on process concurrency or team concurrency and uncertainty of new product
the impact of product integration on overall new on new product development development on the
characteristics and product development performance of tea
development practices on performance processing firms in
performance  There was a negative impact of Kenya
product uncertainty or
complexity on overall product
development performance
 There was no direct positive
relationship between project
complexity and overall new
product development
Kilika&Koks (2016) Theoretical model  There is no direct relationship  The study analyzed existing To assess the effect
relating product between product development, literature and did not add any of new product
development strategy, market adoption and firm knowledge development on the
market adoption and firm performance  The study assessed only performance of tea
performance three theories despite being a factories in Kenya
theoretical analysis
Maina, Mugambi & effect of strategic  There is a weak positive  The study didn’t indicate any To assess the effect
Waiganjo (2018) product development relationship between strategic positive effect of product of new product
practices on product development practices development on firm development on the
competitiveness of and competitiveness competitiveness performance of tea
Kenyan tea in the global factories in Kenya
market
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McAdam&Keogli Relationship between  Firm’s inclination to product  The study related product To assess the effect
(2016) firm’s financial development is of vital development to competitive of product
performance and its important in the competitive advantage while the current development on the
familiarity with product environments in order to obtain study is on performance performance of tea
development of higher competitive advantage  The study context was factories in Kenya
manufacturing firms in Uganda while the current is
Uganda in Kenya
Rhee et al (2016) Effect of technology on  There is a strong link between  The study focused on SMEs To establish the
the performance of technology and firm in South Korea effect of
SMEs in South Korea innovativeness  Technology was looked at organizational
 There is a strong positive as an enabler while this resources on firm
relationship between technology study looks at it as resource performance
and performance of SMEs in
South Korea
Zott & Amit (2017) The fit between a firm’s  A firm’s market develop  The only focussed on To determine the
product market strategy strategy that emphasize market develop strategy as a effect of market
and it s business model differentiation, cost leadership determinant on business development
and learly market entry model choice but did not strategies on firm
determine a firm’s business indicate its relationship performance
model
Muga (2016) Effecto f market  the multinational  This study did not get into To determine the
developmetn strategies pharmaceutical companies the details of how the effect of market
on perfomrance of operating in Kenya have identified market development
multinational excellent performance in development strategies are strategies on firm
phramaceutical employee training, customer implemented; it will be performance
companies in Kenya satisfaction, sales growth and prudent for more studies to
be done to for better
68
profitability understanding on how the
market development
strategies are implemented
by the respective
multinational
pharmaceutical companies
and advice on areas that
need to be improved so as
to get maximum benefit in
improving performance of
pharmaceutical companies
Ojwaka & Deya (2018) the effect of growth  market development, market  the study indicated that the To determine the
strategies on penetration, product effect of product effect of market
organization development and diversification dvelopment stratgegy was development
performance among strategies had a positive insignificant but didnt show strategies on firm
commercial printing significant relationship with to what extent performance
firms in Nairobi, Kenya. organizational performance of
The main objective of commercial printing firms in
this study was to Nairobi, Kenya except for
establish the effects of product development strategy
growth strategies on that had an insignificant positive
organizational effect on profit growth of such
firms
Mbithi, Muturi & effect of market  market development strategy  the study only indicated To determine the
Rambo (2015) development strategy in can influence a firm’s capacity possibilities but didnt rely effect of market
sugar industry in Kenya utilization and sales on statistics development
strategies on firm
performance
Mwau, Oloko & the influence of market  market development strategy  There was a negative To determine the
69
Muturi (2016) development strategy on specifically through new relationship but this study effect of market
performance of firms geographical areas was noted to hypothesizes for a positve development
within the insurance influence the performance of relationship strategies on firm
industry in Kenya insurance firms in a negative performance
manner
Mehdi, Sied &Jamshid Organizational  strategic alignment between  the study did not indicate To establish the
(2013) perfomrance, marketing financial nd marketing has the direct effect of market effect of market
strategy and finacnial significant impact on pentration strategies on firm penetration strategies
stratgegies aligment profitability of company perfomrance on firm performance
amogn Iranian resulting in arise of all their
pharmaceutifal firms profitability indices
Kumar (2018) international expansion  firms with more line of business  the study was not able to To establish the
strategy of Japanese (LOB), horizontal business establish perfomrance of the effect of market
firms group (H.B.G), Vertical firms since it was difficult penetration strategies
business group (VBG) have to determine the present on firm performance
greater advantage value or future value of a
 expansion decisions do not firm
depend only on the financial
status of the firm it is a strategic
decision, which is related to
firm's objectives and missio
Ogohi (2018) effects of marketing  Promotion, pricing, distribution,  The study did not indicate To establish the
strategies on and product standardization and individual effects of the effect of market
organizational adaptation have an impact on market strategies on firm penetration strategies
sales, customer and financial perfomrance on firm performance
performance.
performance of firms
Njomo & Oloko (2016) Market penetration  penetration strategies have a  The study focussedon soft To establish the
strategies and relationship with organizational drink industry while the effect of market
organization growth of growth. current study is on the tea penetration strategies
 penetration pricing strategy was processing sector in Kenya on firm performance
soft drink sector in
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Kenya negative and doesn’t have a
strong impact on organizational
growth.
 Promotional strategies on the
other hand is key because it
positively affects organizational
growth, distribution channel do
not directly determine the
organizational growth because it
had a negative relationship
hence companies have to add on
distribution channels and
incorporate other strategies to
gain organizational growth.
 There is a weak positive
relationship between product
improvement strategies and
organizational growth
Muthengi (2015) effect of market  marketing has become a major  the study focussedon To establish the
penetration strategies on function in the banking industry commercial banks whiel the effect of market
the performance of as a result of increased current study is on tea penetration strategies
commercial banks in competition brought about by processing firmsin Kenya on firm performance
Kenya bank consolidation and reforms
Source: Author, 2019& literature review
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2.4 Conceptual Framework
Conceptual framework is a structure ofideas presented in an inquiry (Cambell, 2013). In
conducting this study, the conceptual discussion was schematized as under:
Independent Variable
Dependent Variable
Business Growth Strategies
Diversification Strategy
Firm PerformanceFirmPerformance
Number of products diversified
H01
Size of Investments in H0(1-4) Tea prices
diversification Market share
Bonus payment
Number of diversification Level customer satisfaction
strategies employed Level of customer retention
Product development strategy H05 (a-d)
H02
Number of PD processes
Extent of firm innovation
Amount of research / Consultation PD Organizational Resources
processes
Amount of Financial Resources
Moderating Variable
Experiences of Human Capital
Market Development Strategy
H03 Size of Technological resources
Cost of marketing Extent of Market research
Number of products on offer
Frequency of advertising
Market Penetration Strategy Moderating Variable

H04
Penetration pricing
Number of Market segments targeted
Level of product differentiation
Figure 2.1: A conceptual framework

Source: Researcher, 2019
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As illustrated in the conceptual framework, the study’s independent variable is business
strategies of growth that is: product development, market development, product
diversification, and market penetration that can be employed in tea factories. The
moderating variable is organizational resources while the dependent one is how tea
factories in Kisii Highlands and Kericho Highlands regions under the management of
KTDA in Kenya perform. It was assumed that KTDA managed factories employ business
growth strategies under study: strategies on product development, development of market
strategies, diversification of product strategies, and penetration of market strategies,
which bear a positive influence on performance. The indicators of performance were:
increased tea prices in the global market, increased market share, increased bonus
payment, increased customer retention and increased customer satisfaction. Further the
study believed that organizational resources: financial resources, experiences of human
capital, size of technological resources and market research, have a positive moderating
role on the association between firm performance and business growth approaches.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Philosophy
In research, a philosophy refers to what a researcher believes with regard to data collection,
data analysis, data interpretation, and data utilization with regard to a specific phenomenon.
It is developing knowledge and contains basically the nature of knowledge and assumptions
about the world (Saunders, Lewis &Thornhill, 2017). A research philosophy is a belief on
how data about a topic under investigation should be collected, analyzed and used.
Doxology (what is believed to be true) and epistemology (what is known to be true) pertains
the many philosophies of research approach. Science is the practice of dispensing things
believed into things known: doxa to episteme. Science has mainly two philosophies:
positivism and interpretivism (Galliers,1991)
This research adopted a positivism philosophy since knowledge generated through it is
founded on empirical facts, logic and it is verifiable. Further to that, the philosophy allows
using probabilistic and deductive logic in determining meanings of situations. Finally, the
philosophy allows scientific analyses of data plus the use of theoretical bases of ideas.
Positivists agree that the subject under study can be interfered with and that reality can be
detected and defined from an objective viewpoint (Levin, 1988). Observations should be
done in an isolated manner over and again. This may lead to particular conclusions with
differences in one independent variable to know consistencies and form relations among few
of the essential elements of the social world. On the other hand, interpretivists believe that
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subjective analysis and intervention in reality results fully understanding the subject under
study. Phenomena in their natural surrounding are important to the interpretive philosophy,
in effect, no manipulation of the subject under study. They admit that there may be many
interpretations of reality, which informs knowledge.
3.2 Research Design
The design used in this research was descriptive. It has been explained that a design is used
equally for thewholecourse and, exactly, for the structure of the study (Sekaran, 2013). The
latter explains how data collected are structured. According to Kothari (2014), descriptive
studies are planned so as to get precise and relevant information on the present state of a
phenomenon and, where possible, to conclude effectively on the basis of the facts exposed.
This design was adopted because information and data are obtainable by use of the method
devoid of moving the environment (Deyrup, 2013).The design has been used in past
research by a wide range of scholars including Cherotich (2018), Ojwaka and Deya (2018),
Geroski (2015), and Kimei (2017).
3.3 Study Area
This research wasdone at two regions: Kisii and Kericho Highlands which fall within
regions 5 and 6 both within factories managed by KTDA. The 28tea-manufacturing
factories managed by KTDA comprised organizations researched. Kericho highlands is west
of Mau forest sharing a boarder withthe Kisii Highlands. The Kericho Highlands decimal
longitude and latitude coordinates are 35.28314 and -0.36774 respectively. Kisii and
Kericho were sampled since they were found to be applying differentapproaches of business
75
growth and the tea factories are geographically highly and closely concentrated.
Consequently, adequate data with regard to the variables of the research could be gotfrom
those who respondents for they were looked at as having relevant practical knowledge.
3.4 Target Population
The persons, organizations, events, products, animals, items, and things, from which a
researcher takes a sample in research is referred to as a population (Serakan, 2013; Oso &
Onen, 2015). In seven tea growing regions in Kenya, there are 69 factories. Their managing
staff countrywide ,top management ;(unit managers, production managers, accountants, field
managers, and administrators in field services); heads of sections (production assistants,
assistant factory accountants and assistant field service administrators) and supervisors
(factory supervisor I, senior factory mechanics, clerk II green leaf, tea extension service
assistants, boil attendants, plant technicians, stores clerk I) is 1506 according to KTDA
(2018). Kericho and Kisii highland tea zones werepurposively sampled. In the current
research, the population targeted was 701 managing staff of Kericho and Kisii highlandstea
processing factories managed by KTDA. We had140 top managers, 179 heads of sections,
and 382 supervisory staff totaling to 701 (KTDA, 2018). The element of analyses were the
701 managers of the 28 factories managed by KTDA in Kisii and Kericho highlands as
described in Table 3.1.
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Table 3. 1 Showing Target Population
LEVEL OF MANAGEMENT INTHE FACTORY Total
Factories Top Management Level Section Head Supervisor
KERICHO
Boito 5 7 13 25
Chelal 5 5 14 24
Toror 5 6 13 24
Tirgaga 5 5 11 21
Olenguruone 5 5 14 24
Kapkatet 5 6 13 24
Kapkoros 5 7 14 26
Kapset 5 6 13 24
Tegat 5 6 12 23
Rorok 5 7 11 23
Kobel 5 5 12 22
Litein 5 6 13 24
Mogogosiek 5 7 15 27
Momul 5 6 14 25
Motigo 5 7 15 27
Tebesonik 5 7 14 26
KISII
REGION
Nyankoba 5 7 12 24
Nyansiongo 5 7 15 27
Ogembo 5 6 15 26
Itumbe 5 7 15 27
Rianyamwamu 5 7 14 26
Kiamokama 5 7 16 28
Sanganyi 5 7 15 27
Nyamache 5 7 14 26
Kebirigo 5 7 15 27
Gianchore 5 7 13 25
Tombe 5 7 15 27
Eberege 5 5 12 22
Total 140 179 382 701
Source: KTDA, 2020
3.5 Sampling Design and Sample Size
This section shows how the sample size of the study was established.
3.5.1 Sampling Frame
Researchers use a sample frame to describe their population of interest. It is a mechanism of
selecting the sample size of target population. Rarely do researchers have direct access to the
77
entire population of interest in social science; a researcher therefore must depend on the
sampling frame to represent all the elements of the population of interest. Generally, a
sample frame aid in selecting particular elements from the target population. This study used
364management of KTDA employees as the sample size from the entire population of 701
under study in KTDA managed factories in Kenya covering 28 factories.
3.5.2 Sampling Procedure and Sample Size
This is a method of selecting a sample size for inquiry purposes (Mugenda and Mugenda,
2013). The research classified the population into layerscomprising the 28 tea manufacturing
factories and then later into units of administration. The sample size, according to Bryman
(2012), is symbolic of the target population. In this investigation, the sample was arrived at
by use of Yamane’s (1967) formulation, which proposes a simple principle to work out the
sample size for a finite population as presented here.
Where;
N is the size of the population is the size of the sample and e is the level of precision or
the level of statistical significance set. The degree of precision desired, generally set at
0.05 levels. At 95% confidence level, therefore level of precision = 5% (0.05)
Hence given the population as
n = 255respondents
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Thisresearch reserved a 30% possibility for those who would not respond. Yangon
(2015), Cheung (2017), and Berg (2018) suggest that to provide room for non-response
bias, it is required that a 10-30% provision of the population sampled is made.
Consequently, the sample size was 364 respondents, i.e. 255+109.
Proportionality was used to allocate the sample to every factory andworker levelon the
basis of the ratio of the size of the sample to the population. Sample stratums
comprisedsupervisors, managers at top levels, and heads of sections. Apportioning of
sample sizes was conducted by use of stratifying technique. Stratification, according to
Parson (2014), is meant to improve effectiveness of a sample design in respect of
estimator precision and survey costs.
n= ×Proportion Value
Where; N=Total respondents per factory
n=Sample size calculated
Proportion Value=total sample size targeted
Total=Target population
Dzisi& Ofosu (2014) study on market development approaches and the performance of
SMEs in Ghana used a sample size of 363 respondents and Ge and Ding (2015) studied
the intermediating influence of a corporation’s competitive approach in the market
orientation performance which used a sample size of 371.Table 3.2 shows sample size
distribution in different tea processing firms in the two regions.
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Table 3.2Sample Size
Tea Factory Top Managers Section Heads Supervisors Total
Kericho Region
Boito 2 3 8 13
Chelal 2 3 8 13
Toror 2 3 8 13
Tirgaga 2 2 8 12
Olenguruone 2 3 8 13
Kapkoros 2 3 8 13
Kapset 2 3 8 13
Tegat 2 2 9 13
Rorok 2 2 8 12
Kobel 2 2 8 12
Litein 2 3 9 14
Mogogosiek 2 3 8 13
Momul 2 3 8 13
Motigo 2 3 8 13
Tebesonik 2 3 8 13
Kisii Region
Nyankoba 2 3 8 13
Nyansiongo 2 3 8 13
Ogembo 2 3 8 13
Itumbe 2 3 8 13
Rianyamwamu 2 3 9 14
Kiamokama 2 3 8 13
Sanganyi 2 3 8 13
Nyamache 2 3 9 14
Kebirigo 2 3 8 13
Gianchore 2 3 8 13
Tombe 2 3 8 13
Eberege 2 3 8 13
Total 56 80 228 364
Source: Researcher, 2020
3.6 Data Collection
Questionnaires were used to collect data from KTDA managed factories in Kericho and
Kisii Highlands. The sampling approach used was simple random and consequently data
were obtained.
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3.6.1 Instrumentation
Primary data were obtained using self-structured questionnaires. Questionnaires are pre-
constructed set of questions that subjects respond to (Mugenda & Mugenda, 2013).
Questionnaire, according to Kothari (2014) is one of the commonly used data collection
instrument and is used to get data precisely and fast on attitudes, current topics, practices,
opinions, and conditions (Orodho, 2018). The instrument is comparatively affordable
compared to other tools. In the questionnaire used, structured question items would get the
view of the persons who responded and open-ended ones were meant to get information on
the theme of the research. Questionnaire administration was done through the drop and pick
technique.
3.6.1.1 Validity of Research Instrument
Krishna (2016) asserts that validity is the degree to which a tool for research processes what
is supposed to be measured. Mutai (2013) defines validity as the level at where results got
from the use of the instrument represents the phenomena under investigation. Face validity
and content validity were tested. Face validity was tested by developing a dichotomous scale
in the questionnaire with categorized options for the respondents and through peer reviews
while content validity was ensured by using the expert opinion of the University
Supervisors.
3.6.1.2 Reliability of Research Instrument
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Kothari (2014) asserts that reliability is the level to which the measuring instruments
provide consistent results. Johnson, Spitzer and Williams (2012) indicate that reliability is
ability of a measuring instrument to give similar result, in the same circumstances and at
different times. Reliable instrument should be able to give the same answer from different
respondents at different times. Pilot testing was used to enhance instrument reliability. Hill
(1998) proposes 10% of a sample population to pilot study in survey research.
A pre-study was carried out inAberdares region at Theta Tea Factory and Kagwe Tea
Factories where thirty-six (36) questionnaires were used. After a pre-study of the
instruments on the proposed respondents, the researcher looked at the design in the
responses and revised the instrument. Pilot respondents were excluded from the last sample.
These questionnaires were coded and responses keyed into SPSS version 24. Cronbach’s
Alpha (α) generated by SPSS version 24 is a measure which shows the degree to which a set
of items of an examination can be preserved as measuring a single latent variable
(Cronbach,1951). A threshold value of 0.7 was adopted and used as recommended in social
sciences (Kothari, 2014).The results of reliability tested are indicated on table 3.3.
Table 3.3 Reliability Results

Reliability Statistics Results
Variable Cronbach's Alpha N of Items
Product Diversification Strategy 0.969 12
Product Development Strategy 0.901 12
Market Development Strategy 0.871 12
Market Penetration Strategy 0.845 11
Organization Resources 0.97 15
Firms Performance 0.864 9
Overall Reliability Mean 0.903
Source: Field Data, (2020)
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3.6.2 Data Collection Procedures
Kisii University offered the permission sought (an introducing letter was issued) and then a
permit of research from the National Commission for Science, Technology, and Innovation
(NACOSTI) was obtained. Permission was similarly obtained from factory management
before data collection. Research assistants were recruited and trained on data collection
techniques and ethical procedures on data collection to assist them in collecting data. The
researcher and the research assistants issued out data collection instruments to the
respondents on agreed dates in their respective firms. Follow up was done through phone
calls and revisits to remind respondents on agreed upon dates of collection of the
instruments. The researcher collected the data collection instruments from the respondents
on the agreed dates through direct contact.
3.7 Data Analysis and Presentation
Questionnaires were picked from respondents and responses coded and keyed into the SPSS
version 24. This was followed by analysis. Tools used for data analysis were descriptive
statistics, which is standard deviations and means. Factor analysis was used on each research
variable in order to reduce the number of constructs and to hold the constructs that were fit
to define the variable. Regression analyses were done using simple and multiple regressions.
The simple regressions for each of the variables were;
Objective 1: Product Diversification Strategy and Organizational Performance
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Y = β0 + β1X1 + ε…………………………………………………………………….i
Where
Y= Performance of Tea Processing Firms in Kenya
= Performance of Tea Processing Firms in Kenya
B0 - intercept coefficient
εi – error term (extraneous variables)
X1 – diversification strategies
β1 =regression coefficients
Objective 2: Product Development Strategy and Organizational Performance
Y = β0 + β2X2+ε………………………………………………………….……ii
Where
Where;
X2 – Product development strategies
Β2 =regression coefficients
Objective 3: Market Development Strategy and Organizational Performance
Y = β0 + β3X3+ε………………………………………………………………………iii
Where
Where;
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X3 – Market development strategies
Objective 4: Market Penetration Strategies and Organizational Performance
Y = β0 + β4X4+ε…………………………………………………………………iv
Where
Where;
X4 – Market penetration strategies
The regression was summarized using a multiple regression model as shown below;
Y = β0 + β1X1 + β2X2 + β3X3+ β4X4+ε…………………………………...v
Where;
X1 – product diversification strategies
X2– product development strategies
X3–Market development strategies
X4–Market penetration strategies
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β1,β2, β3andβ4 =regression coefficients
The fifth objective was to determine the moderating effect of organizational resources on
firm performance. Hierarchical regression model was used as indicated below;
Y = β 0 +β1X1 + β2 X2+ β3 X3 + β4 X4 + β5 X1*M + ε …………….………........(va)
Y = β 0 + β1X1 + β2 X2+ β3 X3 + β4 X4+ β5 X1*M + β6 X2 *M + ε ……………..(vb)
Y = β 0 + β1X1 + β2 X2+ β3X3 + β4X4 + β5X1*M + β6X2 *M + β7 X3*M+ ε…….(vc)
Y = β 0 +β1X1 + β2 X2+ β3X3 + β4X4 + β5X1*M + β6X2 *M + β7 X3*M + β8X4*M + ε............
(vd)
Where;
Y -Performance of Tea factories in Kenya
β1…..β4 - regression coefficients
εi– error term (extraneous variables)
X1 – diversification strategies
X2 – Product development strategies
X3 – Market development strategies
X4 – Market penetration strategies
F-test tested the overall model statistical significance
P-value determined the significance of the model
If F calculated value is more than F critical value, then the null hypothesis was rejected or
otherwise. If change in R2 after addition of interaction term (Moderator) is significant
then organization resources bears a regulating influence on the association between
development of business strategies and performance of tea factories in Kenya.
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3.8 Ethical Considerations
An introduction letter from Kisii University was obtained seeking for permission from
Kenya Tea Development Authority to obtain and utilize the information from the selected
Tea Factories. Further, the researcher sought NACOSTI permit to collect data from the
selected Kericho Highlands region and Kisii Highland region.
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CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND DISCUSSIONS

4.1 Response Rate
Three hundred and sixty-four(364) questionnaires were given outtofactory managers out of
which three hundred and nineteen (319) were filled out and returned. This wasa rate of 87.64
%. Saunders et al (2011), consider this sufficient for a study. Forty-five respondents did not
return their questionnaires and three were inappropriately filled out and therefore unsuitable
to be used for analysis. That 316 fully filled out questionnaires from the respondents making
the rate of response to be 86.8 %. According to Holbrook (2009), a response rate of above
0.5 is representative enough and falls inside the response rate desired. The distribution of
participation is described on Table 4.1.
Table 4.1: Response Rate

Sample size Number Percent
Distributed Questionnaires 364 100.00
Returned questionnaires 319 87.64
Questionnaires Not returned 45 12.4
Non usable questionnaires 3 .8
Usable questionnaires 316 86.8
4.2 Data Cleaning and Screening
Data screening, editing and transformation was done before initial data presentation. (Hair et
al., 2010) opined that it is important to screen data in order to recognize prospective
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breaches of basic values of multivariate approaches. Collected raw data needs to be cleaned
up prior to commencement of multivariate data analysis. This was realized through treating
errors, missing data, and outliers.
4.2.1 Analysis of Data Entry Errors
Data from the questionnaires were entered in SPSS version 24 for further analysis. Three (3)
questionnaires were classified under data entry errors.
4.2.1.1 Analysis of Outliers
A data point that is far from other observations is referred to as an outlier. Presence of
outliers compromises the statistical reliability and validity of the research (Hair Jr et al.,
2010). In addition, outliers significantly affect statistical estimations (e.g means and
standard deviations of a sample), hence overestimating or underestimating values (Kwak&
Kim, 2017). In this study variables; product development, organizational resources,
productdiversification, marketdevelopment, firm’s performance, and market penetration had
outliers. The outliers came as a result of variability of measurements. However, all the
outliers identified were within the expected range of values and were retained for analysis.
4.2.1.2 Analysis of Out of Range Values
Three observations were found to be having out-of-range values. These observations were
made missing and could not be made available for analysis.
4.2.1.3 Analysis of Missing Data

Missing data arises when cases such as, respondents failing to respond to some questions.
Additionally,an important fraction of data may be erroneous in which the only alternative
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may be to discard the erroneous data (Batista & Monard, 2003). Missing data leads to a
biased statistical analysis resulting to wrong data estimation. Out of 319 questionnaires
received, 3 of them were found to be having missing data and hence dropped.
4.3 Demographics of the Respondents
Bio-data of those who responded including period of working at the factories, age, gender,
level of education, were evaluated. Demographic information gives data on respondents and
is important for determining persons in a research and are a typical sample of the targeted
population for the sake of generalizing the findings of a study (Salkind, 2010). Demographic
characteristics are widely acknowledged to have a great influence on how respondents
respond to questions and their performance in organizations. According to Wasike (2016),
demographic characteristics are individual features such aslevel of education, age, race,
family size, ethnicity, and work experience. Ongeti (2014) points out that the demographic
characteristics have an influence on whether stakeholders will be committed to their
obligations or not.
4.3.1 Profile of Respondents
The general information about each subject which forms the base ofwhich interpretations
are made was obtained. This information was important to the study because it helped the
reader to understand some issues that might be important in the analysis. Among the
characteristics regarding the respondents included; gender, age, highest level of education,
period worked in the factory and the level of management in the factory.
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Table 4.2: Demographic Characteristics of the Respondents
Characteristics Description Frequency %
Gender Male 197 62.3
Female 119 37.7
Total 316 100
Age 20 - 29 years 69 21.8
30 - 39 years 145 45.9
40 - 49years 80 25.3
Above 50 years 22 7.0
Total 316 100
Level of O-Level 26 8.2

Education Certificate 38 12
Diploma 115 36.4
Degree 109 34.5
Post-Graduate 28 8.9
Total 316 100
Period worked in Less than 5 years 103 32.6
the factory 6-10 years 110 34.8
11-15 years 74 23.4
16-20 years 28 8.9
More than 21 years 1 0.3
Total 316 100
Level of Top management level 50 15.8
management in Section head 75 23.7
the factory Supervisor 191 60.5
Total 316 100
The research results show that 197 (62.3%) of those who responded were male, 119
(37.7%) were female. This indicates that the factories structures adhere to the principles
of gender balance in employing staff and in this way theirdecisions are likely to be
gender sensitive. Since the two-thirds requirement was achieved then results were
considered unbiased.
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The study also assessed age of those who responded. The study results show that 69
(21.8%) of those who responded had 20 – 29 years, 145 (45.9%) had 30 – 39 years, 80
(25.3%) had 40 – 49 years, 22 (7.0%) had above 50 years. These findings revealed that
respondents of different ages participated in the study hence the results were not biased
based on the ages of the study’s subjects.
Table 4.2 above shows the academic qualifications of the subjects. The study results
show that 26 (8.2%) of those who responded had O- level, 38 (12.0%) had certificate
level education, 115 (36.4%) had diploma level education, 109 (34.5%) had degree level
education, 28 (8.9%) had graduate level education. Findings indicated that the
respondents were of a reasonable educational level to participate in the study.
The work period of those who responded is described in Table 4.2. Findings show that
103 (32.6%) of those who responded had been employed for less than 5 years at the
company, 110 (34.8%) had been employees for 6–10 years, 74 (23.4%) had been working
for 11– 15 years, 28 (8.9%) had been employees for 16 – 20 years, while 1 (0.3%) had
worked for over 21 years. The findings indicate that majority of those who responded had
worked for over 5 years hence were well informed on the operations of the factories and
hence could be nominated to take part in the investigation.
Table 4.2 above exemplifies the level of management in the factory. The research
findings indicated that 50(15.8%) of the respondents were top level
management,75(23,7%) were section heads and 191 (60.5%) were supervisors. This
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category of respondents was selected because they were aware of the management
characteristics necessary in the operations in factories.
4.3.2 Region of Factory
The study sought to assess the regions from which the factories participating in the research
were located. The study findings are described on table 4.3
Table 4.3: Region of Factory

Region Frequency Percent
Kisii highlands 146 46.2
Kericho highlands 170 53.8
Total 316 100
Findings show that 146 (46.2%) of the respondents were from Kisii Highlands, 170
(53.8%) were from Kericho Highlands. These regions were chosen because of the
abundance of these factories in these areas. They would therefore provide a picture of
what happens in all other areas of the country.
4.3.3 Business Growth Strategies
The study sought to identify the business growth strategies that were being employed by the
various tea factories selected to participate in the study. The research findings are described
in table 4.4
Table 4.4: Business Growth Strategies

What are some of the business growth Frequency Percent
strategies employed bystrategies
Product Diversification your factory? 73 23.1
Product development strategies 148 46.8
Market development strategies 59 18.7
Market penetration strategies 35 18.7
Total 316 100
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The research results show that 73 (23.1%) of those who responded were of the opinion
that the factories employed diversification strategies, 148 (46.8%) indicated that the
factories employed product development strategies, 59(18.7%) indicated that the factories
employed market development strategies, 35(18.7%) indicated that the factories
employed market penetration strategies. This indicates that product development
strategies is the most used strategy by factories of the four Ansoff matrix strategies.
4.4 Descriptive Analysis
The research analyzed the data collected based on the research objectives. The mean scores
(M) and standard deviations (SD), for all the measurement items related to the business
growth strategies. The study findings were presented in table 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10.
4.4.1 Product Diversification Strategy
Thisresearch evaluated product diversification approaches used by tea factories whose
results are described in Table 4.5
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Table 4.5: Descriptive Statistics results of Product diversification strategy (N = 316)
Minimum Maximum Mean Std. Deviation

The firm offers other products as 1 5 3.50 1.651
opposed to tea products
Diversified products by the firm are not 1 5 3.91 1.344
only in the agricultural sector
The company engages in development 1 5 3.84 1.379
of new diversified products regularly
Comparatively, the firm has a high 1 5 3.78 1.359
number of products diversified
the cost of product diversified 1 5 4.08 1.251
constitute a large part of the firms
budget
Diversification investments are only 1 5 4.15 1.071
possible through raise of additional
capital through equity or debt
Diversified products require their own 1 5 3.97 1.392
physical, human resource and
technological infrastructure
payback periods for diversification 1 5 3.84 1.387
projects is over a period of periods
Diversification is conducted only for 1 5 3.97 1.180
products that can utilize existing
company technologies
The firm is keen to diversify into 1 5 3.72 1.425
product that may appeal to tea
customers
diversification strategies employed 1 5 3.91 1.242
depend on management
The firm diversification policy restricts 1 5 3.78 1.355
how diversification is to be done
Average Mean 3.868 1.336
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Findings indicate that subjects held the view thatorganizations give different products
different from black CTC(mean=3.50, SD= 1.651). Those who responded stated that the
various products from the factories are accepted simply by consumers(mean=3.91,
SD=1.344). Additionally, those who responded held the view that the firminvolvesitself
in developing new diverse products at regular intervals (mean=3.84, SD=1.379). Further
to that, those who responded said that somewhat the organization has a big number of
diversified produce (mean=3.78, SD=1.359). Results further suggested that the cost of
diversified products form a significant share of an organization’s spending(mean=4.08,
SD=1.251). Results further show that those who responded agree that diversification
investments are only possible via raising of extra capital through debt or equity
(Mean=4.15, SD= 1.071).Still, those who responded held the view that products that are
diversified need own physical resources, technological structure and human resources
(Mean=3.97,SD = 1.392).
Majority of those who responded held the view that payback periods for diversified
projects is after some time (Mean=3.84,SD =1.387) . Those who responded further agree
that diversifying is done for products that make use of existing firmtechnology
only(Mean=3.97, SD = 1.18). Most of those who responded stated that the organization is
keen to diversify into products that might attract tea clients (Mean=3.72, SD= 1.425).
Those who responded felt that diversification plans used depend on the managers
(Mean=3.91, SD= 1.242). Majority of those who responded agreed that organizational
diversification policies restrict how diversification is to be conducted (Mean=3.78, SD =
1.355).
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It shows, with a standard deviation of 1.336, that all the items were not dispersed and
thereforeindicating ahigh level of internal consistency and hence would measure the same
concept(diversification of products).Generally, the different items in the research in
product diversification objective hada standard deviation of 1.336 and a mean of 3.868
which indicates that factories that are managed by KTDA in Kenya have taken up
diversification of products as a tactic of business advancement.
Research results indicating tea factories adopting diversifyingproducts to manufacture
appealingproducts is understood to imply that these organizations have recognized
importance of dealing with own performance challenges by adopting diversifying as a
tactic to increase production. This finding is corroborated by others who note that
because ofstabletea production, the global prices of processed tea remained unchanged
with supply stabilized and accelerating costs of manufacture with returns for tea growers
coming down (Hajra & Yang, 2015). With introduction of different types of health
drinks, beverages with diversetastes, health and tasteadvantages to gratify the versatile
health promoting and organoleptic demands of the 21st century markets, it is somewhat
not safe for tea industries with investment base of whatever scale to focus on the
manufacture and sale of any particular variety of tea since it makes
thebusinesssusceptible to market trends which might divert towards various parallel
products.
Further Wachiraet al (2016)note that this state of things emphasizes the necessity of
exploring alternate approaches by the tea firms of bringing up profits from the farming of
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tea. Diversifying products to take hold of the world market is a companytactic and
products ofdiversification of tea with added value are asignificanttactic to
getimprovedearnings for tea farmers. In this way, diversifying from exportation of bulk
tea to value added tea diversified products with clearly-defined sellingapproaches
embraced by the factories might be useful to face the strong competitive challenges in the
global market.
According to Bhandari et al (2019), tea added value diversified products might assist the
factories win the world tea market and similarly looking at the health aspect, studies
indicate that adding value to tea has been found to add potential to its pharmacologic
rating through synergistic influence amongst tea secondary metabolites and value added
flavoring. Lemon grass tea has been founddisplaying synergistic hypolipidemic effects
compared to black tea only. Tumeric incorporated black tea has been found
exertingenhanced neuroprotective and antihypertensive effects with respect to black tea
on its own. In this way, value addition and product diversification in tea is useful for
increasing the profit edge from commercial aspects and customer acceptance with a fresh
outlook, health benefits, taste, and flavor. In addition, it should be noted that
diversification of tea products mustactually aid to synergistic addition of value without
hindering the original chemo profile of tea and organoleptic acceptability amongst the
consumers.
Devanathan (2014) notes that Kenya is presently the global top producer of black tea.
Due to overproduction, the unit prices of processed tea have either stagnated or decreased
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despite increasing costs of production resulting in decreasing returns for tea growers.
There is necessary to look for alternateusages of tea so as to increase the demand for the
crop's products and shore up market prices. Product diversification throughadding value
is an essential method to ensure better returns to growers. The beverage is a source of
dietary polyphenols which have been associated with numerous health enhancing
properties. Tea germplasm however differs significantly in its biochemical make up. The
scope for diversification of tea products is therefore dependent among others on the
availability of appropriate germplasm with ability to produce the right raw material for
production of high value diversified tea products. Though the tea species is not native to
Kenya, the country's germplasm is diverse and efforts have been made to enlarge the
existing gene pool through introductions from other centre's of origin and dispersal and
also to generate intra- and interspecific hybrids with the potential to produce tea products
with unique properties.
4.4.2 Product Development Strategy
This research assessed the product development approaches that tea factories use. The
findings are described on Table 4.6.
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Table 4.6: Descriptive Statistics Results on Product Development Strategy
Statements Min Max Mean Std.

Dev
There is a defined policy governing product development 1 5 3.76 1.146

process
Processes in product development are adopted from industry 1 5 3.89 0.929
practises
There is a minimum of five processes that a new product has 1 5 3.56 1.129
to go through before it is developed
Management defines the processes a new product will go 1 5 3.72 1.058
through before development
The firm level of innovativeness in new product development 1 5 3.59 1.052
has been recognised in the past
The firm new products are received well in the market due to 1 5 3.65 0.996
high level of innovation
Intra-preneurship in the organisation has led to the 1 5 3.43 1.098
development of new products
The firm promotes creativity among various developments by 1 5 3.75 1.051
investing in their ideas
The firm has a research and development department 1 5 3.49 1.153
The research and development department has been 1 5 3.22 1.144
sufficiently funded
Many new products have been developed through R&D 1 5 3.44 1.138
The r&d department activities have been recognised by 1 5 3.55 1.087

industry players
The research results pointed out that a bigger number of the respondents understand that
there is a knownrulethat governs development of product processes(mean=3.76,
SD=1.146). In addition, respondents were in agreement that development of product
processes are embraced frombusiness traditions(mean=3.89, SD=0.929). Majority of
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those who responded held the view that the least number of processes new products
gothrough is five before developing (mean=3.56, SD=1.129). Further, they held the view
that managers define the processes that new products must be taken through before being
developed (Mean=3.72, SD=1.058). Additionally, majority of those who responded held
the view that an organization’s extent of innovation in development of new products has
previously been recognized(mean=3.59, SD=1.052). Still, majority of those who
responded held the view that fresh products are readily accepted in the market because of
high innovation levels (mean=3.65, SD =0.996). Similarly, others expressed diverse
views to the claim that intra-preneurship in a company is responsible for the developing
of fresh products (mean =3.43, SD=1.098).
Another view held by respondents is that an organization encourages imagination among
different developments by capitalizing on their insights (mean =3.75, SD= 1.051). A
bigger number of those who responded admitted that organizations have development
and research departments(mean=3.49, SD=1.153). On whether the development and
research departments are funded enough, the respondents disagreed (mean=3.22,
SD=1.44). The research additionally indicated that majority of those who responded held
the view that the development and research departments’ activities are acknowledged by
players in the industry (mean =3.55, SD=1.087).
The average standard deviation of 1.082 indicates that all items were not spread and in
this way indicating thatinternal consistency was high and so might measure the similar
concept of development of products. The general result on product development
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strategies indicates a mean of 3.588 with a1.082 standard deviation. Its connotation is the
significance attached by management of KTDA factories on development of products as
a business growth plan.
The research results that different procedures are required for developing products which
might be embraced from practices in industry are understood to imply that there is aneed
for adopting technology with an aim of improving development of products. These
results are corroborated by Feng, Li, Wang, Zhang, Wan & Yang, (2019) who observe
that targeting fresh markets in the Far East, KTDA, a private establishment thatoffers
managerial services to low-scale farmers of tea for producing, processing, and marketing
of teas in Kenya, has brought on board orthodox teas processing. Orthodox teas refers to
whole leaf teas that are manufactured via the traditional process, and ordinarily sell better
than those processed by the “crush, tear, and curl” (CTC) process. KTDA’s targets
production of 60 million tonnes of orthodox teas annually with a factory in each zone of
tea production.
Additionally, Van Lelyveld& De Rooster (2016) discoveredthat the number of products
of tea is going up with lots of processing anddevelopment of products. With expansion in
the teaindustry, those who manufacture needto adapt to demands of the market in order to
survive. They maycopyhigher processing standards from other factories so as tothrive in
their performance subject to what markets require.
Herath& De Silva, (2017) further noted that to spare tea farmers the increasing operation
costs, KTDA and tea factories in Kenya took a daring decision in embracing innovation
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in their business. The inventions were both process and organizational (KTDA, 2014).
The former comprises implementing of new or meaningfullyenhancedproduction and
delivery method. It comprises important modifications in software, techniques, and
equipment. Innovation in firms involves: new practices aimed at improving knowledge
sharing and learning in the firm; business re-engineering, lean production, introducing of
managerialmethods for general production or supply operations, and systems managing
quality(Beckman& Barry, 2017).
Innovation of processes is ordinarily embraced with the purpose of reducing unit prices
of production. Process innovations conducted by tea factories and KTDA were changing
steam boilers from furnace fuels to firewood and automatic tea processing by embracing
Continuous Fermentation Unit aiming at bringing down operational costs. Automatic tea
processing systems are intelligent machines which changed tea manufacturing traditions
by abolishing human involvement in the fermentation processes. It was done to bring
down labour costs as fewer workers were needed in operating the plant in comparison to
the previous system. The system was additionally embraced to enhance quality since it
does not influenced by human involvement in the different stages of tea processing
(KTDA, 2014). Since furnace fuel costs went up, KTDA choseto move to firewood steam
boilers from furnace fuel steam boilers (CPDA, 2008; Kagira, Kimani, & Kagwithi,
2012).
4.4.3 Market Development Strategy
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This research assessed approaches on market development used by thesample factories.
The findings are described in table 4.7.
Table 4.7: Descriptive statistics Results on Market Development Strategy. (N= 316)
minimum maximum mean std. deviation

There is a set budget for 1 5 3.96 .977
marketing in new markets
marketing budgets are very high 1 5 4.08 .979
compared to available funds by
the company for new markets
Marketing costs are fixed cost 1 5 4.11 1.002
that do not vary irrespective of
new market characteristics
marketing is not done in new 1 5 4.12 1.049
markets
New markets are offered only one 1 5 3.96 .991
product at a time
Any potential new market is 1 5 4.19 .836
offered any existing products
products are introduced in a new 1 5 3.90 .986
market over time
new products are offered at once 1 5 4.00 1.039
in a new market
different forms of advertising are 1 5 4.00 .971
conducted in new markets
Advertising is done frequently in 1 5 4.01 .946
new market
advertising is done differently for 1 5 4.06 .997
different markets
Their scope in new markets is 1 5 3.93 .993
more intense than in existing
markets
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The research results indicated that many of those who responded held the view that there
is a set budget for marketing in new markets (mean=3.96, SD = .977). Most respondents
agreed to the opinion that marketing budgets are very high compared to available funds
by the company for new markets (mean=4.08, SD= .979). Respondents agreed to the
opinion that marketing costs are fixed cost that do not vary irrespective of new market
characteristics (mean= 4.11, SD = 1.002). Majority of those who responded held the view
that marketing is done in the new markets (mean=4.12, SD=1.049). Many of those who
responded held the view that new markets are offered only one product at a
time(mean=3.96, SD=.991). Further, respondents agreed that any potential new market is
offered any existing products (mean= 4.19, SD=.836). Many of those who responded
agreed that more products are introduced in a new market over time (mean=3.90,
SD=.986). Most of the respondents agreed that new products are offered at once in a new
market (mean=4.00, SD=1.039).
Majority of those who responded had the view that different forms of advertising are
conducted in new markets (mean=4.00, SD=.971), while still majority of them were of
the view that advertising is done frequently in new markets (mean=4.01, SD=.946).
Majority of them further held the view that advertising is done differently for different
markets (mean= 4.06, SD=.997). Most respondents agreed that their scope in new
markets is more intense than in existing markets (mean=3.93,SD=.993). Overall result
posting on market development objective plan showed a mean of 4.03 and a standard
deviation of 0.981. This shows that factories in Kenya under KTDA management have a
strong conviction that market development is key in order to realize better performance.
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The results that to advertise is significant in developing markets was taken to imply that
firms marketing tea are keen on tapping into fresh markets in which they might sell
different tea products in order to beat emerging competition via advertisementcampaigns
on the products that they offer. These findings are supported byMbogo et al (2015) who
argue that Kenya sells to international markets the black CTC tea. This brings up
challenges especially when the supply is high as a result of overproducing of green leaf.
Over relying on the old markets including Egypt, the UK, and Pakistan (accounting for
more than 65%) is, in addition, a big challenge particularly when these countries are
politically unstable. Pakistan, for example, buys 24% of the total tea sold outside Kenya
(Made et al., 2009). Kenya’s tea old markets are decreasing due to high taxes levied on
the Kenyan tea. For instance, Pakistan has begun to look out for alternative markets
therefore bringing down Kenyan tea imports to 65,000 tonnes in 2006 from 91,000
tonnes in 2005.
Accordingly, there exists a necessity to broaden markets away from the present high
dependence on the five leading export markets which are (Afghanistan, Sudan, UK,
Egypt, and Pakistan). As observed from Mombasa Auction, up to 18% of processed tea is
not sold weekly (World Bank, 2014) and as a result, consumption of Kenyan tea needs to
be encouraged domestically by the KTDA. India, according to Kumar and Mittal (1995),
is an example in this; they consume more tea than what they export.
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About 85% of households in the Indian sub-continent consume about 81% of the entire
tea products in the country. On the other hand, in Kenya, only 5% of tea products is sold
within the country. Accordingly, market strategies and techniques to make sure more
products of tea are consumed by Kenyans should be put in place by the relevant
institutions. A number of approaches can be explored including social media, radio,
television, and road shows to publicize such a project. Other strategies will include
branding, packaging, and value addition. Tea marketers should also keep close to
consumers, visiting them to determine consumer choices and tastes and to understand
their tea drinking behavior. It is viewed that such an approach will enable the tea business
to produce best tea to measure up to consumer preferences (Ge and Ding,2015).
Gesimba, Langat, Liu, &Wolukau, (2015) supports these findings by noting that in spite
of tea being a leading cash crop in Kenya, the country continues to produce processed tea
at a basic level with little value addition and product differentiation which has adversely
affected profit growth. Even though the capacity of value added to tea sales has been
going up, there, is need for promoters to increase what is sold by creating variety in
production, to increase profits and to provide employment for Kenyans engaging in
adding value. This will consequently help the country attain the objective of
industrialization as captured in the country’s Vision 2030. The requirement to add value
to tea is becoming more crucial than previously in a bid to provide consumers-in Kenya
and world over-with pure Kenyan branded tea, which is blended at the source.
107
Kenya continues to heavily depend on the old markets including Afghanistan, Sudan,
UK, Egypt, and Pakistan accounting for 71% of the entire export volume, according to
KTDA (2015). The 71% reflects on the power of purchasers as high which has resulted to
anadverseinfluence on how competitivetea from Kenya isin the world market. In such
situations, any negative influence on the economic prospects and political situation of
these nations significantly influences tea demands from Kenya in the markets and
consequently their prices.
The Economic Survey of 2015 observes that the price per a unit of Kenyan tea maintains
adescending tendency due to high production and drop in demand for black CTC tea in
somecore old markets. In spite of capability for production of quality black CTC tea
annually and exporting in bulk, the absence of planson market development practices
deters expanding of markets andcontributes to decreasing how competitive tea from
Kenya is in the world market. This thought is confirmed by the fact that old markets of
the Kenyan Tea face many challenges thereforethe declining.
4.4.4 Market Penetration Strategy
This research alsosought to assess the market penetration approaches used by the tea
factories and the findings are described on table 4.8.
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Table 4.8:Descriptive Statistics Results on Market Penetration Strategy (N= 316)
company products are offered at 1 5 4.30 .892
different prices in markets where
competitors exist
the company has a pricing policy 1 5 4.10 .998
for existing markets
the company prices are dictated 1 5 4.11 .987
by existing market forces when
penetrating markets
price in existing market are 1 5 4.15 .960
offered at no profits but increase
as customers know the product
the company targets specific 1 5 3.95 .989
niche markets in existing markets
with products
more than on niche market can be 1 5 3.91 .968
targeted in a new market with the
company products
the company has no preference on 1 5 4.00 1.013
marketing of products
products are differentiated to suite 1 5 3.77 .977
specific markets
product differentiation is 1 5 3.70 .944
emphasized for all company
products
differentiation costs the company 1 5 4.03 .993
production processes significantly
company profitability has been 1 5 4.09 .957
achieved because of differention
Average Mean 4.01 .974
The results showed that most of those who responded felt company products are offered
at different prices in markets where competitors exist (mean=4.30, SD=.892).
Respondents agreed that the company has a pricing policy for existing markets
109
(mean=4.10, SD=.998). Company prices are dictated by existing market forces when
penetrating markets (mean=4.11, SD=.987).Majority of the respondents did agree that
price in existing market are offered at no profits but increase as customers know the
product (mean=4.15, SD=.960).
Study findings showed that the company targets specific niche markets in existing
markets with products (mean=3.95, SD=.989). Respondents agreed that more than one
niche market can be targeted in a new market with the company products (mean=3.91,
SD=.968). Company has preference on marketing of products (mean=4.00, SD=.1.013).
Many of the respondents indicated that products are differentiated to suite specific
markets (mean=3.77, SD=.977) Findings show that respondents agreed that products
differentiation is important for all company products (mean=3.70, SD=. 944.Most
respondents agreed that product differentiation costs the company production processes
significantly(mean=4.03, SD=.993). Study findings showed that company profitability
has been achieved as result of product differentiation (mean=4.09, SD=.957).
Overall posting on the market penetration objective as a business growth plan showed
mean a standard deviation of .974 and a mean of 4.01. This suggests that factories under
KTDA management in Kenya have employed market penetration business growth
strategy in an attempt to improve their performance.
The study findings that differentiation and pricing were some of the strategies used to
penetrate markets by tea companies were interpreted to imply there was a high level of
110
competition among the tea firms locally and abroad. Consequently, companies had to find
ways in which they would ensure that their products were chosen over other company’s
products. These results are corroborated by Farrok et al (2019) who observes that in the
initial steps of entry into the market, the firm should expose its products to the public to
increase their character. Ability to expose its product value, firms can make strong their
union with consumers. Value shared between companies and consumers can improve
firm performance. Hu(2012) suggests that a focus on market strategies can improve sales
or improve customer re-purchasing rate.
Blowfield & Dolan (2015)say that pricing strategies are meant to fix prices in relation to
characteristics of the targeted portion. For fresh products, price strategiesare centered on
a policy on price penetration preparing to institute long-term growth and returnsby
creating the brand. Plans on price penetration are made in a manner to capitalize what is
sold, gain extensive market acceptance, and seize a large share of the market fast and via
fixing a comparatively low initial price. The cost incurred by firms in creating products
are imperative in setting of prices. On the basis of production costs, companies can
institute short-term price cuts to encourage sales or store traffic (Ferrell & Hartline,
2014).
Maina, Mugambi, & Waiganjo (2018) observe that market activities like price variations
and promotions can sway customer purchasing decisions. Varying prices might give
varying effects on customers. While flat pricing was looked at as fairer, companies need
to change prices to meet perceptions of consumers (Bujisic, Bilgihan, & Hutchinson,
111
2013). A wide promotion and aggressive intervention measures is only the first step
totheimprovement ofthe domestic market, particularly in the context of competitive
involvement from other countries. The present Kenyan tea consumption is about 0.65 kg
per capita annually, which is comparatively low in comparison to most tea-producing
countries like India and China consuming over one kg per capita per year. The low per
capita consumption is due to inter alia VAT on homegrown tea, lack of knowledge on
health benefits of the beverage, and liking for tea with high milk and low tea content.
Local markets can be formed through market promotions. The important goalof
advertising campaigns is to convince the consumer to purchase the product instead of
related products in the market.
4.4.5 Organizational Resources
This research sought to assess the organizational resources used by factories processing tea.
The results are described on table 4.9.
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Table 4.9: Descriptive Statistics results on Organizational Resources (N=316)
Statements Min Max Mean Std.
Dev.
The factory has sufficient financial resources to implement its 1 5 3.64 1.126
strategies.
The company books allow the firm to seek for financial assistance for 1 5 3.82 .952
any project
The factory has a favourable organizational financial management 1 5 3.83 .959
culture which favours strategies implementation
The company has a good social networks which gives it a competitive 1 5 3.87 .903
edge in seeking for financiaal resources
The firm has qualified, skilled and experienced employees 1 5 4.13 .871
The management is competent in strategy formulation and execution 1 5 4.05 .895
The company facilitates and encourages employee capacity and career 1 5 3.93 .957
development
The factory has invested heavily in modern technology 1 5 3.98 .903
The company invests in operational efficiency to improve revenue 1 5 3.99 .893
The engineering department has automated all operations at the 1 5 3.53 1.085
company
The company has an ICT department to manage technological 1 5 3.97 1.028
resources
The factory involves all stakeholders in decision making and strategy 1 5 3.95 .976
implementation
The firm complies, collaborates and participates in government policy 1 5 3.94 .951
formulation regarding tea sector
The factory learns from better performing zones, re4gions and firms 1 5 4.06 1.001
to benchmark for improved competitive advantage
Research and development is a key component of the company's 1 5 3.87 1.003
operations
Results indicated that the factories had sufficient financial resources to implement their
strategies (mean =3.64;SD= 1.126).Findings showed that the company books allow the
firm to seek for financial assistance for any project(mean= 3.82;SD = 0.952). A relatively
113
bigger number of the respondents held the view that factories had favorable
organizational financial management culture which favors strategies’ implementation
(mean= 3.83;SD=0.959.).Some of those who responded had the view that the factories
had good social networks which gives them a competitive edge in seeking for financial
resources (mean= 3.87; SD = 0.903).
Findings suggested that most of the respondents held the view that the firms had
qualified, skilled and experienced employees (mean= 4.13;SD = 0.871). Those who
responded held the view that the firm is competent in strategy formulation and execution
(mean =4.05;SD = 0.895). Others of those who responded were of the view that the
company facilitates and encourages worker capacity and career development (mean
=3.93;SD= 0.957). Some believed that the factory had invested heavily in modern
technology (mean =3.98; SD = 0.903).Finally, it was also felt that tea factories invest in
operational efficiency to improve revenue(mean= 3.99; SD = 0.893).
Many of the respondents believed that the engineering department has automated all
operations at the company(mean=3.53; SD=1.085). Findings indicated that the company
has an ICT department to manage technological resources (mean= 3.98;SD=
0.903).Many of those who responded feltthat the factory involves all stakeholders in
decision making and strategy implementation(mean =3.95;SD=0.976). Findings indicated
that the firm complies, collaborates and participates in government policy formulation
regarding tea sector(mean= 3.94;SD= 0.951).Majority of those who responded were of
114
the opinion that the factory learns from better performing zones, regions and firms to
benchmark for improved competitive advantage (mean =4.06;SD= 1.001).
Findings showed that research and development is a key component of the company's
operations (mean= 3.87; SD = 1.004). Overall aggregate mean posted was 3.9 and
standard deviation of .97 of all the items of organizational resources under investigation.
This confirms that KTDA managed factories in Kenya have in place various
organizational resources.
The study findings that the firms use a number of organizational resources to achieve
success including competent employee’s strategy, assets and organizational learning can
be interpreted to mean that organizational resources are useful assets that can moderate
any outcome for a tea factory or any other firm. This is because of the importance of
operational resources necessary for organizational resources. This finding is supported by
Areri, Anyango, & Okelo (2015) who note that there exist internal and external
environmental conditions that contribute to the higher profits in tea manufacturing firms
and some of these factors are budget controls, export marketing approaches, the use of
information technology and managing assets efficiently.
Ogage(2015) poses that managers must create a controlled environment if firms must
earn higher profits. They have a successful set of internal controls that enable workers to
operate according to policies and procedures of the management. Controls have to assure
and ensure compliance by workers at all levels. Managers have to perceive and adhere to
the limits on their power to increase the firm’s resources. Monthly budgetary control
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reports indicate the details on how managers expend resourcesusing the powers given to
them. Definitely ‘Budget Management Structure’ must give room for reviews during the
specified period.
According to Kerubo, Koech, & Otieno, (2020), managing assets, in its broadest
definition, refers to a system that maintains and monitors things of value of a group. The
definition further indicates that it may be relevant to physical assets-such as structures -
and to indefinable aspects such as goodwill and intellectual property. Managers of tea
manufacturing companies need to manage their firms’ assets competently in order to
achieve organizational goals.
Asset management decision, according to Horne &Wachowicz (2014), is one of the
decision functions of managing finances and purchased firm’s resources ought to be
taken care of professionally. Additionally, managers of finance departments are given the
mandate to take care of the current resources and make sure that they are managed
properly. Such accountabilities need committed finance managers to look after current
resources. An enormous responsibility of managing non-current resources is in the hands
of the department which usually uses them.
4.4.6 Descriptive Statistics Results on Firm Performance.
The research assessed performance of tea factories under management ofKTDA. The
research results were described in table 4.10.
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Table 4.10: Descriptive Statistics Results on Firms Performance. (N=316)
1 5 4.27 .851
The firm is a cost leader in the
market
The firm pricing of its 2 5 4.14 .835
products is the best for its
suppliers
The company’s market share 2 5 4.07 .857
is among the highest in the
industry
2 5 4.02 .822
The company’s market share
has developed with business
growth diversification
Bonus payments by the 1 5 3.64 1.090

company are among the
highest
1 5 3.60 1.078
The firm’s farmers are paid in
time and at a high rate
1 5 4.13 .824
Surveys have shown that
customers are satisfied with
the company’s products
There are many referrals by 1 5 4.09 .910
customers
Levels of retaining customers 1 5 4.31 .734
are high
Average Mean 4.03 .889
Results from this research indicate thatfactories processing tea are cost leaders in the
market (mean= 4.27; SD=.851). Many respondents held the view that the way the factory
determines prices of products is the most appropriate for its suppliers (mean=4.14;
SD=0.835) and that firm market share has become better due to business development
approaches and in the industry, it remains the leading(mean=4.07;SD=0.857).Majority of

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those who responded held the view that the firm’s market share has become better with
business progress indiversifying(mean=4.02; SD=0.822). But, with regard to the claim
bonus payments are among the highest, responses indicated a divergent view
(mean=3.64;SD=1.090). There was variation, among respondents, in their feelings with
regard to the claim that those who grow tea are paid in a timely manner and at a higher
scale (mean=3.60; SD=1.078). Some said that surveys show that consumers are content
withwhat factoriesproduce (mean= 4.13; SD=0.824). A bigger number of those who
responded held the view that recommendations by the company are high (mean=4.09;
SD=.910). Results in this research also showed that respondents held the view that
thelevel of retaining customers is higher(mean=4.31; SD=0.734). Generally, the research
items on firm performance objective displayed an average mean of 4.03 and a standard
deviation of .889. This suggests that business development approaches have an effect on
the performance of a firm.
The research results are corroborated by Namu, Kaimba &Nkari, (2014)they argue that in
Africa, tea production is small and done at a small level. The continent has the duty of
rivalinglarge-scale producers whose production costs are lower with their advancements
in operations. In Africa, Kenya is the top tea producer but the tea manufacturing industry
faces significant challenges. Due to government conditions, legislation, and
environmental uncertainty, costs of power and firewood-which are essential in
production-have gone up significantly, thus, leaving an impact on the price of the
finished products. The price of laborhas similarly increased the production budget.
Duale(2016) identifies the challenges to excellence in processes in East Africa to include
118
poor time consciousness, the marginal economic development level, failure to adhere to
writtenguidelines, unpredictability of life, lack of foresight on potential challenges, low
innovation levels, and acceptance of poor quality.
Other researchers, including Omari (2015), observe that the tea business entails the
manufacturing of fresh tea leaves into finished products ready to be sold. Many people
depend on the tea industry for their livelihoods. Processing of raw tea is done within
factory precincts and since the fresh teaperishes after a short time, factories are situated
close to plantations. Bigfactories, in most cases, have their plantations and offer diverse
tea products with established markets found locally and contest for outside markets. The
operations play animportantpart in this business and left free, the price of producing the
final products might be overstated occasioning loss-making. Operation costscomprise
core processes-including the change of the raw leaf to a finished product-and the supply
chain. Here, the business uses machines and people for the processing and the chain of
supply can regulate tea quality reaching the last customer. Factories obtain their raw
materials from different sources including plantations and individual small-scale tea
farmers.
4.5 Exploratory Factor Analysis
Williams, Onsman,& Brown, (2010), opined that factor analysis is the concept that
measurable and variables that are observable can be compressed to less existing variables
which have a common variance and are undetectable. Factor analyses were conducted to
119
recognize highly loaded items and therefore significant ones for data analyses were
reserved. Exploratory factor analyses were used to bring down the number of variables
(questions). This wassignificantasa big number of items in a variable bears the potential
of making the research become somewhatdifficult. Moreover, it could be that some of the
variables measure diverse features of a similarfundamental variable. This method works
by combining variables with comparablefeatures to generate a small number of factors
that are able to explain the variation seen in a bigger number of variables. The factors
reduced were used for additional analyses.
The suitability of factor analysis about the number of cases (sample size) for the research
was checked. Comrey and Lee (1973), as cited in Williams, Onsman, and Brown
(2010)state that: 100 is poor, 200 is fair, 300 is good, 500 is very good, and 1000 or more
is excellent. Sample in this research was 364 considered suitable. The research adopted
the Kaiser-Meyer-Olkin (KMO) and Bartlett's Test in defining the factors to be reserved
following the principal components analysis (PCA) method. These analyses were
designed to account for all of the variations including those found in the correlation
coefficients and error variance (Williams, Onsman & Brown, 2010). The Kaiser-Meyer-
Olkin value measures the sampling adequacy and should be greater than 0.5 for
satisfactory factor analyses (Kaiser, 1974). The Kaiser criterion for retaining factors with
Eigen values greater than 1 was also applied as proposed by Yong and Pearce (2013).The
research further used scree plots (see Appendix VI)to regulate the number of factors to be
retained. The curve indicated maximum number of components to retain.
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4.5.1 Principle Component Analysis (PCA) for Product Diversification
The research tested validation of data for product diversification by use ofexploratory factor
analysis. By use ofSPSS version 24, results of this factor analysis, with the assumption of
extracting via principal components method and rotating via varimax are described in table
4.11.
Table 4.11: Factor Analysis for Product Diversification

Rotated Component Matrixa
Component
1 2
Diversification is done only for products that utilize existing firm technologies 0.762
Diversification approaches used depend onthe managers 0.75
Payback periods for diversification projects is over a period of periods 0.727
Diversified products needown human resource, technological, and physical, 0.704
infrastructure
The company is keen to diversify into products that may attract tea customers 0.702
Diversification investments are only possible through raise of additional capital 0.682
through equity or debt
The firm diversification policy restricts how diversification is to be done 0.621
In comparison, the company has a big number of products diversified 0.778
The firm involves itself in developing new diversified products often 0.757
The firm offers other products as opposed to tea products 0.735
The cost of diversified products constitutes a large part of the company’s budget 0.683
Products diversified by the company are not only in the agricultural sector 0.633
Total Variance Explained
Initial Eigen values 5 1.650
% of Variance 41.667 13.751
Cumulative % 41.667 55.480
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.880
Bartlett's Test of Sphericity Approx. Chi-Square 1424.968
Df 66
Sig. 0.000
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations.
121
We subjected the 12 items for product diversification, to principal components analyses
by use ofSPSS version 24. Before conducting PCA, suitability of data for factor analyses
was measured. Factor loadings of above 0.5 were retained for further analyses and none
was dropped since all items met this criterion and, therefore, the 12 items were retained
for further analyses. The Kaiser-Meyer-Olkin Measure value was 0.880exceeding the
commended value of 0.6 (Kaiser 1970, 1974) and Bartlett’s Test of Sphericity (Bartlett
1954) was significant with a p value less than 0.000 (Bartlett's test=1335.21, p<.05)
indicating the manifestation of factorization of 3 factors for product diversification.
Principal components analyses showed the presence of two components with Eigen
Values respectively exceeding 1, explaining 41.67% and 13.75% of the variance. Items
are considered as belonging to a factor component if their factor loading corresponds to
that particular component and are comparatively higher than their factor loadings in the
other factor components. This was,additionally,demonstrated using the scree plot (see
Appendix VI) which shows that screes started to develop at factor 2 further indicating
that 2 factors describe diversification of products. The two components explain a total of
55.18% of the variance.
4.5.2 Principle Component Analysis (PCA) for Product Development
In this research, we measured data validation for product development using exploratory
factor analysis using SPSS version 24. The results of this factor analyses, with the
assumption of extracting via principal components method and rotating via Varimax are
described in table 4.12.

122
Table 4.12: Factor Analysis for Product Development
Component
1 2 3
Many novel products have been developed via R&D .848
The R&D department’s activities are recognized by industry stakeholders .838
The R&D department is adequately funded .816
The company has an R&D department .793

The company encourages creativity among various developments by investing .494
in their ideas
Processes in product development are adopted from industry practices .855
There is a defined policy that governs product development processes .828

Managers define processes a fresh product goes through before development .629
There is a minimum of five processes a new product goes through before .595
developement
The industry’s new products are received well in the market due to high .755
innovation levels
The industry’s level of innovativeness in new product development has been .695
recognized in the past
Intra-preneurship in the firm has led to developing of new products .694

Initial Eigen values 4.389 2.119 1.027
% of Variance 36.576 17.656 8.558
Cumulative % 36.576 54.232 62.789
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .847
Df 66
Sig. .000
We subjected the 12 items for diversification of products to principal components
analyses using SPSS version 24. Before performing PCA,we assessed suitability of data
123
for factor analyses. We retained factors with factor loadings of over 0.5 for additional
data analyses and none was dropped since all items met this criterion. Consequently, we
retained the 12 items for additional analyses. The Kaiser-Meyer-Olkin Measure value
was 0.847exceeding the commended value of 0.6 (Kaiser 1970, 1974) and Bartlett’s Test
of Sphericity (Bartlett 1954) was significant with p value less than 0.000 (Bartlett's
test=1412.944, p<.05) demonstrating the manifestation of factorization of 3 factors for
product diversification.
Principal component analyses showed the presence of two components with Eigen
Values respectively exceeding 1, explaining 36.576, 17.656 and 8.558 of the variance.
Items are assumed to belong to a factor component if their factor loading corresponds to
those specific components and are comparatively higher than their factor loadings in the
other factor components. The two components explained a total of 62.79% of the
variance.
4.5.3 Principle Component Analysis (PCA) for Market Development
This research measureddata validation for product development by use of exploratory factor
analyses. Using SPSS version 24, results of this analyses, with the assumption of extracting
via principal components method and rotating via Varimax are presented in table 4.13.
124
Table 4.13: Factor Analysis for Market Development
Component
1 2 3
Advertising is done frequently in new market .780
Advertising is done differently for different markets .752
Different forms of advertising are conducted in new markets .729
More products are inroduced in a new market over time .688

Their scope in new markets is more intense than in existing .667
markets
Any potential new market is offered any existing products .568
Marketing is not done in new markets .789
New markets are offered only one product at a time .763
Marketing costs are fixed cost that do not vary irrespective of new .692
market characteristics
New products are offered at once in a new market .641
Marketing budgets are very high compared to available funds by .584
There is a set budget for marketing in new markets .820
% of Variance 34.624 15.038 9.738
Cumulative % 34.624 49.661 59.399
Df 66
Sig. .000
Source: Field Data, 2020
125
The 12 items for product diversification were exposed to principal components analyses
by use of SPSS version 24. Before performing PCA, suitability of data for factor analyses
was measured. Factors with factor loadings of over 0.5 were retained for additional
analyses. No factor was dropped since all items met this measure. Consequently, the 12
items were retained for additional analyses. The Kaiser-Meyer-Olkin Measure value was
0.839exceeding the commended value of 0.6 (Kaiser 1970, 1974) and Bartlett’s Test of
Sphericity (Bartlett 1954) was significant with p value less than 0.000 (Bartlett's
test=1143.8451, p<.05) thus indicating the manifestation of factorization of 3 factors for
diversification of products.
Values respectively exceeding 1, explaining 34.624, 15.038 and 9.738 of the variance.
Items are considered as belonging to a factor component if their factor loading
corresponds to those particular components and are comparatively higher than their factor
loadings in the other factor components. The two components explained a total of
59.40% of the variance.
4.5.4 Principal Component Analysis (PCA) for Market Penetration
The research tested data validation for product development by use of exploratory factor
analyses. By use ofSPSS version 24, results of this factor analyses, with the assumption of
extracting via principal components method and rotating via Varimax are described in Table
4.14.
126
Table 4.14: Factor Analysis for MarketPenetration
Component
1 2 3
Company products are offered atdifferent prices in markets where .733
competitors exist
The company prices are dictated by existing market forces when .685
penetrating markets
More than on niche market can be targeted in a new market with the .636
company products
The company has a pricing policy for existing markets .627
The company targets specific niche markets in existing markets with .578
products
Company profitability has been achieved because of differentiation .803
Differentiation costs the company production processes significantly .777
Product differentiation is emphasized for all company products .589
Products are differentiated to suite specific markets .514
The company has no preference on marketing of products .784
Price in existing market are offered at no profits but increase as .779

customers know the product

% of Variance 32.220 12.326 9.491
Cumulative % 32.220 44.546 54.037
Df 55
Sig. .000
The 11 items for diversification of products were exposed to principal components
analyses by use of SPSS version 24. Before performing PCA, suitability of data for factor
127
analyses was measured. Factors with factor loadings of over 0.5 were retained for
additional data analyses. No factor was dropped since all items met this criterion. The
Kaiser-Meyer-Olkin Measure value was 0.806exceeding the commended value of 0.6
(Kaiser 1970, 1974) and Bartlett’s Test of Sphericity (Bartlett 1954) was significant with
p value less than 0.000 (Bartlett's test=714.073, p<.05) indicating the manifestation of
factorization of 3 factors for diversification of products.
Values exceeding 1, explaining respectively, 32.220, 12.326, and9.491of the variance.
Items are assumed to belong to a factor component if their factor loading correspond to
those particular components and are comparatively higher than their factor loadings in the
other factor components. The two components explained 59.40% of the variance.
4.5.5 Principle Component Analysis (PCA) for Organizational Resources
The research tested data validation for organizational resources by use of exploratory factor
analyses. By the use ofSPSS version 24, results of this factor analyses, with the assumption
of extracting via principal components method and rotating via Varimax are described in
table 4.15.
128
Component
1 2 3
The company invests in operational efficiency to improve revenue 0.745
The company has an ICT department to manage technological resources 0.744
The factory involves all stakeholders in decision making and strategy 0.738
implementation
The factory learns from better performing zones, re4gions and firms to 0.723
benchmark for improved competitive advantage
The management is competentin strategy formulation and execution 0.717
The company facilitates and encourages employee capacity and career 0.699
development
The firm complies, collaborates and participates in government policy 0.679
formulation regarding tea sector
The company has a good social networks which gives it a competitive edge in 0.662
seeking for financial resources
The firm has qualified, skilled and experienced employees 0.643
The factory has invested heavily in modern technology 0.606
The factory has a favorable organizational financial management culture 0.589
which favours strategies implementation
Research and development is a key component of the company's operations 0.566
The company books allow the firm to seek for financial assistance for any 0.592
project
The factory has sufficient financial resources to implement its strategies 0.588
The engineering department has automated all operations at the company 0.61
% of Variance 40.868 9.807 6.966
Cumulative % 40.868 50.674 57.641
Df 105
Sig. .000
Table 4.15: Factor Analysis for Organizational Resources
Source: Field, Data, (2021)
We subjected the 15 items for organizational resources to principal components analyses by
use of SPSS version 24. Before performing PCA, data suitability for factor analyses were
measured. Factors with factor loadings of over 0.5 were retained for additional data
129
analyses. No factor was dropped since all items met this criterion. Consequently, the 15
items were retained for additional analyses. The Kaiser-Meyer-Olkin Measure value was
0.899exceeding the recommended value of 0.6 (Kaiser 1970, 1974) and Bartlett’s Test of
Sphericity (Bartlett 1954) was significant with p value less than 0.000 (Bartlett's
test=1888.791, p<.05) indicating the manifestation of factorization of 3 factors for
Principal components analyses indicated the presence of two components with Eigen Values
exceeding 1, thus explaining 40.868, 9.807 and 6.966 of the variance respectively. Items are
assumed to belong to a factor component if their factor loading corresponds to those specific
components and are comparatively higher than their factor loadings in the other factor
components. The two components explained a total of 57.64% of the variance.
4.5.6 Principal Component Analysis (PCA) for Firms Performance
The research tested data validation for an organization’s performance using exploratory
factor analyses. By the use ofSPSS version 24, results of this factor analyses, with the
assumption of extracting via principal components method and rotating via Varimax are
described in table 4.17.
130
Table 4.16: Factor Analysis for Firms Performance
Component Matrixa
Component
1
The farmers of the factory are paid in time and at a better rate .729
Surveys show that customers are satisfied with the firm’s products .713
The company’s market share has improved with business growth .678
diversification
Level of retaining customers is high .672
The firm’s pricing of products is the best for its suppliers .668
Bonus payments by the factory are among the highest .662
The firm is a cost leader in the market .643
There are high levels of referrals by the firm .592
The company’s market share is among the the highest in the industry .557
Initial Eigen values 3.908
% of Variance 43.419
Cumulative % 43.419
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.874
Df 36.000
Sig. .000
a. 1 components extracted.
The 9 items for diversification of products were exposed to principal components
analyses (PCA)by use of SPSS version 24. Before performing PCA, appropriateness of
data for factor analyses were measured. Factors with factor loadings of over 0.5 were
retained for additional analyses. All items were retained since they met this criterion.
Therefore, the 9 items were retained for additional analyses. The Kaiser-Meyer-Olkin
Measure value was 0.874which exceeded the recommended value of 0.6 (Kaiser 1970,
1974) and Bartlett’s Test of Sphericity (Bartlett 1954) was significant with p value which
was less than 0.000 (Bartlett's test=789.383, p<.05) demonstrating the manifestation of
factorization of 3 factors for diversification of products.

131
Values exceeding 1, explaining 43.419of the variance. Items are seen to belong to a
factor component if their factor loading corresponds to those particular components and
are comparatively higher than their factor loadings in the other factor components. The
two components explained a total of 43.42% of the variance.
4.6 Inferential Analysis
4.6.1 Diagnostic Tests for Regression Assumptions
The research assessed the direct associations between the dependent and independent
variable which was firms’ performance. Before this, the assumptions of regression were
tested. Garson (2012), Osborne and Waters (2002) among many other scholars underscores
the need to ascertain that data fulfills the assumptions of the scientific processes to be
carried out by the review. This is because tests of assumptions help the analyzer to
corroborate the nature of the data and highlight the relevant research model that maintains
impartial, steady and competent appraisals. As such, varied statistical assumptions were
analyzed as indicated in the section here to determine if the data achieved the multi-
collinearity, normality, autocorrelation, linearity and heteroscedasticity assumptions. In the
absence of performing the tests, the significance of the interpretation of the regression
coefficient in the various models would have been at risk. It was because of these results,
that the tests of prediction and association were performed subsequently.
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4.6.1.1 Multicollinearity Test
The Variance Inflation Factor (VIF) measures the influence of collinearity among variables
in a regression model. If VIF values are below 10 and tolerance score more than 0.1, then
there is no multi-collinearity (Williams, 2015).
Table 4.17: Multicollinearity Test

Coefficientsa
Model Collinearity Statistics
Tolerance VIF
1 (Constant)
Product Diversification 0.740 1.352
Product Development 0.755 1.325
Market Development 0.660 1.516
Market Penetration 0.721 1.387
a. Dependent Variable: Firm Performance
VIF values were ranging between 1.352 and 1.516 which were less than 10 and tolerance
scores ranged between 0.660 and 0.740 which is more than 0.1implying that there was no
Multicollinearity.
4.6.1.2 Normality Test
This research sought to establish how well the distribution could be estimated using normal
distribution. Accordingly, Kurtosis and skewness were used as described in table 4.19.
Skewnessmeasures deviation of distribution from symmetry and Kurtosis measures
peakness of the distribution according to Cooper and Schindler (2008). The values of
Kurtosis and skewness should be zero in normal distribution statistics (Tabachnick & Fidell,
2007). Hairet al (2007) observes that skewness of data values must fall within +1 and -1
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andkurtosis values must range between +3 and -3, if P-values are <0.05 for data distributed
normally.
Table 4.18: Normality Test Table (Skewness and Kurtosis Results)
Descriptive Statistics
N Skewness Kurtosis
Statistic Statistic Std. Error Statistic Std. Error
Product Diversification 260 -0.52 0.151 0.111 0.301
Product Development 287 -0.658 0.144 0.598 0.287
Market Development 252 -0.527 0.153 0.99 0.306
Market Penetration 266 -0.82 0.149 1.65 0.298
Organizational Resources 245 -0.823 0.156 0.94 0.31
Firm Performance 299 0.101 0.141 2.079 0.281
Valid N (listwise) 141
It is indicated, from table 4.18,that the data for the six variables were distributed
normally.
The normality tests were also supplemented by graphic assessment of normality using a
histogram.
Figure 4.1: Histogram

134
Figure 4.1 showed a bell shaped and symmetrical appearance hence implying that data
was normally distributed for parametric test such as regression analysis and correlation
analysis.
4.6.1.3 Linearity Test
Linearity implies that the predictor variables in the regression have a straight-line
association with the outcome variable.
Table 4.19: Linearity Test Results
Sum of df Mean F Sig.

Squares Square
Firm Performance * Deviation 21.289 39 0.546 1.025 0.438
Product from
Diversification
Firm Linearity
Performance * Deviation 17.727 35 0.506 1.190 0.225
Product Development from
Linearity
Market Development from
Linearity
Market Penetration from
Linearity
Org Resources from
Linearity
The research results show that all the predictors had no significant deviations (means)
from the dependent variable (p>0.05) which meant that they were all linear.
135
4.6.1.4 Autocorrelation Test
Autocorrelation arises when the residuals are not independent from each other (Tabachnick
& Fidell, 2001). We tested the linear regression model for autocorrelation using Durbin-
Watson test. While Durbin Watson assumes values between 0 and 4, values around 2 show
no autocorrelation. A conservative rule needs that values less than 1 and greater than 3 should
raise an alarm.
Table 4.20: Testing Autocorrelation
Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson
1 .530a 0.281 0.264 0.64499 1.938

a. Predictors: (Constant), Market Penetration, Product Diversification, Product Development,
Market Development
b. Dependent Variable: Firm Performance
Source: Field Data (2020)
As a rule, values of >1.5 and <2.5 show that there is no auto-correlation in the data
(Field, 2009) from the data there was no autocorrelation as the Durbin-Watson value was
1.938.
4.6.1.5 Homoscedasticity Test
Homoscedasticity means that the variances of all the observations are identical to one
another, heteroscedasticity means they are different (Allison, 2015). The assumption of
homoscedasticity (literally, same variance) is at the centre of linear regression models.
Homoscedasticity explains a situation where the error term (that is, the “noise” or random
disturbance in the association between the dependent variables and the independent variable)
136
is the same across values of the independent variables. A scatter plot reveals the
relationships or associations between two variables.
Figure 4.2: Homoscedasticity Plot Chart

The scatter plot in fig 4.2 reveals circles distributedequally below and above zero on x-
axis, and to the right and left on the y-axis. This shows that the assumption for
homoscedasticity was met.
4.6.2 Correlation Analysis

The correlation matrix was run to check the relationship between variables. The research
used Pearson product moment correlation coefficient (r) to determine the correlation
137
between the study variables of interest. The business growth strategies items consisted of
statements that sought to measure the extent to which tea factories have used the business
growth strategies and a scale of 1 to 5, where “1” strongly disagree and “5” strongly
agree. Correlation coefficient(r) shows the direction and magnitude of the association
between the research variables. Coefficient(r) takes a range of values between +1 and -1.
A value of 0 indicates no relationship between two constructs, R-value of + 0.1- +0.29
shows a weak relationship, an R value of + 0.3 - + 0.59 connotes a moderate relationship
whereas an R – value of +0.6 - +1 shows a strong relationship. Table 4.21 below shows
the correlation matrix between business growth strategies and firm performance.
Table 4.21: Results on Correlation Analysis

Product Product Market Market Firm
Diversification Development Development Penetration Performance
Product Pearson
Diversification Correlation
Sig. (2-
tailed)
N
Product Pearson
.460**
Development Correlation
Sig. (2-
.000
tailed)
N 316
Market Pearson
.557** .533**
Development Correlation
Sig. (2-
.000 .000
tailed)
N 316 316
Market Pearson
.595** .643** .564**
Penetration Correlation
Sig. (2-
.000 .000 .000
tailed)
N 316 316 316
Firm Pearson
.705** .716** .639** .787**
Performance Correlation
Sig. (2-
.000 .000 .000 .000
tailed)
N 316 316 316 316
**. Correlation is significant at the 0.01 level (2-tailed).
138
Results presented in Table 4.21show that the strategies of business growth that is: market
development, market penetration, product diversification and product development, have a
statistically significant association with firm performance. Precisely, product diversification
strategies had a strong, positive and significant association (r=.705, n=316, p <0.05) with
firm performance. Strategies on product development also had a strong, positive, and
significant association (r=0.716, n=316, p<0.05) with firm performance. Market
development strategies had a strong, positive and significant association (r=0.639, n=316,
p<0.05) with firm performance. Market penetration strategies bore a strong, positive, and
significant association (r=0.787, n=316, p<0.000) with performance of firms. These findings
are in congruence with previous studies carried out (Morris et al,2017), Carolina &
Marco(2018), Zott & Amit(2017), Mwau, Oloko, and Muturi (2016), Kumar (2018), Ge and
Ding (2015). These studies found out that business growth strategies had a significant
relationship with firm performance.
4.7 Regression Analysis
Here, the results of hypotheses testing, quantitative analyzes, and the interpretation of
relationships among the various variables under study are presented; that is: to define the
effect of strategies of product diversification, examine the effect of strategy on market
development, determine the effect of strategies on market penetration, examine the effect of
strategies on product development, determine the moderating effect of organizational
resources on the association between strategy on product diversification and how tea
factories in Kenya perform, determine the controlling effect of organizational resources on
the association between strategies of product developments on how tea factories in

139
Kenyaperform, test the controlling effect of organizational resources on the association
between market development strategy and performance of tea factories in Kenya and to
examine the moderating effect of organizational resources on the association between
market penetration strategy and performance of tea factories in Kenya. Results from
multiple linear regression analyses were used to interpret the findings, where p< 0.05 will
indicate a statistically significant relationship and the otherwise indicates no statistically
significant relationship. If the calculated F change value is equivalent or more than the F
critical value, then the result is significant. Beta values in the coefficient table are used to
formulate the regression equation model.
4.7.1 Product Diversification Strategy and Firm Performance
The first objective of this research was to establish the role of strategies of product
diversification on how selected tea factories in Kenya perform. A prediction was made that
product diversification strategies did not have statistically significant effects on
performance. A simple regression model was used to determine the association between
product diversification strategies and firm performance. The model that tested the
hypothesis was as follows,
Y = βo + β1X1 +ε ………i
Where:
Y - Firm Performance,
βo - Constant (coefficient of intercept).
β1-change in firm performance for each 1 increment change in X 1, that is, product
diversification strategy.
140
X1 - Product Diversification Strategy.
ε - the error term
Table 4.22a: Effect of Product Diversification Strategies on Performance

Std. Error of the
Model R R Square Adjusted R Square Estimate
1 .705 a
.496 .495 .53525
a. Predictors: (Constant), Product Diversification
Results in Table 4.22a show that product diversification strategies had (R 2 = .496),
meaning that, diversifying products, describes 49.6% of the changes in firm performance
(dependent variable)
The ANOVA results are described in table 4.22b.
Table 4.22b ANOVAa

Sum of
Model Squares df Mean Square F Sig.
1 Regression 88.667 1 88.667 309.491 .000b
Residual 89.959 314 .286
Total 178.626 315
b. Predictors: (Constant), Product Diversification
Source: Field Data (2020).
The ANOVA model indicated model fitness for effect of strategies of product
diversification on firm performance which was statistically significant (F = 309.491,
ρ<0.05). Given that the calculated F = 309.491, while the F critical = 3.94(1,314).Then F≥ F
critical α 0.05,hence H01 is rejected.This was an indication that product diversification is an
important predictor on the performance of firms.
This result is supported by Oyedijo (2012) who found out that financial performance and
sale development of companies are influenced by the method used to diversify. He made
a recommendation that organizationsthat seek supportable quick growth and higher

141
performance have to follow related product-market diversification methods,
embracespecializing strategies, but not two strategies concurrently. Similarly, Njuguna,
Orwa, & Kwasira (2018) allude to the fact thatproduct diversification strategies are
important for broadening corporation markets. Further, Kimeu (2017) established that
product size increase improved product performance of the firms and product size
reduction retrogressed product demand. The regression coefficients in table 4.23c
establishes the mean change in performance of firms for one unit change in
Table 4.22c Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .780 .174 4.482 .000
Product
.775 .044 .705 17.592 .000
Diversification
Results show that diversifying productshas a significant coefficient of estimate based on
β1 = 0.705 (p< 0.05). The influence of strategies on product diversification was more than
17 times the influence attributed to the error which was shown by the t-test value =
17.592. On the basis of the results above, the following simple linear regression model
was derived,
142
4.7.2 Product Development Strategy and Firm Performance.
The second objective was to establish the role of product development strategies on how tea
factories in Kenya perform. The research predicted that product development had no
significant statistical influence on firm performance. A simple regression model was used to
determine the association between strategies on product development and performance of a
firm. The model that tested the hypothesis is as follows.
Y = βo + β2X2 +ε ………ii
Where:
Y - Firms Performance,
βo - Constant (coefficient of intercept),
Β2-change in firm performance for each 1 increment change in X 2, that is, product
Development,
X2 - Product Development Strategy
ε - the error term
Table 4.23a Model Summary
Adjusted R Std. Error of the

Model R R Square Square Estimate
1 .716a .513 .511 .52640
a. Predictors: (Constant), Product Development
Results in Table 4.23a show that product development had (R 2= .513), implying that,
development of products, describes 51.3% of the changes in the performance of a firm
The ANOVA findings are described in table 4.23b
143
Table 4.23b ANOVAa
Sum of
1 Regression 91.618 1 91.618 330.640 .000b
Residual 87.008 314 .277
Total 178.626 315
b. Predictors: (Constant), Product Development
The ANOVA model shows model fitness for the effect of strategies of product
development on firm performance was statistically significant (F = 330.640,
ρ<0.05).Given that the calculated F = 330.640, while the F critical = 3.94(1,314), then Fcalc ≥
F critical α 0.05. This result indicates that productdevelopment is an important predictor on
the performance of firms, hence the null hypothesis H02 was rejected and a conclusion
was made that strategies on product development have a significant effect onthe
performance of firms.
The results agree withMaurice and Scholastica (2016), who established that originality of
procedures of innovation bear a positive effect on development of products and on a
firm’s performance. Similarly, McAdam and Keogli (2016) established that an
organization’s feeling to develop was significant in competitive settings in order to get
greatercompetitive benefits. Additionally, results by Mbithi, Rambo, and Muturi (2015)
show that introducing new products, to an important extent, has been insignificant, while
improvement of current products has adapted through repackaging and rebranding.
Resulting performance was observed as positive in output revenue and sale amounts;
utilization of capacity was moderate, while after tax profitabilityshowed inconsistent
results. They found performance to be responsive to enhancement of product procedures,
144
but poor in introducing of fresh products since maximization is yet to be actualized.
Kinyanjui (2015) alludes that a big number of the organizations that have diversified in
production, products and market, have been found introducing new products, improving
current ones or using new technologies to improve effectiveness. Theresults, without
doubt, indicate that development of products is key in performance of tea factories.
The regression coefficients in table 4.23c below established the mean change in firm
performance for each unit change in the strategies on product development.

1 (Constant) .401 .189 2.120 .035
Product
.910 .050 .716 18.184 .000
Development
Source: Field Data(2020)
Results show that strategies on product development have a significant coefficient of
estimate basing on β1 = 0.716 (p < 0.05). The influence of product development strategies
was more than 18 times the effect attributed to the error indicated by the t-test value =
18.184. On the basis of the results above, the simple linear regression model below was
derived.
145
4.7.3 Market Development Strategy and Firm Performance
The third objective was to establish the role of market development strategies on how tea
factories in Kenya perform. The research predicted that market development has no
important statistical influence on firm performance. Simple regression model was used to
determine the association between market development strategies and performance of a
firm. The model that tested the hypothesis was as follows.
Y = βo + β3X3 +ε ………iii
Where:
Y - Firms Performance.
β3-change in firm’s performance for each 1 increment change in X 1, that is, Market
Development,
X3 - Market Development Strategy.
ε -the error term

1 .639a .409 .407 .58006
a. Predictors: (Constant), Market Development
Results in Table 4.24a show that Market Development had (R2 = .409), meaning that,
Market Development, describe up to 40.9% of the changes in firm performance
The ANOVA results are presented in table 4.24b
146
Table 4.24b ANOVAa
Sum of
1 Regression 58.582 72.975 1 72.975 216.887
Residual 104.459 105.651 314 .336
Total 163.040 178.626 315
b. Predictors: (Constant), Market Development
The ANOVA model shows model fitness for influence of Market Development strategies
on firm performance was statistically significant (F = 72.975, ρ<0.05). Given that the
calculated F = 72.975, while the F critical = 3.94(1,314). Then F≥ F critical α 0.05. This result
indicates that market development is an important predictor of firm performance.
Therefore, null hypothesis H03 was rejected and it was concluded that Market
Development strategies had a significant statistical influence on performance of a firm.
It is shown, from the results, that there is a statistical significant effect of market
development plan on firm performance. In line with the study, Zott and Amit (2017)
discovered that novelty-centered business approaches—combined with product market
approaches that insist on cost leadership, diversity, or early market entry—might improve
corporation performance. Similarly, Dzisi& Ofosu (2014) study results suggest that
strategic marketing approaches are drivers of organizational positioning in dynamic
contexts, and that they help to increase development of newer products and services for
markets already in existence. Muga’s (2016) findings support these results where he
claims that implemented market development strategies showed positive contribution
towards sales, new customer acquisition, and profitability though Base of the pyramid
market development strategy showed likelihood of decreasing employee motivation and
147
innovation.The findings are also in conformity with those of Ojwaka and Deya (2018)
who recommended that corporate heads and other major shareholders of commercial
printing corporations need to apply the range of market development approaches
underscored in improving performance of firms. The regression coefficients in table
4.24c established the mean change in firm performance for unit change in the market
development strategies.

1 (Constant) 1.453 .162 8.948 .000
Market
.638 .043 .639 14.727 .000
Development
Results in Table 4.24c indicate that strategies on market development had a significant
coefficient of estimate basing on β3= 0.639 (p < 0.05). The effect of market development
strategy was greater than 14 times the influenceascribedto the error; this was shown by
the t-test value = 14.727. On this basis, the results derived the following simple linear
regression model.
4.7.4 Market Penetration Strategy and Firm Performance
The fourth objective was to establish the role of market penetration strategies on how tea
factories in Kenya perform. The research predicted that market penetration had no statistical
148
significant influence on the performance of a firm. A simple regression model was used to
regulate the association between market penetration strategies and the performance of a
firm. On the basis the results above, a simple regression model was derived as shown below,
Y = βo + β4X4 +ε ………iv
Where:
Y - Firm Performance.
β4 - change in firm performance for each 1 increase change in X 1, that is, Market
Penetration,
X4 - Market Penetration Strategy.
ε - the error term

1 .787a .619 .618 .46549
a. Predictors: (Constant), Market Penetration
Results in Table 4.25a show that Market Penetration had (R 2 = .619), meaning that,
Market Penetration, describe 61.9% of the changes in firm performance (dependent
variable).
The ANOVA results are presented in table 4.25b.
149
Table 4.25b ANOVAa
Sum of
1 Regression 68.284 110.588 1 110.588 510.375
Residual 94.756 68.038 314 .217
Total 163.040 178.626 315
b. Predictors: (Constant), Market Penetration
The ANOVA model shows model fitness for influence of market penetration plans on a
firm’s performance was statistically significant (F = 110.588, ρ<0.05). Given that the
calculated F = 110.588, while the F critical = 3.94(1,314).Then F≥ F critical α 0.05. Thus, the
model was fit to predict firm performance using market penetration strategies. The null
hypothesis H04 was therefore rejected and a conclusion was made that market penetration
strategies had a statistical significant effect onfirm performance.
Cognate to the results, Mehdi, et al (2013) established that strategic alignment between
finance and marketing has significant effects on productivity of firms resulting in the rise
of all their profitability indexes. Their research made the conclusion that management
should not consider decisions with regard to marketing plans independent of their
financial strategies. Muga (2016) alluded that to achieve best results in the new market,
these companies have to make some necessary changes, which comprise reduction of
prices, adding established distribution channels to their regular distribution network,
develop friendly ways of paying for their products and changing product packaging.
Additionally, findings by Gacheo, et al (2016) found out that strategies to penetrate a
market had a direct effect on competitiveness of a firm in the sense that penetration rates
150
that are higher imply enhanced performance because the organization can generate and
maintain prominent profits than the norm for that corporation. Besides, Kimaru (2018)
noted that the companies use a mixture of strategies, which include market promotion and
enhancing distribution channels promotion and advertising pricing and diversification.
The study concluded that the penetration strategies are highly effective in any
organization as growth is dependent on them.
The regression coefficients in table 4.25c established the mean change in firm
performance for a unit change in the market penetration Strategy.

1 (Constant) 1.033 .125 8.258 .000
Market
.764 .034 .787 22.591 .000
Penetration
Results in Table 4.25c show that Market Penetration strategies hada significant
coefficient of estimate based on β 1 = 0.787 (p <0.05). The influence of Market
Penetration strategies was more than 22 times the effect attributed to the error; this was
indicated by the t-test value = 22.591. On the basis of the above results a simple linear
regression model was derived as shown below.
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4.7.5 Business Growth Strategies and Firm Performance
The research made an attempt to determine the combined business growth strategies and
howselected tea factories in Kenyaperform. Multiple regression analyses were performed to
assess the association between firm performance (dependent variable) and business growth
strategies (independent variable). The results are presented on tables 4.26a, b and c
respectively.

Std. Error of the
Model R R Square Adjusted R Square Estimate
1 .878 a
.771 .768 .36240
a. Predictors: (Constant), Market Penetration, Product Diversification, Market
Development, Product Development
The R2 value indicates that the joint prediction of all the variables accounted for
approximately 77.1 % of the total variation in tea factories (R2 = .771). This means that
22.9% of the variation in tea processing firm performance could be described by other
factors not under investigation in this research.
The ANOVA table 4.26b depicts the significance of the influence of business growth
plans on performance of tea processing factories.
Table 4.26b ANOVAa

Sum of
1 Regression 137.782 4 34.445 262.277 .000b
Residual 40.844 311 .131
Total 178.626 315
152
b. Predictors: (Constant), Market Penetration, Product Diversification, Market
The ANOVA model shows that the combined prediction of all the independent variables
as described in Table 4.26b was statistically significant (F = 262.277, P<0.05). In this
way, the model was fit to predict tea factory performance using product development,
product diversification, market penetration, and market development strategies. The
coefficients table 4.26c shows the beta values of each business growth strategy operating
jointly with other strategies.

1 (Constant) .515 .146 3.518 .000
Product
.320 .039 .290 8.108 .000
Diversification
Product
.362 .047 .285 7.746 .000
Development
Market
.121 .036 .121 3.371 .001
Development
Market Penetration .352 .039 .363 9.025 .000
The results of coefficient of estimate showed market penetration as having the highest
important and positive influence on an organization’s performance of (β 4= 0.363, p < =
0.05), followed by product diversification which also had positive and important effect on
firm’s performance (β1= 0.290, p<0.05), product development came third (β 3= 0.285,
153
p<0.05) and market development was fourth with a significant effect (β 2= 0.121, p<
0.05).
Based on the above results, the study derived the following multiple linear regression
model.
4.8 Business Growth Strategies, Organizational Resources and Firm Performance
The study calculated the hierarchical multiple regression to measure the influence of the
moderator (organizational resources) on the association between independent variables
(product development, market penetration, productdiversification, andmarket development)
and the dependent variable which was firm performance. Hence the following hypotheses
were tested:
H01: Product diversification strategies have no significant statistical role on
H02: Product development strategies have no significant statistical role on performance
of selected tea factories in Kenya.
H03: There is no significant statistical role of market development strategies on the
H04: Market penetration strategies have no role on the performance of selected tea
factories in Kenya.
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H05a Organizational resources do not significantly statistically moderate the
relationship between Product diversification strategies and performance of
selected tea factories in Kenya
H05b Organizational resources do not significantly statistically moderate the
relationship between Product diversification strategies and performance of
selected tea factories in Kenya
H05c Organizational resources do not significantly statistically moderate the
relationship between market development strategies and performance of selected
H05dOrganizational resources do not significantly statistically moderate the relationship
between Market penetration strategies and performance of selected tea factories in
Kenya.
4.8.1 Organizational Resources, Product Diversification and Firm Performance
The fifth objective of the research was to find out the controlling role of organizational
resources on the association between product diversification and firms’ performance. In
order to confirm the moderating role of organizational resources, the following steps were
carried out; firstly, the study fitted a regression model (model 1) predicting the outcome
variable firm performance from the business growth strategies (product development,
product diversification, market penetration strategies, and market development).
The effects as well as the model in general (R2) should be significant. Secondly, the
research added the interaction effect-organizational resources-to the previous model-model
2, 3 and 4-and checked for a significant R 2 change and a significant effect by the new
155
interaction term. If both are significant, then moderation is occurring. If the predictor and
moderator are not significant with the interaction term added, then complete moderation
has not occurred. If the predictor and moderator are significant with the interaction term
added, then moderation has occurred (Marsh et al, 2013), however the main effects are
also significant.

Std. Error Change Statistics
R Adjusted of the R Square F Sig. F
Model R Square R Square Estimate Change Change df1 df2 Change
1 .705 a
.496 .495 .53525 .496 309.491 1 314 .000
2 .767 b
.589 .586 .48430 .093 70.537 1 313 .000
a. Predictors: (Constant), Product Diversification
b. Predictors: (Constant), Product Diversification, Moderated Product Diversification
From the regression results in table 4.27a, two models were generated. The simple
regression model number 2 is the most significant model since it has the interaction
between product diversification and organizational resources. The simple regression
model number two shows a moderate significant association between product
diversification, organizational resources and firm performance implying that product
diversification and organizational resources58.9% of the changes in tea firm
performance. Even though product diversification alone explained 49.6% of the variance
in the organization’s performance, when combined with organizational resources they
explain 58.9% of the variations of firm performance. The magnitude of organizational
resourcescontrolling influence on the association between product diversification and
performance of a firm outcome is 9.3 % (58.9% -49.6%).
156
Table 4.27b ANOVAa
Sum of
1 Regression 88.667 1 88.667 309.491 .000b
Residual 89.959 314 .286
Total 178.626 315
2 Regression 105.212 2 52.606 224.284 .000c
Residual 73.414 313 .235
Total 178.626 315
b. Predictors: (Constant), Product Diversification
c. Predictors: (Constant), Product Diversification, Moderated Product Diversification
The ANOVA model indicated that product diversification and organizational resources
were statistically significant (F = 224.284, P< 0.05).Given that the calculated F = 224.284,
while the F Critical = 3.09; at α = 0.05 is a clear indication that organizational resources is a
significant moderator on the association between product diversification strategy and firm
performance, hence H0 (5a) is rejected.
The coefficients of this predicative model aimed at addressing the concerns of
objectiveV(a) are given in the table 4.29c.

1 (Constant) .780 .174 4.482 .000
Product Diversification .775 .044 .705 17.592 .000
2 (Constant) 1.613 .186 8.668 .000
Moderated Product
.090 .011 .575 8.399 .000
Diversification
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The model shows that a unit increase of product diversification strategy moderated by
organizational resources resulted to an increase in performance by .575, p< 0.05. Based
on the above results the study derived the following simple linear regression model.
Y = 1.613+0.090X1M
4.8.2Organizational Resources, Product Development and Firm Performance
A simple linear regression was used to determine the controlling role of organizational
resources on the association between product development strategy and firm performance.
Results are described in tables 4.28 a, b and c respectively.

1 .716 a
.513 .511 .52640 .513 330.640 1 314 .000
2 .803 b
.645 .643 .44983 .133 116.993 1 313 .000
a. Predictors: (Constant), Product Development
b. Predictors: (Constant), Product Development, Moderated Product Development
between Product Development strategy and organizational resources. The simple
regression model number two shows a moderate important association between strategies
on product development, organizational resources andperformance of a firm implying
that Product Development strategies and organizational resources explain 64.5% of the
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changes in tea firm performance. Product Development strategy explained 51.3% of the
variance infirm performance. The magnitude of organizational
resourcescontrollinginfluence on the association between product development and firm
performance outcome is 13.2 % (64.5% - 25.3%).
Table 4.28b ANOVAa

Sum of
1 Regression 91.618 1 91.618 330.640 .000b
Residual 87.008 314 .277
Total 178.626 315
2 Regression 115.292 2 57.646 284.886 .000c
Residual 63.335 313 .202
Total 178.626 315
b. Predictors: (Constant), Product Development
c. Predictors: (Constant), Product Development, Moderated Product Development
The ANOVA model indicated that Product Development and organizational resources
were statistically significant (F = 284.886, p<0.05). Thus, the model was fit to predict the
moderation of organizational resources between Product Development strategy and firm
performance. Given that the calculated F = 284.886, while the F Critical = 3.09; at α = 0.05,
the results show that organizational resources is a significant moderator of the association
between Product Development and performance of firms, hence H0(5b) is rejected.
The coefficients of this predicative model aimed at addressing the concerns of objective
V(b) are given in the table 4.28c.
159
1 (Constant) .401 .189 2.120 .035
Product Development .910 .050 .716 18.184 .000
2 (Constant) 1.308 .182 7.186 .000
Moderated Product
.108 .010 .613 10.816 .000
Development
The model shows in table 4.28c that increase of Product Development strategy as moderated
by organizational resources results to a unit increase in performance by .613, p< 0.05. Based
on the results above, the study derived the following simple linear regression model.
Y = 1.308 + 0.108X2M
4.8.3 Organizational Resources, Market Development and Firm Performance
A simple linear regression was used to find the moderating role of organizational resources
on association betweendevelopment of a market and firm performance. Result s are shown in
table 4.29 a, b and c respectively.

1 .639 a
.409 .407 .58006 .409 216.887 1 314 .000
2 .741 b
.549 .546 .50752 .140 97.170 1 313 .000
a. Predictors: (Constant), Market Development
b. Predictors: (Constant), Market Development, Moderated Market Development
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between market development strategy and organizational resources. The simple
regression model number two shows a moderate significant association between market
development strategies, organizational resources, and firm performance implying that
Market development and organizational resources explain 54.9% of the changes in
selected tea firm performance outcome. Results in model 1 showed that market
development strategy alone explained 40.9 % of the variance in the firm performance.
The magnitude of organizational resourcescontrollinginfluence on the association
between Market development strategies and firm performance outcome is 14% (54.9% -
40.9%).
Table 4.29bANOVA
Sum of
1 Regression 58.582 72.975 1 72.975 216.887
Residual 104.459 105.651 314 .336
Total 163.040 178.626 315
2 Regression 77.333 98.004 2 49.002 190.242
Residual 85.707 80.622 313 .258
Total 163.040 178.626 315
b. Predictors: (Constant), Market Development
c. Predictors: (Constant), Market Development, Moderated Market Development
The ANOVA model in Table 4.29b indicated that Market development strategy and
organizational resources were statistically significant (F = 49.002, p<0.05). Given that
161
the calculated F = 49.002, while the F Critical = 3.09; at α =0.05, the results show that
organizational resources is an important moderating factor on the association between
market development strategies andperformance of firms, hence H0(5c) is rejected.
The coefficients of this predicative model aimed at addressing the concerns of objective
V(c) as given in the table 4.29c.

1 (Constant) 1.453 .162 8.948 .000
Market Development .638 .043 .639 14.727 .000
2 (Constant) 2.046 .154 13.263 .000
Moderated Market
.110 .011 .672 9.857 .000
Development
The model in Table 4.29cindicates that a unit increase of market development strategies
moderated by organizational resources results to an increase in performance by.672,
p< 0.05.
Based on the results above the research derived the following simple linear regression
model.
Y = 2.046 + 0.110X3M
4.8.4 Organizational Resources, Market Penetration, and Firm Performance
A simple linear regression was used to determine the controlling role of organizational
resources on the association between market penetration strategy and firm performance.
Results are described in tables 4.30 a, b and c.
162
1 .787 a
.619 .618 .46549 .619 510.375 1 314 .000
2 .815 b
.664 .662 .43761 .045 42.289 1 313 .000
a. Predictors: (Constant), Market Penetration
b. Predictors: (Constant), Market Penetration, Moderated Market Penetration
between market penetration strategy and organizational resources. The simple regression
model number two indicates a moderate significant association between market
penetration strategies, organizational resources and performance of firms. This implies
that Market Penetration strategy and organizational resources explain 66.4% of the
changes in tea firm performance outcome. The results in model 1 indicate that strategies
on market penetration aloneexplains 61.9% of the variance in the firm’s performance.
The magnitude of organizational resources moderating effect on the relationship between
market penetration strategy and firm performance outcome is 4.5% (66.4% -61.9%).
Table 4.30b ANOVAa

Model Sum of Squares df Mean Square F Sig.
1 Regression 110.588 1 110.588 510.375 .000b
Residual 68.038 314 .217
Total 178.626 315
2 Regression 118.687 2 59.343 309.887 .000c
Residual 59.939 313 .191
Total 178.626 315
b. Predictors: (Constant), Market Penetration
c. Predictors: (Constant), Market Penetration, Moderated Market Penetration
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Source: Field Data(2020).
The ANOVA model indicated that market penetration and organizational resources were
statistically significant (F = 309.887, P < 0.05). The calculated F = 309.887, while the F
Critical = 3.09; at α = 0.05, the results indicated that organizational resources is animportant
moderatingfactor on the association between strategies on market penetrationandfirm
performance, hence H0(5d) is rejected.
The coefficients of this predicative model aimed at addressing the concerns of objective V(d)
are given in the table 4.32c.

1 (Constant) 1.033 .125 8.258 .000
2 (Constant) 1.511 .139 10.896 .000
Moderated Market Penetration .071 .011 .455 6.503 .000
The model shows that a unit increase of market penetration strategy moderated by
organizational resources resulted to an increase in performance by .455, p<0.05.
Based on the above results the study derived the following simple linear regression
model as shown below.
Y = 1.551 + 0.071X4M
4.8.5 Organizational Resources, Business Growth Strategies and Performance of
Selected Tea Factories
This research made an attempt to define the degree to which organizational resources
moderate the association between strategies on business growth and performance of firms.
164
Multiple regression analysis method was used to determine the moderating role of
organizational resources on the relationship between business growth plans and performance
of firms using the following procedure. First, (step 1) a regression model was conducted to
test the effect of business growth strategies and performance and secondly (step 2) the
regression model was conducted between strategies on business growth (product
diversification, product development, market development, and market penetration) and
firm performance to find out the effect between business growth strategies and selected tea
performance. The results are described in tables 4.31a, b and c respectively.

1 .878a .771 .768 .36240 .771 262.277 4 311 .000
2 .888 b
.789 .784 .35010 .018 6.557 4 307 .000
a. Predictors: (Constant), Market Penetration, Product Diversification, Market
Development, Product Development, Moderated Product Diversification, Moderated
Product Development, Moderated Market Development, Moderated Market Penetration
From the regression results in table 4.31a, two models were generated. The multiple
regression model number 2 is the most significant model since it has the inclusion of all
business growth strategies and organizational resources. The multiple regression model
number two shows a moderate significant association between business growth plans,
organizational resources, and performance of firms. This implies that business growth
strategies and organizational resources explain 78.9% of the changes in firms’
165
performance outcome. Even though business growth strategies alone explain 77.1% of
the variance in the selected tea factories’ performance, when combined with
organizational resources they explain 78.9% of the variations in performance of selected
tea factories. The magnitude of moderating effect of organizational resource on the
association between business growth plans and selected tea factories’ performance
outcome is 1.8% (73.5- 56.5). The coefficients of this predicative model aimed at addressing
the concerns are given in the table 4.31b.
Table 4.31b ANOVAa

Sum of
1 Regression 137.782 4 34.445 262.277 .000b
Residual 40.844 311 .131
Total 178.626 315
2 Regression 140.996 8 17.625 143.790 .000c
Residual 37.630 307 .123
Total 178.626 315
c. Predictors: (Constant), Market Penetration, Product Diversification, Market
Development, Product Development, Moderated Product Diversification, Moderated
Product Development, Moderated Market Development, Moderated Market Penetration
The results in Table 4.31b show thatthe complete model was significant (F = 143.790, ρ˂
.05) and hence fit to predict the moderation of organizational resources in the association
between business growth plans and firm performance. This implied that overly,
organizational resources had a positive and important role on the association between
business growth plans and performance of firms. This implies that H O5 as proposed is
rejected.
166
Table 4.31c Coefficient
1 (Constant) .515 .146 3.518 .000
2 (Constant) 1.471 .196 7.522 .000
Product Development .102 .245 .103 .418 .006
Market Development .035 .200 .045 .177 .030
Market Penetration .042 .219 .050 .194 .046
Moderated Product
.017 .006 .134 2.565 .011
Diversification
Moderated Product
.012 .059 .072 .203 .039
Development
Moderated Market
.028 .051 .180 .557 .008
Development
Moderated Market
.049 .056 .316 .876 .002
Penetration
The coefficients in table 4.33c shows Model 2 regression coefficient (β) value of between
business growth strategies on firm performance after the inclusion of the interaction
term(organizational resources) was 0.134(Diversification moderated product) with a
significance level of (p<,0.05),0.72(moderated product development)with a significance
level of (p<,0.05),0.180(moderated market development)with a significance level of
(p<.05),1.316(moderated market penetration)with a significance level (p<0.05). The
coefficients table 4.33c indicated that moderated market penetration contributed highly to
firm performance, while diversification moderated product, moderated product

167
development and moderated market development indicated an inverse and insignificant
contribution to firm performance. This resulted to a multi-regression equation as below.
Y = 1.471+0.195X1 + 0.102 X2+ 0.035X3 +0.042X4 + 0.017X1*M + 0.012X2 *M -
0.028*M + 0.049X4*M
This finding concurs with(Gardetti, 2015), who alludes that market penetration strategy
aims at attaining market dominance through gaining a rival’sclients, attracting non-users,
and having the existing users buy more.
168
Table 4.32: Summary of Hypotheses Testing Results
Hypothesis Formulated ρ – values Calculated Critical Decision
Main Effects F Value F Value
α = .05
H01: There is no significant statistical effect of 0.000 309.491 df Null
product diversification strategies on (1,314) Rejected
performance of tea factories in Kenya. = 3.94
HO2: Product development strategies do not 0.000 330.640 df Null

have any significant statistical effect on (1,314) Rejected
performance of tea factories in Kenya. =3.94
HO3: There is no significant statistical effect of 0.000 72.975 df Null

market development strategies on the (1,314) Rejected
H04: there is no significant statistical effect of 0.000 110.588 df Null

market penetration strategies on the (1,314) Rejected
HO5a: There is no significant Moderating effect 000 224.284 df Null

of organizational resources on the relationship (2,313) Rejected
between business growth strategies and =3.09
performance of tea factories in Kenya
HO5b: The moderating effect of organizational 0.000 284.886 df Null

resources on the relationship between product (2,313) Rejected
development strategies on performance of tea =3.09
factories in Kenya is not statistically significant
HO5c: There is no significant moderating effect .000 49.002 df Null

of organizational resources on the relationship (2,313) Rejected
between market development strategies and =3.09
performance of tea factories in Kenya
HO5c: (d) There is no significant moderating .000 309.887 df Null

effect of organizational resources on the (2,313) Rejected
relationship between market penetration =3.09
169
strategies and performance of tea factories in
Kenya .
Source: Field Data, 2020
4.8.6 Proposed Model of Business Growth Strategies and Firm Performance as
Moderated by Organizational Resources
A proposed performance measurement model is illustrated in figure 4.3. The figure divides
business growth strategies as proposed by Ansoff matrix (1957).This matrix allows
management to quickly summarize the available growth strategies and evaluate the
associated risks. The four strategies are measured using a five point Lickert scale which is
weighted into means. The means are then relatively converted into percentages. An average
of growth strategies is determined. The same is established for organizational resources.
Performance is then computed by moderating the sums of the four variables.
The model can be utilized to enhance performance in tea processing firms and other sectors
170
Business Growth Strategies
H01=0.496
Product Diversification Strategy
H05 = (.789)
Firm
Performance
H02=0.513H05a=.589
H02 (R
Product
2
0.513) H05bstrategy
development =.645H05b= .645
H05c=.549
H05d=.664
Ho3=0.409 Organizational
Market Development Strategy Resources
H03 (R2 0.409)
Cost of marketing
Number of products on offer
H04=0.619
Frequency of advertising
Market
H04(R2Penetration
0.619) Strategy
Source: Researcher, (2021)
Figure 4.3: The Relationship of Organizational Resources on Business growth strategies to
Firm Performance using Ansoffs’ Matrix
Product diversification strategy as a business growth strategy when employed by tea
factories contributes .496 to performance of tea factories. An introduction of
171
organizational resources in the relationship between product diversification strategies and
performance of a firm improves performance to .589. Product development strategy
contributes .513 to firm performance. An introduction of organizational resources as a
moderator in this relationship improves performance of tea factories to .645. Further,
market development strategy contributes .409 to performance of tea factories in Kenya.
An introduction of firm resources as a moderator in this relationship boosts tea factory’s
performance to.549. Kenya Tea Development Authority managed factories enjoy .619
performance as a result of using market penetration strategy as business growth strategy.
This performance is further improved to .664 by introducing organizational resources as a
moderator in this relationship. Combined, the four Ansoff business growth strategies
posted .789 to tea factory’s performance using organizational resources as the moderator.
From the model, it is evident that market penetration strategy contributes more to tea
factory’s performance than the other three Ansoff matrix strategies. This is because firms
would rather wade to the depth of risks they are conversant with than venture into new
markets whose risks they don’t know. This is a very sound business decision criteria
when it calls for apportioning scarce resources of the firm. It is also recommended from
the model for KTDA managed factories to consider pursuing individual business growth
strategies. It produces much better results than employing more than one strategy in an
attempt to improving performance.
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CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
5.1 Summary of Findings
This research sought to establish the role of organizational resources in the association
between business growth approaches andhow selected tea factories in Kenya perform. The
major gap the research was addressing was to define whether business growth plans have an
effect on the performance of a firm and what role firm resources play in the relationship. To
address this gap, the study was guided by the Ansoff Matrix model which shows the four
main business growth strategies and the Resource Based View theory which indicates the
resources of a firm. The positivist research philosophy guided the methodology in terms of
data which was collected, analyzed and interpreted to determine the various relationships
among the different variables. Regression analyses were used to analyze the relationships
among the various variables of the study. This study stands out from other previous studies;
as referred from empirical studies, in introducing the organizational resources as a
moderator in the association between business growth plans and performance of a firm.
5.1.1 Product Diversification Strategy and Performance of Selected Tea Factories
The resultsshowedthat tea factories diversifyto create products whichare appealing to
clients. This is understood to implythat these organizations have realized the necessity of
dealing with challenges in performingtheir work by adopting diversification as a tactic to
increase production. Correlation results show that there is a strong, positive, and
importantassociation between diversifying products and performance of firms. In the same
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breath, the study results showed that product diversification strategy is animportantpredictor
onperformance of a firm, hence the null hypothesis-hence H01-is rejected
5.1.2 Product Development Strategy and Performance of Selected Tea Factories
The results showed that several procedures are required for product developmentwhich can
be embraced from practices in industry. This is understood to imply there is a requirement
for adopting technology to improvedevelopment of products. Results showed that there
existsan importantassociation betweendevelopmentof products and performance. Further to
that, the resultsestablished that to advertise is significant in market development. This has
been understood to implythat tea marketing firms are interested to exploit fresh markets in
which they might sell different tea productsto ward offdeveloping competitionvia
advertising products on offer. Further, correlation results indicated a strong, positive and
significant association between product development and firm performance. The study
results indicated that product development strategy significantly predicted firm
performance, hence the null hypothesis hence H02 is rejected
5.1.3 Market Development Strategy and Performance of Selected Tea Factories
The results of the research show that animportantassociationexists between market
development and firm performance. The research results noted that differentiation and
pricing were some of the strategies used to penetrate markets by tea companies. This was
interpreted to imply there existed a high level of competition among the tea companies
locally and abroad. Consequently, companies had to find ways in which they would ensure
that their products were chosen over other company’s products. The correlation results
174
showed a strong, positiveand importantassociation between market development strategies
and firm performance. The findings also indicated that market development strategies are
animportant predictor on organizationalperformance, hence the null hypothesis-hence H03-
was rejected.
5.1.4 Market Penetration Strategy on Performance of Selected Tea Factories
The results on market penetration showed that company prices are always dictated by
existing market forces when penetrating markets. Products are also differentiated to suite
specific markets. Besides, Product differentiation is emphasized for all company products.
In fact, company profitability has been achieved because of differentiation. Moreover,
company products are offered at different prices in markets where competitors exist. There
are however gaps as to whether price in existing market are offered at no profits but increase
as customers know the product. Similarly, there are doubts as to whether the company has
no preference on marketing of products. The correlation results showed a strong, positive
and importantrelationship between market penetration strategy and firm performance. The
findings also indicated that market penetration strategy is animportant predictor on firm
performance, hence the null hypothesis-hence H04-was rejected
The regression results showed that approaches on market penetration had a positive and
importantassociationon how selected tea factories in Kenya perform. Consequently, the
null hypothesis was rejected. The results of the moderated hierarchical regression showed
that organizational resources positively moderated the association between market
175
penetration strategies and performance of selected tea factories in Kenya. Therefore, the
null hypothesis was rejected.
5.1.5 Moderating Role of Organizational Resources on the Relationship between
Business Growth Strategies and Performance of Selected Tea Factories
The research results suggest that the firms use a number of organizational resources to
achieve success including competent employee’s strategy, assets and organizational
learning. This can be interpreted to mean that organizational resources are useful assets that
can moderate any outcome for a tea factory or any other firm. This is because of the
importance of operational resources necessary for firm performance.
Study findings indicated an importantassociation between moderated product diversification
to firm performance, animportantassociation between moderated product development to
organizational performance, a significant relationship between moderated market
development to firm’s performance and finally indicated animportantassociation between
moderated market penetration to performance of organizations.
The combined effect of the moderator however suggested that there is
animportantinfluence of the moderator on the business growth strategies. The findings
revealed that the number of tea customers is high, there is high customer retention and that
customers increase as organizational processes such as diversification increase. This can be
interpreted to mean that the industry has unlimited potential in terms of performance. There
could be barriers that make the operations of the tea factories stall which the tea factories in
collaboration with other government agencies should work to ease.
176
On the proposed model, the standardized aggregateeffect of product diversification on
performance of a firm is that, because of direct and indirect effects of product diversification
on performance of firms, when product diversification goes up performance of a firm also
goes up.
5.2 Conclusion
The study concludes that tea factories use diversification of products to enhance their
competitive benefit over others and to make products that are appealing to buyers. Tea
factories have recognized the necessity of dealing with challenges of performance by
adopting diversifying of products as a tactic to increase productivity. This tactic dictates that
organizations producealternate products which mightmake them able toleverage on their
profits. This, as a result, compensates the low sale times of their core products. For example,
firms specializing in black tea processing have attempted processing of Kenyan Olong tea,
purple tea, pan fried green tea, white premium tea, green tea, white tea, silver tips tea,
golden tips tea, lemon grass tea,and yellow tea.
Strategies of product development among tea factories haveimportant effects on
performance of these firms. However,different processes are required for developing of
products which should be embraced from organizational practices. These procedures are, in
most cases, dictated by having a favorable policy framework, levels of innovation and
creativity, intra-preneural initiatives, and research and development. Most of the factories
in the study have not done much with regard to their product development
177
proceduresexceptbeing dependent on the knowledge of some workers though those who
responded affirmed the importanceof product development plans.
Market development is instrumental in improving performance of selected tea factories in
Kenya. Tea marketing firms are interested in tappingfresh markets in which they might sell
different tea products in order to ward offdeveloping competition throughadvertisement
campaigns targeting products being offered.
The study also concludes that differentiation and pricing are some of the strategies used to
penetrate markets by tea companies which is because of high level of competition among
the tea factories locally and abroad. Differentiating products makes them suite particular
markets and needs of customers. This makes the factories optimize opportunities in terms
of returns.
The study also concluded that tea factories use organizational resources to achieve success
including financial resources, human capital, technological resources and market research.
There was therefore need to develop a consistent productive model using structured
equation modeling that would affect the generalfirm performance.
This research concluded that the proposed model should employ organizational resources
as a mediating factor in the association between business growth strategies and
performance of firms. The proposed model illustrated that diversification of products,
development of products, development of markets and market penetration have the effects
178
on firm’s performance. Using the proposed model structure, the impact on an
organization’s performance is more positive and important. The proposed model produces
best results when individual strategies are employed by utilizing organizational resources.
5.3 Recommendations of the Study
5.3.1 Recommendations for Policy and Practice

For the tea factories management, business growth strategies in reference to this research
have proved effective in improving the performance of selected tea factories in Kenya.In
order to achieve this, business growth strategies should be well planned and implemented
through proper allocation and utilization of organizational resources.
Diversifying productshas been shown as animportant ingredient in entry or development of
a market. Tea factories need to expend in diversifying of products to make sure that they
have something offer to fresh markets they will be entering. This approach makes sure that
small sales of products are complemented by the sale volumes of other products and in this
way guaranteerevenueto tea factories. In addition, this method will ensure that factories
keep a competitive benefit in the market.
The researcher also recommendsthat tea managers need to encourageinventiveness
indifferent product development procedures by the way of capitalizing on fresh and
practical ideas, investing ondevelopment and research departments to make them able to
come up with novel products that can compete in the world market. Factoriesinvesting in
development and research haveenhanced their innovation capacities as well as creativity in
179
product development processes making their products more attractive to targeted customers
and have therefore brought downthe costs of production.
Tea firms should do marketing strategies that will ensure it gets more customers for their
products. This might be attained through increasing marketing budgets and conducting
different forms of advertisement. Further new products should be introduced quite often in
new market to harness new opportunities. Finally, frequent price differentiation should be
practiced by tea processing factories to enhance market penetration of the products and
improvement of market share.
The management should also look for ways on how to entice new customers for their
products. This can be achieved by offering products at different prices in markets where
competitors exist, reviewing of the existing pricing policy for new markets and
differentiation of products to suite specific markets.
5.3.2Implications on Theory
In relation to the Ansoff Matrix, the study has been able to provide modifications to the
Ansoff Matrix in a manner that would make the Ansoff Matrix more applicable to the tea
industry in Kenya. This has been achieved by illustrating how the matrix can combine
organizational resources to be very relevant in influencing organizational resources. The
study has also shown the order within which the Ansoff Matrix needs to be employed for
tea factories so as the impact on firm performance can be achieved.
In relation to the Resource Based View theory where resources are required to be unique,
the study has been able to show how these resources can be combined in the market
180
penetration process to specifically achieve firm performance. The study has illustrated that
unique resources are more productive if incorporated to the market penetration stage of a
manufacturing process as opposed to any other stage of firm operation.
Finally, in relation to the market based theory which notes that key factors for success of an
organization/industry are; elasticity of demand, number of players in the market, and entry
barriers, the study has shown the importance of differentiation in order to access markets.
The study has therefore been able to enrich the market based theory by proposing that to
enhance demand, players and reduce entry barriers, differentiation is a key component
which is likely to make the marketing process more successful.
5.3.3 Suggestions for Further Studies

The research recommends as follows to enhance the findings of this research;
To conduct a study that will determine the organizational resources required by the tea
factories and their impacts on firm’s performance. The current study has generalized the
organizational resources and provided an overall picture of their effect. Specific
organizational resources have not been identified.
A comparative study to establish other business growth strategies that combine with
organizational resources to advance the performance of organizations. The current study
has only stuck to the four business growth strategies provided by the Ansoff Matrix. There
is a need to identify if there are other business growth strategies that influence performance
of tea factories.
181
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APPENDICES
APPENDIX I: LETTER OF INTRODUCTION

Dear Sir/Madam,
I am a post graduate student at Kisii University. In partial fulfilment of the requirements
for the conferment of Doctorate in Business Administration degree, I am carrying out
research on BUSINESS GROWTH STRATEGIES ON THE PERFORMANCE OF
SELECTED TEA FACTORIES IN KENYA.THE MODERATING ROLE OF
ORGANIZATIONAL RESOURCES. You are requested to assist in providing the
required information by filling in the questionnaire provided below, as your views are
considered important to this study.
All information you give remains confidential.
Thank you for taking your time to fill in the questionnaire.
Yours Sincerely,
Omosa Henry
Reg.No.: DCB/10270/2015
210
APPENDIX II: RESEARCH QUESTIONNAIRE
Section A : General Information
1. Gender
Male Female
2. Age of the respondents
20-29 years
30-39 years
40-49 years
Above 50 years
3. Highest Education level
O-level
Certificate
Diploma
Degree
Post-graduate
Period worked in the factory
4. Less than 5 yrs 6-10 yrs 11-15 yrs 16-20 yrs More than 21
years
5. Region
Kisii Highlands Kericho Highlands
6. Level of Management in the factory
Top level management Section Head Supervisor
7. To What are some of the business growth strategies employed by your
factory?
Product Diversification strategy
Product development strategy
Market development strategy
Market penetration strategy
Section B: Product DiversificationStrategy
211
On a five point Likert scale, please indicate the extent to which you agree with the following
statements on product branding strategies in your factory where 1 strongly disagree(SD), 2
disagree(D), 3 Neutral(N), 4 Agree(A) and 5 Strongly Agree(SA).
SD D N A SA
S/N Statement 1 2 3 4 5
1 The firm offers other products as opposed to black CTC
2 Diversified products by the firm are easily acceptable in the
market
3 The company engages in development of new diversified
products regularly
4 Comparatively the firm has a high number of products diversified
5 The cost of products diversified constitute a large part of the
firms budget
6 Diversification investments are only possible through raise of
additional capital through equity or debt
7 Diversified products require their own physical, human resource
and technological infrastructure
8 Payback period for diversification products is over a period of
time
9 Diversification is conducted only for products that can utilize
existing company technologies
10 The firm is keen to diversify into products that may appeal to tea
consumers (same market segment customers).
11 Diversification strategies employed depend on management
12 The firm diversification policy restricts how diversification is to
be done.
Section C: Product Development Strategy

Product development involves coming up with new products, improving on existing
products, product innovations, imitations and product lifecycle efficiency improvement.
Please rate the extent to which the following aspects of product development are
employed in your factory on a scale of 1-5 where 1 strongly disagree(SD), 2
disagree(D), 3 Neutral(N), 4 Agree(A) and 5 Strongly Agree(SA).
212
SD D N A SA
1 There is a defined policy governing product development
processes
2 Processes in product development are adopted from industry
practices
3 There is a minimum of five processes that a new products has to
go through before it is developed
4 Management defined the processes a new product will go through
before development
5 The firm level of innovativeness in new product development has
been recognized in the past
6 The firm new products are received well in the market due to high
level of innovation
7 Intra-premiership in the organization has led to development of
new products
8 The firm promotes creativity among various departments by
investing in their ideas
9 The firm has a research and development department
10 The research and development department has been sufficiently
funded
11 Many new products have been developed through the R&D
12 The R&D department activities have been recognized by industry
players
Section D: Market development strategy
Please indicate the extent to which you agree with the following statements relating
market development strategies in your factory on a scale of 1-5 where 1 strongly
disagree(SD), 2 disagree(D), 3 Neutral(N), 4 Agree(A) and 5 Strongly Agree(SA).
213
SD D N A SA
1 There is a set budget for marketing in new markets
2 Marketing budgets are very high compared to available funds by
3 Marketing costs are fixed costs that do not vary irrespective of
new market characteristics
4 Marketing is not done in new markets
5 New markets are offered only one product at a time
6 Any potential new market is offered any existing product
7 More products are introduced in a new market over time
8 New products are offered at once in a new market
9 Different forms of advertising are conducted in new markets
10 Advertising is done frequently in new markets
11 Advertising is done differently for different markets
12 There scope in new markets is more intense than in existing
markets
Section E: Market Penetration Strategy

Please rate the extent to which the following statements on market penetration strategy
apply in your factory on a scale of 1-5 where 1 strongly disagree(SD), 2 disagree(D), 3
Neutral(N), 4 Agree(A) and 5 Strongly Agree(SA).
214
SD D N A SA
1 Company products are offered at different prices in markets
where competitors exist
2 The company has a pricing policy for existing markets
3 The company prices are dictated by existing market forces when
penetrating markets
4 Price in existing markets are offered at no profits but increase as
customers know the products
5 The company targets specific niche markets in existing markets
with products
6 More than on niche market can be targeted in a new market with
the company products
7 The company has no preferences on marketing of products
8 Products are differentiated to suite specific markets
9 Product differentiation is emphasized for all company products
10 Differentiation costs the company production processes
significantly
11 Company profitability has been achieved because of
differentiation
Section F: Organizational Resources

In this study, organizational resources focussed at as a contributor to the strength of the
association between product diversifying and performance of tea processing firms in
Kenya. To this effect, please rate the extent to which the following organizational
resources contribute to the implementation of product diversification strategies in your
firm on a scale of 1-5 where 1 strongly disagree(SD), 2 disagree(D), 3 Neutral(N), 4
Agree(A) and 5 Strongly Agree(SA).
215
SD D N A SA
S/N Statements 1 2 3 4 5
1 The factory has sufficient financial resources to implement its
strategies
2 The company books allow the firm to seek for financial assistance
for any project.
3 The factory has a favourable organizational financial management
culture which favours strategy implementation
4 The company has a good social networks which gives it a
competitive edge in seeking for financial resources
5 The firm has qualified, skilled and experienced employees
6 The management is competent in strategy formulation and
execution
7 The company facilitates and encourages employee capacity and
career development
8 The factory has invested heavily in modern technology
9 The company invests in operational efficiency to improve revenue
10 The engineering department has automated all operations at the
company
11 The company has an ICT department to manage technological
resources
12 The factory involves all stakeholders in decision making and
strategy implementation
13 The firm complies, collaborates and participates in government
policy formulation regarding tea sector
14 The factory learns from better performing zones, regions and firms
to benchmark for improved competitive advantage
15 Research and Development is a key component of the company’s
operations
Section G: Firm Performance

The study seeks to establish the performance of your factory based on the employment of
product diversification strategies. Please rate the following indicators of performance on
a Likert scale of 1-5 where 1 strongly disagree (SD), 2 disagree(D), 3 Neutral(N), 4
Agree(A) and 5 Strongly Agree(SA).
216
SD D N A SA
S/N Indicator 1 2 3 4 5
1 The company is a cost leader in the market
2 The company pricing of its products is the best for its suppliers
3 The firms market share is among the highest in the industry
4 The firm market share has improved with business growth
diversification
5 Bonus payments by the firm are among the highest
6 The factory farmers are paid in time and at a high rate
7 Surveys have indicated that customers are satisfied with the forms
products
8 There are high levels of referrals by the company
9 Level of customer retention is high
217
APPENDIX III: RESEARCH PERMIT
218
APPENDIX IV: LIST OF KTDA MANAGED FACTORIES IN KENYA
No. Region Number Region Name Factories

1 Region 1 Aberdare Ranges Kambaa
2 Mataara
3 Kagwe
4 Theta
5 Ngere
6 Ikumbi
7 Ndarugu
8 Gachege
9 Njunu
10 Nduti
11 Makomboki
12 Gacharage
13 Region 2 Aberdare Ranges Githambo
14 Kanyenyaini
15 Kiru
16 Gatunguru
17 Chinga
18 Iriaini
19 Gitugi
20 Gathuthi
21 Ragati
22 Region 3 Mt. Kenya Ndima
23 Kangaita
24 Mununga
25 Kimunye
26 Thumaita
27 Kathangariri
28 Mungania
219
29 Rukuriri
30 Region 4 Mt. Kenya Weru
&NyambeneHills
31 Kinoro
32 Kionyo
33 Imenti
34 Githongo
35 Igembe
36 Michimikuru
37 Kiegoi
38 Region 5 Kericho Highlands Toror
39 Tegat
40 Monul
41 Litein
42 Chelal
43 Kapkatet
44 Mogogosiek
45 Kobel
46 Kapset
47 Rorok
48 Kapkoros
49 Tirgaga
50 Boito
51 Olenguoruone
52 Motigo
53 Tebesonik
54 Region 6 Kisii Highlands Sanganyi
55 Tombe
56 Gianchore
57 Nyansiongo
58 Kebirigo
59 Nyankoba
60 Rianyamwamu
220
61 Itumbe
62 Nyamache
63 Ogembo
64 Eberege
65 Kiamokama
66 Region 7 Nandi Hills & Western Chebut
Highlands
67 Kaptumo
68 Mudete
69 Kapsara
221
APPENDIX IV: KTDA Bonus Trend Report 2015-2020 (Ksh)
NAME OF 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020
FACTORY
Nyasiongo 44.18 41.05 37.18 32.00 29.65
Nyankoba 42,05 38.00 36.85 35.00 31.05
Ogembo 39.00 38.65 35.55 33.00 31.00
Rianyamwamu 43.68 40.60 38.00 36.00 35.18
Kiamokama 41.00 37.65 36.00 35.00 33.00
Sanganyi 36.75.00 35.65 34.00 32,16 31.05
Nyamache 40.18 37.05 36.17 32.17 29.00
Gianchore 41.00 40.16 38.19 35.00 31.00
Tombe 43.00 40.35 36.00 32.45 29.35
Eberege 35.75 34.00 29.45 28.33 27.65
Itumbe 39.67 38.65 37.00 36.65 35.45
Kebirigo 40.55 38.65 37.00 33.80 31.35
Boito 38.00 36.00 34.30 32.20 29.50
Chelal 32.00 31.00 30.50 30.00 28.50
Toror 41.65 37.50 33.65 32.50 29.55
Tirgaga 33.35 32,50 31.75 30.00 29.50
Olenguruone 39.50 37.40 34.00 31.50 28.45
Kapkatet 37.80 36.00 35.65 33.50 32.18
Kapkoros 39.45 38.00 36.00 32.85 29.16
Kapset 38.75 38.00 34.00 30.65 30.00
Tegat 30.00 29.50 28.50 26.50 25.00
Rorok 33.55 31.45 30.00 29.00 28.50
Kobel 37.54 36.30 35.50 33.75 31.35
Letein 36.65 34.33 34.00 32.00 30.50
Mogogosiek 38.00 36.00 34.00 33.75 28.65
Momul 41.00 39.00 36.00 33.56 32.00
Motigo 36.00 34.65 31.00 21.00 20.00
Tebesonik 39.00 37.89 35.00 33.15 32.57
222

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BUSINESS GROWTH STRATEGIES AND PERFORMANCE OF SELECTED

TEA FACTORIES IN KENYA: THE MODERATING ROLE OF

OMOSA MOTONGWA HENRY

A RESEARCH THESIS SUBMITTED TO BOARD OF POST GRADUATE

Signed _____________________ Date _________________

Signed ____________________ Date _________________

Signed ________________________ Date _______________

Dr. Charles Momanyi, PhD.

To my Wife Damaris Araka, my Son Gaddiel, and my Daughters: Beth, Christabell,

enrich you for your motivation.

efforts. I am grateful to all respondents in the research sincetheir contributions supported

DECLARATION AND RECOMMENDATIONS..........................................................ii

LIST OF ABBREVIATIONS AND ACRONYMS........................................................xi

1.1 Background of the Study 1

1.3.2 Specific Objectives 17

1.4 Research Hypotheses 18

2.1.1Ansoff Matrix/ Model 23

2.1.2 Market-Based Theory 26

2.1.3 Resource Based View Theory 28

2.1.4 Agency Theory 31

2.2 Empirical Literature Review 32

2.2.2 Product Development Strategy and Organizational Performance. 38

2.2.3 Market Development Strategy and Organizational Performance 45

2.2.4 Market Penetration Strategy and Organizational Performance 51

2.2.5 Organizational Resources and Firm Performance 56

2.3Summary of Research Gaps 61

3.1 Research Philosophy 74

DATA ANALYSIS, PRESENTATION AND DISCUSSIONS...............................….88

4.1 Response Rate 88

4.2.1.3 Analysis of Missing Data 89

4.3 Demographics of the Respondents 90

4.5.1 Principle Component Analysis (PCA) for Product Diversification 121

4.7.2 Product Development Strategy and Firm Performance. 142

SUMMARY OF FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS...173

5.1 Summary of Findings 173

5.3.2Implications on Theory 180

5.3.3 Suggestions for Further Studies 181

Table 2. 1:Summary Of Research Gaps............................................................................65

Figure 2.1: A Conceptual Framework...............................................................................72

Appendix I: Letter of Introduction..................................................................................210

EPZA: Export Processing Zone Authority

1.1 Background of the Study

The effectiveness and performance of firms is influenced by a number of aspects,

specifically processes, structure of organizations, and external environments (Hrebiniak &

choice of business strategies. The growing of organizations is determined by three main

connections with the environment (Murray, 2011).

management. Business enterprises use strategy to compete successfully. Strategic verdict

making is at the heart of the organization environment co-alignment procedure so greatly

contributions. Demands made by influential shareholders may sometimes compel an

(Foss and Christensen, 2014).Different business institutions may embrace unrelated

diversification approaches with an intention to improve their performance. Diversifying

manufactured or marketed, and branding. Diversifying products offers a business

entityspiritedbenefits according to Njuguna, Kwasira, and Orwa (2018). Diversifying

products as a business plan is a compulsory approach for business entities to exploit in

enterprise profitability (Kariuki, 2016).

of growth are development of products, diversification, market development and

The effect of innovation in production enables organizationsto grow and

retaincompetitive placenot contestable in strategies of product innovation. Products need

achievejointshort-range and long-range objectives. Short-range ends include: reducing

appropriate place and time. Decisions are made on how to distribute,involve,

warehousing, transportation modes and selecting of market channels, inventory control,

employee benefits and higher salaries (Rose & Hudgins, 2018).

top manager’s perception of their organization’s environment. Organizations, even those

Signed _____ Date _

Signed ____ Date _

Signed __________ Date _