The Effect of Formal Strategic Management on Organizational Performance of Medium Sized Manufacturing Enterprises in Kenya: A Study of Selected Medium Sized Manufacturing Enterprises in Nairobi, Kenya

Abstract

Organizational performance assesses how firms are able to meet their stated objectives over time. It is known that the ultimate goal of any business organization is to be able to meet specific objectives such as customer satisfaction, profit maximization and cost effectiveness. A firm that is able to meet these objectives is perceived as being more successful than one that is not able to meet them. There are many ways of measuring performance, which include profitability ratios such as earnings per share, return on investment or return on equity. Many medium enterprises (MEs) have not adopted formal strategic management (FSM) and therefore cannot have competitive advantage in the industry.

This study examined the effect of formal strategic management on organizational performance of medium sized manufacturing enterprises in Nairobi, Kenya. The research was conducted through a survey of medium enterprises (MEs) in Nairobi, Kenya. Eighty MEs were selected using simple random sampling. Primary data was collected using a semi-structured questionnaire. The respondents who were members of management team filled open and close ended questions. The data was analyzed statistically using the SPSS and R packages through tabulation, proportions and logit analysis.

The results showed that organizations with formal strategic management (FSM) perform better than those without formal strategic management. MEs should therefore adopt formal strategic management to promote performance and counter competition.