Strategy Formulation and Performance of Selected Information and Communication Technology Firms in Kenya

Abstract

Strategy formulation involves the creation of a range of plans for the efficient balancing of internal business environment and external business environment. It entails focusing on the organizations mission, vision and objectives that tare achievable through strategies development and setting policy guidelines. Despite the policy and strategy pronouncements, there are various constraints that tare currently facing the growth and expansion of Information Communication Technology (ICT) firms in the country especially amongst ICT providers. ICT Firms have been noted by a number of researchers to be facing several performance challenges including failure tin US, Europe, Australia and other parts of the globe. Kenya faces similar performance challenges, despite the remarkable growth of ICT sector coupled by opportunities created by government strategies ton ICT. The main purpose of this study was to establish the effects of strategy formulation ton performance of selected information and communication technology firms in Kenya focusing on strategic direction. For the purposes of this study, a descriptive research design was adopted. The target population constituted 344 ICT service providers located in Nairobi where 298 employees in top management, middle management and Lower-level employees were targeted. Out of this, a sample size of 148 was targeted. The sample was determined through stratified random procedures. The study findings showed that strategic direction positively and significantly affected performance of ICT Firms (? = 10.864; P-Value < 0.05). This implies that an increase in implementation of strategic direction practices during strategy formulation significantly improved firm performance. The study recommends that ICT companies to continue investing in strategies since they have the highest influence on performance which is achieved through organizational vision, mission and goals. Managers should consider adopting organizational direction strategies as a competitive strategy since findings indicate that it was only moderately used.

Key Words: Strategy Formulation; Strategic Direction; Organizational Performance; ICT Firms