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 Prime Journal of Business Administration and Management = ISSN: 2251-1261

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Prime Journal of Business Administration and Management

ISSN: 2251-1261. Volume 5, Issue 11, pp. 1936-1940

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Full Length Research

 

Title

Effect of cost leadership on export value addition in tea subsector in Kenya

 

Author(s)

Charles Kirimi Mbui, Prof. Gregory S. Namusonge, and Dr. Fred Mugambi

 

Address(es)

Jomo Kenyatta University of Agriculture and Technology (JKUAT) Nairobi, Kenya

 

Accepted Date

26th October, 2015

 

Citation

Mbui CK, Namusonge GS, Mugambi F (2015). Effect of cost leadership on export value addition in tea subsector in Kenya. Prim. J. Bus. Admin. Manage. 5(11): 1936-1940.

 

Abstract

The objective of the study sought to evaluate the effect of cost leadership on value addition for Kenyan tea exports. The study used a descriptive survey design. The target population was the entire cadre of employees in the top and middle level management in all the registered tea factories, tea exporters and tea packers in Kenya. The sampling frame for this study consisted of all the top and middle management employees of all registered tea factories, tea exporters and tea packers in Kenya. Data was collected from human resource departments of the sampled organizations. Two questionnaires were administered to randomly sampled employees in the cadres of senior management and middle management. Additionally, this study used stratified random sampling technique to categorize respondents from the three different subsectors so as to increase the chances of getting reliable and accurate information. Primary data through use of a likert scale questions was the main instrument of data collection which underwent pilot study to test the validity and reliability of the research instrument. After collecting data through questionnaires, it was prepared in readiness for analysis using statistical package for social sciences (SPSS) to generate descriptive and inferential statistics. Data was summarised using percentages, mean and standard deviation while F-tests was used to test the hypothesis. This was done using step by step method at 95% level of confidence. Pearsonís product moment correlation (r) was derived to show the nature and strength of the relationship of the variables where Coefficient of determination (R2) was used to measure the amount of variation in the dependent variable explained by the independent variable. All the analysis was done using SPSS statistical package. The study findings indicated that the management at tea subsector were concerned with attaining high profits and thus improved performance due to exportation of value added teas. The study findings indicated that cost leadership is a key driver in determining export value addition in tea subsector. This was evidenced by the responses from the respondents who indicated that their companies focused on cost control mechanisms and they bought products in bulk in order to cut costs. It therefore possible to conclude that for any firm to add value in its exports it must focus on cost control and cost reduction strategies to ensure that they keep their production costs per unit as low as possible. The study concludes that the tea subsector have put in place this strategy by ensuring that they buy packaging in bulk, they maintain shorter lead times, they practice economic order quantity and continuous monitoring of staff productivity cuts processing costs. It is recommended that the tea exporting companies invest more in environmental assessment to enable them gather adequate information which would enhance their response speed by minimizing uncertainties. The companies should also involve more workers in strategic issue management particularly the middle level and lower cadre workers. Further, they should democratize more the management by allowing more workers in decision making particularly by delegating decision making responsibilities thus harnessing the variable potentialities in them.

Key words:
Cost leadership, Export Value Addition, Strategic Management Practices.


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