RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT PRACTICES AND PERFORMANCE OF AGRO-VETERINARY BASED INDUSTRIES. A CASE STUDY OF HIGHCHEM AGRO-VETERINARY DIVISION

Abstract

The Agro-veterinary industry in Kenya is vital in supporting agricultural sector’s productivity through veterinary and agrochemical solutions. However, recent sectoral reports indicate that firms, especially in the Agro-Veterinary Division of HighChem Group face intense competition from cheaper imports, declining market share and inconsistent performance in terms of innovation uptake and profitability. Despite its leading position in the sector, HighChem Agro-Veterinary Division (HAVD) continues to grapple with performance challenges in an increasingly regulated and competitive environment. This raises concern on whether the division effectively leveraged strategic management practices to enhance competitiveness and drive growth. The purpose of this study was to investigate the effect of selected strategic management practices; strategic innovation, product differentiation, resource allocation and cost leadership on the performance of HAVD. The study was anchored on the Blue Ocean Strategy, Porter’s Five Competitive Forces and the Resource-Based View. The exploratory research design was adopted in the study. Primary data was collected using a structured questionnaire administered to a sample of 116 respondents drawn from a population of 166 across the eight national regions. From a response rate of 72.4% (84 responses) the descriptive statistics revealed that strategic innovation (M = 3.75), cost leadership (M = 3.89), resource allocation (M = 3.71) and product differentiation (M = 3.88) were the most prominent. A multiple linear regression model was employed to test the hypotheses. The regression results showed that all four strategies had positive and statistically significant effects on performance with strategic innovation (β = 0.2878, p < 0.001), resource allocation (β = 0.4874, p < 0.001), cost leadership (β = 0.5095, p < 0.001) and finally product differentiation (β = 0.6477, p < 0.001). The model was highly significant with F = 272.35 and p < 0.001) with an R² of 0.883 demonstrating that the four predictors explained performance to an accuracy of 88.3%. The findings showed that product differentiation had the strongest effect on performance, followed by cost leadership strategy, effective resource allocation and strategic innovation respectively. Therefore, HAVD’s performance is seen to be greatly enhanced hrough investment in high-quality products, distinctive, capacity development and cost efficiency. These results offer practical insights to managers in agro-based divisions and firms and contributes to empirical literature through bridging a gap in strategy-performance research within the East African agro-veterinary sector.