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THE EFFECT OF STRATEGIC PLANNING ON INNOVATION WITHIN THE TELECOMMUNICATION INDUSTRY IN KENYA BY EVA WAMBUGU UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA SUMMER 2018
THE EFFECT OF STRATEGIC PLANNING ON INNOVATION WITHIN THE
TELECOMMUNICATION INDUSTRY IN KENYA
BY
EVA WAMBUGU
UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA
SUMMER 2018
ii
THE EFFECT OF STRATEGIC PLANNING ON INNOVATION WITHIN THE
TELECOMMUNICATION INDUSTRY IN KENYA
BY
EVA WAMBUGU
A Research Project Report Submitted to the Chandaria School of Business in Partial
Fulfillment of the Requirement for the Degree of Masters in Business Administration
(MBA)
UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA
SUMMER 2018
iii
STUDENT DECLARATION
I the undersigned declared that this research project is my original work and has not been
submitted to any other institution of higher learning for academic credit other that United States
International University-Africa
Signed: _____________________________ Date: _____________________________
Eva Wambugu (643453)
This project has been presented for examination with my approval as the appointed supervisor.
Signed: _____________________________ Date: _____________________________
Prof. Maina Muchara
Signed: _____________________________ Date: _____________________________
Dean, Chandaria School of Business
iv
COPYRIGHT
Copyright © 2018. All texts, graphics or other works are copyrighted works of Eva Wambugu.
All rights reserved. No part of this report may be recorded or otherwise reproduced or transmitted
in any form or by electronic or mechanical means without prior permission or authority granted
by the author.
v
ABSTRACT
The purpose of this study was to determine the effect of strategic planning on innovation within
the telecommunication industry. The study was guided by three research questions touching on
the following aspects: the relationship between strategic environmental scanning and innovation,
the relationship between strategy formulation and innovation and the relationship between
strategic evaluation and innovation in the telecommunication sector.
The research adopted a descriptive survey research design. The population of the study entailed
senior level management, heads of business units and middle management in the
telecommunication industries. Primary data for the research was collected through use of
questionnaires that comprised of close ended questions. Respondents were required to respond to
questions developed from the three research questions to provide substantial data for analysis to
derive conclusions. The data was analyzed using SPSS Statistics in terms of percentages, mean,
as well as regression and presented in form of tables and figures to elicit the findings in light of
the three research questions. Data analysis methods used in the study included both qualitative and
quantitative techniques. The study also undertook a regression and correlation analysis of the various
variables to determine how the various variables relate to each other. The information was presented
by use of tables and figures where necessary for ease of comprehension and analysis.
The study revealed that strategic planning (strategic environmental scanning, strategy formulation and
strategy evaluation) accounts for 50 % of factors that influence innovation in the telecommunication
industry. Strategic environmental scanning has a strong correlation with innovation whereby
respondents indicated that customer analysis plays a key role towards innovation. Strategy
evaluation also has a strong correlation with innovation whereby respondents agreed that the soft
elements (staff, skills, style and shared values) are major contributors when it comes to
innovation. Strategy formulation on the other hand has a weak correlation to innovation based on
the extent to which respondents agreed that the vision, mission and goal setting are embraced
within the organizations.
The study concludes that only two out of the three variables have a strong correlation with innovation.
Strategic environmental scanning and strategy evaluation have a strong correlation with innovation
while strategy formulation has a weak relationship with innovation in the telecommunication industry
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in Kenya. Strategic environmental scanning and strategy evaluation would lead to an increase in
innovation in the telecommunication industry while innovation is not necessarily improved by
strategy formulation.
The study recommends that while conducting strategic environmental scanning, organizations
should engage more in competitor analysis and market analysis as these are currently done to a
low extent in the telecommunication industry. This could lead to more insights for the industry in
addition to those attributed to environmental analysis and customer analysis. Organizations
should also explore ways in which they can strengthen the systems or improve structure so as to
foster innovation within the companies during strategy evaluation. This will provide a different
aspect from the soft elements (staff, style, skills and shared values) which had the most impact on
innovation from the study. There are opportunities for innovation that may present themselves on
the backdrop of the systems and structures that have been set in place. From the study strategy
formulation has the weakest correlation to innovation in the telecommunication industry and
therefore organizations can focus on ways in which tapping into the process of strategy
formulation can improve their innovative strategies. The companies should consider how various
components of strategy formulation can positively impact their innovative strategies and
capabilities leading to product, process or market innovation.
The study also recommends that further studies should be done to explore other factors that affect
innovation in the telecommunication sector. From the study strategic planning (strategic
environmental scanning, strategy formulation and strategy evaluation) only accounts for 50 % of
factors that influence innovation, therefore other researchers can consider evaluation of other factors
such as strategy implementation to establish other factors that have an impact on innovation.
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ACKNOWLEDGEMENT
First and foremost I would like to thank God for seeing me through this project to completion. I
would also like to thank my research project supervisor Dr. Maina Muchara for his guidance and
assistance while carrying out the research and directing me accordingly. I would also like to
acknowledge the support I have received from family and friends. Thank you all.
viii
DEDICATION
I would like to dedicate this to my family for the encouragement, love and financial support shown
throughout the journey.
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TABLE OF CONTENTS
STUDENT’S DECLARATION ............................................................................................ iv
COPYRIGHT ......................................................................................................................... iv
ABSTRACT ..............................................................................................................................v
ACKNOWLEDGEMENT .................................................................................................... vii
DEDICATION...................................................................................................................... viii
TABLE OF CONTENTS ...................................................................................................... ix
LIST OF TABLES ................................................................................................................. xi
LIST OF FIGURES .............................................................................................................. xii
LIST OF ABBREVIATIONS ............................................................................................. xiv
CHAPTER ONE ......................................................................................................................1
1.0 INTRODUCTION............................................................................................................. 1
1.1 Background Information ..................................................................................................... 1
1.2 Statement of the Problem .................................................................................................... 4
1.3 Purpose of the Study ........................................................................................................... 6
1.4 Research Questions ............................................................................................................. 6
1.5 Importance of the Study ...................................................................................................... 6
1.6 Scope of the Study .............................................................................................................. 7
1.7 Definition of Terms............................................................................................................. 8
1.8 Chapter Summary ............................................................................................................... 8
CHAPTER TWO ...................................................................................................................10
2.0 LITERATURE REVIEW .............................................................................................. 10
2.1 Introduction ....................................................................................................................... 10
2.2 Strategic Environmental Scanning and Innovation........................................................... 10
2.3 Strategy Formulation and Innovation ............................................................................... 19
2.4 Strategic Evaluation and Innovation ................................................................................. 24
2.5 Chapter Summary ............................................................................................................. 33
CHAPTER THREE ...............................................................................................................34
3.0 RESEARCH METHODOLOGY .................................................................................. 34
x
3.1 Introduction ....................................................................................................................... 34
3.2 Research Design................................................................................................................ 34
3.3 Population and Sampling .................................................................................................. 34
3.4 Data Collection Methods .................................................................................................. 36
3.5 Research Procedures ......................................................................................................... 37
3.6 Data Analysis Methods ..................................................................................................... 37
3.7 Chapter Summary ............................................................................................................. 38
CHAPTER FOUR ..................................................................................................................39
4.0 RESULTS AND FINDINGS .......................................................................................... 39
4.1 Introduction ....................................................................................................................... 39
4.2 Demographic Information ................................................................................................. 39
4.3 Effects of Strategic Planning on Innovation ..................................................................... 41
4.4 Innovation ......................................................................................................................... 70
4.5 Correlation ........................................................................................................................ 78
4.6 Regression Analysis .......................................................................................................... 80
4.7 Chapter Summary ............................................................................................................. 82
CHAPTER FIVE ...................................................................................................................83
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS ............................... 83
5.1 Introduction ....................................................................................................................... 83
5.2 Summary ........................................................................................................................... 83
5.3 Discussions ....................................................................................................................... 84
5.4 Conclusion ........................................................................................................................ 90
5.5 Recommendations ............................................................................................................. 90
REFERENCES .......................................................................................................................92
APPENDIX I: QUESTIONNAIRE ....................................................................................113
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LIST OF TABLES
Table 3.1: Population .............................................................................................................. 35
Table 4.1: Response Rate ........................................................................................................ 39
Table 4.2: Environmental Scanning ........................................................................................ 42
Table 4.3: Environmental Analysis......................................................................................... 43
Table 4.4: Market Analysis ..................................................................................................... 45
Table 4.5: Competitor Analysis .............................................................................................. 48
Table 4.6: Customer Analysis ................................................................................................. 51
Table 4.7: Strategy Formulation ............................................................................................. 53
Table 4.8: Vision ..................................................................................................................... 54
Table 4.9: Mission .................................................................................................................. 56
Table 4.10: Goal Setting ......................................................................................................... 59
Table 4.11: Strategy Evaluation .............................................................................................. 62
Table 4.12: Structure ............................................................................................................... 62
Table 4.13: Systems ................................................................................................................ 65
Table 4.14: Soft Elements (Staff, skills, style & Shared Values) ........................................... 67
Table 4.15: Innovation ............................................................................................................ 70
Table 4.16: Product Innovation............................................................................................... 71
Table 4.17: Process Innovation ............................................................................................... 74
Table 4.18: Market Innovation ............................................................................................... 76
Table 4.19: Strategic environmental scanning and innovation ............................................... 79
Table 4.20: Strategy formulation and innovation ................................................................... 79
Table 4.21: Strategy evaluation and innovation ..................................................................... 80
Table 4.22: Model summary ................................................................................................... 81
Table 4.23: Coefficients .......................................................................................................... 81
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LIST OF FIGURES
Figure 4.1: Gender of the Respondents................................................................................... 40
Figure 4.2: Length of Existence of the Organization in the Telecommunication Sector ....... 40
Figure 4.3: Length of Employment in the Organization ......................................................... 41
Figure 4.4: Management Regularly Seeks and Sieves Information ........................................ 43
Figure 4.5: Management uses the Sieved Information to Make Decisions ............................ 44
Figure 4.6: Environmental Analysis Informs the Firm’s Current Position ............................. 45
Figure 4.7: Management Segmentation of Actual and Potential Customers .......................... 46
Figure 4.8: Frequency of Market Research on Customers ..................................................... 47
Figure 4.9: Gathering of Information from the Current and Potential Customers .................. 47
Figure 4.10: Market Research on Competitors ....................................................................... 49
Figure 4.11: Organization’s Use of Competitor Information ................................................. 49
Figure 4.12: Exploration of Sources of Information to Gain Competitive Advantage ........... 50
Figure 4.13: Market Research on Customers .......................................................................... 51
Figure 4.14: Customer Needs as Drivers of Business Objectives .......................................... 52
Figure 4.15: Customers Satisfaction ....................................................................................... 52
Figure 4.16: The Extent to which the Vision Statement is Inspirational ................................ 54
Figure 4.17: The Extent to Which the Vision Statement Guides the Organization ................ 55
Figure 4.18: The Extent to Which the Vision Statement Presents the Firm's Strategy Intent 56
Figure 4.19: The Mission Statement Sums up the Organization's Reason for Being ............. 57
Figure 4.20: The Mission Statement Explains the Business Culture ...................................... 58
Figure 4.21: Staff are Able to Recite the Mission Statement ................................................. 59
Figure 4.22: The Availability of Clearly Stated and Articulated Objectives .......................... 60
Figure 4.23: Goals are Simple, Measurable, Attainable, Realistic and Time Bound ............. 60
Figure 4.24: Availability of Processes of Monitoring Progress towards Goals ...................... 61
Figure 4.25: Structure is Guided by a Policy .......................................................................... 63
Figure 4.26: Components of Structure .................................................................................... 64
Figure 4.27: Importance of Organizational Structure in Delivering Expected Results .......... 64
Figure 4.28: Availability of Congruent Systems and Processes ............................................. 66
Figure 4.29: Alignment of Organizational Processes with Technology ................................. 66
Figure 4.30: Extent of Capability Built by Systems ............................................................... 67
Figure 4.31: Extent to Which Leaders Promote and Maintain Flexibility .............................. 68
Figure 4.32: Extent of Empowerment by Leaders Empower to Create Strategic ................... 69
Figure 4.33:Leaders Stimulate Subordinates to Challenge Systems and Performance .......... 70
Figure 4.34: Organization’s Introduction of New Products into the Market .......................... 72
Figure 4.35: Product Innovation Role in Creating Competitive Advantage ........................... 72
Figure 4.36: Importance of Product Innovation for the Company's Future Success .............. 73
Figure 4.37: Introduction of New Techniques for Accomplishing Tasks .............................. 74
Figure 4.38: Importance of New Techniques to Organization Productivity ........................... 75
Figure 4.39: Importance of Process Innovation for the Company's Future Success .............. 75
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Figure 4.40: Alignment of Products and Services to Customer Needs................................... 76
Figure 4.41: Organizations Commitment of Resources to New Sales Methods in Business . 77
Figure 4.42: Importance of Market Innovation for the Company's Future Success ............... 78
xiv
LIST OF ABBREVIATIONS
PEST Political Economic Social and Technology
PMS Performance Management Systems
SPSS Statistical Package of Social Science
SWOT Strength Weaknesses Opportunities & Threats
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background Information
There are many definitions of strategic planning from various researchers as well as methods
that can be adopted when undertaking strategic planning. Most definitions emphasize on
aligning the organization with its environment towards the future. Bryson (2011) argues that
strategic planning is a set of concepts, procedures and tools designed to assist leaders and
manager with their tasks. The same author defines strategic planning as a disciplined effort to
produce fundamental decisions and actions that shape and guide what an organization is, what
it does, and why it does it (Bryson, 2011).
Strategic planning as a concept was introduced by authors such as Ansoff (Ansoff, 1965). The
idea was that companies can and should set their long term goals rationally and deliberately:
based on that resources and plans to pursue these goals can and must be defined in advance.
However, the concept has evolved and changed a lot in terms of its meaning and application
(Wolf & Floyd, 2013). Strategic planning refers to the process of setting guidelines and
formulating strategies that control the activities being undertaken to achieve an organizations
set goals and objectives (Karabulut & Efendioglu, 2010). The company is examined as a
system composed of interconnected subsystems and permits managers to look at the
organization as a whole. It provides a framework for coordination and control of organization’s
activities, decision-making throughout the company and forces the setting of objectives, which
provides a basis for measuring performance (Arasa & K’Obonyo, 2012).
Strategic planning process involves preparing the best way to respond to the circumstances of
the organisation's environment (Okumus, Altinay & Chathoth, 2010). According to
Mcllquham-Schimidt (2010), strategic planning is the process of diagnosing an organization’s
external and internal environments, deciding on a vision and mission, developing overall goals,
creating and selecting general strategies to be pursued, and allocating resources to achieve the
organization’s goals.
2
Strategic planning can be defined as an attempt to alter a company’s strength relative to that of
its competitors, in the most efficient and effective way (Sukley et al., 2012). Strategic planning
helps organizations to anticipate future challenges and opportunities (Volberda, 2010).The
objective of the strategic planning processes is to design competitive strategies that enable the
firm to find a position in the present environment, and to go beyond perceptions of the current
situation to distinguish the enterprise into the future (Leon-Soriano et al., 2010). According to
Sukley (2012) strategic planning focuses on the direction of the organization and actions
necessary to improve its performance. One of the ways that companies can improve
performance is through innovation.
Companies innovate through adopting new technologies and management practices that will
yield efficiency and ultimately lead to better performance (Johnson, Scholes & Whittington,
2011). The current environment thrives on innovation which is driven by knowledge, employee
creativity and the desire to constantly learn research and develop new ideas and processes
(Bartes, 2013).
Innovation research in general tends to focus on technological innovation by manufacturing
firms where significant financial revenues can result when a firm licenses its own technology
to other firms. Licensing agreements are a common form of inter-firm alliance, especially for
firms looking to exploit an extensive technology patent portfolio. IBM, for example, received
370 million USD in licensing-based fees and an additional 228 million USD from the sale and
transfer of intellectual property in 2009 (IBM, 2010).With this view, innovation studies focus
on product and process innovation largely ignoring service innovation and its inherent
opportunities (Sánchez, Lago , Ferras, & Ribera, 2011). This narrowed focus likely stems from
a traditional view of services as activities with low innovative frequency, and the product-
centric orientation of innovation literature that reflects a setting in which manufacturing was
the primary economic driver (Papulova & Papula, 2015).
Further research demonstrated peculiar traits that differentiate services from goods:
Intangibility, perishability, heterogeneity, simultaneity, transferability and cultural specificity
(Carlborg, Kindström, & Kowalkowski, 2014). This uniqueness of services from products
poses great challenges to both marketers and strategist since they have nothing to show to
3
customers. It is regretted that although service innovation is currently being acknowledged as
a source of competitive advantage in the service firms (Carlborg, Kindström, & Kowalkowski,
2014), little importance has been attached on service innovation, keenly because of its
characteristics. However, according to these characteristics makes them a strategic opportunity
and a source of sustained competitive advantage for companies.
According to Robinson and Pearce (2014), the strategic planning process contains four stages
as follows: analyzing of the external environment and internal environment, selection of
business strategies, implementation of those strategies and, lastly, evaluation of the
implementation success of companies' business strategies. Alot of businesses engage
themselves in strategic planning by using new ideas, objects, practices and reaching the goals.
The organizations strategy can decide the fate of an organization by helping organization to
develop innovative products and sustain their competitive advantage.
In Strategic Management itself, which is theory-oriented, Ansoff talks about perception of the
environment by the organization according to the level of turbulence (Martinet, 2010).
Effective management of emerging issues is fundamental to the success of business
organizations. Globalization means that corporate performance in one region of the world
directly impacts its regulatory burden, brand image, reputation and financial wellbeing in that
region as well as across the globe.
From the PwC’s Communications Review (2017), the past couple of decades have been good
ones for the telecom industry in terms of sustained growth and increased efficiency, thanks to
the rise of the Internet, the development of new technologies like fiber optics, the advent of
faster and more connected computers and mobile devices, and the increasing demand from
consumer and business customers for greater connectivity, more data, and faster services. With
growing demand for different types of digital services, telecommunication operators have a
commercially attractive future if they drastically reinvent themselves for the age of digitization
by investing in the right capabilities. These capabilities will aid in reinventing the customer
experiences, reimagining their operating model to significantly reduce costs and re-creation of
their corporate cultures to instill the agile mind-set that will enable digital transformation (PwC
Communications Review, 2017).
4
It is important for a firm to engage in strategic planning so as to increase the chances of the
organizations’ success at achieving its objectives. Though the future is unpredictable, in a
turbulent environment strategic planning can help an organization to achieve a particular goal
in a systematic way by developing effective strategies and dealing effectively with rapidly
changing circumstances (Amin & Majid, 2011).
This study is beneficial to the telecommunication industry because it provides insights into the
role of strategic planning towards innovation in the telecommunication industry in Kenya.
From the study organizations can identify areas along the strategic planning process that need
improvement as strategic planning is essential for organization’s success in business arenas.
The effective role of strategic planning in order to improve organizational performance is well
documented in the strategic management literature (McIlquham-Schmid, 2010).
1.2 Statement of the Problem
As a concept, strategic planning was introduced by authors such as Ansoff (1965). Ansoff was
the most prominent thinker and contributor to strategic planning literature during the 1960s
and 1970s (Martinet, 2010). Strategic planning refers to the process of setting guidelines and
formulating strategies that control the activities being undertaken to achieve an organizations
set goals and objectives (Karabulut & Efendioglu, 2010) Strategic planning is an important
performance driver in all work settings and enhances economic performance and
organizational innovation (Song, 2016).
Innovation refers to the transformation of creative ideas in a business. Schumpeter (1934) is
credited to have coined the term innovation in the start of the 20th century and defined
innovations as organisational, process and product organisation changes that do not only
emanate from scientific discovery but also come from a mix of already existing technologies
and their application in a new way (Zizlavsky, 2011). Industries are responding to customer’s
demand by becoming more innovative in approaching the changed environment (Hax &
Majiluf, 2012).
5
A study by Babtunde and Adebisi (2012) established that the use of strategic environmental
scanning in evaluating the environmental forces (opportunities and threats) has helped in
seizing the opportunities and avoiding threats and it leads to organization profitability. Among
all the strategic planning constituent variables, analysis of business environment exhibits
a stronger relationship with firm performance (Arasa & K’Obonyo, 2012). These studies
have looked at strategic planning with regards to profitability and firm performance
respectively while this study will focus on the relationship between strategic planning on
innovation in the telecommunication sector.
According to Emeka, Ejim and Amaka (2015) a well-conceived and formulated strategy
matched with a well-structured organization increases productivity. Karel, Adam & Radomír
(2013) established that thorough (detailed) strategic planning is definitely a reasonable activity
for any company, because enterprises that prepared detailed strategic documents had better
results than enterprises without written plans. Carraher, Parnell and Spillan (2009) confirm that
retail SMEs with high strategic clarity will outperform those with moderate strategic clarity.
These studies have focused on strategy formulation with regards to different components and
industries whereas this study will focus on strategy formulation on innovation in the
telecommunication industry.
The effect of strategic evaluation is brought out by a study by Mohammed, Gichunge and Were
(2017) which revealed that strategic evaluation ascertains the degree of achievement in
organizations. From the study internal auditing assisted tour firms in identifying weak areas
that needed improvement and those that bench marking activities had positively improved
performance. Ongonge (2013) conducted a study whereby ActionAid undertook evaluation
and control of strategies by systems to promote effective internal communication and
encourage input of external knowledge and perspectives invest in structures and systems that
generate and promote innovations, knowledge and alternatives. These studies have focused on
other industries such as the hospitality industry and non-governmental organizations whereas
this study will focus on the telecommunication industry.
6
From the above it is evident that hardly any of these studies attempted to analyze the effect of
strategic planning with a focus on innovation in the telecommunication industry in Kenya. This
study explores the relationship between strategic planning and innovation in this industry in
Kenya.
1.3 Purpose of the Study
The aim of this study was to determine the effect of strategic planning on innovation in the
telecommunication industry in Kenya.
1.4 Research Questions
1.4.1 What is the relationship between strategic environmental scanning and innovation in
the telecommunication sector?
1.4.2 What is the relationship between strategy formulation and innovation in the
telecommunication sector?
1.4.1 What is the relationship between strategic evaluation and innovation in the
telecommunication sector?
1.5 Importance of the Study
Findings of this study are insightful in towards the need for strategic planning in the
telecommunications services market. This study will reveal the variables of strategic planning
that are valuable for the telecommunication industry towards innovation. The findings of the
study will be useful to various stakeholders:
1.51 General Management
Successful management of business is based upon strategic awareness which informs decisions
leading to appropriate actions. In order to do this, management must be aware of drivers of
change within the organization. The findings of this study can provide guidance to top
management in the telecommunication industry on various strategic planning stages that can
improve the innovative capability of their organizations.
7
1.52 Policy Makers (Communications Authority)
The Communications Authority is the main regulator of the telecommunications industry in
Kenya. The findings of this study can be adopted to inform policy on ow to regulate or
liberalize innovation in the telecommunications industry in Kenya. It can help the regulator to
identify key issues that they can address towards encouraging innovation in the
telecommunication industry.
1.53 Scholars
Scholars will be able to refer to this study on strategic planning in the telecommunication
industry in Kenya. Strategic planning within firms is directly linked to the success of the
organization and has an effect on companywide measures of productivity and performance.
Therefore the study can reveal various components of strategic planning process that are
instrumental towards innovation within the telecommunication industry in Kenya.
1.6 Scope of the Study
The study investigated the effect of strategic planning towards innovation in the
telecommunication industry in Kenya. The independent variables studied included strategic
environmental scanning, strategy formulation and strategy evaluation as components of the
strategic planning process.
The study targeted 30 organizations in the telecommunication industry in Kenya. Primary data was
collected from the organizations through questionnaires. The study targeted top management
employees from organizations within the telecommunication industry in Kenya. Collection of
data was carried out between July 2018 and August 2018 with a pilot exercise undertaken between
2 July and 6 July 2018. The respondents were cooperative as the researcher informed them that the
study was purely academic in order to dispel any fear that the respondents may have had. This was
done to aid in collection of accurate data.
8
1.7 Definition of Terms
1.71 Planning
Daft (2012) describes planning as the act of determining goals and defining the means for
achieving them and planning helps managers think toward the future rather than thinking
merely in terms of day-to day activities.
1.72 Strategic Planning
Strategic planning is concerned with the setting of long-term organizational goals, the
development and implementation of plans to achieve these goals, and the allocation or
diversion of resources necessary for realizing these goals (Stonehouse & Pemberton, 2012;
O'Regan & Ghobadian, 2014).
1.73 Strategy Implementation
According to Lewis (2012) strategy implementation is the procedure of designing systems to
ensure that the plans are carried out in the intended manner and periodically adjusted to keep
the organization on track to achieve its goals.
1.74 Strategic Innovation
Strategic innovation therefore involves penetration into new markets, creation of value for
customers and redefining the existing markets through improving the value of products and
services to the customers (Gebauer, Worch and Truffer, 2012).
1.8 Chapter Summary
Chapter one has presented the background information to the research problem, identified the
problem statement, stated the purpose of the study and listed the research questions addressed
in the research project. It has also presented the rationale, scope, and definition of terms used.
Chapter two presents the literature review. It discusses the existing research literature on issues
touching on strategic planning components: strategic environmental scanning, strategy
formulation and strategy evaluation. The discussion tackles all the research questions posed
and provides a firm theoretical background for the study.
9
Chapter three covers the research methodology. The chapter discusses the research design used in
the study, the population, the sampling techniques, data collection methods, research procedure,
data analysis methods and contains the chapter summary as well. Chapter four discusses the data
analysis, interpretation and presentation of the data collected from the respondents and chapter five
presents the summary of findings, conclusion and recommendations.
10
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter has presented the literature review based on the study research questions.
Literature on the relationship between strategic environmental scanning and innovation has
been presented first, followed by the relationship between strategy formulation and innovation
and finally the relationship between strategic evaluation and innovation. The summary of the
entire chapter has been provided at the end.
2.2 Strategic Environmental Scanning and Innovation
Ansoff (1965) laid the foundation for the usefulness of strategic planning. In 1980s the strategic
planning focus shifted to a broad range of concepts and techniques aiming at the anticipating
and exploiting business opportunities. In dynamic environments where demand constantly
shifts, opportunities become abundant and performance should be highest for those firms that
have an orientation for pursuing new opportunities because they have a good fit between their
strategic orientation and the environment. Environmental scanning is a management tool that
uses external information for improving strategic decision-making (Liao, Welsch & Stoica,
2008).
Environmental scanning refers to possession and utilization of information about occasions,
patterns, trends, and relationships within an organization’s internal and external environment
(Fitzroy, Hulbert & Ghobadian, 2012). It helps the managers to decide the future path of the
organization. Scanning must identify the threats and opportunities existing in the environment
Environmental scanning allows strategic decision-makers to understand the events in the
external environment so they can identify and anticipate environmental change (Coulter,
2013).
Generally speaking, internal environmental factors such as management, employees, culture
and financial change are easier to control than external environmental factors. Therefore for
this study we shall focus on the external environment specifically the, macro environment,
micro environment (market, customer, supplier) and competitors.
11
2.2.1 Environmental Analysis
The external environment of firms’ affects their ability and the ability of individuals to create
or discover opportunities. Environmental analysis facilitates the ability to exploit the resources,
acquiring resources, as well as identifying opportunities to create competitive advantage (Hitt,
Ireland, & Hoskisson, 2011). Nowadays organizations are facing big challenges to make their
knowledge more productive as a competitive resource in a complex and an unpredictable
environment (Daud & Yusoff, 2011).
According to Robinson and Pearce (2013), components of external environment analysis
include scanning, monitoring, forecasting and assessing; factors which constitute the external
environment can be divided into three interrelated subcategories which include the remote
environment, industry environment and operating environment. The remote environment
contains factors that originate beyond and usually irrespective of any firm’s operating situation
such as economic, social, political, technological and ecological factors.
Harvard professor Michel E. Porter propelled the concept of industry environment into the
foreground of strategic thought and business action as they highlight the critical strengths and
weaknesses of the company (Porter, 2008). The operating environment comprises of factors in
the competitive situation that affect a firm’s success in acquiring needed resources or in
profitability in marketing its goods and services. Assessing its competitive position improves
a firm’s chances of designing strategies that optimize its environmental opportunities
(Robinson & Pearce, 2013).
Another tool that sets the stage for analyzing the external environment is a SWOT analysis
whereby the categories strengths, weaknesses, opportunities and threats are placed in
quadrants. A SWOT analysis is a predecessor to having a strategic plan and is completed by a
group of specialists who can measure the organization from a serious perspective (Esra, 2010).
According to Kahveci & Meads (2008), one of the significances of a SWOT analysis for an
organization is that it aids the organization in using its resources efficiently. It is a way to organize
facts so as to make sense of the data and see the implications for an organization.
12
In addition, another tool that can be used for making these strategic decisions is a P.E.S.T
(Political, Economic, Social and Technological) analysis. Kotler (2008) claims that P.E.S.T
analysis is a useful tactical tool for understanding market decline or growth, business position,
potential and direction for operations. The use of P.E.S.T. analysis can be seen effective for
business and strategic planning, marketing planning, product and business development and
research reports.
Fairholm (2009) and Drago and Clement (1999), all agree that a leader plays an integral role
in the environmental analysis that is required to inform the firm of its current position in the
market place as well as its strengths and weaknesses in the market place. Leaders needs to
analyze the situation and identify gaps that can be exploited to deliver success to the
organization. Leaders are also tasked with the arduous role of seeking out information and then
sieving out what is relevant in the decision-making process. Fabbri (2016) confirms that the
leaders need to analyze the internal as well as the external environment that the organization
is operating in to be able to develop strategies that the firm can employee. It is important for
managers to understand the environment in which they operate, since these are a major
influence on what their organizations need to do in order to survive and succeed.
Strategic planning relies heavily on strategic surveillance through environmental scanning and
special alert controls. It employs the technique of object gap analysis to ensure that operational
controls are in place which requires organizational capabilities to facilitate management
response to surprising changes. It is necessary for a firm to invest in a strategic plan so as to
effectively deal with the changes. Environmental analysis is therefore not a passive exercise,
but rather an active and essential input to strategy development, helping the firm and its
business units identify attractive opportunities and make decisions on where and how to
compete (Fitzroy, Hulbert & Ghobadian, 2012). Successful strategy development requires an
understanding of changes in the environment.
2.2.2 Market Analysis
According to Fitzroy, Hulbert and Ghobadian (2012), markets are characterized as comprising
buyers, either individual or institutional, with different needs and requirements. Meeting the
needs of customers requires developing different types of offers, each focused on the needs of
13
a different segment. Market segmentation is the process of grouping together actual and
potential customers whose needs are similar so that target segments can be selected and
appropriate marketing programmes designed.
According to Porter (2008), segmentation permits the firm to focus on those segments in which
it has a competitive advantage permitting greater differentiation of the offer and consequently
better margins. Customers often play different roles- gatekeeper, influencer, decision maker,
buyer and user in a purchase process. Failure to understand these roles may preclude sufficient
understanding of sources of value. Different customers also have differing needs and wants
depending upon socio-cultural and situational factors, as well as role in purchasing process
(Fitzroy, Hulbert & Ghobadian, 2012).
Mohsin, Halim and Ahmad (2012) reported that market orientation allows owner-managers to
gather information from the current and potential customers needs to create superior customer
values and respond in an entrepreneurial manner. Therefore it enhances a company’s market
sensing capabilities, which in turn encourages the development of products, processes and new
ideas. The market orientation provides a firm a better understanding of its competitors,
customers and environment, which subsequently leads to superior firm performance (Kara,
Spillan, & Deshields, 2005).
According to Nwankwo and Gbadamosi (2010), the business culture that produces outstanding
performance through its commitment to creating superior value for customers refers to market
orientation. The beliefs implicit in this culture are embedded in continuous cross-functional
learning about customers latent and expressed needs and about competitors’ capabilities and
strategies and also in cross-functionally coordinated action to create and exploit the learning.
Every manager in a business must think broadly about firm’s market orientation and the scope
of its strategic maneuvers.
Baker and Sinkula (2007) reported that market orientation is positively and significantly
associated with new product success, and enhances organizational performance through
increasing a firm’s innovativeness. The literature concerning the marketing concept has
assumed that the implementation of the market orientation would lead to superior
organizational performance (Piercy, Haris & Lane, 2002).
14
Innovation is widely acknowledge as production of enhanced or fresh products, new approach
in production methods, and the unearthing of fresh markets and organization of structures.
According to Medrano and Olarte-Pascual (2016), innovation can change any part of the value
chain. Innovation in business entails various changes in different aspect of the business, this
study is focused on the innovation aspect in business product and service, business process
innovation and marketing innovation.
2.2.3 Competitor Analysis
According to Fitzroy, Hulbert and Ghobadian (2012), most competitor analysis is undertaken
at the business unit level. In undertaking to analyze specific competitors we are making an
implicit assumption that the unit in question is engaged in oligopolistic competition since under
perfect competition there would be no purpose in the exercise. Since the best competitive
strategies are typically pre-emptive, identification is a very important stage that should
encompass not only today’s competitors, but also those that could represent a threat tomorrow.
A competitor is any entity capable of meeting the same set of customer requirements a
company intends to meet.
According to Porter (2011), competition takes place across industries and therefore there is
much need for analysis of competitors from all dimensions to be able to get a better picture of
the trends and activities. In response to rapid change and the increasing cost of business and
product development, more and more firms are moving to organize themselves as network
competitors (Fitzroy, Hulbert & Ghobadian, 2012). Critical to an effective competitor analysis
is gathering data and information that can help the firm understand its competitor’s intentions
and strategic implications resulting from them. Through effective competitive intelligence the
firm gains the insights needed to make effective strategic decisions about how to compete
against rivals (Hitt, Ireland, & Hoskisson, 2011).
A key driver of organizational inertia is a lack of information about the key competitors of the
business and in-depth insight of the scenario regarding competition. Competitor orientation is
the extent to which firms are oriented toward and understand the strengths, weaknesses, tactical
and strategic capabilities of both current and potential competitors (Porter, 2011). Lack of
knowledge of a firm about its competitors can prove detrimental to the firm. Thus in order to
15
be more competitive, resilient and relevant in the business world enterprises need to prioritize,
identify, and minimize their business challenges in today’s world (Talib, Ali, & Idris, 2013).
Competitor information is key to organizations.
To survive in today’s competitive market environment, companies must be capable to meet
customers’ requirements with emphasis on production of products of high quality, in time
delivery and low cost. Businesses should focus on customer needs, focusing on the customers
and their needs seems a certain way to succeed and to avoid the worst kind of surprises
specially in turbulent environments such as the new competitive landscape, where competitors
can come from any line of business or any nation without warning (Meyer & Heppard, 2001).
When an organization is competitor and customer oriented, it emphasizes on the search of
information and use geared toward meeting customer needs and achieving competitive.
Technical turbulence moderates customer and competitor orientations’ impact upon innovation
performance (Liu, Luo & Shi, 2003). Dynamic and competitive conditions of the industrial
environment require organizations to more intensively explore sources (capabilities) of
innovations and accelerate generation of the innovations (Franke, 2007).
2.2.4 Customer Analysis
Customer analysis involves developing a detailed understanding of customers, their needs and
values, how these needs may vary within (market segmentation) how they are changing and
what the firm can do to introduce change to the market place (Fitzroy, Hulbert & Ghobadian,
2012). Growth comes not from doing the same as competitors, but from being creative, with
insight about how to respond to or create marketplace change. Such skills are an important
intangible asset. According to Robinson and Pearce (2014), assessing consumer behavior is a
key element in the process of satisfying your target market needs. Market research and industry
surveys can help to reduce a firm’s chances of relying on illusive assumptions. Patterns can be
identified based on the geographic area, demographic, psychographic and buyer behaviors.
Since customers have become more selective and conservative in their buying habits, and
larger companies are more forceful in attaining target markets. In order to retain customers’
loyalty and substantial competitive edge in the market; small businesses must focus on meeting
customer needs (Carraher, Parnell, & Spillan, 2009). By managing the types of behaviors and
16
employees display, firms often attempt to shape their image with customers. The customers’
service employees play a vital role for organizations in which success depends on effective
customer relations. Verhees and Meulenberg (2004) suggested that customer market
intelligence positively affects performance.
Understanding customer value is essential to developing a business model. One of the most
important sources of determining customer value is understanding who the customer is. Any
person who can influence the decision to purchase the firm’s products and services, not just
those who pay, should be viewed as a customer. We should also recognize that customers are
always individuals in as much as organizations do not make decisions, people do. We need to
clearly understand the needs and dissatisfactions of customers and how these are changing.
Such changes open up an opportunities for astute firms (Fitzroy, Hulbert & Ghobadian, 2012).
Pursuit of customer oriented strategies are more likely to provide quality and contribute to
customer satisfaction. It is argued that this type of orientation plays a more relevant role in
service organizations than in other types of companies (Kelley, 2012; Kim & Cha, 2012; Saura,
Contri, Taulet & Velazquez, 2015). Customer orientation has been shown to have a positive
impact on performance at both the company (Narver & Slater, 2010; Singh & Ranchhod, 2014)
and salesperson (Sujan, Weitz & Kumar, 2014; Donavan & Hocutt, 2012) levels. Customer-
oriented employees derive satisfactions from pleasing external and internal customers
(Donavan & Hocutt, 2012); additionally, by improving their understanding of customer needs
and using this knowledge to design better products and services, customer orientation should
directly impact customer satisfaction (Gustafsson, Nilsson & Johnson, 2013).
Customer-oriented firms thus are consistently perceived as offering higher quality physical
goods and employee performance (Brady & Cronin, 2011). Similarly, if service employee
behaviors are focused on long-term relationships (like high contact intensity, mutual
disclosure, and cooperative intentions), and in turn favorably affect customer perception of
relational service quality (Crosby, Evans & Cowles, 1990); in that way, while service people
pay more attention on customer and put the customer first, they improve their ability to provide
satisfactory customer services. In literature, it is argued that this type of orientation plays an
even more relevant role in service organizations than in other types of companies (Kelley,
2012; Kim & Cha, 2012).
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2.2.4 Innovation
Innovation is one of the strategies that helps a company remain competitive, according to
Bartes (2013). The modern business environment prospers on innovation. Organizations have
found it essential to innovate and sustain an innovative organization culture (Urbancová,
2013). Innovation is the process denoting either new product, new processes or new services
or business practices, it entails the introduction of a fresh or meaningfully enhanced product,
process, structural method or marketing method by the enterprise (Quinn, McKitterick,
McAdam, & Brennan, 2013). Quinn, et al., (2013) observed that a company is capable of
attaining competitive advantage through managing in the present effectively while building
innovation for the future concurrently.
Innovation is widely acknowledged as production of enhanced or fresh products, new approach
in production methods, and the unearthing of fresh markets and organization of structures.
According to Medrano and Olarte-Pascual (2016), innovation can change any part of the value
chain. Innovation in business entails various changes in different aspect of the business, this
study is focused on the innovation aspect in business product and service, business process
innovation and marketing innovation.
Product innovation is the innovation that is concentrated in the product, it can be the
introduction of new product into the market, the design modification of conventional products
or the application of new ingredients in production of conventional products (Zhan, 2016).
Michael (2014) defined product innovations as the recombination of an organization
knowledge to create a new product or services in the sector. According to Kanagal (2015),
product innovation is necessary for a business to deal with competitive pressures, changing
tastes and preferences, short product life cycles, technological advancement, wavering demand
patterns, and particular needs of consumers.
Process innovation is a dimension of innovation, described as the introduction of a new
technique for accomplishing a task that makes a company stay competitive and fulfill customer
need. According to Michael (2014) it is the change that lead to new techniques of delivering
existing products to the market. Rochina-Barrachina, Mañez and Sanchis-Llopis (2010)
observed that process innovation leads to an increase in organization productivity.
18
Marketing innovation is another dimension of innovation that is thought as, the efforts and
resources concentrated to new sales methods in business, they are regarded to be very
significant when it gets to enhancing businesses’ competitiveness (Medrano & Olarte-Pascual,
2016). It involves marketing activities that sought knowledge on customers’ need, this
knowledge is then used for aligning product and services to the customer needs in order to
create customer satisfaction and retention. Marketing innovation, is an appropriate technique
for organizations to create competitive advantage that is sustainable (Ren, Xie & Krabbendam,
2010).
The relationship between innovation and organization performance is receiving attention in the
academic world since the arguments of Schumpeter (1934) that continuous innovation activity
is the main basis for long term firm success (Rosenbush, Brinckmann & Bausch, 2011). The
ability of firms to generate innovations for shortened life cycles and level of competition to
generate innovations are important in allowing organizations to maintain competitive
advantage and improve performance (Artz, Norman, Hatfield & Cardinal, 2010). On a study
on effect of patenting and product innovation on organization performance, Artz, Norman,
Hatfield and Cardinal (2010) found that product innovation had a positive and significant
impact on organization performance.
Innovation refers to the transformation of creative ideas in a business. Schumpeter (1934) is
credited to have coined the term innovation in the start of the 20th century and defined
innovations as organizational, process and product organization changes that do not emanate
from scientific discovery but also come from a mix of already existing technologies and their
application in a new way (Zizlavsky, 2011). Abdi and Ali (2013) define an innovation strategy
as a means that promotes the implementation and development of new services and products.
Shqipe, Gadaf and Veland (2013), opined that there are distinctively two types of innovations;
these are incremental and radical innovations. An incremental innovation is one that focuses
on feature or costs improvements of already existing services, products and processes. On the
other hand, radical innovation however focuses on the services, processes and product with
unprecedented performance features. Innovations have an effect on corporate performance by
producing enhanced market position that shows superior performance and competitive
advantage (Gunday, Ulusoy, Kilic & Alpkan, 2011).
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There is further evidence of studies focusing on the relationship between innovation and
performance of telecoms players. In Vietnam, Daisy and Deqing (2014) found that innovation
had a positive and significant effect on customer satisfaction and customer retention. In
Nigeria, Oluseye, Ibidunni, and Adetowubo-King (2014) found that innovation strategies had
a positive effect on creating new market and expanding market share of telecommunication
industry companies. Letangule and Letting (2012) conducted a study on effect of innovation
strategies on performance of firms in the telecommunication sector in Kenya. The study
concluded that innovation strategies contributed to improved organizational performance
among telecommunication firms.
Mathenge (2013) conducted a study on the effect of innovation on competitive advantage of
telecommunication companies in Kenya. The study concluded that financial innovation
positively affects the competitive advantage of telecommunications companies to a great
extent, it focused on firm performance and was limited to the financial innovation strategy.
Njoroge, Muathe and Bula (2016) did a research on the influence of technology on the
performance of mobile sector in Kenya which found that there is need for mobile telephony
firms to invest more in new technologies to address the changes that are needed to improve
performance. Onguko and Ragui (2012) researched on the role of strategic positioning on
products performance in the telecommunications industry in Kenya and concluded that
Safaricom has invested heavily in innovation as compared to other companies in the same
industry. A study by Ngugi and Mutai (2014) on determinants influencing growth of mobile
telephony in Kenya in Safaricom Limited concluded that innovation positively affect the
growth of mobile telephony in Kenya.
2.3 Strategy Formulation and Innovation
Azhar, Ikram, Rashid and Saqib (2013) concur that the leaders are direction setters for an
organization and they need to have a clear view of the direction that they would like the
organization to take in relation to the strategy formulation and implementation. The leader’s
vision provides a basis for strategy formulation and subsequently strategy execution. The
vision should be created in conjunction with the team to create buy in from the staff. Everyone
should understand the need for change and should contribute their effort to towards achieving
20
the firm’s vision. Wit and Meyer (2010) confirm that leaders need to inspire and motivate the
people to bring about change. Fairholm (2009) declares that leaders are solely responsible for
the development of an organizations mission. Loon, Lim, Lee and Tam (2012) add that a
transformational leader should ideally influence the employees to strive to archive the
organizations mission through encouraging the employees to set aside their self-interests to
achieve the common goal of the team. Leaders are tasked with the key role of not only
developing a firm’s mission statement but also ensuring that the employees are able to
distinguish between the firm’s vision and mission (Azhar et al., 2013).
In the recent past, there has been an increased concentration on strategic leadership and
strategic alignment as a way of enhancing organizational performance (Yukl, 2010). Strategic
leadership gives a form of purpose and meaning to most organizations (Bateman & Snell,
2009). It is important that in strategic formulation, parameters for strategy audit are provided,
articulated, and circulated for those implementing the strategy (Gustafsson, Schöld, Sihvo, &
Summitt, 2009). This does not only help the organization create awareness, but lay the
background for future performance evaluation. In management “Ansoff” introduced the
concept of “strategic planning” in early 70s (Mohamed, Ann & Yee, 2010). Change exists in
all form of organizations and occurs not only physically but can also be seen in terms of
utilizing resources such as oil, land or water and technology as well. Strategic Planning
therefore bridges the gap between where we are, and where we want to go (Alaka, Tijani, &
Abass, 2011). Therefore it is important to identify the constituent components of strategic
planning as part of strategy formulation which include: the vision statement, mission statement,
and goal setting.
2.3.1 Organization’s Vision
A vision statement presents the firm’s strategi intent that focuses the energies and resources of
the company on achieving a desirable future. It is often a single sentence designed to be
memorable (Robinson & Pearce, 2014). Vision statements can be used to refocus the attention
of the investors and the public.
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A vision is the foundation of the firm’s mission statement and is a picture of what a firm wants
to be (Hitt, Ireland & Hoskisson, 2011). Therefore organizations are able to compete in
different situations through strategic efforts towards achieving better performances than their
competitors. It is important that owners, top management and employees are all aware of the
vision so as to align efforts towards its achievement. Successful management of business
development is based upon strategic capability awareness which informs decisions leading to
appropriate actions.
The first step of strategic planning is considered as the development of a “vision statement”. It
guides and shapes an organization and gives purpose and direction to the organization. It also
serves as a motivator for the people inside and outside the organization. The vision statement
refers to the future of an organization (Mohamed, Ann & Yee, 2010). Kohles (2012) defined
vision integration as the degree to which followers use the vision offered as a guiding
framework to understand the uncertainties inherent in daily organizational life. Strategic
planning is useful not only because it can help realize the vision or mitigate unforeseen risks
but it also has many more benefits (Vel, Creed & Narayan, 2012).
Some scholars have also noted the importance of a clear vision to achieve superior business
performance and have also noted the lack of research on this topic (Hamel & Prahalad, 1996;
Marcum & Blair, 2011). Shared vision is importance to successful entrepreneurial management
(Ruvio, Rosenblatt & Hertz-Lazarowitz, 2010). Organizations utilizing effective vision-driven
change strategies can earn and sustain above average profits and competitive advantage
(Kantabutra & Avery, 2010).
Vision emphasizes change, an idealized future state and has a longer time span than strategies
(James & Lahti, 2011). Grounding the organization’s vision in ideals and values helps leaders
convince followers to pursue the future organizational state, and encourages individual and
organizational performance (Slack, Orife & Anderson, 2010). In studying factors that resulted
in long-term financial success of family businesses, Neff (2011) found that shared vision
among the family and management was a crucial variable
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2.3.2 Mission Statement
According to Robinson and Pearce (2014), a mission statement is a message designed to be
inclusive of the expectations of all stakeholders for the company’s performance over the long
run. It is a broadly framed but enduring statement of a firm’s intent. It describes the firm’s
product, market and technological areas of emphasis, and it does so in a way that reflects the
values and priorities of the firm’s strategic decision makers. It should establish a firm’s
individuality and should be inspiring and relevant to all stakeholders (Hitt, Ireland &
Hoskisson, 2011). A mission statement of an organization deals with questions like “what is
our business?”, “why are we here?” and “why do we exist?” and refers to the present. It is
concerned with the way an organization is managed. The mission statement of an organization
should be clear and concise in order to distinguish it from others (Mohamed, Ann & Yee,
2010).
Strategic planning entails development of the vision and mission statements, internal analysis
and external analysis to establish long term objectives and development of strategies (David,
2013). Strategic planning for all kind of industries has become absolutely crucial in today’s
business environment. As never before there have they been confronted with such substantial
increases in both uncertainty and competition without any doubt for the organizations.
A study by Iseri –Say, Scholes and Whittington (2008), reveals that no less than 84 % of
managers cite mission statements among the most important management tools they have
adopted. Different readings have found that up to 85 % of Western profit focused institutions
have their missions inscribed in a form of a statement (Kiliko, Atandi & Awino, 2012) while in
Slovenia a study found that mission statements showed up in 44 % of top performing firms’
annual reports (Kieu, 2010).
The owners and employees must be clear and well aware of the organization’s mission as it
leads them towards their vision. Karabulut and Efendioglu (2010) conducted a study in Turkish
firms and reported that a “mission statement” identifies and define the importance of the
process of strategic planning in the organization and has significant impacts on the profitability
of the firms. Their study revealed that the mission statement that was correlated (positively
influenced) and statistically significant with profitability of the Turkish firms.
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2.3.3 Goal Setting
A meta-analysis by Toli, Webb and Hardy (2016) indicates that prompting people to form
implementation goals (plans specifying when, where and how they will achieve their goals,
along with strategies for dealing with potential setbacks) helps them to successfully reach their
goals. Two major conclusions emerge from meta-analyses of the relationship between goal
setting and performance is that goals that are difficult and challenging but realistic have a
moderately positive effect on performance, compared to easy goals. Second is that clear and
specific goals have a moderately positive effect on performance, compared to non-specific
goals or do-your-best instructions (Locke & Latham, 2002; Rahyuda, Syed & Soltani, 2014).
While it is not entirely clear how goal setting energizes employees to perform, evidence from
Harkin, Webb, Chang, Prestwich, Conner and Keller (2015) indicates that the monitoring of
progress towards a goal, rather than just the formulation of it, seems to motivate people towards
such specific attainment.
Similarly, Klug and Maier (2015) report stronger well-being in relation to successful goal
pursuit (making progress) compared with reports of well-being after the goal has been attained.
In addition, when employees need to acquire knowledge or skills to perform a task, or when
the task is complex, behavioral goals and learning goals tend to have a more positive effect on
performance than outcome goals (Porter & Latham, 2013). At its core, goal setting relies on a
set of rather simple behavioral hypotheses: workers work harder when they have clear, focused,
and challenging goals. But the apparent simplicity of giving goals to managers and employees
evolves into complex social behaviors when confronted with organizational realities. For
instance, repeated high goals can antagonize or deplete workers (Mawritz, Folger & Latham,
2014; Welsh & Ordóñez, 2014), they can create noxious competition (Poortvliet & Darnon,
2010), and even downright gaming and cheating (Ossege, 2012; Pollitt, 2013).
Furthermore, one of the most challenging issues in the implementation of goal setting is the
collective resistance of workers who elaborate astute strategies to retain a measure of control
or influence in the goal-setting process, such as regulating their efforts to avoid ratchet effects
or balancing work and rewards among team members (Cohn, Fehr, Herrman & Schneider,
2014; Horton, 2010). In the worst cases, goal setting essentially decreases organizational
performance (Pollitt & Dan, 2013; Soman & Cheema, 2004).
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While the validity of goal-setting theory core results is not put into question, the organizational
effects of performance management remain fickle (Arnold & Artz, 2015; Artz et al., 2012). In
their review, Franco-Santos, Lucianetti and Bourne (2012) discussed an array of conceptual
frameworks that go well beyond agency and goal setting, but found that work is still needed to
reconnect individual behavior and organizational effects. Repeated high goals have been found
to lead to higher levels of unethical behaviors (Welsh & Ordóñez, 2014).
Deschamps and Mattijs (2017) research reveals the importance of goals for motivating workers
and to strengthen the culture of performance within the organization. In strategy evaluations,
the first step involves determining what to measure (Wheelen & Hunger, 2006). Therefore,
setting the objectives in an important component in performance evaluations as it enables the
evaluation process to have tangible indicators. According to Gustafsson, Schold, Sihvo and
Summitt (2009), objectives in an organization are the conduits through which performance and
performance evaluation is conducted. Without clearly stated and articulated objectives, it is
difficult for an evaluator to determine what needs to be measured, under what parameters, and
in comparison, to what indicators.
Objective and goal setting is also a key role played by leaders during strategy formulation. The
goals set act a guide line for the organizations, they need to simple, measurable, attainable, and
realistic and time bound (Azhar et al., 2013). Cohn, Herrmann and Schneider (2014) insist that
good chief executives of an organization need to set goals and ensure that employees buy into
the goals and derive motivation from them. Anderson and Sun (2015) support by suggesting
the introduction of shared goals which the leader should ensure are supported by all the
employees to foster concentration of the firm’s energy towards attainment of the stated goals.
2.4 Strategic Evaluation and Innovation
Evaluation of performance for organizations enhances the utilization of baselines, and
benchmarks (Franco-Santos, Lucianetti & Bourne, 2012). As such, comparing an organizations
performance to the industry standard or to the best standards enables the organization to
reorganize and realign objectives with best practices which in turn significantly enhances
performance.
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A study conducted by Melnyk, Stewart and Swink (2014) established the existence of a
positive relationship between strategic evaluation and organizational performance. Their study
conducted in the USA with 210 organizations sought to measure the impact of metric
measurements on performance. The study found that 82% of firms that had well-articulated
objectives had better performance that companies that did not have well-articulated objectives.
Evaluation of performance enables an organization to set standards of expected performance.
Choi, Poon and Davis (2008) argue that evaluation of performance provides necessary
feedback to employees and the organization on areas they need to improve. Therefore
evaluation of performance can enables companies to achieve the targeted results by acting on
the feedback received in a timely manner.
Variables from McKinsey 7 S model have an impact on performance and achieving desired results
and therefore need to be evaluated regularly. The McKinsey 7 S model was developed in the 1980’s
by Robert Waterman and Tom Peters and the 7 S in the model are: Strategy, structure, systems,
style, staff, skills, and shared values (Waterman & Peters, 2004). These seven interdependent
factors are categorized as either "hard" or "soft" elements. "Hard" elements are easier to define
or identify and management can directly influence them: These are strategy statements;
organization charts and reporting lines; and formal processes and IT systems. "Soft" elements,
on the other hand, can be more difficult to describe, and are less tangible and more influenced
by culture. However, these soft elements are as important as the hard elements if the
organization is going to be successful. For the purpose of this study we shall look at Structure,
System and the soft elements (staff, style skills and shared values).
2.3.2 Structure
Huber (2011) defines organizational structure as a policy that dictates how activities are
apportioned, coordinated and supervised in pursuit of organizational goals. Therefore, a
structure comprises of the business hierarchy, division of labor, delegating and
communications. According to Muhando (2015), structure is the design of organizations
through which the enterprises are administered, including lines of authority and data flow
through the lines therefore it specifies roles, procedures, governance mechanism and decision
making processes. Organization structure must be congruent with the strategy thus implying,
26
there must be a ‘fit’ between them. Leaders must consider whether the organizational structure
facilitates the free flow of information; co-ordination, and the cooperation between
management and other functional areas (Kiptoo & Mwirigi, 2014).
Structure informs “who does what”, and “levels of accountability”. This distinctly indicate that
organizational structure is a fundamental factor when looking at how strategic planning can be
implemented in organizations. Structures play a major role in delivering the expected results
and without proper structures then strategic planning might not see the light in some
organization (Kiptoo & Mwirigi, 2014). For instance with regards to communication,
information asymmetry is where one party has greater access to material knowledge than the
other (Cassar, Ittner & Cavalluzzo, 2015). Low informational asymmetry may assist in the
decision-making process as well as in generating more information and providing more
expertise (Graham, Harvey & Puri, 2015).
Structure plays a key role in achieving desired results as managers at all levels in the
organization may be required to make decisions on business issues at any time, and some of
these decisions could be regarded as 'strategic' - even though they may not appear so at the
time. A manager must be able to identify the strategic issues that must be addressed if the
organization is to meet its business objectives (Abdullahi, 2010). The organization’s structure
gives a firm the form it needs to fulfill its function in the environment (Nelson & Quick, 2011).
The organization structure links the firm’s different functions, at all levels of the organization,
in precisely defined quantities. (Chatzoglou, Diamantidis, Vraimaki, Vranakis, & Kourtidis,
2011).
According to (Kiptoo & Mwirigi, 2014), every organization has a unique structure that reflects
its current image, reporting relationship and internal politics. In one sense, structure is the
arrangement of duties for the work to be done. In another sense, structure is the architecture of
business competence, leadership, talent, functional relationships and arrangement (Tian &
Tran, 2013). Further organizational structure is defined as the shape; division of labor; job
duties and responsibilities; the distribution of power, and decision-making procedures within
the company.
27
It is attestable that organizational structure pinpoints how the roles, powers, responsibilities,
and controls are synchronized within the various levels of management. This will entirely
depend on the organization’s objectives and the strategies that the organization envisaged to
use in delivering the anticipated results (Ahmadi, Salamzadeh, Daraei & Akbari, 2012). For a
vertical structure the level of specialization is important since most people in the management
team are delegated with tasks that match their qualification and expertise (Nabwire, 2014). A
centralized organizational structure saves time by minimizing arguments from the various
departments as it takes less time for an employee to decide on what to do in dealing with a
particular customer than when the matter should be taken to the top management first (Luoh,
Tsaur & Tang, 2014). A decentralized structure on the other hand increases administrative
expenses since new methods, techniques can be applied every day, and employees may incur
an extra cost as they make decisions on their own.
The functional structure is possibly the most common model in various organizations. In this
structure, common organization’s department such as the human resources, accounting are
managed independently from each other (Morden, 2011). Divisional organization structure is
often made up of a number of parallel teams, which focus on a single service or product line.
This type of organizational structure is mostly used in large companies. It is also noted that
management in such organizations is not easy and it is not possible to meet the needs of all
individuals such as customers, employees, and other stakeholders (Crane & Matten, 2016). A
matrix organizational structure is where there is more than one manager to report to. Ideally,
it implies that organization’s employees are accountable to at least two bosses (Guadalupe, Li
& Wulf, 2013). The structure makes the organization more flexible as well breaking monotony
(Goetsch & Davis, 2014).
Another commonly used structure is the product organizational model. In this structure, a
business’s production and sales efforts are grouped based on a particular line of goods and
services (Goetsch & Davis, 2014).This structure is majorly preferred where there are different
product lines with specialized expertise required to make as well as distribute them.
Geographic organization structure is where a firm is organized in several geographical units
which can be regional, national or international and such units all report to a common central
headquarter which is in charge of administering basic functions like planning and marketing
28
(Ashkenas, Ulrich, Jick & Kerr, 2015). Some companies cover a broad spectrum of geographic
areas and sometimes, it is very important for them to organize the regions where they carry out
their operational duties (Huber, 2011).
According the Mckinsey 7s model, organizational structure refers to firm’s hierarchical
divisions (Weiss, 2011). To achieve its goals an organization typically breaks down its
operations into specific different work groups. Tran and Tian (2013) further describe an
organizations structure as the allocation of duties so that work can be effectively carried out.
It is the internal differentiation and patterning of relationships, this is achieved through setting
limits and boundaries for members in the organization whilst ensuring that they have the
necessary resource allocations to allow them to achieve their goals.
Organizations structures are necessary to enable firm’s archive some key objectives (Mullins,
2010). The structure provides benefits such as the control of an organizations resources,
monitoring activities of the firm, creating accountability for work undertaken by groups,
coordination of different parts of the organization and different work areas. Organizations with
highly formalized structures have well defined expectations about behavior of employees, this
leads to increased awareness about the organizations as well as, the individual’s goals (Tran &
Tian, 2013). Unclear and top heavy organizational structure hinder contribution of employees
in the strategy formation process (Pella, Sumarwan & Kibrandoko, 2013).
2.3.3 Systems
When organizational process (management process) is aligned with IT (Information
Technology) infrastructure, an organization may experience IT-based capabilities or
competencies that lead to enhanced process performance and firm performance (Nevo &
Wade, 2010). Furthermore, IT-process alignment builds a strong capability which brings firm’s
sustained competitive advantage (Wade & Hulland, 2004; Wiengarten, Humphreys, Cao &
McHugh, 2013).
One of the systems that are important in today’s business are the Business Intelligence (BI)
systems. In today’s changing business environment, business intelligence (BI) systems play
critical role in organizations to support decision-making and improve organizational
performance (Ramakrishnan, Jones & Sidorova, 2012). Elbashir, Collier and Davern (2008)
29
used the term business intelligence (BI) to refer to a group of systems for data analysis and
reporting, helps top-, middle- and lower-level managers to use relevant and timely information
to make better decisions. Over the past decades, BI has become increasingly important in both
the business communities and the academia (Chen, Chiang & Storey, 2012).
Many organizations have been investing billions of dollars to implement BI systems to
accomplish the task (Anjariny & Zeki, 2011). The IBM Tech Trends Report based on a survey
of over 4,000 information technology (IT) professionals from 93 countries and 25 industries,
identified BI and business analytics as one of the four major technologies in organizations
(IBM, 2011). Moreover, McKinsey Global Institute predicted that a 50 to 60 per cent gap
between the supply and demand of persons with business analytical skill, as well as a shortfall
of 1.5 million data-savvy managers with the know-how to analyze data to make effective
decisions by 2018 (Manyika, Chui, Brown, Bughin, Dobbs, Roxburgh & Byers, 2011).
Systems can also play a key role with regards to evaluation and control. Academics and
practitioners to argue for the need of a systematic approach to measure performance that goes
beyond the scope of the individual stakeholder, and the need to integrate measures with the
strategic planning process, which requires stringent management control systems (Langfield-
Smith, Thorne & Hilton, 2012). Without adequate and appropriate management control
systems, of which performance measurement system (PMS) is an important element,
organizations are at risk of failing (Turner & Weickgenannt, 2009), with retrenchment,
downsizing and financial losses. It follows that an adequate and appropriate PMS can protect
organizations from potential risks and losses, and improve organizational effectiveness
(Fitzgerald, 2007; Turner & Weickgenannt, 2009; Munir, Baird & Perera, 2013).
Competitive markets and business environments have been volatile, turbulent, uncertain,
complex, and heterogeneous (Davenport, 2007). Thus, firms have implemented valuable
competencies, capabilities in organizational to enhance efficiency and competitive advantage
(Bateman & Snell, 2009). A study by Amos (2007) demonstrated that technology alignment
with internal organizational processes enhances organizational performance. To achieve
competitive advantage and performance, organizations processes must be efficient and
effective (Bateman & Snell, 2009). Alignment of organizational processes is key in
determining organizations competitiveness, and performance.
30
A study conducted by Croteau, Solomon, Raymond and Bergeron (2001) established the
existence of a positive relationship between internal process alignment and organizational
performance. The study further indicated that organizations that had established congruent
systems and processes had a 32% production and performance output compared to those that
did not have this processes. According to Rowe (2001), process alignment is very important
both in product line management and in service industry.
According to Kim and Mauborgne (2004), when an organizational processes are aligned with
technology, organizational performance increases. Therefore, the ability for an organization to
anticipate changes in industry technologies, and how this technologies could impact the
organization is critically important. It is very important for organizations to identify, balance,
integrate and align all of the external and internal variables that are likely to have an impact on
the organization’s capacity to fulfill performance objectives. This includes the identification
of process trends, patterns and possible reactions that may be caused by the internal process
alignment with strategy (Yukl, 2010).
2.3.3 Staff, Style, Skills & Shared Values
According to Michalski (2011), the Mckinsey 7-s framework was invented in the 1980s and
comprising of soft elements which include staff, style, skills and shared values as one of the
categories of the elements. These soft elements can be examined to improve the performance of a
company, examine likely future changes and align departments among others uses. For example,
according to Abdullahi (2010), a manager must be able to identify the strategic issues facing
the organization to enable it to meet its business objectives.
It is important for management and other employees to actively involve themselves with
management of strategic issues, if they want a successful future of their enterprise (Mbogo,
2007). According to Çaliskan (2010), toward the end of the twentieth century, management
came to accept that people, not markets, products, cash, buildings, or equipment, are the critical
differentiators of a business enterprise. All the assets of an organization, other than people, are
inert. They are passive resources that require human application to generate value. Further to
these, the key to sustaining a profitable company or a healthy economy is the productivity of
the workforce.
31
Ragui and Gichuhi (2013) found human resource practices to be instrumental in strategy
implementations, such practices were found to motivate staff and consequently increase
strategy implementation level. The people who make up an organization are considered to be
one of the most important resources of today’s firms (Çaliskan 2010).The purpose of
implementing strategies is that managers and employees collaborate to perform formulated
strategic planning (Mumbua & Mingaine, 2015). The soft elements play a key role in ensuring
an organizations success. Porter (2013) supports this by claiming that for implementation of
strategies successfully, managers should have high interpersonal and human relation skills.
Implementation success depends on motivating employees, which is the art of managers. An
organization with all the other resources minus effective human resource can accomplish very
little of its objectives if any (Ragui & Gichuhi, 2013).
According to Grimm (2010), leadership is a multifaceted process of identifying a goal,
motivating other people to act, and providing support and motivation to achieve mutually
negotiated goals. Effectiveness of strategy implementation is in part affected by the quality of
people involved in the process (Govindarajan, 2009). Quality here forth refers to skills,
attitudes, capabilities, experiences and other characteristics of people required by a specific
task or position (Peng & Litteljohn, 2008). Harrington (2008) finds that a higher level in total
organizational involvement during strategy implementation had positive effects on the level of
implementation success, firm profits and overall firm success.
An aspect that relies on the soft elements (style and skills) is with regards to management
enhancing communication within the organization. According to Beer and Eisenstat (2009),
blocked vertical communication has a particularly pernicious effect on a business’s ability to
implement and refine its strategy. Taylor (2010) observed that in order to have all workers
attaining the necessary understanding of the company vision and goals, provide commitment
and actively get involved in translating the strategic plans into implementable activities with
measureable results, strong and decisive leadership is needed to drive the course. According to
Zaribaf and Bayrami (2010), management’s importance is categorized into three key roles
mainly; managing the strategic process, managing relationships and manager training
management.
32
According to Gustafsson, et al., (2009), there exists a positive relationship between
organizations human capital alignment with strategy and performance. They argue that when
an organization has sufficient levels of skills, competencies and knowledge, the organization
records a higher level of performance. The study they conducted in the USA revealed that 82%
of organizations (fortune 500) had remarkable performance rate due to recruiting talented
employees and aligning them with organizations strategy, and performance objectives.
Loon, Lim, Lee and Tam (2012) assert that leaders are a key ingredient for success of
organizations in the current day and age. Azhar et al., (2013) further claim that some
organizations leaders are vital in the development of the firm’s values, the firm’s values are
used to indicate the firms expected behavior.
A firm’s shared values can be termed as the firm’s corporate culture (Weiss, 2011). In the
context of the McKinsey 7s model the study refer to them as a firm’s dominant values beliefs
and norms. All organization have a unique way about them, they have a distinct way of
handling their matters, and this behavior is shaped by organizational culture (Naranjo-
Valencia, Jimenez-Jimenez & Sanz-Valle, 2011). Organizational culture is evident everywhere
in the organization and is reflected in verbal and non-verbal communications between
organizational members. On occasion, the culture of a company is obvious and clearly visible,
as seen in the way a firm handles its customers and the artifacts on display to support this focus
on customer service.
Other times, a company’s culture is less obvious and needs to be further probed to be uncovered
(Flamholtz & Randle, 2011). Viegas-Pires (2013) suggested that organizational culture needed
to be considered when planning. Mullins (2010) refers to organizational climate as the
atmosphere in an organization. The right organizational climate ensures that the employees are
engaged and focused on productivity in the organization. It reduces the possibility of resistance
to change and rules. As a system of shared meaning, it is a critical variable for effective strategy
process.
33
2.5 Chapter Summary
This chapter has presented a review of literature with regards to the three objectives of the
study which include the strategic environment scanning, strategy formulation and strategic
evaluation. The next chapter presents the research methodology that will be adopted in this
study. It details the research design, population and sampling, data collection methods,
research procedures and how data collected was analyzed.
34
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter has elaborated on the research methodology that was used to carry out the research
project. This has included the population of study, the sampling design, sampling techniques
as well as the sample size, data collection methods and also the research procedures and data
analysis methods.
3.2 Research Design
A research design is a conceptual structure within which a study is conducted (Mbizi, Hove,
Thondhlana & Kakava, 2013). The research used a descriptive survey research design as it
sought to present current information about strategic planning and its effect on innovation.
According to Cooper and Schindler (2014), a descriptive study determines, who, what, where,
and how of a phenomenon which is the objective of this study. In addition, a descriptive study
is concerned with finding out the what, where and how of a phenomenon. This descriptive
research design is therefore appropriate for this study. The advantage of using the descriptive
research survey design for this study was to enable measurement of the relationships between
the independent and dependent variables.
The study obtained and described the views of the respondents from the telecommunication
companies in Nairobi, in line with establishing the effect of strategic planning on innovation.
The study incorporated both quantitative and qualitative research so as to gain a better
knowledge and in-depth understanding of the results. The aim of this study was to provide a
clear understanding of role strategic planning on innovation in the telecommunication industry.
3.3 Population and Sampling
3.3.1 Population
Target population is a complete set of cases or group members that is the actual focus of the
research inquiry, and from which a sample maybe drawn (Saunders, Lewis & Thornhill, 2012).
Population can be defined as the total collection of individuals whom researchers seek to make
inference on (Gopalsamy, 2013). A population is the total collection of elements about which
35
one wish to make inferences (Cooper & Schindler, 2014). The population of this study was
made up 98 companies from the telecommunication sector based on the Kenya Business
Directory as of June 2018 (Kenya Business Directory, 2018). According to Kenya’s
Telecommunication report by Business Monitor Intelligence BMI (2018) the major operators
include Safaricom, Airtel and Telcom. See Table 3.1 below.
Table 3.1: Population
Size Population Percentage
Major players 3 30
Others 95 70
Total 98 100
Source: Kenya Business Directory (2018)
3.3.2 Sampling Design
This refers to selecting the target population and selection of the sample (Cooper & Schindler,
2014). The target population in this research was determined by the players in the
telecommunication industry in Kenya. Respondents involved in the study included top
management, head of business units and middle management based on the Kenya Business
Directory as of June 2018 (Kenya Business Directory, 2018).
3.3.2.1 Sampling Frame
The sampling frame is a list of elements from which the sample is actually drawn and is closely
related to the population (Cooper & Schindler, 2014). The sampling frame included all top
management, head of business units and middle management from organizations in the
telecommunication industry in Kenya.
3.3.2.2 Sampling Technique
According to Mugenda and Mugenda (2012), sampling is the process of selecting a study
subject from a bigger population. It is essential because the methodology applied is used to
determine whether or not the sample of the study is a true representative of the whole
population from which it is drawn or not.
36
Purposive sampling technique was used to select three senior employees of each
telecommunication company. Senior employees within the telecommunication companies
were targeted because they are conversant the strategic planning process in the organization.
A purposive sample is a non-probability sample that is selected based on characteristics of a
population and the objective of the study. Purposive sampling is also known as judgmental
sampling.
Despite the fact that there are various sections in the different telecommunication industries,
this did not affect the composition of the sample as the type of responsibility and work role an
employee is involved in does not change the factors under study. Characteristics such as
religion or income level were not be considered as they do not impact the study.
3.3.2.3 Sample Size
A sample refers to the segment of the population that is selected for investigation. From the
population of 98 telecommunication companies in Kenya the study purposively selected senior
employees as they were considered to have relevant information on the effect of strategic
planning on innovation in telecommunication companies in Kenya. A sample of 3 senior
employees were targeted from 30 telecommunication companies forming a sample size of 90
respondents. This sample was suitable as it provided a good representation from top
management from the telecommunication companies in Kenya.
3.4 Data Collection Methods
Primary data for the research was collected through use of questionnaires that comprised both
closed and open ended questions that seek to measure the impact of strategic planning towards
innovation within the telecommunication industry. According to Cooper and Schindler (2014),
data collection involved gathering of facts presented to the researcher from the study’s
environment. Respondents were required to respond to questions developed from the three
research questions which provided substantial data for analysis to derive conclusions.
The questionnaire was administered through drop and pick method and was self-administered
to reduce interviewer bias. Ranking and rating was used to develop scales that were measured
to establish significant data for basing valid conclusions on. The rankings were used when
37
evaluating the respective order of factors. The questionnaire was divided into five sections
whereby Section I covered demographic data of the respondents. Section II covered strategic
environmental scanning and innovation, Section III covered strategic formulation and innovation,
Section IV covered strategic evaluation and innovation and Section V covered product, process
and market innovation.
3.5 Research Procedures
The first step was the preparation of the research proposal followed by the determination of
the sample and estimation of the budget of costs incurred. The data collection instrument
through questionnaires was then developed and a pilot exercise conducted to evaluate its
effectiveness. Findings received from the pretest were incorporated into the questionnaire
before administering the final copy. The evaluation of the pilot exercise which gave leeway to
data collection from the field was done between 2nd July and 6th July 2018.
This was followed by the actual survey after which analysis and interpretation was done. The
questionnaire was administered through drop and pick method and was self-administered to
reduce interviewer bias. To ensure a high response rate the researcher kept track of the status
of completion of the survey sent out to respondents. This enabled the researcher to send
reminders to those who had not responded on a weekly basis. The final step was drawing of
conclusions and making of recommendations coupled with presentation of the findings.
3.6 Data Analysis Methods
According to Cooper and Schindler (2014), data analysis involved reducing accumulated data
to a manageable size, developing summaries, looking for patterns and applying statistical
techniques. The data was analyzed using SPSS Statistics in terms of percentages, means as
well as regression tables and presented in form of tables and figures to elicit the findings in
light of the three research objectives. Data analysis methods used in the study included both
qualitative and quantitative techniques.
The study used inferential statistics to try to infer from the sample to make judgments of the
probability that the observed difference between groups is a dependable one or one that might
have happened by chance in this study. The study also undertook a regression and correlation
38
analysis of the various variables to determine how the various variables relate to each other.
The information was presented by use of tables and figures where necessary for ease of
comprehension and analysis.
3.7 Chapter Summary
This chapter has clearly described the methodology that was used to reach the purpose of the
study. The research methodology was presented under the following sections; research design,
population, sampling frame, sampling technique, sample size, data collection and data analysis.
Chapter four presents the findings and results of the study.
39
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter discusses the interpretation and presentation of the findings obtained from the
field. The chapter presents the background information of the respondents, findings of the
analysis based on the objectives of the study. Descriptive analysis and inferential statistics were
used to analyze the data and discuss the research findings. In this study, a sample of 3 senior
management employees from telecommunication companies was selected, thus forming a
sample size of 90 respondents whereby 78 respondents filled in the questionnaires making a
response rate of 86 percent, as represented in figure 4.1 below, based on Mugenda and
Mugenda (2012), the response rate was considered to excellent. . See Table 4.1 below.
Table 4.1: Response Rate
Questionnaires Frequency Percent
Filled and Collected 78 86%
Non-responded 12 14%
Total 90 100%
4.2 Demographic Information
4.2.1 Gender of the Respondents
The study sought to determine the gender category of the respondent, and therefore requested the
respondents to indicate their gender category. From the research findings, the study established
that majority of the respondents were male at 69% whereas females comprised of 31% of the
respondents. This is an indication that the telecommunication sector’s top management comprises
of more male than female employees. . See Figure 4.1 below.
40
Figure 4.1: Gender of the Respondents
4.2.2 Length of Existence of the Organization in the Telecommunication Sector
The study requested the respondent to indicate the length of time that their organization had
been in existence. From the findings, majority of the companies as shown by 50% have been
in existence for a period of 6-11 years, 15% of the of the respondents indicated their companies
had been in existence for less than five years while 35% of the respondents indicated 12 years
and over. This is an indication that the organizations were well established in the sector in
terms of the period of existence with the bulk (85%) having been in operation for 6 years and
over. See Table 4.2 below.
Figure 4.2: Length of Existence of the Organization in the Telecommunication Sector
69%
31%
Management Regularly Seeks and Sieves Information
Male Female
15%
50%
35%
Length of Organizations Existence
1-5 years 6-11 years 12 years and over
41
4.2.3 Length of Employment in the Organization
The study requested the respondents to indicate the number of years they had worked in their
organization. From the research findings, most of the respondents, as shown by 85% indicated
to have been working in their organizations for between 1- 5 years, 10% of the respondents
indicated to have been working in their organizations for 6- 11 years while 5% indicated to
have worked in their organization for a period of above 12 years. This is an indication that
there is a high turnover in senior management in the telecommunication industry or expertise
is sought from outside the organizations. . See Figure 4.3 below.
Figure 4.3: Length of Employment in the Organization
4.3 Effects of Strategic Planning on Innovation
4.3.1 Environmental Scanning
To address the first research question, respondents were asked a set of statements from which they
were to indicate on the scale provided by indicating the extent to which they agreed with the
statements on a five-scale rank where; 1 = Very High Extent, 2= High Extent, 3=Moderate
Extent, 4=Low Extent and 5=Very Low Extent
85%
10%
5%
Length of Employment in the Organization
1-5 years 6-11 years 12 years and over
42
From the findings the study revealed that majority of the respondents agreed that customer
analysis informs a major part of the organization’s decision making as shown by a mean of
1.8803, the standard deviation of 0.65525 indicates that most companies view customer
information as key knowledge towards their decision making.
Competitor analysis is least carried out by the organizations as indicated by a mean of 2.3077
and a standard deviation of 0.65525. The standard deviation for market analysis of 0.80385 is
highest indicating that some companies carry out research to a high extent while for other
companies research is carried out on a low extent. The findings are indicated in Table 4.2 below.
Table 4.2: Environmental Scanning
Type of analysis N Mean Std. Deviation
Environmental Analysis 78 2.0171 .66644
Market Analysis 78 2.0940 .80385
Competitor Analysis 78 2.3077 .65525
Customer Analysis 78 1.8803 .56337
4.3.3.1 Environmental Analysis
From the findings the study revealed that majority of the respondents agreed that
environmental analysis contributes to strategic planning to a high extent as shown by a mean
of 2.0171 and a mode of 2. Respondents agree that environmental analysis greatly informs the
firm’s current position with a mean of 1.8590. Management in the telecommunication
organizations regularly seek and sieve information from the environment. The information is
used by management to make decisions affecting the organization. See Table 4.3 below.
43
Table 4.3: Environmental Analysis
Statistics
Overall
environmental
analysis
Management
regularly seeks
and sieves
information
Management
constantly uses
the sieved
information
Environmental
analysis informs
the firm's
current position
N 78 78 78 78
Mean 2.0171 2.0000 2.1923 1.8590
Mode 2.00 2.00 2.00 1.00a
Std. Deviation .66644 .83744 .60426 .86376 a. Multiple modes exist. The smallest value is shown
Majority of the respondents, that is, 76% indicated that the organization’s management
regularly seeks and sieves information to a high extent and very high extent. This is shown by
46% of respondents indicating that their management regularly seeks and sieves information
to a high extent while 30% of respondents indicate that their management regularly seeks and
sieves information to a very high extent. Twenty four percent of organization’s management
regularly seeks and sieves information to a moderate and low extent indicated by 19% and 5%
respectively. See Figure 4.4 below.
Figure 4.4: Management Regularly Seeks and Sieves Information
0%
10%
20%
30%
40%
50%
Very high extent High extent Moderate extent Low extent
Management Regularly Seeks and Sieves Information
Frequency
44
Majority of the respondents, that is, 80% agree that management constantly uses the sieved
information to make decisions to a high extent and very high extent. This is shown by 60% of
respondents indicating that their management constantly uses the sieved information to make
decisions to a high extent while 10% of respondents indicate that their management constantly
uses the sieved information to make decisions to a very high extent. Thirty percent of
organization’s management constantly uses the sieved information to make decisions to a
moderate extent. See Figure 4.5 below.
Figure 4.5: Management uses the Sieved Information to Make Decisions
Majority of the respondents, that is, 80% agree that environmental analysis informs the firm
of its current position to a high extent and very high extent. This is shown by 40% of
respondents indicating that they agree that environmental analysis informs the firm of its
current position to a high extent while 40% of respondents indicate agree that environmental
analysis informs the firm of its current position to a very high extent. Twenty percent of
respondents agree that environmental analysis informs the firm of its current position to a
moderate and low extent indicated by 15% and 5% respectively. See Figure 4.6 below.
0%
10%
20%
30%
40%
50%
60%
70%
Very high extent High extent Moderate extent
Management Constantly uses the Sieved Information to Make Decisions
Frequency
45
Figure 4.6: Environmental Analysis Informs the Firm’s Current Position
4.3.3.2 Market Analysis
From the findings the study revealed that majority of the respondents agreed that market
analysis contributes to strategic planning to a high extent as shown by a mean of 2.0940 with
a mode of 2.33. Respondents agree management gathers information from the current and
potential customers needs to create superior customer values for various market segments to a
high extent with a mean of 1.7051. See Table 4.4 below.
Table 4.4: Market Analysis
Statistics
Overall Market
Analysis
Management
segments
actual and
potential
customers
Market
research on
customers is
conducted
regularly
Management
gathers
information to
create superior
products and
services
N 78 78 78 78
Mean 2.0940 2.1410 2.4359 1.7051
Mode 2.33 2.00 2.00 1.00a
Std. Deviation .80385 .97667 1.02678 .79133 a. Multiple modes exist. The smallest value is shown
0%
10%
20%
30%
40%
50%
Very high extent High extent Moderate extent Low extent
Environmental Analysis Informs the Firm of its Current Position
Frequency
46
Majority of the respondents, that is, 71% agree that management segments actual and potential
customers based on similar needs to a high extent and very high extent. This is shown by 45%
of respondents indicating that their management segments actual and potential customers based
on similar needs to a high extent while 26% of respondents indicate agree that their
management segments actual and potential customers based on similar needs to a very high
extent. Twenty nine percent of respondents agree that their management segments actual and
potential customers based on similar needs to a moderate and low extent indicated by 24% and
5% respectively. See Figure 4.7 below.
Figure 4.7: Management Segmentation of Actual and Potential Customers
Majority of the respondents, that is, 60% agree that market research on customers is conducted
regularly to a high extent and very high extent. This is shown by 45% of respondents indicating
that market research on customers is conducted regularly to a high extent while 15% of
respondents indicate that market research on customers is conducted regularly to a very high
extent. Forty percent of respondents agree that market research on customers is conducted
regularly to a moderate extent, low extent and very low extent indicated by 26%, 9% and 5%
respectively. See Figure 4.8 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Very high extent High extent Moderate extent Low extent
Management Segments Actual and Potential Customers
Based On Similar Needs
Frequency
47
Figure 4.8: Frequency of Market Research on Customers
Majority of the respondents, that is, 90% agree that management gathers information from the
current and potential customers needs to create value to a high extent and very high extent.
This is shown by 45% of respondents indicating that management gathers information from
the current and potential customers needs to create value to a high extent while 45% of
respondents indicate management gathers information from the current and potential
customers needs to create value to a very high extent. Ten percent of respondents agree that
management gathers information from the current and potential customers needs to create
value to a moderate extent and low extent indicated by 5% and 5% respectively. See Figure
4.9 below.
Figure 4.9: Gathering of Information from the Current and Potential Customers
0%
10%
20%
30%
40%
50%
Very high extent High extent Moderate extent Low extent Very low extent
Market Research on Customers Is Conducted Regularly
Frequency
0%
10%
20%
30%
40%
50%
Very high extent High extent Moderate extent Low extent
Management Gathers Information from the Current and
Potential Customers Needs to Create Value
Frequency
48
4.3.3.3 Competitor Analysis
From the findings the study revealed that majority of the respondents agreed that competitor
analysis contributes to strategic planning to a high extent as shown by a mean of 2.3077 with
a mode of 2. Respondents agree that the organization explores sources of innovation to gain
competitive advantage against competitors to a high extent with a mean of 1.9872. See Table
4.5 below.
Table 4.5: Competitor Analysis
Statistics
Overall
Competitor
Analysis
Market
research is
conducted on
competitors
Company uses
competitor
information to
make decisions
Company
explores
sources of
information to
gain
competitive
advantage
N 78 78 78 78
Mean 2.3077 2.0385 2.8974 1.9872
Mode 2.00 2.00 3.00 1.00
Std. Deviation .65525 .87449 .69487 .90444
For most companies market research is conducted on competitors to a high extent. Majority of
the respondents, that is, 71% agree that market research is conducted on competitors to a high
extent and very high extent. This is shown by 40% of respondents indicating that market
research is conducted on competitors to a high extent while 31% of respondents indicate
market research is conducted on competitors to a very high extent. Twenty nine percent of
respondents agree that market research is conducted on competitors to a moderate extent and
low extent indicated by 24% and 5% respectively. See Figure 4.10 below.
49
Figure 4.10: Market Research on Competitors
Majority of the respondents, that is, 81% agree that competitor information is used in making
decisions to a moderate extent and low extent. This is shown by 67% of respondents indicating
that competitor information is used in making decisions to a moderate extent while 14% of
respondents indicate competitor information is used in making decisions to a low extent.
Nineteen percent of respondents agree that competitor information is used in making decisions
to a high extent and very high extent indicated by 14% and 5% respectively. See Figure 4.11
below.
Figure 4.11: Organization’s Use of Competitor Information
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Very high extent High extent Moderate extent Low extent
Market Research is Conducted on Competitors
Frequency
0%
10%
20%
30%
40%
50%
60%
70%
80%
Very high extent High extent Moderate extent Low extent
Organization's Use of Competitor Information to Make
Decisions
Frequency
50
Majority of the respondents, that is, 71% agree that management explores sources of
information to gain competitive advantage to a high extent and very high extent. This is shown
by 35% of respondents indicating that management explores sources of information to gain
competitive advantage to a high extent while 36% of respondents indicate management
explores sources of information to gain competitive advantage to a very high extent. Twenty
nine percent of respondents agree that management explores sources of information to gain
competitive advantage to a moderate extent and low extent indicated by 24% and 5%
respectively. See Figure 4.12 below.
Figure 4.12: Exploration of Sources of Information to Gain Competitive Advantage
4.3.3.4 Customer Analysis
From the findings the study revealed that majority of the respondents agreed that customer
analysis contributes to strategic planning to a high extent as shown by a mean of 2.0171 with
a mode of 2. Respondents agree that the organization regularly measures customer’s
satisfaction to a high extent with a mean of 1.8590. See Table 4.6 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
Very high extent High extent Moderate extent Low extent
Organization Explores Sources of Information to Gain
Competitive Advantage
Frequency
51
Table 4.6: Customer Analysis
Statistics
Overall
Customer
Analysis
Market research
is conducted on
customers
regularly
Business
objectives are
driven by what
customers need
Company
regularly
measures
customers
satisfaction
N 78 78 78 78
Mean 2.0171 2.0000 2.1923 1.8590
Mode 2.00 2.00 2.00 1.00a
Std. Deviation .66644 .83744 .60426 .86376 a. Multiple modes exist. The smallest value is shown
Majority of the respondents, that is, 70% agree that market research on customers is conducted
regularly to a high extent and very high extent. This is shown by 44% of respondents indicating
that market research on customers is conducted regularly to a high extent while 26% of
respondents indicate market research on customers is conducted regularly to a very high extent.
Thirty percent of respondents agree that market research on customers is conducted regularly
to a moderate extent and low extent indicated by 26% and 4% respectively. See Figure 4.13
below.
Figure 4.13: Market Research on Customers
0%
10%
20%
30%
40%
50%
Very high extent High extent Moderate extent Low extent
Market Research on Customers is Conducted Regularly
Frequency
52
Majority of the respondents, that is, 86% agree that business objectives are driven by what
customers need to a high extent and very high extent. This is shown by 65% of respondents
indicating that business objectives are driven by what customers need to a high extent while
31% of respondents indicate business objectives are driven by what customers need to a very
high extent. Four percent of respondents agree that business objectives are driven by what
customers need to a moderate extent. See Figure 4.14 below.
Figure 4.14: Customer Needs as Drivers of Business Objectives
Majority of the respondents, that is, 77% agree that they regularly measures customer’s
satisfaction to a high extent and very high extent. This is shown by 46% of respondents
indicating that they regularly measures customer’s satisfaction to a high extent while 31% of
respondents indicate they regularly measures customer’s satisfaction to a very high extent.
Some respondents agree that they regularly measures customer’s satisfaction to a moderate
and low extent indicated by 19% and 4% respectively. See Figure 4.15 below.
Figure 4.15: Customers Satisfaction
0%
20%
40%
60%
80%
Very high extent High extent Moderate extent
Business Objectives are Driven by What Customers Need
Frequency
0%
20%
40%
60%
Very high extent High extent Moderate extent Low extent
Company Regularly Measures Customers Satisfaction
Frequency
53
4.3.2 Strategy Formulation
To address the second research question, respondents were asked a set of statements from which
they were to indicate on the scale provided by indicating the extent to which they agreed with the
statements on a five-scale rank where; 1 = Strongly Agree, 2= Agree, 3=Uncertain, 4=Disagree
and 5=Strongly Disagree
From the findings the study revealed that majority of the respondents agreed that the vision
greatly influences compared to goal setting as shown by a mean of 1.7479 and with a standard
deviation of 0.56647. For some companies goal setting was carried out to a high extent while
in some to a very low extent which is indicated by the standard deviation of 0.82219 showing
a greater dispersion in the responses compared to vision and mission. The findings are indicated
in Table 4.7 below.
Table 4.7: Strategy Formulation
Components N Mean Std. Deviation
Vision 78 1.7479 .56647
Mission 78 1.9744 .58051
Goal Setting 78 1.8718 .82219
From the findings the study revealed that majority of the respondents agreed that the vision
contributes to strategic planning to a high extent as shown by a mean of 1.7479 with a mode
of 1. Respondents agree that the vision statement guides and gives purpose to the organization
to a high extent with a mean of 1.7308. . See Table 4.8 below.
54
Table 4.8: Vision
Statistics
Overall Vision Vision
statement is
inspirational
and represents
the
organizations
identity
The vision
statement
guides and
gives purpose
to the
organization
The vision
statement
presents the
firm's strategy
intent that
focusses
resources on
achieving the
desirable future
N 78 78 78 78
Mean 1.7479 1.6410 1.7308 1.8718
Mode 1.00a 2.00 2.00 2.00
Std. Deviation .56647 .58051 .69643 .76207 a. Multiple modes exist. The smallest value is shown
Majority of the respondents, that is, 95% either agree or strongly agree that the vision statement
is inspirational and represents the organization’s identity. This is shown by 54% of respondents
indicating that they agree that their vision statement is inspirational and represents the
organization’s identity while 41% of respondents strongly agree that the vision statement is
inspirational and represents the organization’s identity. Five percent of respondents are
uncertain as to whether the vision statement is inspirational and represents the organization’s
identity. See Figure 4.16 below
Figure 4.16: The Extent to which the Vision Statement is Inspirational
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain
The Vision Statement is Inspirational and Represents the Organization's Identity
55
Majority of the respondents, that is, 86% either agree or strongly agree that the vision statement
guides and gives purpose to the organization. This is shown by 45% of respondents indicating
that they agree that their vision statement guides and gives purpose to the organization while
41% of respondents strongly agree that the vision statement guides and gives purpose to the
organization. Fourteen percent of respondents are uncertain as to whether the vision statement
guides and gives purpose to the organization. See Figure 4.17 below.
Figure 4.17: The Extent to Which the Vision Statement Guides the Organization
Majority of the respondents, that is, 77% either agree or strongly agree that the vision statement
presents the firm's strategy intent that focusses resources on achieving the desirable future.
This is shown by 41% of respondents indicating that they agree that the vision statement
presents the firm's strategy intent that focusses resources on achieving the desirable future
while 36% of respondents strongly agree that the vision statement presents the firm's strategy
intent that focusses resources on achieving the desirable future. Twenty three percent of
respondents are uncertain as to whether the vision statement presents the firm's strategy intent
that focusses resources on achieving the desirable future. See Figure 4.18 below
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Stronlgy agree Agree Uncertain
The Vision Statement Guides and Gives Purpose to the
Organization
56
Figure 4.18: The Extent to Which the Vision Statement Presents the Firm's Strategy
Intent
From the findings the study revealed that majority of the respondents agreed that the mission
statement contributes to strategic planning to a high extent as shown by a mean of 1.9744 with
a mode of 2. Respondents agree that the company’s mission statement sums up the
organization's reason for being to a high extent with a mean of 1.6410. See Table 4.9 below.
Table 4.9: Mission
Statistics
Overall
Mission
Company
Mission
statement
sums up the
organization's
reason for
being
Mission
statement
explains what
our business
culture is like
Staff able to
recite mission
statement
without
making a
mistake
N 78 78 78 78
Mean 1.9744 1.6410 1.7949 2.4872
Mode 2.00 2.00 1.00 2.00
Std. Deviation .58051 .58051 .87325 .86405
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Stronlgy agree Agree Uncertain
The Vision Statement Presents the Firm's Strategy Intent That
Focusses Resources on Achieving the Desirable Future
57
Majority of the respondents, that is, 95% either agree or strongly agree that the company's
mission statement sums up the organization's reason for being. This is shown by 54% of
respondents indicating that they agree that the company's mission statement sums up the
organization's reason for being while 41% of respondents strongly that the company's mission
statement sums up the organization's reason for being. Five percent of respondents are
uncertain as to whether the company's mission statement sums up the organization's reason for
being. See Figure 4.19 below.
Figure 4.19: The Company's Mission Statement Sums up the Organization's Reason for
Being
Majority of the respondents, that is, 81% either agree or strongly agree that the mission
statement explains the business culture. This is shown by 36% of respondents indicating that
they agree that the mission statement explains the business culture while 45% of respondents
strongly agree that the mission statement explains the business culture. Twenty three percent
of respondents are uncertain as to whether the mission statement explains the business culture
while 5% disagree. See Figure 4.20 below.
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain
The Company's Mission Statement Sums up the
Organization's Reason for Being
58
Figure 4.20: The Mission Statement Explains the Business Culture
Majority of the respondents, that is, 55% either agree or strongly agree that staff are able to
recite the mission statement without making a mistake. This is shown by 45% of respondents
indicating that they agree that staff are able to recite the mission statement without making a
mistake while 10% of respondents strongly agree that staff are able to recite the mission
statement without making a mistake. Thirty one percent of respondents are uncertain as to
whether staff are able to recite the mission statement without making a mistake while 14%
disagree. See Figure 4.21 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Stronlgy agree Agree Uncertain Disagree
The Mission Statement Explains the Business Culture
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Stronlgy agree Agree Uncertain Disagree
Staff are Able to Recite the Mission Statement Without
Making a Mistake
59
Figure 4.21: Staff are Able to Recite the Mission Statement
From the findings the study revealed that majority of the respondents agreed that goal setting
contributes to strategic planning to a high extent as shown by a mean of 1.8718 with a mode
of 1. Respondents agree that the organization has clearly stated and articulated objectives to a
high extent with a mean of 1.6923. See Table 4.10 below.
Table 4.10: Goal Setting
Statistics
Overall Goal
Setting
Organization
has clearly
stated and
articulated
objectives
Organizational
goals are simple,
measurable,
attainable,
realistic and
time bound
Leaders have
processes to
monitors
progress
towards goals
N 78 78 78 78
Mean 1.8718 1.6923 1.9872 1.9359
Mode 1.00 1.00 2.00 1.00
Std. Deviation .82219 .84219 .78117 1.08520
Majority of the respondents, that is, 76% either agree or strongly agree that the organization
has clearly stated and articulated objectives. This is shown by 21% of respondents indicating
that they agree the organization has clearly stated and articulated objectives while 55% of
respondents strongly agree that the organization has clearly stated and articulated objectives.
Twenty four percent of respondents are uncertain as to whether the organization has clearly
stated and articulated objectives. See Figure 4.22 below.
60
Figure 4.22: The Availability of Clearly Stated and Articulated Objectives
Majority of the respondents, that is, 71% either agree or strongly agree that the organizational
goals are simple, measurable, attainable, realistic and time bound. This is shown by 40% of
respondents indicating that they agree that the organizational goals are simple, measurable,
attainable, realistic and time bound while 31% of respondents strongly agree that the
organizational goals are simple, measurable, attainable, realistic and time bound. Thirty
percent of respondents are uncertain as to whether the organizational goals are simple,
measurable, attainable, realistic and time bound. See Figure 4.23 below.
Figure 4.23: Organizational Goals are Simple, Measurable, Attainable, Realistic and
Time Bound
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain
The Organization has Clearly Stated and Articulated
Objectives
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Stronlgy agree Agree Uncertain
Organizational Goals are Simple, Measurable, Attainable,
Realistic and Time Bound
61
Majority of the respondents, that is, 70% either agree or strongly agree that the leaders have
processes to monitors progress towards goals. This is shown by 24% of respondents indicating
that leaders have processes to monitors progress towards goals while 46% of respondents
strongly agree that leaders have processes to monitors progress towards goals. Twenty four
percent of respondents are uncertain as to whether the leaders have processes to monitors
progress towards goals while 5 % disagree that their leaders have processes to monitors
progress towards goals. See Figure 4.24 below.
Figure 4.24: Availability of Processes of Monitoring Progress towards Goals
4.3.3 Strategy Evaluation
To address the third research question, respondents were asked a set of statements from which they
were to indicate on the scale provided by indicating the extent to which they agreed with the
statements on a five-scale rank where; 1 = Strongly Agree, 2= Agree, 3=Uncertain, 4=Disagree
and 5=Strongly Disagree
The study revealed that most organizations agree that the soft elements, that is, staff, style skills
and shared values play a major role with a mean of 2.0256 in the strategic planning process.
This is closely followed by systems with a mean of 2.0598 as they build a strong capability in
supporting the important process of strategic planning within the organization. The findings are
indicated in Table 4.11 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Stronlgy agree Agree Uncertain Strongly disagree
Leaders Have Processes to Monitors Progress Towards Goals
62
Table 4.11: Strategy Evaluation
Elements N Mean Std. Deviation
Structure 78 2.1538 .81418
Systems 78 2.0598 .74969
Soft elements
(staff, style, skills, shared values) 78 2.0256 .80541
From the findings the study revealed that majority of the respondents agreed that structure
contributes to strategic planning to a high extent as shown by a mean of 2.0171 with a mode
of 2. Respondents agree that the organization has clearly stated and articulated objectives to a
high extent with a mean of 1.8590. See Table 4.12 below.
Table 4.12: Structure
Statistics
Overall
Structure
Organizational
structure is
guided by a
policy
Organizational
structure
comprises of
business
hierarchy,
division of
labor,
delegating and
communication
Organizational
structure plays
a major role in
delivering
expected
results
N 78 78 78 78
Mean 2.0171 2.0000 2.1923 1.8590
Mode 2.00 2.00 2.00 1.00a
Std. Deviation .66644 .83744 .60426 .86376 a. Multiple modes exist. The smallest value is shown
Majority of the respondents, that is, 57% either agree or strongly agree that organizational
structure is guided by a policy. This is shown by 36% of respondents indicating that they agree
that the organizational structure is guided by a policy while 21% of respondents strongly agree
63
that the organizational structure is guided by a policy. Thirty three percent of respondents are
uncertain as to whether their organizational structure is guided by a policy while 5% disagree
that their organizational structure is guided by a policy. Five percent also strongly disagree that
their organizational structure is guided by a policy See Figure 4.25 below.
Figure 4.25: Structure is Guided by a Policy
Majority of the respondents, that is, 77% either agree or strongly agree that the organizational
structure comprises of business hierarchy, division of labour, delegation and communication.
This is shown by 51% of respondents indicating that they agree that the v organizational
structure comprises of business hierarchy, division of labour, delegation and communication
while 26% of respondents strongly agree that the organizational structure comprises of
business hierarchy, division of labour, delegation and communication. Nineteen percent of
respondents are uncertain as to whether the organizational structure comprises of business
hierarchy, division of labour, delegation and communication while 4 % disagree. See Figure
4.26 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
Stronlgy agree Agree Uncertain Disagree Strongly disagree
Organizational Structure is Guided by a Policy
64
Figure 4.26: Components of Structure
Majority of the respondents, that is, 72% either agree or strongly agree that the organizational
structure plays a major role in delivering expected results. This is shown by 41% of respondents
indicating that the organizational structure plays a major role in delivering expected results
while 31% of respondents strongly agree that the organizational structure plays a major role in
delivering expected results. Nineteen percent of respondents are uncertain as to whether the
organizational structure plays a major role in delivering expected results while 9% disagree.
See Figure 4.27 below.
Figure 4.27: Importance of Organizational Structure in Delivering Expected Results
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain Disagree
Organizational Structure Comprises of Business Hierarchy,
Division of Labour, Delegation and Communication
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Stronlgy agree Agree Uncertain Disagree
Organizational Structure Plays a Major Role in Delivering
Expected Results
65
From the findings the study revealed that majority of the respondents agreed that structure
contributes to strategic planning to a high extent as shown by a mean of 2.0598 with a mode
of 1.67. Respondents agree that organizational processes are aligned with technology to a high
extent with a mean of 1.7179. See Table 4.13 below.
Table 4.13: Systems
Statistics
Overall
Systems
Organization
has congruent
systems and
processes set in
place
Organizational
processes are
aligned with
technology
Systems build
a strong
capability
N 78 78 78 78
Mean 2.0598 2.3205 1.7179 2.1410
Mode 1.67 2.00 1.00 2.00
Std. Deviation .74969 .84506 .92438 .73369
Majority of the respondents, that is, 71% either agree or strongly agree that the organization
has congruent systems and processes set in place. This is shown by 46% of respondents
indicating that they agree that the organization has congruent systems and processes set in
place while 15% of respondents strongly agree that the organization has congruent systems
and processes set in place. Twenty nine percent of respondents are uncertain as to whether the
organization has congruent systems and processes set in place. See Figure 4.28 below.
66
Figure 4.28: Availability of Congruent Systems and Processes
Majority of the respondents, that is, 86% either agree or strongly agree that the organizational
processes are aligned with technology. This is shown by 35% of respondents indicating that
they agree that the organizational processes are aligned with technology while 51% of
respondents strongly agree that the organizational processes are aligned with technology.
Twenty three percent of respondents are uncertain as to whether the organizational processes
are aligned with technology while 9% disagree. See Figure 4.29 below.
Figure 4.29: Alignment of Organizational Processes with Technology
Majority of the respondents, that is, 75% either agree or strongly agree that their systems build
a strong capability. This is shown by 60% of respondents indicating their systems build a strong
capability while 15% of respondents strongly agree that their systems build a strong capability.
Nineteen percent of respondents are uncertain as to whether their systems build a strong
capability while 5 % disagree. See Figure 4.30 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Stronlgy agree Agree Uncertain
The Organization has Congruent Systems and Processes Set in
Place
0%
20%
40%
60%
Stronlgy agree Agree Uncertain Disagree
Organizational Processes are Aligned with Technology
67
Figure 4.30: Extent of Capability Built by Systems
From the findings the study revealed that majority of the respondents agreed that soft elements
(staff, skills, style & shared values) contributes to strategic planning to a high extent as shown
by a mean of 2.0171 with a mode of 2. Respondents agree that leaders stimulate the
subordinates to challenge their own value systems and improve individual performance to a
high extent with a mean of 1.8590. See Table 4.14 below.
Table 4.14: Soft Elements (Staff, skills, style & Shared Values)
Statistics
Soft Elements
(Staff, skills,
style & Shared
Values)
Leaders
promote
flexibility and
have the ability
to anticipate,
envision and
maintain
flexibility
Leaders
empower
others to create
strategic
change as
necessary
Leaders
stimulate the
subordinates to
challenge their
own value
systems and
improve
individual
performance
N 78 78 78 78
Mean 2.0171 2.0000 2.1923 1.8590
Mode 2.00 2.00 2.00 1.00a
Std. Deviation .66644 .83744 .60426 .86376 a. Multiple modes exist. The smallest value is shown
0%
10%
20%
30%
40%
50%
60%
70%
Stronlgy agree Agree Uncertain Disagree
Systems Build a Strong Capability
68
Majority of the respondents, that is, 76% either agree or strongly agree that the leaders promote
flexibility and have the ability to anticipate, envision and maintain flexibility. This is shown
by 40% of respondents indicating that they agree that the leaders promote flexibility and have
the ability to anticipate, envision and maintain flexibility while 36% of respondents strongly
agree that the leaders promote flexibility and have the ability to anticipate, envision and
maintain flexibility. Twenty four percent of respondents are uncertain as to whether the leaders
promote flexibility and have the ability to anticipate, envision and maintain flexibility. See
Figure 4.31 below.
Figure 4.31: Extent to Which Leaders Promote and Maintain Flexibility
Majority of the respondents, that is, 77% either agree or strongly agree that the leaders
empower others to create strategic change as necessary. This is shown by 62% of respondents
indicating that leaders empower others to create strategic change as necessary while 15% of
respondents strongly agree that the leaders empower others to create strategic change as
necessary. Eighteen percent of respondents are uncertain as to whether the leaders empower
others to create strategic change as necessary while 5% disagree. See Figure 4.32 below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Stronlgy agree Agree Uncertain
Leaders Promote Flexibility and Have the Ability to
Anticipate, Envision and Maintain Flexibility
69
Figure 4.32: Extent of Empowerment by Leaders Empower to Create Strategic
Majority of the respondents, that is, 77% either agree or strongly agree that the leaders
stimulate the subordinates to challenge their own value systems and improve individual
performance. This is shown by 41% of respondents indicating that leaders stimulate the
subordinates to challenge their own value systems and improve individual performance while
36% of respondents strongly agree that the leaders stimulate the subordinates to challenge their
own value systems and improve individual performance. Fourteen percent of respondents are
uncertain as to whether the leaders stimulate the subordinates to challenge their own value
systems and improve individual performance while 4% and 5% disagree and strongly disagree
respectively. See Figure 4.33 below.
0%
10%
20%
30%
40%
50%
60%
70%
Stronlgy agree Agree Uncertain Disagree
Leaders Empower Others to Create Strategic Change as
Necessary
70
Figure 4.33: Extent to Which Leaders Stimulate the Subordinates to Challenge Their
Own Systems and Performance
4.4 Innovation
To address the third research question, respondents were asked a set of statements from which
they were to indicate on the scale provided by indicating the extent to which they agreed with
the statements on a five-scale rank where; 1 = Strongly Agree, 2= Agree, 3=Uncertain,
4=Disagree and 5=Strongly Disagree.
According to the findings on innovation most companies engage in market innovation which
is shown by a mean of 2.0085 and a standard deviation of 0.59816. This is closely followed by
process innovation with a mean of 2.0171 and lastly product innovation with a mean of 2.1709.
The findings are indicated in Table 4.15 below.
Table 4.15: Innovation
Type of Innovation N Mean Std. Deviation
Product 78 2.1709 .78357
Process 78 2.0171 .61463
Market 78 2.0085 .59816
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Stronlgy agree Agree Uncertain Disagree Strongly disagree
Leaders Stimulate the Subordinates to Challenge Their Own
Value Systems and Improve Individual Performance
71
From the findings the study revealed that majority of the respondents agreed that product
innovation contributes to strategic planning to a high extent as shown by a mean of 2.0171
with a mode of 2. Respondents agree that Product innovation is increasingly important for the
company's future success to a high extent with a mean of 1.8590. See Table 4.16 below.
Table 4.16: Product Innovation
Statistics
Overall
Product
Innovation
Organization
introduces new
products into
the market
often
Product
innovation
creates
competitive
advantage in
our
organization
Product
innovation is
increasingly
important for
the company's
future success
N 78 78 78 78
Mean 2.0171 2.0000 2.1923 1.8590
Mode 2.00 2.00 2.00 1.00a
Std. Deviation .66644 .83744 .60426 .86376
a. Multiple modes exist. The smallest value is shown
Majority of the respondents, that is, 59% are either uncertain or disagree that their organization
introduces new products into the market often. This is shown by 36% of respondents indicating
that they are uncertain as to whether their organization introduces new products into the market
often while 23% of respondents disagree that their organization introduces new products into
the market often. Forty two percent of respondents are either agree or strongly agree that their
organization introduces new products into the market often as indicated by 21% and 21%
respectively. See Figure 4.34 below.
72
Figure 4.34: Organization’s Introduction of New Products into the Market
Majority of the respondents, that is, 81% either agree or strongly agree that the product
innovation creates competitive advantage in our organization. This is shown by 60% of
respondents indicating that they agree that the product innovation creates competitive
advantage in our organization while 21% of respondents strongly agree that the product
innovation creates competitive advantage in our organization. Fourteen percent of respondents
are uncertain as to whether the product innovation creates competitive advantage in our
organization while 5% disagree. See Figure 4.35 below.
Figure 4.35: Product Innovation Role in Creating Competitive Advantage
0%
5%
10%
15%
20%
25%
30%
35%
40%
Stronlgy agree Agree Uncertain Disagree
Organization Introduces New Products into the Market Often
0%
10%
20%
30%
40%
50%
60%
70%
Stronlgy agree Agree Uncertain Disagree
Product Innovation Creates Competitive Advantage in our
Organization
73
Majority of the respondents, that is, 72% either agree or strongly agree that product innovation
is increasingly important for the company's future success. This is shown by 21% of
respondents indicating that they agree that product innovation is increasingly important for the
company's future success while 51% of respondents strongly agree that product innovation is
increasingly important for the company's future success. Nineteen percent of respondents are
uncertain as to whether product innovation is increasingly important for the company's future
success while 9% disagree. See Figure 4.36 below.
Figure 4.36: Importance of Product Innovation for the Company's Future Success
From the findings the study revealed that majority of the respondents agreed that process
innovation contributes to strategic planning to a high extent as shown by a mean of 2.0171
with a mode of 2. Respondents agree that process innovation is increasingly important for the
company's future success to a high extent with a mean of 1.7692. See Table 4.17 below.
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain Disagree
Product Innovation is Increasingly Important for the
Company's Future Success
74
Table 4.17: Process Innovation
Statistics
Overall
Process
Innovation
Organizations
regularly
introduces new
techniques for
accomplishing
tasks
New
techniques
increase
organization
productivity
Process
innovation is
increasingly
important for
the company's
future success
N 78 78 78 78
Mean 2.0171 2.1923 2.0897 1.7692
Mode 2.00 2.00 2.00 2.00
Std. Deviation .61463 .68486 .90001 .66299
Majority of the respondents, that is, 75% either agree or strongly agree that the organizations
regularly introduce new techniques for accomplishing tasks. This is shown by 65% of
respondents indicating that they agree while 10% of respondents strongly agree that the
organizations regularly introduce new techniques for accomplishing tasks. Nineteen percent of
respondents are uncertain while 5% disagree. See Figure 4.37 below.
Figure 4.37: Introduction of New Techniques for Accomplishing Tasks
0%
10%
20%
30%
40%
50%
60%
70%
Stronlgy agree Agree Uncertain Disagree
Organizations Regularly Introduce New Techniques for
Accomplishing Tasks
75
Majority of the respondents, that is, 76% either agree or strongly agree that new techniques
increase organization productivity. This is shown by 50% of respondents indicating that new
techniques increase organization productivity while 26% of respondents strongly agree that
new techniques increase organization productivity. Fourteen percent of respondents are
uncertain as to whether new techniques increase organization productivity while 10% disagree.
See Figure 4.38 below.
Figure 4.38: Importance of New Techniques to Organization Productivity
Majority of the respondents, that is, 87% either agree or strongly agree that process innovation
is increasingly important for the company's future success. This is shown by 51% of
respondents indicating that they agree that process innovation is increasingly important for the
company's future success while 36% of respondents strongly agree. Thirteen percent of
respondents are uncertain as to whether the process innovation is increasingly important for
the company's future success. See Figure 4.39 below.
Figure 4.39: Importance of Process Innovation for the Company's Future Success
0%
10%
20%
30%
40%
50%
60%
Stronlgy agree Agree Uncertain Disagree
New Techniques Increase Organization Productivity
0%
20%
40%
60%
Stronlgy agree Agree Uncertain
Process Innovation is Increasingly Important for the Company's
Future Success
76
From the findings the study revealed that majority of the respondents agreed that market
innovation contributes to strategic planning to a high extent as shown by a mean of 2.00085
with a mode of 2. Respondents agree that process innovation is increasingly important for the
company's future success to a high extent with a mean of 1.8974. See Table 4.18 below.
Table 4.18: Market Innovation
Statistics
Overall Market
Innovation
Organization
commits efforts
and resources
to new sales
methods in
business
Organization
aligns products
and services to
customer needs
Market
innovation is
increasingly
important for
the company's
future success
N 78 78 78 78
Mean 2.0085 2.1410 1.8974 1.9872
Mode 2.00 2.00 2.00 1.00
Std. Deviation .59816 .73369 .63634 .90444
Majority of the respondents, that is, 85% either agree or strongly agree that the organization
aligns products and services to customer needs. This is shown by 59% of respondents
indicating that they agree that that the organization aligns products and services to customer
needs while 26% of respondents strongly agree. Fifteen percent of respondents are uncertain
as to whether that the organization aligns products and services to customer needs. See Figure
4.40 below.
Figure 4.40: Alignment of Products and Services to Customer Needs
0%
20%
40%
60%
80%
Stronlgy agree Agree Uncertain
The Organization Aligns Products and Services to Customer
Needs
77
Majority of the respondents, that is, 75% either agree or strongly agree that the organizations
commit efforts and resources to new sales methods in business. This is shown by 60% of
respondents indicating that they agree that the organizations commit efforts and resources to
new sales methods in business while 15% of respondents strongly agree that the organizations
commit efforts and resources to new sales methods in business. Nineteen percent of
respondents are uncertain as to whether the organizations commit efforts and resources to new
sales methods in business. See Figure 4.41 below.
Figure 4.41: Organizations Commitment of Resources to New Sales Methods in Business
Majority of the respondents, that is, 71% either agree or strongly agree that market innovation
is increasingly important for the company's future success. This is shown by 35% of
respondents indicating that they agree that market innovation is increasingly important for the
company's future success while 36% of respondents strongly agree that market innovation is
increasingly important for the company's future success. Thirty percent of respondents are
uncertain as to whether market innovation is increasingly important for the company's future
success. See Figure 4.42 below.
0%
10%
20%
30%
40%
50%
60%
70%
Stronlgy agree Agree Uncertain
Organizations Commit Efforts and Resources to New Sales
Methods in Business
78
Figure 4.42: Importance of Market Innovation for the Company's Future Success
4.5 Correlation
Pearson’s correlation shown below explains the relationship between the independent
variables, strategic environmental scanning, strategy formulation and strategy evaluation and
the dependent variable, innovation. From the Tables 4.19 and 4.21 below, there is a strong
relationship between both strategic environmental scanning (0.651) and strategy evaluation
(0.646) respectively with innovation. The correlation between strategy formulation and
innovation at 0.37 indicates that there is a weak relationship as seen in Table 4.20.
The factors considered under strategic environmental scanning were environmental analysis,
customer analysis, competitor analysis and market analysis. These factors influence innovation
in the telecommunication industry whereby the study reveals a strong relationship between
environmental scanning and innovation with a correlation value of 0.651. See Table 4.19
below.
0%
5%
10%
15%
20%
25%
30%
35%
40%
Stronlgy agree Agree Uncertain
Market Innovation is Increasingly Important for the
Company's Future Success
79
Table 4.19: Strategic environmental scanning and innovation
Correlations
Environmental
Scanning Innovation
Environmental
Scanning
Pearson Correlation 1 .651**
Sig. (2-tailed) .000
N 78 78
Innovation
Pearson Correlation .651** 1
Sig. (2-tailed) .000
N 78 78
The factors considered under strategy formulation were the vision, the mission and goal setting
in the telecommunication industry. These factors have little influence on innovation in the
telecommunication industry as shown by the study which reveals a weak relationship between
strategy formulation and innovation with a correlation value of 0.387. See Table 4.20 below.
Table 4.20: Strategy formulation and innovation
Correlations
Strategy Formulation Innovation
Strategy Formulation
Pearson Correlation 1 .387**
Sig. (2-tailed)
.000
N 78 78
Innovation
Pearson Correlation .387** 1
Sig. (2-tailed) .000
N 78 78
80
The factors considered under strategy evaluation were strategy, structure and soft elements
(staff, skills, style and shared values). These factors have influence on innovation in the
telecommunication industry whereby the study reveals a strong relationship between strategy
evaluation and innovation with a correlation value of 0.646. See Table 4.21 below.
Table 4.21: Strategy evaluation and innovation
Correlations
Strategy
Evaluation Innovation
Strategy Evaluation
Pearson Correlation 1 .646**
Sig. (2-tailed) .000
N 78 78
Innovation
Pearson Correlation .646** 1
Sig. (2-tailed) .000
N 78 78
4.6 Regression Analysis
In this study, a multiple regression analysis was conducted to test the influence among
predictor variables. The research used statistical package for social sciences (SPSS) to code,
enter and compute the measurements of the multiple regressions.
Adjusted R squared is coefficient of determination which tells us the variation in the dependent
variable due to changes in the independent variable. From the findings in the table 4.9 below
the value of adjusted R squared was 0.497, an indication that there was variation of 49.7% on
innovation due to strategic environmental scanning, strategy formulation and strategy
evaluation at 95% confidence interval. This shows that a 49.7% change in innovation is caused
by strategic environmental scanning, strategy formulation and strategy evaluation. R is the
correlation coefficient which shows the relationship between the study variables. From the
findings shown in the table below there was a strong positive relationship between the study
variables as shown by 0.719. See Table 4.22 below.
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Table 4.22: Model summary
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .719a .516 .497 .40380
As per table 4.23 below, the established regression equation becomes (Y= β0+ β1X1 + β2X2 +
β3X3) becomes:
Y= 0.476+ 0.466X1 - 0.146X2+ 0.431X3
Where;
Y is the dependent variable innovation
X1 – Strategic environmental scanning
X2 – Strategy formulation
X3 – Strategy evaluation
The regression equation illustrated in Table 4.10 establishes that holding strategic environmental
scanning, strategy formulation and strategy evaluation at a constant then innovation in the
telecommunication sector would stand at 0.476. The findings presented also showed that with all
other variables held at zero, a unit change in strategic environmental scanning would contribute to
a 0.466 change in innovation, and a unit change in strategy formulation will contribute to a -0.146
change to innovation, while a unit change in strategy evaluation will contribute to 0.431 change in
innovation. Strategic environmental scanning and strategy evaluation were statistically significant
(p value<0.05). This implies that within the telecommunication industry they influence innovation.
Table 4.23: Coefficients
Coefficients
Model Unstandardized Coefficients Standardized
Coefficients
T Sig.
B Std. Error Beta
(Constant) .476 .210
2.269 .026
Strategic environmental
Scanning .466 .122 .412 3.804 .000
Strategy Formulation -.146 .119 -.136 -1.231 .222
Strategy Evaluation .431 .118 .466 3.655 .000
82
4.7 Chapter Summary
Chapter four has mainly described the research findings on the survey on to investigate effect
of strategic planning on innovation in the telecommunication sector. The study established that
strategic environmental scanning and strategy evaluation were significant to innovation while
there was a weak relationship strategy formulation and innovation. In chapter five these results
will be discussed and relevant conclusions and recommendations made about innovation in the
telecommunication industry.
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CHAPTER FIVE
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the discussion of key data findings, conclusions drawn from the findings
highlighted and recommendations. The recommendations given are with regards to the effect
of strategic planning on innovation in the telecommunication sector and areas of improvement.
The research will assist in further studies on the influences of innovation in the
telecommunication sector.
5.2 Summary
The purpose of the study was to establish the effect strategic planning on innovation in the
telecommunication industry in Kenya. The specific research questions of the study were to
examine the effect of strategic environmental scanning on innovation in the telecommunication
industry in Kenya, the effect of strategy formulation on innovation in the telecommunication
industry in Kenya and the effect of strategy evaluation on innovation in the telecommunication
industry in Kenya.
The study adopted descriptive research design. The target population of the study comprised
of telecommunication industries listed on the Kenya Business Directory as of June 2018
(Kenya Business Directory, 2018). The sampling frame of the study was top management
(reports to CEO), head of business units and middle management in the telecommunication
companies in Kenya. Selecting a sample is more efficient when it comes to collecting data
from a large population. Purposive sampling technique was used to select three senior
employees of each telecommunication company. Senior employees within the
telecommunication companies were targeted because they are conversant the strategic
planning process in the organization. The criteria chosen was a sample of 3 senior employees
from each organization, thus forming a sample size of 90 respondents. Primary data was
obtained through self-administered questionnaires from respondents.
84
The questionnaire contained both open-ended and close-ended questions for ease of collecting
quantitative and qualitative data. Pre-testing was done by administering the questionnaire to 5
respondents who were not included in the actual study. The questionnaire was tested for
validity and reliability. The data was analyzed using Statistical Package for Social Sciences
(SPSS). Data was presented using tables, and pie charts and figures for ease of communication
to the reader.
The first objective of the study was to examine the effect of strategic environmental scanning
on innovation in the telecommunication industry in Kenya. The study revealed that the
respondents agreed that there is a strong relationship between strategic environmental scanning
and innovation in the telecommunication industry. The companies invest time in scanning the
environment majorly on customer analysis and environmental analysis compared to market
analysis and competitor analysis
The second objective of the study was to examine the effect of strategy formulation on
innovation in the telecommunication industry in Kenya. The study revealed that there is a weak
relationship between strategy formulation and innovation. From the study the vision is what
most companies can relate to compared to the mission and goal setting within the companies.
The third objective of the study was to examine the effect of strategy evaluation on innovation
in the telecommunication industry in Kenya. The study revealed that the respondents agreed
that there is a strong relationship between strategy evaluation and innovation in the
telecommunication industry. Evaluation of the soft elements (staff, style, skills and shared
values) is a major contributor to innovation which is closely followed by systems and lastly
structure.
5.3 Discussions
5.3.1 Effect of Strategic Environmental Scanning on Innovation
The study revealed that strategic environmental scanning influences innovation in the
telecommunication sector. This is in line with Arasa and K’Obonyo (2012) findings in that
business environment analysis exhibits a stronger relationship with firm performance
compared to other strategic planning constituent variables in their study. From their study,
85
Babtunde and Adebisi (2012) established that the use of strategic environmental scanning in
evaluating the environmental forces such as opportunities and threats has aided in improving
an organization’s profitability by exploiting opportunities and avoiding threats.
Amongst the activities related to scanning the environment, customer analysis plays a key role
when it comes to innovation. The respondents agree that management in their organizations
regularly evaluates key data relating to their customers i.e. demographics, population, sources
of funding etc. According to Robinson and Pearce (2014), evaluating consumer behavior
provides insights towards the process of satisfying customer needs. Respondents also agreed
that their organizations business objectives are driven primarily by what the customers need
and they regularly measure customer satisfaction. Organizations in the telecommunication
sector prioritize their customer needs as this forms a large basis of their innovative strategies.
Understanding the needs and dissatisfactions of customers and how these are evolving may
open up opportunities for an organization (Fitzroy, Hulbert & Ghobadian, 2012). Customer’s
perception is important to organizations in the telecommunication industry as it is majorly a
service industry and the feedback sought provides insights into what their customer need.
Environmental analysis as one of the activities that are carried out under strategic
environmental scanning is fairly influential when it comes to innovation. The respondents
agree that management in their organizations regularly seeks and sieves information from the
environment relevant to the organization and constantly uses the sieved information from the
environment to make decisions. Environmental analysis enhances a firm’s ability to exploit the
resources, acquiring resources, as well as identification of opportunities that can help a firm
lay the foundation for establishing a competitive advantage (Hitt, Ireland, & Hoskisson, 2011).
Respondents also agreed that the information gathered helps the firm in establishing its current
position in the market place as well as determining its strengths and weaknesses. Evaluating
its competitive position enhances a firm’s possibility of designing strategies that help a firm
achieve maximum efficiency in exploiting environmental opportunities (Robinson & Pearce,
2013). Assessing the environment is important to the companies as it informs them of trends
that they could exploit leading to innovative strategies.
86
The study revealed that the level of engagement in competitor analysis is lowest when carrying
out strategic environmental scanning compared to environmental analysis, market analysis and
customer analysis. The respondents agreed that organizations in the telecommunication
industry engaged in carrying out research to gather information related to competitors across
the industries to a low extent. Businesses should focus on customer needs, focusing on the
customers and their needs seems a certain way to succeed and to avoid the worst kind of
surprises specially in turbulent environments such as the new competitive landscape, where
competitors can come from any line of business or any nation without warning (Meyer &
Heppard, 2001).
The study also revealed that organizations in the telecommunication sector to a low extent
regularly use competitor information to make decisions and explore sources of innovation to
gain competitive advantage against competitors. This could imply that the organizations are
strategy driven and focus on their own path without paying too much attention to competitors
and therefore may not view it as a value addition exercise. Alternatively, those who may seek
or see the need for competitor information may not have the resources available to enable them
to get much value out of it, for example information gathered on competitor may be dated. A
major factor that contributes to organizational inertia is little or no information about the key
competitors. For organizations to be more competitive, resilient and relevant in the turbulent
world of business they need to prioritize, identify, and minimize their business challenges in
today’s world (Talib, Ali, & Idris, 2013).
When it comes to market analysis, organizations vary on the extent to which this is carried out
in their organizations. Some carry it to a very high extent while some engage in it to a very low
extent which was indicated by the greatest standard deviation compared to the other activities.
Respondents agreed that their management engaged in activities such as grouping together
actual and potential customers whose needs are similar so that target segments can be selected
and appropriate marketing programs designed. Mohsin, Halim and Ahmad (2012) stated that
market orientation allows owner-managers to gather information from the current and potential
customers needs to create superior customer values and respond in an entrepreneurial manner.
87
Respondents also agreed that their organizations gathered information on the current and
potential customers needs to enable creation of superior customer values for various market
segments. Organizations within the telecommunication sector majorly fall in the service sector
and therefore they focus on the customers experience that they are able to give their clients.
Customers want value and this may require different sets of solutions for the different
segments.
Alternatively the customers may require combined solution sets and therefore it is important
for the companies to profile the customers into segments to enable them to cater for their needs
appropriately. The market orientation provides a firm a better understanding of its competitors,
customers and environment, which subsequently leads to superior firm performance (Kara,
Spillan, & Deshields, 2005). Strategic environmental scanning is important in the
telecommunication industry as it provides them with the necessary insights on trends and
developments in their sector. These insights lead to innovations with regards to the products,
process and market.
5.3.2 Effect of Strategy Formulation Scanning on Innovation
The study revealed that among the three variables (strategic environmental scanning, strategy
formulation and strategy evaluation) only strategy formulation has a weak relationship with
innovation in the telecommunication sector. The study focused on three components of strategy
formulation, that is, vision, mission and goal setting with regards to the extent in which they
are embraced within organizations in the telecommunication sector. Respondent’s responses
varied on their knowledge of the organizations strategy formulation components, that is, vision,
mission and goal setting. Azhar et al. (2013) state that leaders are direction setters for an
organization and they need to have a clear view of the direction that they would like the
organization to take in relation to the strategy formulation and implementation.
The respondents view the vision as the most relatable amongst the three components. This
means that the vision statement is inspirational and represents the organizations identity and
highest aspirations, it guides, shapes and gives purpose to the organization and it presents the
firm’s strategic intent that focuses the energies and resources of the company on achieving a
desirable future. Mohamed, Ann and Yee (2010) concur that the vision statement refers to the
88
future of an organization. In addition, James and Lahti (2011) state that vision emphasizes
change, an idealized future state and has a longer time span than strategies. Therefore the vision
is broader and guides the strategies.
From the study goal setting follows vision as the next relatable component of strategy
formulation in the telecommunication industry. The respondents agree that their organization
have clearly stated and articulated objectives, the objectives set are simple, measurable,
attainable, realistic and time bound. Deschamps & Mattijs (2017) study revealed the
importance of goals towards motivating workers and strengthening the culture of performance
within the organization. Therefore the establishment of goals in this case would motivate
workers and hence positively influence innovation. The respondents agreed that their leaders
have set processes set in place to monitor progress towards the objectives. According to
Gustafsson, et al., (2009) objectives in an organization are the conduits through which
performance and performance evaluation is conducted.
From the study, the mission statement ranks least as the most relatable in terms of strategy
formulation in the telecommunication companies. Respondents agree that their mission
statement sums up the organizations reason for being, it also explains what their business
culture is like and they are able to recite the whole mission statement without making a mistake.
The mission statement of an organization should be clear and concise in order to distinguish it
from others (Mohamed, Ann & Yee, 2010).
The vision, mission and goal setting components of strategy formulation are well adopted in
the telecommunication organizations as the respondents agree that these have been established
in their organizations. However, the correlation analysis between strategy formulation (based
on these factors) and innovation indicated that there is a weak relationship between strategy
formulation and innovation. This implies that strategy formulation has very little effect on
innovation within the telecommunication sector. This may be attributed to the fact that the
strategy formulation process equips the organization with a guide that sets the initial direction
based on the available information. However the initial path may change due to change and
turbulence in today’s society and therefore even if innovative strategies were initially set as
part of the strategy formulation process, these may be disrupted by change and hence little
influence on innovation. The telecommunication sector is heavily relies on technology and
89
therefore a change could impact the direction of the company abruptly interfering with
previously set innovative strategies. Therefore the initial goals and strategies would need to be
revised to accommodate the new landscape.
5.3.3 Effect of Strategy Evaluation on Innovation
The study revealed that strategy evaluation influences innovation in the telecommunication
sector. A study conducted by Melnyk, Stewart and Swink (2014) concurs on the positive
influence of strategy evaluation on organizations. The study established the existence of a
positive relationship between strategic evaluation and organizational performance. Choi, Poon
and Davis (2008) argue that evaluation of performance provides necessary feedback to
employees and the organization on areas they need to improve.
Amongst the activities related to strategy evaluation, the soft elements (staff, skills, style and
shared values) are the most influential when it comes to innovation. The respondents agree that
the soft elements in their organizations, that is, staff, style skills and shared values are the most
influential with regards to innovation. This is largely due to leaders promoting flexibility and
having the ability to anticipate, envision and maintain flexibility, leaders empowering others
to create strategic change as necessary and leaders stimulating the subordinates to challenge
their own value systems and improve individual performance. According to Çaliskan (2010),
towards the end of the twentieth century, management came to accept that people, not markets,
products, cash, buildings, or equipment, are the critical differentiators of a business enterprise.
The study also revealed that systems influence innovation in the telecommunication sector.
The respondents agree that their organizations have congruent systems and processes set in
place, the organizational processes are aligned with technology and their systems build strong
capabilities (evaluation, control, enhanced process performance & enhanced firm
performance). According to Munir (2013), adequate and appropriate Performance
Management Systems (PMS) can protect organizations from potential risks and losses, and
improve organizational effectiveness. A study by Amos (2007) also demonstrated the positive
impact of systems on organizations. The study revealed that technology alignment with internal
organizational processes enhances organizational performance. In the same way technology
alignment can aid in innovative strategies within the telecommunication industry.
90
From the research structure also positively influences innovation. The respondents agree that
their organizational structure is guided by a policy that dictates how activities are apportioned,
coordinated and supervised in pursuit of organizational goals, it also comprises of the business
hierarchy, division of labor, delegating and communications as well as plays a major role in
delivering expected results. According to Mullins (2010), organizations structures are
necessary to enable firm’s archive some key objectives. Structures allow efficiency by
allocating tasks in a manner that enhances accountability.
5.4 Conclusion
5.4.1 Effect of Strategic Environmental Scanning on Innovation
The study revealed a significant relationship between strategic environmental scanning and
innovation in the telecommunication sector. The study also established that a unit increase in
strategic environmental scanning would lead to an increase in innovation in the
telecommunication sector. The study concluded that strategic environmental scanning would
lead to an increase in innovation in the telecommunication sector.
5.4.2 Effect of Strategic Environmental Scanning on Innovation
The study established a weak relationship between strategy formulation and innovation in the
telecommunication sector. The study also revealed that a unit increase in strategy formulation
would lead to a negative change in innovation in the telecommunication sector. The study
concludes that innovation is not necessarily improved by strategy formulation.
5.4.3 Effect of Strategy Evaluation on Innovation
The research found a significant relationship between strategy evaluation and innovation in the
telecommunication sector. The study found that a unit increase strategy evaluation would lead
to an increase in innovation in the telecommunication sector. The study concludes that strategy
evaluation would lead to an increase in innovation in the telecommunication sector.
5.5 Recommendations
5.5.1 Recommendations for Improvement
5.5.5.1 Effect of Strategic Environmental Scanning on Innovation
91
Companies in the telecommunication sector should consider putting in the same amount of
effort to the four aspects of environmental scanning, that is, environmental analysis, market
analysis, customer analysis and competitor analysis. The organizations consistently engage in
customer and environmental analysis but engage lowly when it comes to competitor analysis.
Focus on this may add more insights into the individual companies on areas in which they may
exploit through innovation. Market analysis is also not consistently done amongst all
organizations in the telecommunication sector. The companies that do not engage highly in
this should consider utilizing it as part of gathering research and insights into the market needs.
5.5.5.2 Effect of Strategy Formulation on Innovation
Strategy formulation is weak amongst telecommunication companies with relation to
innovation. Companies can focus on factors that will aid in improving their innovative
strategies through tapping into the process of strategy formulation. The companies should
consider how various components of the strategy formulation can better impact their
innovation strategies and capabilities which can lead to product, process or market innovation.
5.5.5.3 Effect of Strategy Evaluation on Innovation
Strategy evaluation most impacts innovation in the telecommunication sector through the soft
elements that is staff, style, skills and shared values. Companies should look into ways that
they can strengthen the systems or improve structure so as to foster innovation within the
companies.
5.5.2 Recommendations for Further Research
The study sought to establish the effect of strategic environmental scanning on innovation in
the telecommunication sector. It was revealed that strategic planning accounts for only 50% of
the factors that influence innovation in companies in the telecommunication sector. This
implies that there are other factors within strategic planning that affect innovation in the
telecommunication sector. Other researchers could look into other factors that may influence
innovation such as strategy implementation to give more insights into ways in which the
organizations can enhance innovation.
92
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To Whom It May Concern
United States International University
P.O. Box 14634 - 00800
Nairobi, Kenya
Dear Respondent,
I am student at the United States International University currently undertaking my Masters of
Business Administration (MBA) degree.
I am conducting a study to determine the effect of strategic planning on innovation within the
telecommunication industry in Kenya
Kindly respond to the below questions to the best your knowledge. The responses collected
will only be used for this study. Your assistance in this study will be highly appreciated.
Thank you for your cooperation and time.
Yours Sincerely,
Eva Wambugu
113
APPENDIX I: QUESTIONNAIRE
Section I: General Information
1. Name of institution………………………………………………………
2. Age
a. 18-25 [ ]
b. 26-35 [ ]
c. 36-45 [ ]
d. 46-55 [ ]
e. Above 55 [ ]
3. Gender
a. Male [ ]
b. Female [ ]
4. Highest level of Education (tick one)
a. Doctorate
b. Masters [ ]
c. Bachelors [ ]
d. Secondary [ ]
e. Others (Please specify) ________________________________________
5. How long has the organization been in existence?
a. 1 - 5 years [ ]
b. 6 – 11 years [ ]
c. 12 years and over [ ]
6. What are your main functional roles?
a. Top Management (reports to CEO) [ ]
b. Head of Business Unit [ ]
c. Middle Management [ ]
7. How many years have you worked in the company?
a. 1 - 5 years [ ]
b. 6 – 11 years [ ]
c. 12 years and over [ ]
114
Section II: Strategic environmental scanning and innovation
Using a scale of 1-5 tick the appropriate answer from the alternatives provided for the extent
to which the components influence strategic planning. 1=Very High Extent, 2=High Extent,
3=Moderate Extent, 4= Low Extent and 5= Very Low Extent
Strategic environmental scanning 1 2 3 4 5
a) Environmental analysis
Management regularly seeks and sieves information from
the environment relevant to the organization
Management constantly uses the sieved information from
the environment to make decisions
Environmental analysis informs the firm of its current
position in the market place as well as its strengths and
weaknesses
b) Market analysis
Management groups together actual and potential
customers whose needs are similar so that target segments
can be selected and appropriate marketing programs
designed.
Market research on customers is conducted regularly
within the organization
Management gathers information from the current and
potential customers needs to create superior customer
values for various market segments
c) Competitor analysis
Our organization carries out research to gather
information related to competitors across the industries
Our company regularly uses the competitor information to
make decisions
Our organization explores sources of innovation to gain
competitive advantage against competitors
d) Customer analysis
Management regularly evaluates key data relating to our
customers i.e. demographics, sources of funding etc.
Our business objectives are driven primarily by what our
customers need
Our company regularly measures customer satisfaction
115
Section III: Strategy formulation and innovation
Indicate the extent to which you agree with the following statements by using a scale of 1 to 5
where; 1 = Strongly Agree, 2= Agree, 3=Uncertain, 4=Disagree and 5=Strongly Disagree
Strategic components 1 2 3 4 5
a) Vision
The vision statement is inspirational and represents the
organizations identity and highest aspirations
The vision statement guides, shapes and gives purpose
to the organization
The vision statement presents the firm’s strategic
intent that focuses the energies and resources of the
company on achieving a desirable future
b) Mission
Our mission statement sums up the organizations
reason for being.
The mission statement explains what our business
culture is like
I am able to recite the whole mission statement without
making a mistake
c) Goal Setting
Our organization has clearly stated and articulated
objectives
Our organizations objectives set are simple,
measurable, attainable, realistic and time bound
Our leaders have processes set in place to monitor
progress towards the objectives
116
Section IV: strategic evaluation and innovation
Using a scale of 1-5 tick the appropriate answer from the alternatives provided for each of the
variables where; 1 = Strongly Agree, 2= Agree, 3=Uncertain, 4=Disagree and 5=Strongly
Disagree
Statement 1 2 3 4 5
a) Structure
Our organizational structure is guided by a policy that dictates
how activities are apportioned, coordinated and supervised in
pursuit of organizational goals.
Our organizational structure comprises of the business
hierarchy, division of labor, delegating and communications.
Our organizational structure plays a major role in delivering
expected results
b) Systems
Our organization has congruent systems and processes set in
place
Our organizational processes are aligned with technology
Our systems build a strong capability (evaluation, control,
enhanced process performance & enhanced firm performance)
that support the important process of strategic planning within
the organization.
c) Staff/Style/Skills/Shared Values
Our leaders promote flexibility and have the ability to
anticipate, envision and maintain flexibility
Our leaders empower others to create strategic change as
necessary
Our leaders stimulate the subordinates to challenge their own
value systems and improve individual performance.
117
Section V: Innovation
Using a scale of 1-5 tick the appropriate answer from the alternatives provided for each
of the variables where; 1 = Strongly Agree, 2= Agree, 3=Uncertain, 4=Disagree and
5=Strongly Disagree
Statement 1 2 3 4 5
Product
Our organization introduces new products into the market
often
Product innovation creates competitive advantage
Product innovation is increasingly important for our
company’s future success
Process
Our organization regularly introduces new techniques for
accomplishing tasks
The new techniques increase organization productivity
Process innovation is increasingly important for our
company’s future success= The new processes have
enhanced internal service delivery
Employee satisfaction level has been going up as the
company introduces innovative processes
Market
Our organization commits efforts and resources to new sales
methods in business
Our organization aligns products and services to customer
needs
Market innovation is increasingly important for our
company’s future success
THANK YOU
