The Effect of Differentiation Procurement Strategy on Performance of Manufacturing Firms in Kenya

Abstract

The manufacturing sector is experiencing a major problem of stiff competition emanating from illicit and illegal trade. The study aims at providing insights on procurement competitive strategies used by manufacturing firms in Kenya to achieve competitiveness and increase their performance. The objective of the study was to identify the effect ofdifferentiation procurement strategies on performance of manufacturing firms in Kenya. The study was anchored on Porter's competitive strategy typology. The study will adopt the explanatory research design. The study targeted population of 766 procurement managers from manufacturing firms in Kenya. The Yamane's formula was used to compute a sample size of 264 procurement managers. Stratified, simple random and purposive sampling was used to select respondents. Questionnaire was used to collect primary data. Content validity of the instrument was determined by the researcher using expert judgment. Cronbach's Coefficient Alpha will be used to determine the reliability of the research instrument. The data was coded and entered in the computer for analysis using the Statistical Package for Social Sciences.  Pearson Correlation Coefficient was used to determine relationship between differentiation procurement strategies on performance of manufacturing firms in Kenya. There is a significant positive relationship between differentiation procurement strategy and performance of manufacturing firms (r= 0.344, p value =0.000). From the regression model, (R² = .113) showing that differentiation account for 11.3% variation in performance of manufacturing firms. A positive significant relationship between differentiation and performance of manufacturing firms(β=0.336 and p value <0.05). Differentiation has a significant influence on performance of manufacturing firms. Manufacturing firm's managers should utilize much of differentiation procurement strategy as it has been proven to have the highest significant effect on manufacturing firm performance.