Abdalla Yusuf Ibrahim Mba 2015

EFFECTS OF STRATEGY EVALUATION ON
ORGANIZATIONAL PERFORMANCE: A CASE OF

CENTRE STAR COMPANY LIMITED
BY
ABDALLA YUSUF IBRAHIM
UNITED STATES INTERNATIONAL UNIVERSITY-

AFRICA
SPRING 2015
EFFECTS OF STRATEGY EVALUATION ON
ORGANIZATIONAL PERFORMANCE: A CASE OF
CENTRE STAR COMPANY LIMITED
BY
ABDALLA YUSUF IBRAHIM
A Research Project Report Submitted to Chandaria School of

Business in Partial Fulfillment of the Requirement for the
Degree of Masters of Business Administration (MBA)
UNITED STATES INTERNATIONAL UNIVERSITY-

AFRICA
SPRING 2015
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than the United States International
University in Nairobi for academic credit.
Signed: ________________________ Date: _________________________
Abdalla Yusuf (ID:628111)
This research project proposal has been presented for examination with my approval as
the appointed supervisor.
Signed: ________________________ Date: _________________________
Dr. Katuse Paul
Signed: _______________________ Date: _________________________
Dean, Chandaria School of Business
ii
COPYRIGHT
All rights reserved; no part of this work may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise without the express written authorization from the writer.
Abdalla Yusuf © 2015
iii
ABSTRACT
The purpose of the study was to determine the effects of strategy evaluation on
organizational performance. The study was guided by the following research questions;
What are the approaches to strategy evaluation at Centre Star Company Limited? What
are the effects of strategy evaluation on performance at Centre Star Company Limited?
How can strategy evaluation be enhanced at Centre Star Company Limited?
The study employed a descriptive research approach. The population for this study
comprised of all the 200 staff members at Centre Star Company stratified in
departments; administration, logistics, operations and sales & marketing. The study used
a stratified random sampling approach to select 30% (60) of the 200 employees to
participate in the survey. The data collection was carried in March 2015.
The first research objective sought to identify the approaches adopted at CSC in strategy
evaluation. The study identified four approaches to Strategy evaluation at CSC to enhance
performance of the organization. First, the strategy objectives must be consistent to the
overall organizational objectives, organizational culture, organizational operations and
organizational spending patterns. Second is the suitability of the strategy to effectively
exploit the opportunities in the organization’s environment, avoid threats in the
organization’s environment, avoid the organization’s weaknesses and to address the
cultural and political context of the organization. Third, is the feasibility of implementing
the strategy in line with the availability of the required employee expertise, raw materials,
operating systems, and operating cash flows. Fourth, is the acceptability of the strategy by
having the ability to increase dividend development, decrease cost of income ratio,
increase residual value/net income, reduce investor risk and increase shareholder value.
The second study objective sought to identify the effects of strategy evaluation at CSC.
First, the study showed that strategy evaluation at CSC facilitates organizational direction
setting at it ensures compliance to organizational vision, streamline operations to specific
objectives, targets correcting strategic directions and establishes common tactics and
purpose. Secondly, strategy evaluation results helps in inspiring and motivating employee
at CSC as it enables employees measure their performance; helps employees in
determining the nature of adjustments needed; helps employees relate their objectives to
that of the organization; good results inspires hard work; and the information inspires
better work. Third, strategy evaluation at CSC is used as a tool for benchmark with other
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industry players. The evaluation is used to compare performance or peers; compares
performance to industry standards; compares performance among deportments; and
compares performance between strategies. Finally, strategy evaluation results helps in
legitimizing the use of strategy at CSC. The evaluation results legitimize management’s
actions in the eyes of the shareholders; customers; government and the general public.
The third study objective sought to highlight strategies for enhancing strategy evaluation
at CSC. The study showed that there is a well-established strategy evaluation culture at
CSC. There is common drive for strategy evaluation; well-established procedures for
strategy evaluation; deliberate effort to seek information on strategy performance;
established responsibilities for evaluation performance; and regular informed demand for
results of information. Second, CSC has well established organizational capacity that
enhances strategy evaluation. There is effective organizational capacity in designing,
implementing and managing strategy evaluation process; there is capacity in accessing,
building and using evaluative knowledge; continuous learning, improvement and
accountability; awareness and support for strategy evaluation; knowledge and evaluative
thinking; integrating evaluation into practice; and capability towards positive change.
Third, there is sufficient organizational support for strategy evaluation at CSC. This was
demonstrated by sufficient finances, time, technological support, top management’s
commitment, supportive organizational incentives, and built in learning systems for
strategy evaluation. Lastly, there are appropriate strategy evaluation methods at CSC
which supports the strategy evaluating efforts. The organization uses a mix of financial
ratios, systematic analysis, shareholder value and customer/process learning and growth.
The study recommends that, it would be strategic for the organization to have strategies
that are completely consistent with the organizational overall strategic direction for
enhanced performance. The study also calls for re-evaluation of the strategies and their
alignment to the overall organizational goals. Still the study calls for sstrengthening of
evaluation enhancing strategies. Finally, broadening the scope of the study considering
other organizations within the sector are much welcome.
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ACKNOWLEDGEMENT
My appreciation goes to Prof. Katuse Paul for his for guidance and suggestions during
this research. His insights were very valuable in making this work a success. I would also
like to appreciate my family for their support and encouragement.
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DEDICATION
I dedicate this work to my family who has always been a source of motivation in all that I
do. Especially my dad Mr. Yusuf Ibrahim Ismail who has always been my side and
motivating me. My beautiful wife Salma Abdi Ali who has ensured I always have quite
environment in the house and providing me with the required support and my children for
being my source of motivation. My final dedication goes to my small brother Abdirizak
Yusuf who always ensured he stood in for me at workplace so that I had time to complete
my research.
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TABLE OF CONTENTS
STUDENT’S DECLARATION .................................................................................... ii
COPYRIGHT ............................................................................................................... iii
ABSTRACT .................................................................................................................. iv
ACKNOWLEDGEMENT............................................................................................ vi
DEDICATION ............................................................................................................. vii
LIST OF ABBREVIATIONS ....................................................................................... x
LIST OF TABLES........................................................................................................ xi
LIST OF FIGURES ..................................................................................................... xii
CHAPTER ONE ............................................................................................................ 1
1.0 INTRODUCTION ................................................................................................... 1
1.1 Background of the Problem .................................................................................... 1
1.2 Statement of the Problem ....................................................................................... 4
1.3 Purpose of the Study .............................................................................................. 5
1.4 Research Questions ................................................................................................ 5
1.5 Importance of the Study ......................................................................................... 5
1.6 Scope of the Study ................................................................................................. 6
1.7 Definition of Terms ................................................................................................ 6
1.8 Chapter Summary .................................................................................................. 7
CHAPTER TWO ........................................................................................................... 8
2.0 LITERATURE REVIEW ........................................................................................ 8
2.1 Introduction ........................................................................................................... 8
2.2 Approaches to Strategy Evaluation ......................................................................... 8
2.3 Effects of Strategy Evaluation on the Organizational Performance ....................... 12
2.4 Strategies for Enhancing Strategy Evaluation ....................................................... 16
2.5 Chapter Summary ................................................................................................ 20
CHAPTER THREE..................................................................................................... 21
3.0 RESEARCH METHODOLOGY .......................................................................... 21
3.1 Introduction ......................................................................................................... 21
3.2 Research Design................................................................................................... 21
3.3 Population and Sampling Design .......................................................................... 21
3.4 Data Collection Method ....................................................................................... 23
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3.5 Research Procedure .............................................................................................. 24
3.6 Data Analysis Method .......................................................................................... 24
CHAPTER FOUR ....................................................................................................... 25
4.0 RESULTS AND FINDINGS ................................................................................. 25
4.1 Introduction ......................................................................................................... 25
4.2 Demographic Characteristics of the Respondents ................................................. 25
4.3 Approaches to Strategy Evaluation ....................................................................... 28
4.4 Effects of Strategy Evaluation .............................................................................. 31
4.5 Strategies for Enhancing Strategy Evaluation ....................................................... 34
4.6 Chapter Summary ................................................................................................ 38
CHAPTER FIVE ......................................................................................................... 39
5.0 DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS ..................... 39
5.1 Introduction ......................................................................................................... 39
5.2 Summary.............................................................................................................. 39
5.3 Discussions .......................................................................................................... 41
5.4 Conclusions ......................................................................................................... 46
5.5 Recommendations ................................................................................................ 48
REFERENCES ............................................................................................................ 49
APPENDICES ............................................................................................................. 54
Appendix A: Cover Letter .......................................................................................... 54
Appendix B: Questionnaire ........................................................................................ 55
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LIST OF ABBREVIATIONS
CSC Centre Star Company
x
LIST OF TABLES
Table 3.1: Study Population………………………………………………………….…..22
Table 3.2: Sample Size……………………………………………………………...……23
Table 4.1: Length of Service……………………………………………………….…….27
Table 4.2: Highest Education Level…………………………………………………...…27
Table 4.3: Position within the Organization……………………………….……………..28
Table 4.4: Factor Analysis for Approaches to Strategy Evaluation……………………...29
Table 4.5: Cronbach’s Alpha Analysis for Approaches to Strategy Evaluation…………30
Table 4.6: Approaches to Strategy Evaluation…………………………………………...30
Table 4.7: One-Way Analysis of Variance on Approaches to Strategy Evaluation by

Department……………………………………………………………………………….31
Table 4.8: Factor Analysis for Effects of Strategy Evaluation…………………………...32
Table 4.9: Cronbach’s Alpha Analysis for Effects of Strategy Evaluation………………33
Table 4.10: Effects of Strategy Evaluation………………………………………………33
Table 4.11: One-Way Analysis of Variance on Effects of Strategy Evaluation by

Department………………………………………………………………………………34
Table 4.12: Factor Analysis for Enhancing Strategy Evaluation………………………...35
Table 4.13: Cronbach’s Alpha Analysis for Enhancing Strategy Evaluation……………36
Table 4.14: Enhancing Strategy Evaluation……………………………………………...36
Table 4.15: One-Way Analysis of Variance on Enhancing Strategy Evaluation by

Department……………………………………………………………………………….37
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LIST OF FIGURES
Figure 2.1: Framework for StrategyEvaluation……………………………………………8

Figure 4.1: Response Rate………………………………………………………………..25
Figure 4.2: Gender………………………………………………………………………..26
Figure 4.3: Age…………………………………………………………………………...26
Figure 4.4: Department…………………………………………………………………...26
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CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Problem

The basic premise of strategic management is that the chosen strategy will achieve the
organization's mission and objectives as planned. In practice, this may not be the case due
to complexities as well as rapid and unpredictable changes in the business environment
(Gianos, 2013). Therefore, a business needs to review its strategic choices and
continuously make adjustments in order to maintain fit with the changing environment.
This is achievable through systematic review, evaluation and controlling of the
implementation of strategies because the best formulated and well-implemented strategies
become valueless as the business environment changes (Dubihlela & Sandada, 2014). The
need for such re-examination of past assumptions, the comparison of actual results with
earlier hypotheses have since become common features of strategic management.
According to Strydom (2011), strategy evaluation and control inform the managers about
the reasons leading to the failure to meet a certain objective, performance standard and/or
any other performance indicator. In this sense evalaution is used as strategic learning tool
and has continued to to play a role in strategy formulation and implementation. Despite
this, there still lacks clear understanding on the role played by evaluation. Preskill and
Mack (2013) lament that in many organizations, the meaningfulness and usability of
evaluation information has been limited because of its disconnection from strategic and
organizational-level decision making. They posit that if learning and evaluation efforts
are to inform an organization’s decision making practices, then there needs to be a
comprehensive strategy for evaluating the strategy itself and the organization’s
effectiveness.
They continue that this requires “a clear vision for evaluation; a culture that fosters
individual, group,and organizational learning; a compelling and cogent strategy;
coordinated evaluation and learning activities; and a supportive environment and when
these elements are fully implemented, they work together to ensure that learning and
evaluation activities reflect and feed into the organization’s latest thinking. In this
context, evaluation can help answer the most pressing questions of leadership and staff”
(Preskill & Mack, 2013, pg. 6).
1
Strydom (2011) proposed a four stage approach to strategy evaluation and control.
Dubihlela and Sandada (2014) expounded on the proposed stages by Stydom to include;
constant revision and updating of the strategy to meet the environmental conditions;
setting of standards to be met in order to achieve goals; evaluating performance of
employees through performance appraisals in order to ascertain if everyone is performing
as required; preventing problems and crises through proactive planning. This suggestion
is in line with earlier sentiments by Pearce and Robinson (2005) who indicated that, to be
effective, control systems need to follow four steps; setting standards of performance,
measuring actual performance,identifying deviations from set standards and initiating
corrective action.
Gavrea, Ilies and Stegerean (2011) present chronological view on the concept of
organizational performance and its evolution over time. They posit that in the 1950s, the
concept was seen as the extent to which organizations, then viewed as a social system,
fulfilled their objectives. During this time the performance evaluation focused on work,
people and organizational structure. In the 1960s and early 1970s, the perception shifted
to an organization's ability to exploit its environment for accessing and using the limited
resources.
Nineteen eighties and 1990s saw the realization that an organization is successful if it
accomplishes its goals (effectiveness) using a minimum of resources (efficiency). Thus,
the view that a successful organization is that which achieves its performance objectives
based on the constraints imposed by the limited resources. Hence, profit arose as one of
the performance indicators (Gavrea, Ilies, & Stegerean, 2011).
The foregoing study adopts definition by Lebans and Euske (2006) which sees
organizational performance as a set of financial and non-financial indicators which offer
information on the degree of achievement of objectives and results. The objective of
which may be short term, long term or strategic in nature.Hence, while it is acknowledged
that the identification of strategic issues and, strategy analysis and selection facilitates the
achievement of efficient allocation of resources, sustainable competitive advantage, and
improved innovation, it is also critical to take into account the development of
implementation programmes, evaluation and control systems which facilitates smooth
execution and implementation of the planned tasks (Arasa & K'Obonyo, 2012).
2
In Kenya, many companies are constantly re-evaluating their strategies due to increased
competition, dynamic business environment and rapid changes in customer demands to
achieve their goals and objectives (Kathuni & Mugenda, 2012). The evaluations are
mostly aimed at achieving integrated businesses which are operationally and strategic
efficient.
Centre Star Company Limited is a civil engineering and building construction company
founded in 2004 and based in Nairobi, Kenya. The company endeavors in professionalism
and continuity that enables it to provide attractive, functional, cost effective products and
services (CSC, 2014). The orientation of the organization towards continued learning has
seen the organization adopt dynamic strategies focusing on the market fluidity and
changes. Therefore to effectively mange the dynamic customer demands in the
construction industry, the company needs a constinous monitoring and evaluation of its
strategies for effective alignment of these strategies to both internal and external
demands.
Center Star Company is categorised as a small to medium enterprise comapny-SME. This

sector of the economy is unique in that competition is often intense for SMEs e.g. many
are small suppliers in near perfectly competitive markets and are unable to influence price
or quantity; the contingent, and standard view, of competitiveness where firms compete
on cost or differentiation is problematic for SMEs since they are unlikely to be able to
lock in customers and suppliers, build barriers to entry, or significantly lower costs
(Duhan, Levy, & Powell, 2005).
SMEs also suffer from limited access to resources, and a lack of expertise on the part of
the owner/manager. Thus, strong business strategies become inevitable for SME’s
performance (Kishore, Majumdar, & Kiran, 2012). It is thus necessary for the SMEs to
take a step back and evaluate work plans, as well as capacity acquisition processes and
enabling technology and determine a strategy that works for the organization.
The current study intends to identify how strategy evaluation impacts on the
organization’s performance. It will seek to identify the evaluation approaches adopted in
the evaluation of the institutiuon’s strategy as well as come up with suggestions on how
to enhance the evaluation process.
3
1.2 Statement of the Problem
The need for organizations to continuously review their strategic choices and make
adjustments in order to maintain a fit with the environment through a systematic review,
evaluation and controlling of the implementation of strategies has been widely
acknowledged in literature. This is critical since the best-formulated and well-
implemented strategies become valueless as the business environment changes (Dubihlela
& Sandada, 2014). Hence, the need for such re-examination of past assumptions, the
comparison of actual results with earlier hypotheses has since become common features
of strategic management.
Arasa and K'Obonyo (2012) posit that strategy evaluation and control just like any other
step in the strategic management is important e.g. they worder how the achievements and
successes of a business strategy can be measured if there is no critical evaluation of the
implementation plan put in place? The need for controlling and evaluation of strategies is
therefore to inform the process of direction and to enable an efficient and effective
achievement of strategic objectives.
Several studies have been carried out elswhere in the world and in the business sectors
regarding evaluation of strategies though no study have focused on Centre Star Company
Limited in Kenya, this thus presents a knowledge gap. The management of the
organization needs to be clearly aware of the impacts of the strategies in place to be able
to set clear direction for the organization. Njeru, Stephen and Wambui (2013) while
analysing factors influencing formulation of strategic plans in Embu, Kenya,
acknowledges the significance of strategy monitoring and evaluation since key action
areas are measured on pre-determined standards set by the evaluation creteria. While
studying the banks in Kenya, Kathuni and Mugenda (2012) posited that in order to stay
competitive and achieve their goals and objectives, banks are periodically re-evaluating
their strategies with the aim of achieving an integrated banking business which is
operationally efficient.
A study by Arasa and K'Obonyo (2012) while primarily focusing on the connection
between the strategic planning process and and organizational performance also
acknowledged the development of implementation programme, evaluation and control
systems facilitates smooth execution and implementation of the planned tasks.
4
This study was thus set out to examine the relationship between strategy evaluation and
organizational performance at Centre Star Company Limited. The afore mentioned
studies (Arasa & K'Obonyo, 2012; Kathuni & Mugenda, 2012; Njeru, Stephen, &
Wambui, 2013), on strategy evaluation did not take in to account the unique charactristics
presented by strategy evaluation at Centre Star Company Limited. Since strategic
management is fast being embraced in most organizations, whether for profit or non-
profit, it is important that the implications of evaluation of strategy is well researched and
documented in all sectors of the economy. This study therefore attempts to find out the
approaches used to evaluate strategies at Centre Star Company Limited; the effects of
strategy evaluation on the organizational performance; and how strategy evaluation can
be enhanced.
1.3 Purpose of the Study

organizational performance.
1.4 Research Questions

The study was guided by the following research questions;
1.4.1 What are the approaches to strategy evaluation at Centre Star Company Limited?
1.4.2 What are the effects of strategy evaluation on the performance at Centre Star
Company Limited?
1.4.3 How can strategy evaluation be enhanced at Centre Star Company Limited?
1.5 Importance of the Study

The findings of the study will be significant to the following stakeholders;
1.5.1 Management at Centre Star Company Limited

The study aimed to identify empirically the effects of strategy evaluation on
organizational performance. The findings gives evidence based information that can be
used for future strategy direction at the organization.
1.5.2 Management in Other Organizations

Other institutions in the sector can also borrow and better their strategic management
from the lessons from Centre Star Company Limited.
5
1.5.3 Researchers and Academicians
The findings of this study act as a point of reference for other scholars who intends to
further knowledge on the effects of strategy evaluation on the organizational
performance.
1.6 Scope of the Study

The population of this study included all the organization’s (CSC) departments of
administration, logistics, operations and sales and marketing. Each member of staff of
200 employees within the organization was targeted to participate in the survey.
The data collection was carried in March 2015. The study was limited to staff on duty at
the time of carrying out the survey. The study was expected to be limited by the
unwillingness of the respondents to give full information about their organization for fear
of victimization. This was mitigated by assuring the respondents before the study of the
confidentiality of the information given. Names were not captured as part of the study.
They assured that the information given was only be used for academic purposes.
1.7 Definition of Terms
1.7.1 Organizational Performance

A set of financial and non-financial indicators which offer information on the degree of
achievement of objectives and results (Lebans & Euske, 2006)
1.7.2 Evaluation
A systematic investigation of the worth or merit of an object or process (Stufflebeam,
1994).
1.7.3 Strategy
Basic directional decisions, that is, to purposes and missions i.e. the means to attaining
end goals (Nickols, 2012).
1.7.4 Strategy Evaluation

Systematic investigation to determine the reasons behind failures and success of certain
strategy in terms of objectives, performance standard and/or any other performance
indicator (Strydom, 2011).
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1.8 Chapter Summary
The chapter has discussed the importance of evaluating strategy. It has also brought out
the meaning of organizational performance and its relationship with strategy evaluation.
The chapter further highlights the knowledge gap and presented the objectives of the
study, scope, and the terminologies to be used in this study. The second chapter of this
study offers a review of other scholars’ work on the subject of the study. Chapter three
highlights step-wise how the actual study was carried out. This involves research design,
population, sampling design, data collection and analysis. Chapters four offers the
findings while chapter five gives a summary of the findings, discussions, conclusions and
recommendations of the study.
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CHAPTER TWO
2.0 LITERATURE REVIEW

2.1 Introduction
This chapter offers a review of literature on the subject of strategy evaluation and its
impact on organizational performance. It has five sections. The first coves the approaches
to strategy evaluation. Second, covers the effects of strategy evaluation on organizational
performance. Third, covers how to enhance strategy evaluation. Finally there is a chapter
summary.
2.2 Approaches to Strategy Evaluation

Strategy evaluation is a critical tool for managers to understand reasons behind failures
and success of certain objectives, performance standard and/or any other performance
indicator (Strydom, 2011). In this sense, evalaution is used as strategic learning tool and
has continued to to play a role in strategy formulation and implementation. Literature on
strategy evaluation has proposed several approaches to strategy evaluation exercise.
Kunene (2004) in his seminal study identified four types of strategy evaluation criteria.
Consitency, suitability, acceptability and feasibility.
Strategy Evaluation
Criteria
Consistency Suitability Acceptability Feasibility
Risk/sharehol Capabilities,
With mission With company competences/
der
and objectives circumstances resources
expectations
Figure 2.1: Framework for StrategyEvaluation

Source: Kunene (2004, pg. 69)
8
2.2.1 Consistency
There is a general agreement among the business strategists that a strategy should not
present mutually inconsistent goals and policies (Perez-Franco, Singh, & Sheffi, 2011).
Classical work by Rumelt (1979) gave an analogy with a mathematical equation where
conflicting objectives imply a nul set of feasibille solutions. Hence, a strategy that
contains goals, objectives and policies that are mutually inconsitent is null and should be
rejected.
The challenge of inconsitancy is mainly experienced in a multi-enterprise organization

with different units (Rumelt, 1979). Bryceson and Slaughter (2011) posit that one of the
key issues faced by a business, particularly a multi-enterprise one, is that of managing the
internal units effectively.They explain that in a multi-enterprise organisation, there is the
tendency for a disconnect to develop between the goals and strategies of each busines unit
and the overall business goals. This is mainly because each component is often an
autonomous business unit or profit centre which may result in lack of integration,
coordination, communication and cooperation. Thus, if a goal is incongruence (when
individuals or groups within an entity may have only partly overlapping goals) amongst
components of the units develops, a risk to busines integration and value creation for the
entire business arises.
This therefore calls for strategic alignment of strategies to the broader organizational
goals and vision. An empirical study by Issa-Salwe, Ahmed, Aloufi and Kabir (2010)
shows that aligning operational strategies to the organisational strategy goals is essential
for improved business performance. Alignment in this context is defined as the capacity
to demonstrate a positive relationship between operational strategy and the accepted
organizational measures of performance.
2.2.2 Suitability
According to Kunene (2004), assessing suitability is concerned with whether the strategic
option addresses the circumstances in which the organisation is operating or wishing to
operate. He explains that it further assesses the extent to which a proposed strategy fits
the situation as identified in the strategic analysis and how it would contribute to or
sustain the competitive position of the organisation.
Therefore, the suitability is the ability of the strategy to exploit the opportunities in the
environment as it avoids the potential threats. It also includes the ability to takes
9
advantage of the organizational strengths and find ways of dealing with the organizational
weaknesses (Jeffs, 2012). The chosen strategy should also be in congruent with the firm’s
existing culture and in alignment with the broader environmental, political and social
context (Wu, 2010).
According to Virvilaite, Seinauskiene and Sestokiene (2011), the suitability of a strategy

is confirmed by the influence of the strategy on the company’s performance, economic
and strategic benefit received after the implementation of the strategy. They add that the
assessment method of cash flows is the most suitable one when assessing sutability of
different strategic choices while added economic value is a suitable method, when the aim
is to assess current (ongoing) performance and its efficiency and to determine, if the
current strategic decision creates value for shareholders. Earlier Doyle (2008) indicated
that the analysis of shareholder value is the most effective means when seeking to assess
the efficiency of alternative strategies in financial terms.
Wu (2010) explains that, to determine the suitability, managers can use external analytical
tools to evaluate each strategic choice. The models include, PESTEL analysis, Porters
Five Forces, Poters diamond, life cycle analysis, value chain analysis, positioning of the
firm or its products, portfolio anlaysis, business profile evaluation, gap analysis, ranking,
scenerio planning, and sensitivity analysis among others.
2.2.3 Feasibility
According to Wu (2010), feasibility evaluation focuses on whether the organization has
the resources to pursue the strategic choice. In this sense it becomes an evaluation of the
internal capabilities of the organization e.g. where a firm does not have adequate
resources to pursue a straregic choice, the organization can decide to exclude the that
particulr strategic choice. The resources may be in form of money, manpower, machines,
markets, materials and among others
This is hinged on the resource based view. The resource based view as proposed by
Penrose (1959) argued that a firm’s success or growth, both internally and then
externally, is based on the internal resources and how they are employed. In her
arguments, resource availability and strategy must be in tandem for a firm to gain a
competitive edge over its competitors. These arguments tends to support the theory that
strategy follows resources.
10
As Kunene (2004) puts it that the requirements of future strategies should be analysed and
key resources and competencies identified before hand as the strategy implementation
could be impossible as it would be hindered by poor resourcing of the strategy e.g. for
better efficiencies to be achieved, it must be established whether there are resources in
place to acquire new systems and whether the expertise and skills are available to develop
the systems to yield the required efficiencies.
Therefore the success of a strategic may only be achieved if there are sufficeint resources
within the organization to support the strategic direction (Penrose, 1959). This implies
that where the resources are not available for new strategies, the organization ought to
generate or borrow the resources (Wu, 2010). This comes with the accessibility and cost
of funds or competencies to determine whether the strategy makes any economic sense at
all if implemented.
2.2.4 Acceptability
Acceptability on the other hand focuses on financial aspects such as return to risk of each
alternative and stakeholder aspects such as strategic impact influence of the stakeholders’
interests. The financial return of the strategic choice may be calculated using various
financial measurements such as net present value; internal rate of return; cost benefit
analysis; economic value added and shareholder value analysis (Wu, 2010).
According to Arshad (2012) NetPresent Value-NPV, is the sum of all the future cash
flows to determine the present value. Cash flows include the both inflows and outflows
that are discounted at a rate. It is calculated as:
NPV = Cash inflows – Cash outflows or expenditure of Investment.
Kalhoefer (2010) posit that an investment should be accepted if the NPV is exceeding
zero. Therefore, the interest rate used to discount the cash flows is the hurdle rate for the
decision. Stakeholders normally like to relate their future of their investment in relation to
the current situation. Inability of a strategy to generate favourable net present value may
see reduced level of acceptability and support of the strategy.
On the other hand internal rate of return -IRR, is the interest rate that, when applied to the
NPV formula, gives an NPV of zero i.e.it is the interest rate where the sum of the
discounted cash flows equals the initial investment (Kalhoefer, 2010). Hence, IRR shows
the effective return of the internally invested capital and an investment should be
11
undertaken if the IRR exceeds the applied interest rate i, because in this case it will have a
positive net present value.
The other financial indicator of strategy evaluation and acceptance is the economic value
added. It defines the net operating profit after taxes reduced by cost of capital i.e.it is an
economic over profit, that remains for the equity holders after considering all economic
cost (Zdeněk, 2011). Further, cost benefits analysis assumes that an act should not be
undertaken unless its benefits outweigh its costs (Kelman, 2011) while shareholder value
analysis determines whether the value of shareholders holdings in a company are
increasing, decreasing or have remained unchanged. Earning per share (EPS) is a popular
indicator of shareholders' return and can be defined as the net profit after tax divided by
total number of shares in issue (Singh & Pattanayak, 2014).
2.3 Effects of Strategy Evaluation on the Organizational Performance

This section discusses the positive effects of strategy evaluation on the organizational
performance. These include direction setting, guidance on bench marking and motivation.
2.3.1 Direction Setting

Literature has significantly underscored the importance of strategic direction setting for
organizations. The strategic direction provides multiple benefits to an organization.
According to Olk, Rainsford and Chung (2010), direction setting presents a broadly
shared sense of organizational direction and purpose. They posit that the direction is
needed because few organizations have achieved greatness by being all things to all
consumers. Thus to instil a purpose, most successful companies achieve their leadership
position by adopting a vision far greater than their resource base and competencies would
allow.
Various scholars have had different views on the direction setting process. Brady and
Walsh (2008), hold the view that direction setting requires a charismatic leader who
through force of personality and leadership acumen can line up all the members of the
organisation in one direction. Thompson, Strickland and Gamble (2007) proposed that the
direction setting process involves vision development followed by setting of objectives,
designing of strategy, implementation and review of the process. Hill and Jones (2008),
further proposes that the process starts with mission and goals selection, followed by
identification of opportunities and threats, identification of strengths and weaknesses,
selection of a strategy and its implementation.
12
Strategy evaluation therefore becomes a critical tool and measure in assessing the
organization’s strategic position. This enables the management to make sure that the
organisation is heading in the right direction and that corrective action is taken where
needed. There is the need for management to continuously evaluate its strategies against
performance so that any indication that the company is failing to achieve its objectives
calls for corrective adjustments.
For example, according to McGraw-Hill Education (2014), where the company’s

implementation efforts have fallen short, new tactics must be devised to fully exploit the
potential of the company’s strategy. Whereas if management determines through strategy
evaluation that the company’s execution efforts are sufficient, it should challenge the
assumptions underlying the company’s business strategy and alter the strategy to better fit
competitive conditions and the company’s internal capabilities. If the company’s strategic
approach to competition is rated as sound, then perhaps management set overly ambitious
targets for the company’s performance.
2.3.2 Inspire Confidence/Motivation

According to Lai (2011), motivation refers to reasons that underlie behaviour that is
characterized by willingness and volition. She explains that intrinsic motivation is
animated by personal enjoyment, interest, or pleasure, whereas extrinsic motivation is
governed by reinforcement contingencies. Hence, motivation involves a constellation of
closely related beliefs, perceptions, values, interests, and actions.
Goal setting theory links goal setting and evaluation to motivation and performance of an
organization. According to Lunenburg (2011) evaluation provides the much needed
feedback that helps organization members to measure and attain their performance goals.
He explains that feedback helps in two important ways. ‘First, it helps people determine
how well they are doing. For example, sports teams need to know the score of the game; a
sharp shooter needs to see the target; a golfer needs to know his score. Likewise a work
team, department, or organization. Performance feedback tends to encourage better
performance’ (Lunenburg, 2011, pg. 3).
Further, Lunenburg (2011) indicates that feedback also helps people determine the nature
of the adjustments to their performance that are required to improve. For example, a CEO
of an organization can gauge the growth, profitability, and quality of a product line. The
general presumption is that information about good performance inspires confidence in
13
everybody. Those within the organisation are likely to be more motivated to maintain and
achieve better performance in order to keep up their record of accomplishment. Those
outside – customers, government authorities, shareholders –are likely to be impressed
with the good performance.
These arguments are in line with Muhammad (2013) who indicated that performance
appraisal provides feedback to performance. He states that a person works better when he
knows how he is working. This works in two ways, firstly, the person gets feedback about
his performance. Secondly, when the person gets feedback about his performance, he can
relate his work to the organizational objectives and be inspired to do more as it creates
awareness on exact contribution to the organizational success.
While giving an example of self-regulated individuals, (Lai, 2011) posits that they use a
variety of strategies, have high self-efficacy, and set goals for themselves. These groups
of individuals or managers also monitor their own activities and strategies, evaluate their
performance, and experience reactions to evaluation outcomes. She continues that the
valence of a person’s reaction to evaluation depends on the way that successes and
failures are framed, with positive reactions more likely to spur increased motivation than
negative ones. ‘Thus, self-regulation theory postulates that individuals can fortify their
own motivation by engaging in a number of self-regulatory strategies, such as setting
appropriate and achievable goals and monitoring and evaluating their strategies’ progress
toward goals’ (Lai, 2011, pg. 12) .
2.3.3 Provide Guidance on Benchmarking

Apart from goal setting and motivation, strategy evaluation is needed to serve as tool of
providing information on how performance compares to the peers and other standards. It
highlights what is expected and what needs to be done to keep up improving the
performance. In this way strategy evaluation is used to establish a step by step guidelines
on future actions based on learning from the past and the environment (Kvarnerud &
Maspers, 2007).
For example, evaluating strategy in line with the environment is critical in establishing
guidelines on benchmarking with the peers. The presumption is that for any organization,
environment consists of external factors (i.e. customers, competitors, stakeholders and
many more) that have the powers to influence organization’s performance and for every
14
action taken by an organization, there is a creation of some degree of changes in its
internal and external environment (Ayub, Razzaq, Aslam, & Iftekhar, 2013).
According to Luštický and Kincl (2012), ccompetitive advantage comes not only from the
potential possibilities of external environment, but also from internal characteristics, i.e.,
from unique sources and methods of their use. Hence, to achieve a competitive advantage
it is essential to use these resources effectively with regard to changing environmental
conditions. They define benchmarking as the continuous measurement of the performance
(strengths and weaknesses) against not only oneself or other competitors in the same or in
a different country but also against national / international quality grading systems by
assessing both primary and secondary data for the purpose of establishing priorities,
setting targets and gaining improvements in order to gain competitive advantage.
The arguments are supported by an empirical study by Ajelabi and Tang (2010) which
saw strategy evaluation as a tool for strategic benchmarking. The process involves a
systematic process of evaluating alternatives, implementing strategies and improving
performance by understanding and adapting successful strategies from external partners
who participate in an ongoing business alliance. The other forms of benchmarking
include, competitive benchmarking, internal benchmarking, process benchmarking,
functional benchmarking, generic benchmarking and global benchmarking.
2.3.4 Legitimising Use of Strategy Evaluation

Apart from the will to fill knowledge gap, strategy evaluation may also be needed as a
strategy in itself to legitimise managements’ actions before the eyes of the stakeholders.
Organizations normally have different stakeholders with varied opinions. An organization
typically present a mix of individuals with many counteracting wills. Therefore,
evaluation is needed to justify decisions i.e. the legitimising purpose of evaluation has the
function of a source power that can help strengthen a strategic resolve. In this sense,
evaluation findings are used as legitimising factor (Kvarnerud & Maspers, 2007).
Earlier works by Sundin (1995) explained that it is crucial for organizations to obtain
legitimacy as a legitimate issue is seen as valid and without which the management losses
support of the stakeholders. Hence, evaluation is used to persuade the environment in
which the organization exist that certain opinions or actions taken are correct (Kvarnerud
& Maspers, 2007).
15
2.4 Strategies for Enhancing Strategy Evaluation
To carry out an independent, credible and high quality evaluations that assess whether the
organization is doing the right things and whether they are doing them right; contributes
to learning and knowledge sharing; enhance the generation and use of value-added
evaluative information; and identifies what works, literature points to some key
evaluation capacities. These include a strong evaluation culture; capabilities of the people
carrying out the evaluation; management support in terms of resources; organization of
the process; independence of the process and the actual decision process.
2.4.1 Enhancing Evaluative Culture

According to Ehtesham, Muhammad and Muhammad (2011), organizational culture is the
patterns of shared values and beliefs over time, which produces behavioural norms that
are adopted in solving problems. They explain that an organization’s internal environment
is represented by its culture and is construed by the assumptions and beliefs of the
managers and employees. Hence, organizational culture shapes organizational
procedures, unifies organizational capabilities into a cohesive whole, provides solutions
to the problems faced by the organization, and, thereby, hindering or facilitating the
organization’s achievement of its goals.
The concept of values which is embedded in culture is a fundamental aspect in evaluation

systems. An evaluation being an aspect of determining merit, worth and value of things,
processes or strategies, the use of value systems, including perceived biases and problems
associated with them, has strongly emerged in the social science research literature
(SenGupta, Hopson, & Thompson-Robinson, 2004).
This has seen emergence of two approaches to evaluation value systems. One is the
inherent values created in the evaluation system to come up with valid evaluation
outcomes and the creation of the perceived common drive for evaluation values or culture
within an organization. This study will focus on the latter dimension of embedding a
strong and sustainable evaluation culture to enhance strategy evaluation and the
organizational performance.
Mayne (2008) posits that evaluative culture denotes an organizational culture that
deliberately seeks out information on its performance in order to use that information to
learn how to better manage and deliver its programs and services, and thereby improve its
16
performance. She continues that such an organization values empirical evidence on the
results—outputs and outcomes—it is seeking to achieve.
Building an evaluative culture has three main components; leadership, organizational

support structure and learning focus (Mayne, 2008). Leadership entails demonstrated
senior management leadership and commitment to evaluation; regular informed demand
for results information; building results measurement and results management capacity;
establishing and communicating a clear role; and establishing responsibilities for results
management. Second, the organizational support structures entail a supportive
organizational incentives; supportive organizational systems, practices and procedures; an
outcome-oriented and supportive accountability regime; and learning focussed evaluation
and monitoring. Thirdly, a learning focus is about build in learning systems; and ability to
tolerating and learning from mistakes (Mayne, 2008).
2.4.1 Capacity Building

In broader sense, strategy evaluation is not only limited to top management but it’s a
collective exercise that involves strategies at the functional units and business units,
which defines the overall organizational strategy. Therefore, for an effective strategy
evaluation systems, developing capacity needs of individual within the organization and
the organizational capacities are paramount.
There has been varied views on the definition of evalaution capacity building. Scrafford
(2012, pg. 3) defined evaluation capacity building as “context-dependent, intentional
action system of guided processes and practices for bringing about and sustaining a state
of affairs in which quality program evaluation and its appropriate uses are ongoing
practices within and/or between one or more organizations/programs/sites”. He therefore
saw evaluation capacity building as an ongoing process that takes into consideration
organizational factors that may influence sustained evaluation.
On the other hand, this study will adopt Taylor-Powell and Boyd (2008) definition of
evaluation capacity building as strengthening and sustaining an organization’s capacity to
design, implement, and manage effective evaluation process; access, build, and use
evaluative knowledge and skills; cultivate a spirit of continuous organizational learning,
improvement, and accountability; and create awareness and support for program
evaluation and self-evaluation as a performance improvement strategy.
17
At the individual level, there are the cognitive capacities, behavioural capacities, and
affective outcomes capacities (García-Iriarte, Suarez-Balcazar, Taylor-Ritzler, & Luna,
2011). The cognitive outcome is defined as including increasing that is incorporated into
everyday professional practice while behavioural outcomes include improving skills to
integrate evaluation into everyday practice; and lastly affective outcomes are positive
changes in attitudes towards evaluation, increasing ownership regarding evaluation, and
increasing motivation to engage in evaluation (García-Iriarte, et al., 2011).
To enhance individual evaluation capacity Taylor-Powell and Boyd (2008) proposes

training, technical assistance, collaboration, mentorship/coaching and establishing
communities of practices to form an evaluation capacity building frame work.
2.4.3 Enhancing Organizational Support

García-Iriarte, et al. (2011) observe that despite strategy evaluation being highly
recorgnized, organization’s lack of support in terms of resources or funds often negatively
affect the precess of implementing the evaluation processes.Strategy evaluators use a
number of finacial resources to suppot their evaluation activities. Therefore, monetary
resources serves as both a signal and a tool for strategy evaluation. Unless sufficient
finances are set aside for the exercise the outcome may not be as exhoustive.
The other supporting resources include availability of sufficient time, technological

support such as evaluation materials, programs (Taylor-Powell & Boyd, 2008). The
underlying presumpions is that for an organization to understake an effective strategy
evaluation, it needs to ensure that there is an access to the supporting resources needed.
2.4.4 Choice of Strategy Evaluation Methods

Use of financial ratios alone to measure performance of corporate strategies has been
widely criticized as being too narrow, thus leaving out too much information that would
guide in giving the best assessment on the impacts of a strategy (Institute of Management
Accountants, 2014). Therefore, the choice of strategy evaluation method to use by an
organization is critical in presenting the true picture on the performance of a strategy.
Some of the methods to evaluate the success or failure of a strategy are, balanced score
card, strategic audit, shareholder values and stakeholder measures.
According to Poureisa, Ahmadgourabi and Efteghar (2013) in order for firms to

effectively evaluate their performance, they should not only lend on financial aspects but
18
also should consider their performance from customer, processes, and learning and
growth view. This school of thought is what was captured by Kaplan and Norton in their
Balanced Score Card strategy evaluation matrix.
According to Kaplan and Norton (2009) for successful companies to assess their
performance, they should not only use financial measures but also assess their
organizations based on their other three perspectives, i.e. customer, internal processes,
and learning and growth. Hence, companies in each of these four perspectives, determine
their goals and objectives for evaluating success in each perspective, measures and
targets; and identify quantitative goals for all of these measures for the period considered
(Poureisa, Ahmadgourabi, & Efteghar, 2013). Therefore, a well-defined balanced
scorecard should be able to describe ones strategies through the objectives and measure
chosen (Niven, 2007).
On the other hand, strategy audit has also been used to evaluate performance of strategies
by providing a checklist of questions, by area or issue, which enables a systematic
analysis of various organizational functions or activities (Argandona, 2011). In this way,
the audit is an extremely useful diagnostic tool to pinpoint the problems areas and
highlights organizational strengths and weaknesses for corporate planning with the main
objective of strategic audit being to develop benchmarks (Argandona, 2011).
According to the report by Institute of Management Accountants [IMA], (2014),

shareholder value takes into account the owners of equity expectations for management to
generate value over and above the costs of resources consumed, including the cost of
using capital. For example if suppliers of capital do not receive a fair return to
compensate them for the risk they are taking, they will withdraw their capital in search of
better returns, since value will be lost. The report posits that evidence is mounting that
accounting measures such as earnings per share (EPS) and profit or growth in earnings do
not take into account the cost of the investment required to run the business.
Further, stakeholder theory was developed to challenge the narrow view which holds that
the sole purpose of a company is to maximise economic value for shareholders.
According to Argandona (2011), increasing value creation for all stakeholders broadens
the framework of management bringing it closer to a more realistic economic optimum,
generating new cooperative value creation capabilities and overcoming some conflicts.
19
He explains that so lomg as the focus remains on economic value, any solutions adopted
will be insufficient and the outcome will be liable to conflict from the stakeholders.
Therefore since there are various approaches to evaluation and no single one is exhaustive
in nature, the choice of evaluation methods will be directed by the need for the evaluation
process. This means the results wil also be dependent on the specific approach adopted.
Hence for an organization to effectively enhance the outcome and effectiveness of
strategy eveluation, empahis should be put on the approach in line with the objectives.
2.5 Chapter Summary

Chapter two was a discussion on the views held by other scholars in line with strategy
evaluation. The chapter captured approaches to strategy evaluation; effects of strategy
evaluation on organizational performance and strategies for enhancing strategy
evaluation. The following chapter will capture the methodology that offers the road map
for the study.
20
CHAPTER THREE
3.0 RESEARCH METHODOLOGY

3.1 Introduction
The section gives a blue print on how the study was carried out. It describes the research
approach, population of study, sampling frame, sampling procedure, data collection
method, research procedure, data analysis and data presentation methods.
3.2 Research Design

The study employed a descriptive research approach to establish relationships between
the study variables. The approach was appropriate as it enabled testing and confirmation
of the hypotheses objectively, and to explain the impact of strategy evaluation on
organizational performance (Dubihlela & Sandada, 2014).
Further, descriptive research approach is recommended when investigating peoples’

attitudes and views as they are, without manipulating the variables (Kombo & Tromp,
2006). Descriptive survey design also helps in gathering, summarising, presenting and
interpreting information for the purpose of clarification (Mugenda & Mugenda, 2003).
The dependent variable in the study is the organizational performance while the
dependent variable is the strategy evaluation.
3.3 Population and Sampling Design

3.3.1 Population
A population is any entire collection of people, animals, plants or things from which data
may be collected (Easton & McColl, 2012). According to (Cooper & Schindler, 2008) it
represents the entire set of units of analysis or the total collection of elements on which
inference is to be made.
The population for this study comprised of all the 200 staff members at Centre Star
Company. The population was grouped into four departments of the Company. That is the
departments of administration, logistics, operations and sales & marketing.
21
Table 3.1: Study Population
Category Sample Frame Total Percentage
Administration 23 11.5%
Logistics 44 22.0%
Operations 76 38.0%
Sales & Marketing 57 28.5%
Total 200 100%
3.3.2 Sampling Design

3.3.2.1 Sampling Frame
Sample frame defines all the population elements that can be accessed during the data
collection period or a listing of the entire population from where a sample size is selected
(Cooper & Schindler, Business Research Methods, 2008). This may represent a part or
the entire population. For this study, the sample frame was all the 200 employees of
Centre Star Company (CSC, 2014). This was verified by the actual employee database
held by the human resources department at CSC.
3.3.2.2 Sampling Technique

This is the procedure of gathering people, places or things to study (Orodho & Kombo,
2002). The study used a stratified random sampling approach to select a sample size from
each stratum according the proportion. The population was stratified depending on the
department where one works and the selected sample size from each stratum drawn
randomly from within each stratum. This method of sampling ensures that each stratum is
properly represented so that the sample drawn from it is proportionate to the stratum’s
share of the population. It ensured that every element in the population was represented
and it was also used to achieve statistical efficiency (Fricker, 2007).
3.3.2.3 Sample Size

This as a subset or any combination of sampling units that does not include the entire set
of sampling units that has been defined as the population of a sampling units from a
population (Garson, 2012). According to Mugenda and Mugenda (2003) a representative
sample size 30% of the total population is sufficient to draw conclusions about the study
population. For this study, 30% of 200 employees which translate into 60 employees
was selected to form the sample size.
22
Table 3.2: Sample Size
Category Sample Frame Total Sample Total
Percentage Size Percentage
Administration 23 11.5% 7 3.5%
Logistics 44 22.0% 13 6.5%
Operations 76 38.0% 23 11.5%
Sales & Marketing 57 28.5% 17 8.5%
Total 200 100% 60 30%
3.4 Data Collection Method

A structured questionnaire comprising three research constructs was developed in line
with the research questions and the context for primary data collection. The measurement
constructs measure separately the the approaches to strategy evaluation at Centre Star
Company Limited; The effects of strategy evaluation on the performance at Centre Star
Company Limited; and how strategy evaluation can be enhanced at Centre Star Company
Limited.
The questionnaire began with the demographic information section, which incorporated
individual characteristics such as number of years worked within the organization, level
of education, departments, and the management level to which the individual belongs.
This data was critical in profiling the respondents. The second section of the
questionnaire covered the approaches to strategy evaluation while the third and fourth
will covered the effects of strategy evaluation and how strategy evaluation can be
enhanced respectively.
The questionnaire had two types of questions, the closed ended and open-ended question.
For the closed ended questions, the respondents were asked to rank their levels of
agreement on a five-point Likert scale where 1 = strong disagreement, 2 = moderate
disagreement, 3 = neutral 4= moderate agreement and 5 = strong agreement. The Likert
scale was closed ended to limit the external interference and to minimise the completion
time (Pushpakumari & Watanabe, 2009). The respondents were simply required to tick
the most appropriate answer (Dubihlela & Sandada, 2014). The open-ended questions on
the other hand gave the respondents a leeway of answering the questions without any
limitations.
23
3.5 Research Procedure
Before the actual study, a pilot of 5 respondents from the company’s departments of
administration, operations and sales and marketing was carried out. This helped clarify
and remove questions that were ambiguous or not clear to the respondents. The
respondents who participated in the pilot were excluded from the actual study to limit bias
of pre formed opinions created during the pilot stage.
The content of the study instrument was validated by use of experts (Njeru, Stephen, &
Wambui, 2013). In this case, the opinions of the University appointed supervisor was
sought to improve on the questionnaire. This was critical in identifying whether the
instrument measured what it intended to measure. The actual data collection adopted a
drop and pick strategy where hard copy questionnaires were distributed to the respondents
during official working hours for filling before returning. The respondents were assured
of confidentially and allowed a period of two days after which the questionnaires were
collected for analysis.
3.6 Data Analysis Method

The primary data collected by the questionnaire was first coded and entered into
Statistical Package for Social Science [SPSS]. Where the respondents were found to have
offered answers which were not clear or incomplete, call-backs were made to those
individual respondents to fill the gaps before data analysis. This was to ensure
completeness of the information collected.
Descriptive statistics in form of frequencies and percentages was used to analyse the
descriptive elements of the study. Further analysis of variance was carried out to
determine the relationships between the test variables (Arasa & K'Obonyo, 2012). The
findings of the study were presented in form of table and figures for ease of interpretation
and understanding.
3.7 Chapter Summary
The chapter presented the research design, population size of study, sampling technique,
sample frame, sample size, research procedure, data analysis and presentation tools to be
used in this study. Chapter 4 covers the findings of the study in line with research
questions.
24
CHAPTER FOUR
4.0 RESULTS AND FINDINGS

4.1 Introduction
The purpose of this study was to determine effects of strategy evaluation on
organizational performance. The chapter four presents the findings in line with the
research objectives. There are four sections in this chapter. Section one is the general
information about the respondents. Section two covers the approaches to strategy
evaluation. Section three covers the effects of strategy evaluation on performance.
Section four presents the how strategy evaluation can be enhanced. The last section
presents the chapter summary.
4.2 Demographic Characteristics of the Respondents

4.2.1 Response Rate
Sixty questionnaires were distributed to the sample size. Figure 4.1 indicates 77%
response rate.
Unreturned
questionnaires
23%
Questionnaires
duly filled
77%
Figure 4.1: Response Rate
4.2.2 Gender
Figure 4.2 shows that females were the majority at 61 percent while males were 39
percent.
25
Male
39%
Female
61%
Figure 4.2: Gender

4.2.3 Age
Figure 4.3 shows that majority were aged below 25 years [41%]. Those aged between 25
and 36 years were 33 percent while those aged between 36 and 45 years were 26 percent.
36-45 years
26% Less than 25
years
26-35 years 41%
33%
Figure 4.3: Age

4.2.4 Department
Figure 4.4 indicates that 43% of the respondents were drawn from operations department,
26 percent from sales and marketing department, 20 percent from the logistics department
and 11 percent from the administration department.
Sales and Administration

Marketing 11%
26%
Logistics
20%
Operations
43%
Figure 4.4: Department
26
4.2.5 Length of Service
Table 4.1 shows that 20% of the respondents had served in the organization for less than
1 year. Sixty five percent for 1 to 3 years, 13 percent for 4-6 years while less than 2
percent had served for more than 6 years.
Table 4.1: Length of Service
Number of years Percentage [%]
Less than 1 year 20
1-3 years 65
4-6 years 13
More than 6 years 2
Total 100
4.2.5 Highest Education Level

Majority of the respondents were diploma holders at 35 percent. Those with bachelor
degrees were 33 percent, postgraduate diplomas at 15 percent, certificate 13 percent and
Masters degree holders were 4 percent as shown in Table 4.2.
Table 4.2: Highest Education Level
Highest Education Level Percentage [%]
Certificate 13
Diploma 35
Degree 33
Postgraduate Diploma 15
Masters 4
Total 100
4.2.6 Management Position
Table 4.3 indicates that the majority of the respondents were drawn from the senior staff
level position at 46 percent. This was followed by those from the junior staff level at 8
percent, junior level managers at 20 percent, middle level management position at 22
percent and top-level management position at 3 percent.
27
Table 4.3: Position within the Organization
Position Percentage [%]
Junior Staff 8
Senior Staff 46
Junior Manager 20
Middle Level Manager 22
Senior Level Manager 3
Total 100
4.3 Approaches to Strategy Evaluation

The study sought to identify the approaches adopted by the organization [Centre Star
Company] to strategy evaluation. The study looked at four approaches, consistency,
suitability, feasibility and acceptability. The analysis involved descriptive statistics. First,
the data underwent reliability and validity testing. Thereafter one-way analysis of
variance was carried out to determine associations between the independent and
dependent variables. The findings were also summed to get general findings for the test
items.
The responses were first subjected to a factors analysis with a varimax rotation. Emory
and Cooper (1991) indicated that factor analysis helps to reduce a large number of
variables to some smaller number by indicating which factors belong together and seem
to say the same thing. The advantage of which is to ensure that the finding conclusions
are focused. Factor loading of more than 0.5 indicates focused findings. The responses
were then tested for internal reliability using Cronbach alpha tests. Makgosa (2006)
indicated that a Cronbach’s Alpha of less than 0.5 indicates unreliability of the variables
hence, cannot be used to deduce findings. The criteria listed in Table 4.4 include only
those likert elements, which had factor loadings of 0.50 and above.
28
Table 4.4: Factor Analysis for Approaches to Strategy Evaluation
Factor Loadings
Consistency
Streamlining strategy expenditure patterns to overall .885
organizational spending patterns
Aligning strategy objectives to the mission and objectives of the .885
organisation
Closely fitting strategy to the organizational culture .920
Fitting strategy operationalization to organizational .827
systems/structures
Suitability
Ability to effectively exploit the opportunities in the .884
organization’s environment
Ability to effectively avoid threats in the organization’s .853
environment
Ability to effectively capitalises on the organizational strengths .850
and core competencies
Ability to effectively avoid the organizational weaknesses .824
Ability to effectively address the cultural and political context of .714
the organisation
Feasibility
Availability of the required employee expertise .515
Availability of machines and equipments .552
Availability of the raw materials .724
Availability of operating systems .561
Availability of operating cash flows .654
Acceptability
Increasing dividend development .891
Decreasing cost to income ratio .844
Increasing residual value/net income .945
Reducing investor risks .806
Increasing shareholder value .853
Table 4.5 indicates that the overall Cronbach’s alpha test for the approaches to strategy
evaluation is 0.968. The alpha for the test variables was between 0.720 and 0.960, which
indicated that the test scale is valid and reliable (Makgosa, 2006).
29
Table 4.5: Cronbach’s Alpha Analysis for Approaches to Strategy Evaluation
Cronbach’s Alpha Test The Overall Cronbach’s Alpha Test
Variable Alpha N of items Alpha N of items
Consistency .949 4 .968 19
Suitability .945 5
Feasibility .792 5
Acceptability .960 5
Descriptive findings in Table 4.6 indicate that majority at 70 percent agreed [42% agreed;
28% strongly agreed] that consistency is used as measure of evaluating strategy at Centre
Star Company. Similarly, majority 65 percent agreed [28% agreed; 37% strongly agreed]
that strategy suitability is being used as a measure of evaluation strategy at CSC. 100
percent of the respondents agreed [48% agreed; 52% strongly agreed] that strategy
feasibility is used as a benchmark of evaluation strategy. Finally, majority at 66 percent
agreed [38% agreed; 28% strongly agreed] that strategy acceptability is another measure
of evaluating strategy at CSC.
Table 4.6: Approaches to Strategy Evaluation

Variable Percentage [%] Mean SD
SDA [1] DA [2] N [3] A [4] SA [5]
Consistency 4 15 10 42 28 3.70 1.17
Suitability 0 13 22 28 37 3.89 1.05
Feasibility 0 0 0 48 52 4.52 .505
Acceptability 0 20 15 38 28 3.70 1.09
The study then sought to find out if the descriptive findings were influenced by the
departments within the organization i.e. are the findings in any way related to the
departments or it’s a general to the entire population. One way analysis of variance
[ANOVA] was done to determine significance of the relationship. The findings in Table
4.7 indicate lack of statistically significant relationship [p>.05] between the department
and use of consistency [p=.996]; suitability [p=.593]; feasibility [p=.387]; and
acceptability [p=.814] as measures or approaches to strategy evaluation. This means that
regardless of a difference in department, the approach to strategy evaluation at CSC
30
doesn’t change. Hence, we can conclude that consistency, suitability, feasibility, and
acceptability are adopted as strategy evaluation at CSC.
Table 4.7: One-Way Analysis of Variance on Approaches to Strategy Evaluation by

Department
One-Way Analysis of Variance by Department
Approaches of Sum of
Strategy Square Mean
Evaluation Source s df Square F Sig.
Consistency Between Groups .089 3 .030 .020 .996
Within Groups 61.650 42 1.468

Total 61.739 45
Suitability Between Groups 2.207 3 .736 .640 .593

Total 50.457 45
Feasibility Between Groups .789 3 .263 1.034 .387
Within Groups 10.689 42 .254

Total 11.478 45
Accessibility Between Groups 1.184 3 .395 .315 .814

Total 53.739 45
Note. Approaches to strategy evaluation [consistency, suitability, feasibility,

acceptability] p>.05
4.4 Effects of Strategy Evaluation

The study sought to identify the effects of strategy evaluation at CSC. The study looked at
four possible effects, direction setting; inspiration/motivation; benchmarking; and
legitimization of use of strategy.
The responses were first subjected to a factors analysis with a varimax rotation. The
criteria listed in Table 4.8 include only those likert elements, which had factor loadings of
0.50 and above.
31
Table 4.8: Factor Analysis for Effects of Strategy Evaluation
Factor Loadings
Direction Setting
1. Strategy evaluation at my work place is to ensure compliance .561
to the organizations visions
2. Strategy evaluation at my work place aims to streamline .828
operations to specific objectives
3. Strategy evaluation at CSC targets correcting strategic .803
variations
4. Strategy evaluation at CSC aims to establishing common .902
tactics and purpose
Inspiration/Motivation
5. Strategy evaluation results inspires me to work better by .771
enabling me measure my performance goals
6. Strategy evaluation results helps me determine the nature of .792
adjustments needed on my performance
7. Information on good performance inspires me to work harder .718
8. Information on how I am working makes me work better .820
9. Strategy evaluation results allow me relate my work to the .768
organizational objectives and be inspired to do more
Benchmarking
10. Strategy evaluation has been used as tool at CSC for comparing .886
performance to our peers
performance to industry standards
performance among the various departments
performance between strategies
Legitimizing use of Strategy
14. Strategy evaluation at CSC serves to legitimise managements’ .868
actions before the eyes of shareholders
actions before the eyes of customers
actions before the eyes of the government
actions before the eyes of general public
Table 4.9 indicates that the overall Cronbach’s alpha test for the effects of strategy
32
Table 4.9: Cronbach’s Alpha Analysis for Effects of Strategy Evaluation
Variable Alpha N of Alpha N of items
items
Direction Setting .883 4 .975 17
Inspiration/motivation .924 5
Benchmarking .943 4
Legitimizing use of .954 4
strategy
Descriptive findings in Table 4.10 indicate that majority at 63 percent agreed [46%
agreed; 17% strongly agreed] that strategy evaluation at CSC facilitates organizational
direction setting. Similarly, majority 71 percent agreed [21% agreed; 50% strongly
agreed] that strategy evaluation results helps in inspiring and motivating employee at
CSC. Sixty three percent of the respondents agreed [35% agreed; 28% strongly agreed]
that strategy evaluation at CSC is used as a tool for benchmark with other industry
players. Finally, majority at 70 percent agreed [35% agreed; 37% strongly agreed] that
strategy evaluation results helps in legitimizing the use of strategy at CSC.
Table 4.10: Effects of Strategy Evaluation

SDA DA N A SA
[1] [2] [3] [4] [5]
Direction Setting 0 17 20 46 17 3.63 .974
Inspiration/motivation 0 9 20 21 50 4.06 1.06
Benchmarking 0 32 4 35 28 3.58 1.22
Legitimizing use of 9 13 4 35 37 3.58 1.42
strategy
33
and effects of strategy evaluation. Direction setting [p=.739]; Inspiration/Motivation
[p=.927]; Benchmarking [p=.720]; and Legitimizing use of strategy [p=.336]. This means
that regardless of the department, the effects of strategy evaluation at CSC don’t change.
Hence, we can conclude that direction setting; inspiration/motivation; benchmarking; and
legitimization of use of strategy are some of the effects of strategy evaluation at CSC.
Table 4.11: One-Way Analysis of Variance on Effects of Strategy Evaluation by

Department
Direction setting Between Groups 1.245 3 .415 .420 .739

Total 42.717 45
Inspiration/moti Between Groups .538 3 .179 .150 .929
vation
Total 50.804 45
Benchmarking Between Groups 2.086 3 .695 .449 .720

Total 67.152 45
Legitimizing Between Groups 6.980 3 2.327 1.161 .336
use of strategy
Total 91.152 45
Note. Effects of [direction setting; inspiration/motivation; benchmarking; and

legitimization of use of strategy] p>.05
4.5 Strategies for Enhancing Strategy Evaluation

The third study objective sought to identify the strategies used to enhance strategy
evaluation at CSC. The responses were first subjected to a factors analysis with a varimax
rotation. The criteria listed in Table 4.12 include only those likert elements, which had
factor loadings of 0.50 and above.
34
Table 4.12: Factor Analysis for Enhancing Strategy Evaluation
Factor Loadings
Evaluation Culture
1. Perceived common drive for strategy evaluation .871
2. Well established procedures for strategy evaluation .916
3. Deliberate efforts to seek information on strategy .855
performance
4. Established responsibilities for evaluation results .781
management
5. Regular informed demand for results information .717
Capacity
6. Effective organizational capacity in designing, implementing, .757
and managing strategy evaluation process
7. Effective organizational capacity in accessing, building, and .780
using evaluative knowledge and skills
8. Established spirit of continuous organizational learning, .869
improvement, and accountability
9. Established ability to create awareness and support .819
10. Established staff capability in evaluation knowledge and .855
evaluative thinking
11. Established staff capability for skills for integrating .785
evaluation into practice
12. Established staff capability towards positive changes in .709
attitudes towards evaluation, increasing ownership regarding
evaluation, and increasing motivation to engage in evaluation
Organization Support
13. Sufficient finances are set aside for strategy evaluation .853
exercise
14. Sufficient time is set aside in operations for strategy .942
evaluation
15. There is an effective technological support such as evaluation .860
tools
16. There is demonstrated commitment to evaluation by senior .881
management and leadership
17. There is supportive organizational incentives .797
18. There are in built learning systems; and ability to tolerating .925
and learning from mistakes
Strategy Evaluation Method
19. Our strategy evaluation methods only uses financial ratios .925
20. Customers, processes, learning and growth view are .913
effectively embedded in our strategy evaluation methods
21. Systematic analysis of various organizational functions or .901
activities to identify problems, strengths, weaknesses for
benchmarking are effectively considered
22. Shareholder value is well considered .850
35
Table 4.13 indicates that the overall Cronbach’s alpha test for the approaches to strategy
Table 4.13: Cronbach’s Alpha Analysis for Enhancing Strategy Evaluation

Variable Alpha N of Alpha N of items
items
Evaluation Culture .942 5 .987 22
Capacity .954 7
Organization support .971 6
Strategy Evolution .960 4
Method
Table 4.14 shows that majority at 67 percent agreed [36% agreed; 31% strongly agreed]
that there is a well established strategy evaluation culture at CSC. Majority at 66 percent
agreed [33% agreed; 33% strongly agreed] that CSC has well established organizational
capacity that enhances strategy evaluation. Sixty four percent of the respondents agreed
[33% agreed; 31% strongly agreed] that there is sufficient organizational support for
strategy evaluation at CSC. Lastly, 61 percent of the respondents agreed [28% agreed;
33% strongly agreed] that there are appropriate strategy evaluation methods at CSC
which supports the strategy evaluating strategy efforts at CSC.
Table 4.14: Enhancing Strategy Evaluation

SDA DA N A SA
[1] [2] [3] [4] [5]
Evaluation Culture 5 15 13 36 31 3.71 1.21
Capacity 0 10 23 33 33 3.89 .994
Organization support 5 21 10 33 31 3.64 1.26
Strategy Evolution 10 10 18 28 33 3.64 1.32
Method
36
and Evaluation Culture [p=.212]; Organizational Capacity [p=.291]; Organizational
Support [p=.712]; and Strategy Evaluation [p=.276] as strategies for enhancing strategy
evaluation. This means that regardless of a difference in department, the strategies
adopted to enhance strategy evaluation at CSC don’t change. Hence, we can conclude
that, instilling of evaluation culture, establishing sufficient organizational capacity,
having organizational support and choice of appropriate strategy evaluation method are
used as strategies to enhance strategy evaluation at CSC.
Table 4.15: One-Way Analysis of Variance on Enhancing Strategy Evaluation by

Department
Evaluation Between Groups 6.658 3 2.219 1.577 .212
Culture
Total 55.897 38
Organizational Between Groups 3.749 3 1.250 1.292 .292
Capacity
Total 37.590 38
Organizational Between Groups 2.316 3 .772 .461 .712
Support
Total 60.974 38
Strategy Between Groups 6.916 3 2.305 1.343 .276
Evaluation
Method Within Groups 60.059 35 1.716
Total 66.974 38
Note. Approaches to strategy evaluation [Evaluation Culture, Organizational Capacity,

Organizational Support, Strategy Evaluation Method] p>.05.
37
4.6 Chapter Summary
Chapter Four presented the study findings. The chapter was divided into four sections.
The first section covered the demographic characteristics of the population. The second
section presented the findings on the approaches to strategy evaluation at CSC. The third
section dwells on the effects of strategy evaluation while the fourth section covers the
strategies for enhancing strategy evaluation. Chapter five of the study presents the study
summary, discussions, conclusions and recommendations.
38
CHAPTER FIVE
5.0 DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction
The purpose of this study was to identify the effects of competitive strategies on gaining
competitive advantage in the banking industry in Kenya. The study used Barclays Bank
of Kenya as a case study. The current chapter gives the summary of the findings, presents
a discussion of the results, and offers conclusions and recommendation drawn from the
study.
5.2 Summary
organizational performance. The study was guided by the following research questions;
What are the approaches to strategy evaluation at Centre Star Company Limited? What
are the effects of strategy evaluation on performance at Centre Star Company Limited?
How can strategy evaluation be enhanced at Centre Star Company Limited?
The study employed a descriptive research approach. The population for this study
comprised of all the 200 staff members at Centre Star Company stratified in
departments; administration, logistics, operations and sales & marketing. The study used
a stratified random sampling approach to select 30% (60) of the 200 employees to
participate in the survey. The data collection was carried in March 2015. The data was
tested for reliability and validity before conducting descriptive analysis using
percentages, means and standard deviations. Analysis of variance was conducted to
determine statistically significant relationship between the dependent and independent
variables. The findings were presented in tables and figure.
The study showed that majority of staff members at CSC are females at 61 percent. Those
aged 25 years were 41%; those aged between 25 and 36 years were 33 percent while
those aged between 36 and 45 years were 26 percent. The study also showed that majority
of the respondents [43%] were drawn from operations department, 26 percent from sales
and marketing department, 20 percent from the logistics department and 11 percent from
the administration department. Twenty percent of the respondents had served in the
organization for less than 1 year. Sixty five percent for 1 to 3 years, 13 percent for 4-6
years while less than 2 percent had served for more than 6 years. Diploma holders were
at 35 percent, bachelor degrees were at 33 percent, postgraduate diplomas at 15 percent,
39
certificate 13 percent and Masters Degree holders were 4 percent. Finally, majority of the
respondents were drawn from the senior staff level position at 46 percent. This was
followed by those from the junior staff level at 8 percent, junior level managers at 20
percent, middle level management position at 22 percent and top-level management
position at 3 percent.
evaluation. The study showed that majority at 70 percent agreed [42% agreed; 28%
strongly agreed] that consistency is used as measure of evaluating strategy at Centre Star
Company. Secondly, majority at 65 percent agreed [28% agreed; 37% strongly agreed]
that strategy suitability is being used as a measure of evaluating strategy at CSC. Third,
100 percent of the respondents agreed [48% agreed; 52% strongly agreed] that strategy
feasibility is used as a benchmark of evaluation strategy. Finally, majority at 66 percent
agreed [38% agreed; 28% strongly agreed] that strategy acceptability is another measure
of evaluating strategy at CSC. Analysis of variance with department as the independent
variable indicated lack of statistically significant relationship [p>.05] between the
department and consistency [p=.996]; suitability [p=.593]; feasibility [p=.387]; and
acceptability [p=.814] as measures or approaches to strategy evaluation. This means that
regardless of the difference in department, the approach to strategy evaluation at CSC
doesn’t change. Hence, we can conclude that consistency, suitability, feasibility, and
acceptability are adopted as approaches to strategy evaluation at CSC.
The study showed that majority at 63 percent agreed [46% agreed; 17% strongly agreed]
that strategy evaluation at CSC facilitates organizational direction setting. Secondly,
majority 71 percent agreed [21% agreed; 50% strongly agreed] that strategy evaluation
results helps in inspiring and motivating employee at CSC. Third, Sixty three percent of
the respondents agreed [35% agreed; 28% strongly agreed] that strategy evaluation at
CSC is used as a tool for benchmark with other industry players. Finally, majority at 70
percent agreed [35% agreed; 37% strongly agreed] that strategy evaluation results helps
in legitimizing the use of strategy at CSC. Analysis of variance with department as the
independent variable indicated lack of statistically significant relationship [p>.05]
between the department and Direction setting [p=.739]; Inspiration/Motivation [p=.927];
Benchmarking [p=.720]; and Legitimizing use of strategy [p=.336]. This means that
40
regardless of the department, the effects of strategy evaluation at CSC don’t change.
Hence, we can conclude that direction setting; inspiration/motivation; benchmarking; and
legitimization of use of strategy are some of the effects of strategy evaluation at CSC.
at CSC. The study showed that majority at 67 percent agreed [36% agreed; 31% strongly
agreed] that there is a well established strategy evaluation culture at CSC. Second,
majority at 66 percent agreed [33% agreed; 33% strongly agreed] that CSC has well
established organizational capacity that enhances strategy evaluation. Third, Sixty four
percent of the respondents agreed [33% agreed; 31% strongly agreed] that there is
sufficient organizational support for strategy evaluation at CSC. Lastly, 61 percent of the
respondents agreed [28% agreed; 33% strongly agreed] that there are appropriate strategy
evaluation methods at CSC which supports the strategy evaluating strategy efforts at
CSC. Analysis of variance with department as the independent variable indicated lack of
statistically significant relationship [p>.05] between the department and Evaluation
Culture [p=.212]; Organizational Capacity [p=.291]; Organizational Support [p=.712];
and Strategy Evaluation [p=.276] as strategies for enhancing strategy evaluation. This
means that regardless of a difference in department, the strategies adopted to enhance
strategy evaluation at CSC don’t change. Hence, we can conclude that, instilling of
evaluation culture, establishing sufficient organizational capacity, having organizational
support and choice of appropriate strategy evaluation method are used as strategies to
enhance strategy evaluation at CSC.
5.3 Discussions
5.3.1 Approaches to Strategy Evaluation
evaluation. The study identified four approaches to Strategy evaluation at CSC. First, is
the consistency of the strategy objectives to the overall organizational objectives,
consistency to the organizational culture, consistency to organizational operations or
systems and consistency to the organizational spending patterns. The desire to have
consistent strategies is supported by Perez-Franco, Singh and Sheffi (2011) who indicated
that a strategy should not present mutually inconsistent goals and policies. Further, a
Rumelt (1979) gave an analogy with a mathematical equation where conflicting
objectives imply a null set of feasible solutions. The findings are also supported by an
empirical study by Issa-Salwe, Ahmed, Aloufi and Kabir (2010) which showed that
41
aligning operational strategies to the organisational strategy goals is essential for
improved business performance. Alignment in this context is defined as the capacity to
demonstrate a positive relationship between operational strategy and the accepted
organizational measures of performance.
Second is the suitability of the strategy to effectively exploit the opportunities in the
organization’s environment, suitability to effectively avoid threats in the organization’s
environment, suitability to effectively avoid the organization’s weaknesses and suitability
to effectively address the cultural and political context of the organization. This is in line
with Wu (2010) argument that firms exist within a given internal and external
environment thus, strategy being adopted must be suitable to the organization’s conytext.
The significance of strategy suitability was also underscored by Kunene (2004) who
indicated that suitability is concerned with whether the strategic option addresses the
circumstances in which the organisation is operating or wishing to operate. He explains
that it further assesses the extent to which a proposed strategy fits the situation as
identified in the strategic analysis and how it would contribute to or sustain the
competitive position of the organisation. This is line with Virvilaite, Seinauskiene and
Sestokiene (2011) sentiments that the suitability of a strategy is confirmed by the
influence of the strategy on the company’s performance, economic and strategic benefit
received after the implementation of the strategy.
Third, is the feasibility of implementing the strategy in line with the availability of the
required employee expertise, availability of the raw materials, availability of operating
systems, and availability of operating cash flows. This is in line with Kunene (2004)
arguments that the requirements of future strategies should be analysed and key resources
and competencies identified before hand as the strategy implementation could be
impossible as it would be hindered by poor resourcing of the strategy e.g. for better
efficiencies to be achieved, it must be established whether there are resources in place to
acquire new systems and whether the expertise and skills are available to develop the
systems to yield the required efficiencies. This supports the resource based view as
proposed by Penrose (1959) who argued that a firm’s success or growth, both internally
and then externally, is based on the internal resources and how they are employed.
42
Fourth, is the acceptability of the strategy by having the ability to increase dividend
development, decrease cost of income ratio, increase residual value/net income, reduce
investor risk and increase shareholder value. This supports the view by Wu (2010) that
investments are carried out for the benefit of the equity holders. He suggest that
acceptability a strategy can be measured on the financial return of the strategic choice and
may be calculated using various financial measurements such as net present value;
internal rate of return; cost benefit analysis; economic value added and shareholder value
analysis (Wu, 2010). This is further supported by Kalhoefer (2010) posited that an
investment should be accepted if the NPV is exceeding zero. Further, Kelman (2011)
supports this by indicating that cost benefits analysis of a strategy assumes that an act
should not be undertaken unless its benefits outweigh its costs..
5.3.2 Effects of Strategy Evaluation
purpose. This is in line with McGraw-Hill Education (2014) sentiment that strategy
evaluation becomes a critical tool and measure in assessing the organization’s strategic
position. It enables the management to make sure that the organisation is heading in the
right direction and that corrective action is taken where needed. Hence, there is the need
for management to continuously evaluate its strategies against performance so that any
indication that the company is failing to achieve its objectives calls for corrective
adjustments.
Secondly, strategy evaluation results helps in inspiring and motivating employee at CSC
as it enables employees measure their performance; helps employees in determining the
nature of adjustments needed; good results inspires hard work; helps employees relate
their objectives to that of the organization; and the information inspires better work. This
is in line with Goal setting theory which links goal setting and evaluation to motivation
and performance of an organization. It is further supported by Lunenburg (2011) who
indicated that evaluation provides the much needed feedback that helps organization
members to measure and attain their performance goals. The feedback helps people
determine how well they are doing and also helps people determine the nature of the
adjustments to their performance that are required to improve (Lunenburg, 2011). These
43
findings are also in line with Muhammad (2013) who indicated that performance
appraisal provides feedback to performance. He states that a person works better when he
knows how he is working. This works in two ways, firstly, the person gets feedback about
his performance. Secondly, when the person gets feedback about his performance, he can
relate his work to the organizational objectives and be inspired to do more as it creates
awareness on exact contribution to the organizational success (Muhammad, 2013).
Third, strategy evaluation at CSC is used as a tool for benchmark with other industry
players. The evaluation is used to compare performance or peers; compares performance
to industry standards; compares performance among deportments; and compares
performance between strategies. This is in line with Kvarnerud and Maspers (2007)
sentiments that apart from goal setting and motivation, strategy evaluation is needed to
serve as tool of providing information on how performance compares to the peers and
other standards. It highlights what is expected and what needs to be done to keep up
improving the performance. In this way strategy evaluation is used to establish a step by
step guideline on future actions based on learning from the past and the environment
(Kvarnerud & Maspers, 2007). This is also supported an empirical study by Ajelabi and
Tang (2010) which saw strategy evaluation as a tool for strategic benchmarking. The
study indicated that the process involves a systematic process of evaluating alternatives,
implementing strategies and improving performance by understanding and adapting
successful strategies from external partners who participate in an ongoing business
alliance.
Finally, strategy evaluation results helps in legitimizing the use of strategy at CSC. The
evaluation results legitimize management’s actions in the eyes of the shareholders;
customers; government and the general public. This is in line with the arguments that it is
crucial for organizations to obtain legitimacy as a legitimate issue is seen as valid and
without which the management losses support of the stakeholders (Sundin, 1995). Hence,
evaluation is used to persuade the environment in which the organization exist that certain
opinions or actions taken are correct (Kvarnerud & Maspers, 2007).
5.3.3 Strategies for Enhancing Strategy Evaluation
CSC. The study illustrates that there is perceived common drive for strategy evaluation in
44
all employees; there is well-established procedures for strategy evaluation; there is
deliberate effort to seek information on strategy performance; there is established
responsibilities for evaluation performance; and there is regular informed demand for
results of information. This supports the idea that organizational culture shapes
organizational procedures, unifies organizational capabilities into a cohesive whole, and
provides solutions to the problems faced by the organization, and, thereby, hindering or
facilitating the organization’s achievement of its goals (Muhammad, 2011). Hence,
evaluative culture denotes an organizational culture that deliberately seeks out
information on its performance in order to use that information to learn how to better
manage and deliver its programs and services, and thereby improve its performance
(Mayne, 2008). Promoting evaluative culture within an organization is therefore a
measure of determining merit, worth and value of things, processes or strategies
(SenGupta, Hopson, & Thompson-Robinson, 2004).
Second, CSC has well established organizational capacity that enhances strategy
evaluation. The study showed that there is effective organizational capacity in designing,
implementing and managing strategy evaluation process; capacity in accessing, building
and using evaluative knowledge and skills; capacity for continuous learning,
improvement and accountability; capacity to create awareness and support for strategy
evaluation; capabilities in knowledge and evaluative thinking; capability for integrating
evaluation into practice; and capability towards positive change. This is in line with
Taylor-Powell and Boyd (2008) sentiments that for effective strategy implementation,
there has to be effective capabilities at the leadership levels, functional units and business
units, which defines the overall organizational strategy. They proposes training, technical
assistance, collaboration, mentorship/coaching and establishing communities of practices
to form an evaluation capacity building frame work.
strategy evaluation. This is in line with García-Iriarte, et al. (2011) observation that
despite strategy evaluation being highly recorgnized, organization’s lack of support in
terms of resources or funds often negatively affect the precess of implementing the
evaluation processes. The underlying presumpions as suggested by Taylor-Powell and
45
Boyd (2008) is that for an organization to understake an effective strategy evaluation, it
needs to ensure that there is an access to the supporting resources needed.
Lastly, there are appropriate strategy evaluation methods at CSC which supports the
strategy evaluating strategy efforts at CSC. The organization uses a mix of financial
ratios, systematic analysis, shareholder value and customer/process learning and growth.
This is in line with the arguments that the choice of strategy evaluation method to use by
an organization is critical in presenting the true picture on the performance of a strategy
(Institute of Management Accountants, 2014). This supports sentiments by Poureisa,
Ahmadgourabi and Efteghar (2013) that in order for firms to effectively evaluate their
performance; they should not only lend on financial aspects but also should consider their
performance from customer, processes, and learning and growth view.
5.4 Conclusions
5.4.1 Approaches to Strategy Evaluation
evaluation. The study identified four approaches to Strategy evaluation at CSC to enhance
performance of the organization. First, the strategy objectives must be consistent to the
overall organizational objectives, consistent to the organizational culture, consistent to
organizational operations or systems and consistent to the organizational spending
patterns. Second is the suitability of the strategy to effectively exploit the opportunities in
the organization’s environment, suitability to effectively avoid threats in the
organization’s environment, suitability to effectively avoid the organization’s weaknesses
and suitability to effectively address the cultural and political context of the organization.
Third, is the feasibility of implementing the strategy in line with the availability of the
required employee expertise, availability of the raw materials, availability of operating
systems, and availability of operating cash flows. Fourth, is the acceptability of the
strategy by having the ability to increase dividend development, decrease cost of income
ratio, increase residual value/net income, reduce investor risk and increase shareholder
value.
5.4.2 Effects of Strategy Evaluation
46
purpose. Secondly, strategy evaluation results helps in inspiring and motivating employee
at CSC as it enables employees measure their performance; helps employees in
determining the nature of adjustments needed; helps employees relate their objectives to
that of the organization; good results inspires hard work; and the information inspires
better work. Third, strategy evaluation at CSC is used as a tool for benchmark with other
industry players. The evaluation is used to compare performance or peers; compares
performance to industry standards; compares performance among deportments; and
compares performance between strategies. Finally, strategy evaluation results helps in
legitimizing the use of strategy at CSC. The evaluation results legitimize management’s
actions in the eyes of the shareholders; customers; government and the general public.
5.4.3 Strategies for Enhancing Strategy Evaluation
CSC. The study illustrates that there is perceived common drive for strategy evaluation in
all employees; there is well-established procedures for strategy evaluation; there is
deliberate effort to seek information on strategy performance; there is established
responsibilities for evaluation performance; and there is regular informed demand for
results of information. Second, CSC has well established organizational capacity that
enhances strategy evaluation. The study showed that there is effective organizational
capacity in designing, implementing and managing strategy evaluation process; capacity
in accessing, building and using evaluative knowledge and skills; capacity for continuous
learning, improvement and accountability; capacity to create awareness and support for
strategy evaluation; capabilities in knowledge and evaluative thinking; capability for
integrating evaluation into practice; and capability towards positive change.
strategy evaluation. Lastly, there are appropriate strategy evaluation methods at CSC
which supports the strategy evaluating strategy efforts at CSC. The organization uses a
mix of financial ratios, systematic analysis, shareholder value and customer/process
learning and growth.
47
5.5 Recommendations
5.5.1 Recommendations for Improvement
5.5.1.1 Approaches to Strategy Evaluation
The study showed that feasibility [100% agreed] was the most prioritized approach
followed by consistency, acceptability and suitability, which scored seventy percent or
less. However, having a feasible strategy is equally important; it would be strategic for
the organization to have strategies that are completely consistent with the organizational
overall strategic direction for enhanced performance.
5.5.1.2 Effects of Strategy Evaluation
The study has shown that strategy evaluation has a positive effect on employee
motivation, legitimization of the strategy, benchmarking and goal setting in that order.
The fact that goal setting scores last indicate weak link of the operational strategies to the
organization’s overall vision and mission. Hence, this calls for re-evaluation of the
strategies and their alignment to the overall organizational goals.
5.5.1.3 Strategies for Enhancing Strategy Evaluation
The study has shown that CSC has established an evaluative culture, sufficient capacity,
organizational support system and effective methods for strategy evaluation as strategies
for enhancing strategy evaluation. Strengthening of these strategies would be welcome as
their prevalence scored less than sixty-seven percent.
5.5.2 Recommendations for Further Studies
The current study like any other study did not test all variables under the test items.
Therefore, broadening the scope of the study to take into account other strategy
evaluation factors is welcome. The study also focused only on one organization. Studies
in other organizations within the sector are much welcome.
48
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APPENDICES
Appendix A: Cover Letter
CELL: 0725896020 P.O. Box 14634, 00800

EMAIL: abdallah@centrestarcompany.com NAIROBI
DATE:
Respondent,
Dear Sir/Madam,
RESEARCH QUESTIONNAIRE
I am a graduate student at United States International University pursuing a Master of

Business Administration (MBA). I am conducting a research on the effects of strategy
evaluation on organizational performancein partial fulfilment of the Master of Business
Administration degree program at United States International University-Africa (USIU-
Africa). The study is using Centre Star Company Limited a case study.
The findings of this study will provide the management at CSC with an understanding on
approaches to strategy evaluation; the effects of strategy evaluation on performance; and
how strategy evaluation can be enhanced at Centre Star Company Limited.
The information provided will be held in confidence and for academic purpose only. The
questionnaire take approximately 20 minutes to complete.
Yours faithfully,
Abdalla Yusuf
54
Appendix B: Questionnaire
Answer the following questions by ticking or marking the boxes using X or √ or by filling
the empty boxes.
PART I: GENERAL DEMOGRAPHICS

1. What is your gender?
Male ☐ Female ☐
2. What is your age range
Less than 25 years ☐ 26-35 years ☐ 36-45 years ☐ 46-55 years ☐
56 years and above ☐
3. In which department do you work at CSC
Administration☐ Logistics ☐
Operations ☐ Sales and Marketing ☐
4. How long have you worked for CSC
Less than one year ☐ 1-3 years ☐ 3-6 years ☐
More than 6 years ☐
5. What is your highest education level
Certificate ☐ Diploma ☐ Degree ☐ Post graduate Diploma ☐
Masters ☐
6. What is your position at CSC
Junior Staff ☐ Senior Staff ☐ Junior Manager ☐
Middle level Manager ☐Senior level Manager ☐
55
PART II: Approaches to Strategy Evaluation
Please indicate the degree to which you agree or disagree that the following are
considered while evaluating strategies at your workplace. Use a scale of 1-5 where 1 is
strongly disagree, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.
Consistency
Strongly Strongly
Disagree Neutral Agree
disagree agree
(2) (3) (4)
(1) (5)
1. Streamlining strategy
expenditure patterns to overall () () () () ()
organizational spending patterns
2. Aligning strategy objectives to
the mission and objectives of the () () () () ()
organisation
3. Closely fitting strategy to the
() () () () ()
organizational culture
4. Fitting strategy
operationalization to
() () () () ()
organizational
systems/structures
Suitability
Strongly Strongly
disagree Agree
(2) (3) (4)
(1) (5)
5. Ability to effectively exploit the
opportunities in the organization’s () () () () ()
environment
6. Ability to effectively avoid threats in
() () () () ()
the organization’s environment
7. Ability to effectively capitalises on
the organizational strengths and core () () () () ()
competencies
8. Ability to effectively avoid the
organizational weaknesses () () () () ()
9. Ability to effectively address the
cultural and political context of the () () () () ()
organisation
56
For number 10 to 14 kindly indicate in your opinion whether strategy implementation at
CSC is based on a clear match to the following competencies. Use a scale of 1-5 where 1
is strongly disagree, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.
Feasibility
Strongly Strongly
disagree Agree
(2) (3) (4)
(1) (5)
10. Availability of the required employee
() () () () ()
expertise
11. Availability of machines and
() () () () ()
equipments
12. Availability of the raw materials () () () () ()
13. Availability of operating systems () () () () ()
14. Availability of operating cash flows () () () () ()
For number 15 to 19, kindly indicate your level of agreement or disagreement as to

whether strategies adopted at CSC meet the following acceptability criteria.Use a scale of
1-5 where 1 is strongly disagrees, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.
Acceptability
Strongly Strongly
disagree Agree
(2) (3) (4)
(1) (5)
15. Increasing dividend development () () () () ()
16. Decreasing cost to income ratio () () () () ()
17. Increasing residual value/net income () () () () ()
18. Reducing investor risks () () () () ()
19. Increasing shareholder value () () () () ()
20. In your opinion, what other factors affects the choice of strategy at CSC?
…......................................................................................................................................
................................................................................................................................
57
PART III: Effects of Strategy Evaluation
Indicate the degree to which you agree or disagree to the following statements regarding
strategy evaluation at CSC. Use a scale of 1-5 where 1 is strongly disagrees, 2 disagree, 3
neutral, 4 agree and 5 strongly agree.
Strongly Strongly
disagree Agree
(2) (3) (4)
(1) (5)
Direction Setting
18. Strategy evaluation at my work place is to
ensure compliance to the organizations () () () () ()
visions
19. Strategy evaluation at my work place
aims to streamline operations to specific () () () () ()
objectives
20. Strategy evaluation at CSC targets
() () () () ()
correcting strategic variations
21. Strategy evaluation at CSC aims to
() () () () ()
establishing common tactics and purpose
Inspiration/Motivation
22. Strategy evaluation results inspires me to
work better by enabling me measure my () () () () ()
performance goals
23. Strategy evaluation results helps me
determine the nature of adjustments () () () () ()
needed on my performance
24. Information on good performance
() () () () ()
inspires me to work harder
25. Information on how I am working makes
() () () () ()
me work better
26. Strategy evaluation results allow me
relate my work to the organizational () () () () ()
objectives and be inspired to do more
Benchmarking Tool
27. Strategy evaluation has been used as tool
at CSC for comparing performance to our () () () () ()
peers
at CSC for comparing performance to () () () () ()
industry standards
at CSC for comparing performance () () () () ()
among the various departments
at CSC for comparing performance () () () () ()
between strategies
Legitimising use of strategy
31. Strategy evaluation at CSC serves to
legitimise managements’ actions before () () () () ()
the eyes of shareholders
58
the eyes of customers
the eyes of the government
the eyes of general public
35. Please indicate other reasons why strategy evaluation is being carried out at your
workplace
…………………………………………………………………………………………
…………………………………………………………………………………….
59
PART IV: Strategies for Enhancing Strategy Evaluation
Please indicate the degree to which you agree or disagree to the presence of the following
regarding strategy evaluation at your workplace. Use a scale of 1-5 where 1 is strongly
disagrees, 2 disagree, 3 neutral, 4 agree and 5 strongly agree.
Strongly Strongly
disagree Agree
(2) (3) (4)
(1) (5)
Evaluation Culture
23. Perceived common drive for strategy
() () () () ()
evaluation in all employees
24. Well established procedures for strategy
() () () () ()
evaluation
25. Deliberate efforts to seek information on
() () () () ()
strategy performance
26. Established responsibilities for evaluation
() () () () ()
results management
27. Regular informed demand for results
() () () () ()
information
Capacity
28. Effective organizational capacity in
designing, implementing, and managing () () () () ()
strategy evaluation process
29. Effective organizational capacity in
accessing, building, and using evaluative () () () () ()
knowledge and skills
30. Established spirit of continuous
organizational learning, improvement, () () () () ()
and accountability
31. Established ability to create awareness
() () () () ()
and support for strategy evaluation
32. Established staff capability in evaluation
() () () () ()
knowledge and evaluative thinking
33. Established staff capability for skills for
() () () () ()
integrating evaluation into practice
34. Established staff capability towards
positive changes in attitudes towards
evaluation, increasing ownership () () () () ()
regarding evaluation, and increasing
motivation to engage in evaluation
Organizational Support
35. Sufficient finances are set aside for

() () () () ()
strategy evaluation exercise
36. Sufficient time is set aside in operations
() () () () ()
for strategy evaluation
37. There is an effective technological
() () () () ()
support such as evaluation tools
38. There is demonstrated commitment to
evaluation by senior management and () () () () ()
leadership
60
39. There is supportive organizational
() () () () ()
incentives
40. There are in builtlearning systems; and
ability to tolerating and learning from () () () () ()
mistakes
Strategy Evaluation Method
41. Our strategy evaluation methods only
() () () () ()
uses financial ratios
42. Customers, processes, learning and
growth view are effectively embedded in () () () () ()
our strategy evaluation methods
43. Systematic analysis of various
organizational functions or activities to
identify problems, strengths, weaknesses
() () () () ()
for benchmarking are effectively
considered in our strategy evaluation
methods
44. Shareholder value is well considered in
() () () () ()
our strategy evaluation methods.
45. Other than the strategies highlighted above, in your opinion how else can your
organization enhance strategy evaluation process?
…………………………………………………………………………………………
……………………………………………………………………………………
THANK YOU
61
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EFFECTS OF STRATEGY EVALUATION ON

ORGANIZATIONAL PERFORMANCE: A CASE OF

ABDALLA YUSUF IBRAHIM

UNITED STATES INTERNATIONAL UNIVERSITY-

ABDALLA YUSUF IBRAHIM

A Research Project Report Submitted to Chandaria School of

UNITED STATES INTERNATIONAL UNIVERSITY-

Signed: ________________________ Date: _________________________

Abdalla Yusuf (ID:628111)

Signed: ________________________ Date: _________________________

Dr. Katuse Paul

Signed: _______________________ Date: _________________________

Dean, Chandaria School of Business

Abdalla Yusuf © 2015

Table 3.2: Sample Size……………………………………………………………...……23

Table 4.1: Length of Service……………………………………………………….…….27

Table 4.2: Highest Education Level…………………………………………………...…27

Table 4.3: Position within the Organization……………………………….……………..28

Table 4.4: Factor Analysis for Approaches to Strategy Evaluation……………………...29

Table 4.5: Cronbach’s Alpha Analysis for Approaches to Strategy Evaluation…………30

Table 4.6: Approaches to Strategy Evaluation…………………………………………...30

Table 4.7: One-Way Analysis of Variance on Approaches to Strategy Evaluation by

Table 4.8: Factor Analysis for Effects of Strategy Evaluation…………………………...32

Table 4.9: Cronbach’s Alpha Analysis for Effects of Strategy Evaluation………………33

Table 4.10: Effects of Strategy Evaluation………………………………………………33

Table 4.11: One-Way Analysis of Variance on Effects of Strategy Evaluation by

Table 4.12: Factor Analysis for Enhancing Strategy Evaluation………………………...35

Table 4.13: Cronbach’s Alpha Analysis for Enhancing Strategy Evaluation……………36

Table 4.14: Enhancing Strategy Evaluation……………………………………………...36

Table 4.15: One-Way Analysis of Variance on Enhancing Strategy Evaluation by

Figure 2.1: Framework for StrategyEvaluation……………………………………………8

Figure 4.2: Gender………………………………………………………………………..26

Figure 4.3: Age…………………………………………………………………………...26

Figure 4.4: Department…………………………………………………………………...26

1.1 Background of the Problem

Center Star Company is categorised as a small to medium enterprise comapny-SME. This

1.3 Purpose of the Study

1.4 Research Questions

1.5 Importance of the Study

1.5.1 Management at Centre Star Company Limited

1.5.2 Management in Other Organizations

1.6 Scope of the Study

1.7 Definition of Terms

1.7.1 Organizational Performance

1.7.4 Strategy Evaluation

2.0 LITERATURE REVIEW

2.2 Approaches to Strategy Evaluation

Consistency Suitability Acceptability Feasibility

Figure 2.1: Framework for StrategyEvaluation

The challenge of inconsitancy is mainly experienced in a multi-enterprise organization

According to Virvilaite, Seinauskiene and Sestokiene (2011), the suitability of a strategy

NPV = Cash inflows – Cash outflows or expenditure of Investment.

2.3 Effects of Strategy Evaluation on the Organizational Performance

2.3.1 Direction Setting

For example, according to McGraw-Hill Education (2014), where the company’s

2.3.2 Inspire Confidence/Motivation

2.3.3 Provide Guidance on Benchmarking

2.3.4 Legitimising Use of Strategy Evaluation

2.4.1 Enhancing Evaluative Culture

The concept of values which is embedded in culture is a fundamental aspect in evaluation

Building an evaluative culture has three main components; leadership, organizational

2.4.1 Capacity Building

To enhance individual evaluation capacity Taylor-Powell and Boyd (2008) proposes

Signed: Date: _

Signed: Date: _

Signed: _ Date: ___