Factors influencing choice of strategic management modes of small enterprises

Studies indicate that 75% of small enterprises in the world fail during their first 5 years of operation. In Kenya, just about 20% grow to the next size category. Scholars have prescribed formal strategic management modes, but the small enterprises (SEs) continue to not only fail but also depict informal strategic management modes. However, few studies have been done to examine whether the dismal performance of SEs is due to other factors unrelated to the management of the enterprises, especially in the context of a developing country like Kenya. The specific objectives were to identify the strategic management modes employed by the small enterprises in Kisumu County with specific reference to the Youth Enterprise Fund beneficiaries in Kisumu County and to assess the factors influencing the choice of these modes. The study was anchored on Mintzbergs' theories on deliberate, emergent, and reactive strategic management modes. The study adopted a descriptive cross-sectional research design. The target population was the 242 small enterprises run by the Youth Enterprise Development Fund (YEDF), out of which 134 enterprises were sampled using Yamane's criteria. The study adopted questionnaire and interview methods as the basic data collection methods with the questionnaire being tested through content validity index and Cronbach alpha's internal consistency index, respectively. The study found that the basic modes used by small enterprise were deliberate, emergent, and reactive and that the small enterprises in Kisumu County used these modes interchangeably but relied more on the reactive mode of strategic management. The study revealed that the choice of these modes was dictated by the personal, environmental, and firm characteristics of the enterprises. The study concludes that continued exposure to formal modes would only sustain the endemic failure of the SEs because the SEs need formal exposure to models that address their situation. The study therefore urgently recommends formalization of elements of reactive strategic management modes and the personal factors in small firm curricula

Analysis of Dividend Yield and Stock Return in Nairobi Securities Exchange in Kenya

Capital Markets have been reflecting erratic performance coupled with volatility globally, regionally and in domestic market. According to Capital market 2030, the future of equity capital markets report (2018), United States of America outperformed her major emerging markets. The combined United State of American’s Domestic market caps total US$30.4 trillion; total mainland China and Hong Kong was US$10.1 trillion. In 2011, it was US$15.6 trillion and US$ 5.7 trillion respectively. United States of America Securities exchanges are now three times the size of their Chinese counterparts compared with 2.7 times in 2011. The growth in the US market has outstripped expectations, while the growth of China and other emerging markets has lagged. Despite Capital markets performance in USA, indices showed volatility in performance of the S&P 500 and the Hang Seng relative to FTSE/JSE, Africa all All-share index and S&P Pan Africa with the FTSE 100 showing relative stability. Among other factors, volatility could be attributed to trade tariffs imposed by the US, primarily impacting China, continuing political. In Kenya, 20 shares Index  which is used as a proxy of stock return in this study performed dismally in 2011 as compared to 2012 (Kenya Economic report, 2011). The total number of shares traded went down in 2014 and NSE 20 Share Index declined in the fourth quarter of 2016 (The Kenya economic survey, 2016). With volatility witnessed between 2009 and 2018, analysis of relationship between dividend yield and stock return is imperative. This study used quarterly data between 2009 and 2018. The study is a time series study and research design used is correlation. The data was transformed by converting them to their natural logarithms and then differenced to their first differences. After the first differences, the data became stationary. Results revealed that dividend yield has an inverse significant relationship on Nairobi Securities Exchange 20 Share Index, (t=-2.91, p=0.006). Results of this study are useful to policy makers, investors, regulators and finance analyst. Keywords: Dividend yield, NSE-20 Share Index, Stock Return, emerging markets, Volatility, Capital markets. DOI: 10.7176/RJFA/12-8-01 Publication date: April 30th 202

Influence of Investment Appraisal on Efficient Portfolio Selection in the Soft Drink Industry in Kenya

Investment appraisal tools rank investments according to their efficiency and optimality of returns. Portfolio return is thought as a linear function of asset weights and its volatility as a non- linear function indicating that portfolio volatility is less than weighted average of individual asset volatility. Past studies concentrated on simple accept-or- reject investments decisions with conventional cash flows without taking into account firms with complex investment situations and problems. Companies in the soft drink industry in Kenya have adopted performance optimization strategies on various investments in order to compete in new and turbulent business environment and mostly use projected cash flows for investment appraisal, it is clear that an image of investment alternative is not the same in the real world and these investment alternatives in a set can either be efficient or inefficient. This study focused on the contribution of investment appraisal on efficient portfolio selection. The research adopted a survey design with a target population of 250 respondents selected by census technique. Primary data was collected using an interview schedule and secondary data was collected from respondent’s records relating to real and financial assets. Study results indicate a strong correlation between investment appraisal techniques and investment alternatives (F= 293.094, R=0.926; R2=0.857; p = 0.000 < 0.05) and investment appraisal account for 85.7% of investments alternatives,  their ranking is influenced by the type of investment appraisal tools applied,  a significant relationship exist between investment appraisal techniques and portfolio efficiency (F= 259.64; R2 = 0.842;  p 0.000 < 0.05);therefore investments appraisal techniques application influence efficient portfolio selection in the soft drink industry; Part analyses of the investment appraisal techniques on portfolio efficiency show that  PBP has  a higher significant relationship with portfolio efficiency(F=1037.205; p 0.000< 0.05). Study results suggest the need for firms to maximize the application of net present value and payback period to enhance portfolio efficiency to realize optimal performance. Keywords: Kenya, Soft Drink Industry, Investment Appraisal, Diversification, Efficient Portfoli

RELATIONSHIP BETWEEN BIOSECURITY PRINCIPLES AND CONSUMER ATTITUDES

Indigenous chicken abound in Kenya and are produced under minimal/very low levels of biosecurity principles resulting in low productivity. Consumers however exhibit high preferences indigenous chicken products. The aim of this research was to establish the relationship biosecurity principles and intentions to consume indigenous chicken in Kisumu City, Kenya. The subaim was to test the significance of this relationship, if any. Using a descriptive research design, a questionnaire was administered on 281 respondents (females=48%) in Kisumu City (78% response rate), and relationship established through Spearman rank correlation. Observed low and insignificant correlations for management of the flock = .064 (p=.296); control ofincoming animals = .080 (p=.185); and control of other animals =.094 (p=120). Only control of in- and out-going materia l=.127 (p=.035) had a significant correlation with intention to consume. Concluded there is no significant relationship between biosecurity principles and intention to consume indigenous chicken. Thus, the puzzle linking biosecurity and preferences for indigenous chicken still exists given this evidence. The role of the government in providing information on biosecurity cannot be gainsaid as it creates impetus to demand high quality indigenous chicken products. Market mechanisms cannot fully reveal the underlying relationships between biosecurity principles and intention to consume indigenous chicken. Hence need for further research on a wider area utilizing non-market methods like contingent valuation and/or choice experiments to unlock these relationships

Analysis of Stock Return in Nairobi Securities Exchange Using Autoregressive Integrated Moving Average Model

Nairobi Securities Exchange exhibited erratic performance ten years after the 2007 post-election violence. Investors, listed firms and the government had hard time in making investment decisions and policies given the volatility of Nairobi Securities Exchange during this period. This trend worsen in 2011 and 2015 when the burse experienced bear run leading to a loss of investors wealth in terms of market capitalization.  The Nairobi Securities Exchange 20 Share Index recorded high of 5,346 points during the first quarter of the year but dipped to 4,040 points in December 2015, representing 2.0 percent compared to December 2014. With observed volatility witnessed during the study period, analysis of stock return in Nairobi Securities Exchange using autoregressive integrated moving Average model is essential. The model output using ARIMA (p, d, q) will be used useful to managers, investors, investment analysts and policy makers. Using Autocorrelation functions and Partial Autocorrelation functions, the appropriate ARIMA (p, d q) model identified to be suitable for forecasting stock return is ARIMA (1, 1, 1) this is because the autocorrelation function drops sharply after p lags meaning the AR term exists and was be included. Keywords:ARIMA, Investors, Stock Return, Partial Autocorrelation, Bear run, NSE-20 Share Index, Stock Return, Volatility DOI: 10.7176/JAAS/71-04 Publication date: April 30th 202

EXISTING TRENDS IN FOREIGN EXCHANGE RATES OF KENYA’S MAIN TRADING CURRENCIES

Performance of a security market reflects the economic situation of a country as it is affected by both a country’s domestic and foreign economic events. Given the current increased level of cross borders transactions with the value of total exports growing by 25.6% between 2007 and 2008 and imports increasing by 27.4% between the same periods, it was likely that fluctuations in foreign exchange rate market continued to fuel changes in financial markets like Nairobi Securities Exchange market. Since securities markets trade on assets with varying degree of risks, foreign exchange rates fluctuations was believed to be a factor that affect the performance of financial markets. The purpose of this study was to determine the trend of foreign exchange rates fluctuation of Kenya’s main trading currencies, the US Dollar, the Euro and the UK Pound. The study used secondary data collected between the periods January, 2006 to December, 2010 from the Central Bank of Kenya website in establishing the existing trend of foreign exchange rates fluctuation in Kenya. Descriptive statistics, Pearson Product Moment Correlation and Trend Analysis were used in the study. The findings revealed the existence of positive trends in US dollar and the Euro exchange rates and negative trends in UK pound exchange rates. Therefore the study recommended that market players like corporate investors and investment mangers should closely monitor these trends as they are useful in predicting future financial market outcomes

Interaction of Complex Investment Constraints and Diversification on Portfolio Efficiency in the Soft Drink Industry in Western Kenya

Harry Markowitz (1952, 1959) portfolio problem reveals that assets cannot be selected only on characteristics that are unique to them. Past studies on diversification focused on the “extent” of diversification. The purpose of this study was on the interaction of complex investment constraints and diversification on portfolio efficiency in the soft drink industry in western Kenya. The study was a descriptive survey design with a target population of 250 respondents selected by a census sampling technique. Both primary and secondary data were used in this study; an interview schedule was used whose reliability was provided using Cronbach’s Alpha; the results of analysis found Cronbach’s Alpha of 0.970 which suggest strong internal consistency of the research instrument compared to its standard of 0.70. Secondary data was obtained from the firm’s financial statements relating to firm’s assets. Descriptive statistics involved the use of percentages and means, and regression equations to establish the relationship between complex investment constraints, diversification and portfolio efficiency. capital structure as a constraint doesn’t have any significant contribution to diversification; level of investment information and level of investment risk significantly contribute to investment diversification; a strong association exists between complex investment constraints and diversification (R = 0.984) and the variation in investment diversification can be accounted for upto 96.7% by firm’s capital structure, level of investment information and level of investment risk and with a significant relationship (F= 2428.043, p < 0.005); a positive correlation for the diversification alternatives to portfolio efficiency; worst diversification alternative (0.458**), average diversified alternative (0.713**); and best diversified alternative (0.890**); and this correlation was significant at (p<0.01; 2-tailed. Results indicate a significant relationship between investment alternatives (WDA, ADA, and BDA) and portfolio efficiency (F= 398.020; p 0.000< 0.05). The contribution of diversification alternative towards portfolio efficiency shows that only ADA and BDA have positive contribution while WDA has negative contribution to portfolio efficiency; there exist a significant relationship between ADA, BDA and portfolio efficiency; the results indicate that portfolio efficiency depends on diversification sets constructed by investors; PORT.EFF. = 2.103E-16 – 2.795E-15 WDA+ 0.231ADA + 0.769 BDA;  results for part analysis of ADA, BDA and portfolio efficiency show improved performance in portfolio efficiency; the R is 0.911, R2 is 0.829; and adjusted R2 has a dismal increase; but the F value increased from 398.020 to 599.45; this indicate that ADA and BDA are better in influencing portfolio efficiency, but BDA is the best model for selection of efficient portfolio (F= 947.112; R= 0.890; R2= 0.792; p< 0.05). Keywords: Investment Constraints, Diversification, Portfolio Efficiency, Soft Drink Industry, Keny

Construction and validation of consumer attitudes on biosecurity principles: a methodological perspective

This paper presents a methodological perspective to the construction and validation of consumer attitudes on biosecurity principles. Four biosecurity principles are reviewed with regard to indigenous chicken production and consumption. Using Fishbein Multi-Attribute Model, the four principles are translated into a psychometric construct to measure consumer attitudes. A 74-item 7-point Likert scale is constructed. The study proposes a procedure to validate the construct. This includes conducting a pilot study to gather primary data, summarizing the data, testing inter-item validities, and performing factor analysis to measure construct validity among others. The study sets a methodological perspective that researchers, government agencies, international organizations and donors can use to measure consumer attitudes on biosecurity principles for indigenous chicken

INFLUENCE OF SOCIALIZATION ON COMMITMENT AND IDENTIFICATION OF OUTSOURCED EMPLOYEES IN COMPANIES LISTED AT THE NAIROBI SECUTRITIES EXCHANGE (NSE)-KENYA

Abstract With the onset of outsourcing, employers and employees find themselves in a critica