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FACTORS INFLUENCING SALES PERFORMANCE IN THE HOTEL INDUSTRY: A CASE OF THREE STAR HOTELS IN NAKURU MUNICIPALITY

ABSTRACT 
The hotel industry is one of the most dynamic industries and one of the largest employers in the world today as well as contributing economic development of many countries. In Kenya, it has been identified as one of the main sectors that can lead to the achievement of the country’s Vision 2030 goals. Quality of service has been taken as the measure of performance in the hotel industry. However, few studies have considered the factors that influence the quality of service. This project aimed at assessing the factors influencing the sales performance of the three-star hotels in Nakuru municipality in order to offer some insights in the creation of quality among hotels in Kenya. The hotels include Bontana, Midlands, Kunste, Agricultural resource centre (ARC), and Lake Nakuru Hotel and Lodge. A pilot study was done and data for 2008 to 2012 was obtained from all the five three-star hotels in Nakuru which showed that sales figures were lower than expected, but factors that influence sales performance were not identified or documented. Primary and secondary data obtained were analyzed using descriptive statistics and panel fixed effect regression model to address three key objectives of the study: examine the trends of three-star hotels’ sales performance in the study area; assess the perception of guests on the quality of service; and finally to determine the factors that affect the sales performance of three-star hotels. The results of the analysis indicated that most of the three-star hotels had fluctuating trends in their sales throughout the period under study. Analysis of the respondents’ perception on the services offered by the three-star hotels indicated that majority of them had fair prices, enjoyed spacious rooms with courteous staff, clean restaurant and convenient hotel locations. Majority of the hotels were rated highly in terms of attractive exterior and excursions. The panel fixed effect regression results indicated that, the number of staff, and expenditure on equipment were negatively significant at ten (10) percent and five (5) percent respectively on sales performance of the hotels. On the other hand, the expenditure on staff training and suppliers were positively significant at five (5) percent with effects on sales performance of the hotels. As Kenya strives to be an industrialized nation by 2030, the growth and development of the hotel industry should be given much attention as it is seen to significantly contribute to this realization. The results of the study affirm that policy and management/institutional changes, along with increased investments in quality of service, have significant influence on sales performance of the three-star hotels.

CHAPTER ONE 
INTRODUCTION 
Background to the Study
The hotel industry has continued to grow all over the world and like any other business the hotel industry aims at improving revenues through value addition to guarantee repeated visits. The expectation is that the hotel management should embrace the marketing concept, which entails total customer focus. According to, Neil and Alison (1994), organizations which are customer forecast endeavor to become obsessed with the desire to meet customers’ needs. The service industry, and in particular the hotel industry exhibits tight competition within, thereby motivating individual firms to offer services of high quality so as to build and retain that competitive edge that results in sustained sales growth of its products and services offered to customers. A firm can use this knowledge to create marketing strategies that take advantage of its competitors’ weaknesses, and improve its own business performance. Hospitality businesses must deal with such complex factors as globalization, terrorism threats, ecotourism, internet commerce, new business and financial models, and rapidly changing consumer demands (Morrison et al., 1999). 

Businesses endeavor to outperform each other in the competitive world due to the proposition made by Saleemi (2009) who showed that, companies are now shifting from product and sales philosophy to marketing philosophy, where, the customer has become the centre of the business culture. Strategies for improved sales and customer satisfaction include reliability of the business; assurance that employees have the knowledge and courtesy to give trust and confidence to customers; among others, the physical facilities available that can influence the sales performance. Generally, the customer gets satisfaction depending on the service performance in relation to their respective personal expectations. This is because the building of success in today’s businesses is on the firm’s ability to raise customer expectations and delivering performances to match those expectations. Such organizations maintain a high level of performance across all of the selling and sales management activities required to support the sales process. There is no easy answer to solve every sales performance issue, but taking a strategic and deliberate approach to how to address the challenges of a given organization can provide a roadmap to improvement of sales. One of the main objectives of every firm is to achieve and sustain a competitive advantage. In the hotel industry, most rivals are determined according to similarity of price, segment, service and proximity. Everyone is working overtime to grab the guests. 

It is stated in Ministry of Tourism and Wildlife (GoK 2006), that after impressive growth in the 1960’s to 1980’s, Kenya’s tourism sector experienced an unprecedented decline in the 1990’s due to both internal and external factors, exacerbated by security concerns. Both the number of visitor arrivals and earnings peaked in 1994 and since then, the trend has been steadily downward, with arrivals falling in 2002. The downturn accelerated sharply in early 2003 because of negative travel advisories against travel to Kenya and imposition of flight bans by some countries. The decline has resulted in low bed occupancy and a sharp fall in revenues, leading to partial or full closure of hotels and other tourist accommodation establishments, especially at the Kenyan Coast, resulting in loss of jobs in both the formal and informal sectors. However, with aggressive marketing, the trend has been reversed and 2004 recorded arrivals as before with some of the reasons for the downtrend of visitors in hotels highlighted. This includes; first the deterioration and near collapse of infrastructure in some parts of Kenya which has affected access to tourist attractions sites. Secondly, the lack of a system to ensure equitable sharing of benefits and opportunities of tourism with local communities and thirdly is the unplanned expansion of the accommodation sector compared to the demand. Lack of affordable finance for upgrading accommodation and other facilities has also been cited as the fourth reason where the inadequate funding for sustained tourism marketing and promotion is the fifth. In addition, lack of market diversification (over-reliance of certain products and excluding other potentially viable products) and lack of adequate training, examination, control and licensing has been highlighted. Finally, the relatively high cost and erratic supply of utilities such as electricity and telecommunication services as well as the cumbersomeness of visitors’ entry formalities topped the list (GoK, 2006). 

Tourism as an international industry and as the biggest provider of jobs on the planet boasts a greater array of heterogeneous stakeholders than many other industries. In the International Labour Organizations (2010), Tourism industry accounted for more than 235 million jobs globally, an equivalent to 8% of the overall number of direct and indirect jobs. Tourism has also helped in providing employment to a large number of people in Kenya, and according to the Economic Survey (2012), the tourism earnings in Kenya rose by 32.8 percent, from 73.7 billion in 2010 to 97.9 billion in 2011. The hotel industry is seen to shift towards highly competitive, integrated and customer oriented market framework, supported by the progressive career path evident from the fact that more and more universities are now offering hotel management courses, a phenomenon that was rare some ten years ago, even in Kenya. Based on the aforementioned benefits, the Kenya Vision 2030 aims at taking the country to an industrialized status, and the hotel industry has been identified as one of the sectors that will contribute greatly to these achievements (Schulz, 2012). The hotel industry on the other hand has seen customer satisfaction as a key marketing tactic in differentiating itself from its competitors and therefore a heightened understanding of a guest preference and total worth will enhance a guest experience and maximize hotel revenues. Customer satisfaction, according to World Trade Organization (1985) is a psychological concept that involves the feelings of well-being and pleasure resulting from gaining what a person hopes for and expects from a product and/or service. It is the customer’s fulfillment response to consumption experience, a highly personal assessment that is greatly affected by customer expectations and experience. This can be linked to both the personal interaction with the service provider and the outcome experienced by the service users, it is a psychological effect on their choice when they choose a particular hotel or resort to visit and stay in. Dominici et al. (2010) observed that in order to achieve customer satisfaction, it is important to recognize and to anticipate customers' needs and to be able to satisfy them, consequently, the attractiveness of a touristic destination is influenced by the standards of the services provided by the local hotels in the region. Generally, the hotel industry has experienced enormous growth in business volume thereby making them larger and more complex to manage and meet challenges of customer demands. This is further aggravated by the modern communications technology (e-mail, telemarketing, television advertising) which has simply created too much “white noise” in the marketing airwaves (Onyango et al., 2012).

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THE IMPACT OF CORPORATE GOVERNANCE ON DIVIDEND PAYOUT OF MANUFACTURING FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE

ABSTRACT 
This study sought to examine the impact of corporate governance on dividend payout of manufacturing firms listed at the NSE. The objectives of the study were; to determine the impact of board size, board composition, CEO tenure and managerial equity holding on dividend payout of manufacturing firms listed at NSE and finally, to establish the impact of corporate governance on dividend payout of manufacturing firms listed at NSE. This study employed a correlational research design. The population of the study comprised all manufacturing firms which were consistently listed at the Nairobi Securities Exchange from 2008-2014. Data for this study was obtained from the annual published financial statements. Correlation and regression analysis were used to test the impact of the independent variables relating to corporate governance practices on the dependent variable (Dividend Payout). Independent one-way ANOVA test and independent t-test (one tailed) were used to determine the level of significance. 

The study results indicated that board size, board composition, CEO tenure and management equity holding had a weak negative relationship with dividend payout. Furthermore, board size had a statistical significant impact on dividend payout, while board composition, CEO tenure and managerial equity holding were found to have no statistical significant impact on the dividend payout of manufacturing firms listed at the NSE for the period 2008 to 2014. The empirical results from the multiple regression analysis indicated a correlation coefficient(R) value of 0.692. This means that there is a strong and a positive relationship between corporate governance and dividend payout(r>0.5). However, corporate governance only explained 47.8% of the differences in dividend payout as shown by the coefficient of determination value (R2) of 0.478. Moreover, the significance value on the relationship between corporate governance and dividend payout ratio was 0.263. This implied that corporate governance cannot be used to adequately predict changes in dividend payout (P> 0.05).

CHAPTER ONE 
INTRODUCTION 
Background of the Study 
Corporate Governance is defined as the process and structure used to direct and manage business affairs of the Company towards enhancing prosperity and corporate accounting with the ultimate objective of realizing shareholder long-term value while taking into account the interest of other stakeholders. Corporate Governance is acknowledged to play an important role in the management of organizations in both developed and developing countries (Achchuthan and Kajananthan, 2013). It aims at protecting the interests of shareholders and improving performance of organizations. According to Ahmadpour et al (2012), firms having weaker governance structures face more agency problems and this increases the risk to shareholders. This is due to lack of proper structures, mechanisms and processes that ensure that a firm is managed and directed in a way that ensures increase in shareholder value. As a result, corporate governance becomes an important aspect of enhancing the performance of organization by increasing management accountability. 

Hifzalnam and Mukhtar (2014), note that, corporate governance combines a set of market instruments that motivate managers to maximize the value of a firm on behalf of its shareholders. This is by providing processes and structures that are used to direct and manage the affairs of a business thereby enhancing performance and corporate accounting as well as increasing long- term shareholders value. Valenti at el (2011) affirms that corporate governance is essential in improving the performance of organizations. This is because it ensures that the interests of the shareholders are safeguarded, by making sure that the assets of an organization are utilized in a way that maximizes profitability. Therefore, corporate governance augments the performance of a company by motivating managers to take actions that maximize the wealth of shareholders 

Corporate governance can decrease information asymmetries between shareholders and managers by improving a firm’s operational and financial transparency (Thomsen, 2004). The ability of managers to distort information and to increase their incentives can be mitigated by corporate governance provisions. This may in turn improve the financial transparency of an organization and reduce the agency problems as well as increase shareholders’ value (Chung at el, 2010). Al-Najjar (2010) emphasizes that increased performance and information disclosures lead to better valuation of firms and this can lead to a long-term increase in shareholders wealth. According to Murekefu and Ouma (2010), shareholders wealth can also be enhanced by a firms dividend policy. This is because the amount that a company is required to distribute to its shareholders is determined by its dividend policy. Ross at el (2002) notes that dividend policy decision is one of the most important decision areas in finance. Dividend decisions are important because they determine the amount of funds that flow to investors and the amount of funds that are retained in a firm for investment purposes. Gul at el (2012), stress that dividend policy decision is important in organizations because it enables them to achieve efficient performance and to attain their goals. 

The ultimate goal of a firm is to maximize the wealth of shareholders (Griffin, 2010). Accordingly, managers are compelled to provide shareholders with good returns on their investment. Vojtech (2013) notes that efficient corporate governance can provide checks and balances between managers and shareholders and this can make firms to adopt dividend policies that maximize shareholders wealth. Sheikh and Wang (2010), state that corporate governance is aimed at protecting the interests of shareholders by reducing the agency problems and therefore, dividend policy becomes an important aspect of corporate governance. 

Corporate Governance in Kenya 
Corporate Governance has gained prominence in Kenya and this may have been caused partly by corporate failure or poor performance of public and private companies. As such, the Capital Markets Authority has set up guidelines for good corporate governance practices by public listed companies in Kenya in response to the importance of governance issues both in emerging and developing economies and for promoting domestic and regional capital markets growth (Kenya Gazette, 2002). The CMA also works in support with the Centre for Corporate Governance (CCG, formerly Private sector Corporate Governance Trust, PSCGT), whose establishment, was to carry out activities and programmes that aim at improving the quality of life of the people by fostering the adoption and implementation of the highest standards of corporate governance. This in turn leads to improved strategic leadership of companies and enhance profitability, effectiveness and competitiveness in the global market. 

Different other bodies have are also engaged in the promotion of the principles of good corporate governance practices. The Central Bank of Kenya(CBK) demands good corporate governance for financial stability and sustainability from all licensed banks and financial institutions, the NSE for all listed companies, the Kenya Shareholders association(KSA) that mobilizes shareholders to demand good corporate governance from their organizations, and other professional bodies such as the Law Society of Kenya(LSK) (Pierce and Waring, 2004). These Corporate Governance principles mainly deal with the issues such as corporate compliance, corporate communication, accountability, board composition, role of audit committee, separation of the role of CEO and the Chair and the rights of the shareholders (Maniagi, 2003). 

However, The United Nations Publication, (2004) identified several reasons why the application of these principles has not exactly been a success. Firstly, poor political governance and subsequent concentration of political and economic power in the hands of small, privileged and entrenched elite continues to bedevil these efforts. Conflict also renders it impossible for economic actors to plan and undertake the necessary activities for wealth creation. Poverty, decayed physical infrastructure (both transport and communication), weak legal and regulatory systems and underdeveloped capital and financial markets were also identified.

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THE EFFECT OF TEACHER CHARACTERISTICS ON INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) INTEGRATION IN PUBLIC SECONDARY SCHOOLS IN NAKURU TOWN SUB-COUNTY, KENYA

ABSTRACT 
This study sought to examine the effect of teacher characteristics on ICT integration in public secondary schools in Nakuru Town Sub-county, Kenya. The objectives of the study were: To establish the effect of teacher educational beliefs on ICT integration; to establish the effect of self-efficacy on ICT integration; to establish the effect of attitude on ICT integration; to establish the effect of motivation on ICT integration; and to establish the overall effect of teacher characteristics on ICT integration. Primary data for this study was collected using structured questionnaire. The questionnaire was self-administered. The data was analyzed quantitatively. Biographic data on the respondents was analyzed using descriptive statistics such as percentages. The relationship between teacher characteristics and ICT integration was tested statistically using Pearson Moments Correlation. Relationships between teacher characteristics and ICT integration in public secondary schools was determined at the alpha level of p<0.05. Inferential statistics was used. To describe the various elements of teacher characteristics on overall ICT integration, descriptive analysis (percentages) was done. The data was analyzed with the help of Statistical Package for Social Sciences (SPSS) computer program (version 20.0). Data was presented using tables. Purposive sampling design was used in the study where one Head teacher, one Head of ICT Department and one ICT teacher were purposively sampled from each of the 22 public secondary schools yielding a sample size of 66 teachers. The study is beneficial to policy makers when developing teacher programs; it also helps teachers to see that intervention programs can influence their instructional behaviours. The study also provides evidence to researchers that teacher beliefs can be challenged. The study thus recommends that policymakers should incorporate the actual use of ICT when developing teacher programs. Considering the influence of the teacher characteristics on classroom use of ICT, professional teacher development should be aware of the direct impact of these variables, especially the role of teacher ICT motivation.

CHAPTER ONE 
INTRODUCTION 
Background to the Study 
At the start of the 1980s, developed countries made it compulsory for ICT to be integrated into their education system. This was not the case in developing nations such as Kenya, where ICT integration in education is considerably more recent, small- scale and experimental (Mwololo, 2005). Also, the limited and uncoordinated approach to imparting appropriate ICT skills and competencies to teachers remains a major barrier to the integration of ICT in education in Africa and Kenya in particular. 

The Government of Kenya has acknowledged that purchasing and placing computers in a classroom is not true technology integration. Hence, the National ICT Strategy for Education and Training June 2006 Policy document emphasizes that real integration happens when technology is effectively applied to a curriculum and students’ learning. The policy stresses integrating ICT in teaching the curriculum at all levels of education (Ministry of Education Policy Document, 2006). The policy envisages that through the effective use of technology in the schooling process, students will be able to use technology in their studies. It also acknowledges that it is the classroom teacher who will be instrumental in achieving all this integration of technology. Ertmer (2005) also wrote that the key individual in helping students develop those capabilities is the classroom teacher. 

Countries that have harnessed the potential of Information and Communication Technologies (ICTs) have attained significant social and economic development. They are also rapidly transforming into information and knowledge-based economies. In Kenya, the legal framework for ICT integration is mostly embedded in the Information and Communications Act (Cap 411a) of 1998 that provides for the establishment of the Communications Commission of Kenya (now Communications Authority of Kenya), to facilitate te development of the ICT sector and electronic commerce. Various policy and legal frameworks of ICT integration in education have been put in place. Teachers are the people at the centre of the implementation of these new technologies but their abilities to respond to this change and innovation that is an essential factor for success has not been fully studied and documented hence the need for this research. Understanding how teachers’ characteristics affect ICT integration will enable systems to be designed in such a way that the system enhances the work of the teacher who is the user of the system. 

National Policy Framework for ICT Integration 
The National policy framework for ICT integration focuses on Kenya Vision 2030; the National ICT policy; and the E-government strategy. The social pillar of Vision 2030 mandates the Ministry of Education to provide a quality education that produces a highly skilled human capital with requisite ICT skills to competitively participate in knowledge-based economy. ICT is identified as the catalyst to drive the socio- economic transformation of Kenya into a middle-income country. The National ICT Policy, 2006 (Republic of Kenya, 2006) outlines its goals as supporting ICT development, investment, and application; ensuring affordability and access to ICT nationally; supporting research development in ICT and developing an institutional framework for policy formulation and review. One of its objectives is to encourage the use of IT in schools, universities, colleges and other educational institutions in the country so as to improve the quality of teaching and learning. The realization of this policy objective heavily depends on the availability and adequacy of skilled human resource capacity. The Government supports the creation of the necessary capacity by integrating IT subjects in the curriculum at all levels of education; establishing educational networks for sharing educational resources and promoting e-learning at all levels; establishing the establishment of ICT Centres of Excellence and enhancing capacity for research and development in IT. When making this policy, the ministry did not try to understand teachers who are the people directly affected by it and what factors assist and/or hinder the efficient process of ICT integration in schools. Since it is the teachers who must implement this ICT integration in schools, it is their understanding and experience of the situation that are crucial if integration is going to be successful. This motivated our current research. 

Education Policy Framework for ICT Integration 
The Sessional Paper No. 14 of 2012 (Republic of Kenya, 2012) is the current policy framework through which the Ministry of Education affirms commitment to enhancing access to education, promote equity and increase transition rates in its quest for provision of quality education. The policy underscores the ministry’s commitment to competency-based teaching and learning that promotes acquisition of the 21st century skills and attitudes such as critical thinking, creativity, communication, collaboration, and innovation that prepares learners to competitively participate in a knowledge-based economy. Integration of ICT across all levels of subjects and education is envisaged to enhance 21st-century learning skills among others. The Sessional Paper No. 1 of 2005 (Republic of Kenya, 2005) emphasized that ICT played a key role in promoting the economic development of a country. It noted that ICT could be used in education, training, and research as well as in the management of the education sector and that the successful implementation of ICT would require highly skilled human resources. The objectives were to support ICT teacher development, research and development of ICT in education. To implement the ICT policies in this paper, the strategy to reform the curriculum to facilitate use of ICT integration was formulated. Teachers who are the implementers of this policy will assess how implementation will impact on them rather than how it might impact on student growth. Therefore, for this process to be meaningful, its effectiveness mut be proven in terms of the personal and professional growth of all involved. Hence the need for this research study. 

The Education Strategic Plan 
The strategic plan of the Ministry of Education Science and Technology (MOEST) considers and proposes that ICT can contribute substantially towards the realization of these objectives. In addition, ICT has considerable potential to support implementation of Free Primary Education (FPE) and to address emerging challenges such as; overcrowded classrooms, high Pupil Teacher Ratios (PTRs), shortage of teachers on certain subjects or areas, and relatively high cost of learning and teaching materials. The areas of priority under this education plan include; training, research and development and integration of ICTs in education. The role of the classroom teacher is the crucial factor in the full development and use of technology is schools. Transforming this classroom technology from hardware, software, and connection into tools for teaching and learning depends on knowledgeable and enthusiastic teachers who are motivated and prepared to put technology to work on behalf of their students. Hence the need for this research to establish the relationship between motivation and ICT integration in schools. 

Reforms related to ICT integration in the education sector 
The Government of Kenya has carried out various reforms related to ICT integration in the education sector. These include; development of an ICT integration model which emphasizes four key pillars critical to effective implementation of ICT initiatives, creation of specialized units – ICT for Education (ICT4E), national ICT innovation and integration centre (NI3C), ICT unit and ICT integration team. The ICT4E unit is mandated to spearhead the pedagogical use of ICTs. The NI3C center is mandated to carry out the testing of technical solutions submitted for consideration by firms to establish their appropriateness and use in curriculum delivery. The ICT integration team’s role is – coordination and harmonization of all ICT initiatives in the sector. The ICT unit handles ICT technical support and advice, technical support and systems for EMIS and make reports to the Principal Secretary on ICT matters. 

Education initiatives related to ICT integration 
Two major ICT initiatives have been made in the education sector, namely the Economic Stimulus Program (ESP) ICT initiative (Republic of Kenya, 2013) and the ICT integration/Laptop project (Republic of Kenya, 2013). The objective of the ESP ICT integration program is to jumpstart ICT integration in education in line with Kenya Vision 2030 so as to produce a highly skilled human resource to transform Kenya into a middle income, knowledge-based economy. The ICT integration/Laptop program has its origin in President Uhuru Kenyatta’s campaign pledge to provide laptop computers for every standard one pupil in Kenya government schools. This promise is consistent with current educational trends and practices and will usher Kenyan children into the digital age as the country moves forward to Vision 2030. The laptop program is timely because computer literacy in the 21st century is just as important as the 3Rs (reading, writing and arithmetic) of the early 20th century. This is an indication that the school education system is experiencing significant pressure to change. As schools change, the work of teachers is also changing. It is, therefore, important to establish those characteristics that make teachers adopt and integrate technology into teaching. 

Nakuru Town Sub-county 
Nakuru Town Sub-county is located within Nakuru town. Nakuru is the capital of Nakuru County and former capital of the Rift Valley Province. It is an important educational center with both public and private institutions. There are 22 public secondary schools in Nakuru Town Sub-county of Nakuru County (see Appendix III). Out of these, one is a girls’ day school, one is a girls’ boarding school, one is both boys’ boarding and mixed day school, one is a boys’ boarding school and eighteen are mixed day schools. There are two national schools, five county schools, and 15 district schools.

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THE EFFECT OF MICROFINANCE INSTITUTIONS’ PRODUCTS ON FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES: A CASE OF MACHAKOS TOWN, KENYA

ABSTRACT
Vision 2030 has emphasized the importance of SMEs in Kenya. Small and Medium Enterprises are noted as a crucial catalyst for achieving vision 2030. The research was done on the effects of Microfinance institutions` on financial performance of small and medium enterprises in Machakos town, where the general objective of the research was to determine whether there was any significant effect of Microfinance institutions` products on the financial performance of small and medium enterprises in Machakos town. Descriptive research design was employed since the researcher collected information through descriptions and this design is also useful for identifying variables and hypothetical construction. Stratified random sampling technique was used, and the sample size was determined as 372, at 95% confidence interval. Primary data was collected through questionnaires issued to the owners and managers of SMEs, while secondary data was collected by use of secondary data collection sheet. Both descriptive and inferential statistics were used to analyze data, while correlation and regression were also used to establish the strength of the relationship between microfinance products and financial performance of small and medium enterprises. Statistical Packages for Social Sciences (SPSS) was used by the researcher to facilitate the analysis and interpretation of data, and the results obtained was presented by the use of bar graphs, pie charts, and table for easy interpretation. The results showed that, the MFIs` products offered (micro savings, micro credit and training) had a strong positive correlation on the financial performance of the SMEs, while there was a weak positive correlation between micro insurance and financial performance of the SMEs. The regression analysis indicated that; micro savings, micro credit and micro insurance had significance effect on the financial performance of SMEs, while training had no significance effect on the financial performance of the SMEs. The study recommended that MFIs have a great responsibility of ensuring the proper use of credit which is an important facility in financial performance of businesses. To achieve this, credits should be SMEs-oriented and not product- oriented. Proper and extensive monitoring activities should be provided to SMEs who are granted the micro credit product. MFIs can research into very profitable business lines and offer credit to SMEs who have the capacity to exploit such business lines, micro insurance is paramount to SMEs in cushioning them in the event of unfavorable occurrence, and should be enhanced properly to the SMEs, and that business and financial training should be provided by MFIs on a regular basis and most cases should be tailored toward the training needs of the SMEs.

CHAPTER ONE 
INTRODUCTION 
Background to the Study 
In most parts of the continent of Africa, people are suffering from severe lack of basic needs, and therefore there is need to talk about the need to reduce poverty. The argument behind the introduction of micro finance institutions was to bring people out of poverty and into better living standards with the focus of being able to meet their basic needs. Because the poor will always be with us, it is more attainable and measurable to enable the poor people access the basic needs like shelter, food and water than to simply make a goal of reducing poverty (Yunus, 2007) 

Like other countries of the world, SMEs in Kenya have the tendency to serve as sources of livelihood to the poor, create employment opportunities, generate income and contribute to economic growth. They have been seen as the means through which accelerated growth and rapid industrialization have been achieved (Koech, 2011). SMEs have been recognized as socio- economic and political development catalysts in both developed and developing economies (Mwangi, 2011). Maalu, et al. (1999) discussed the role of Small and Medium Enterprises in the economy of Kenya and noted the important role it has played and continues to play, as being employment creation and income generation, the study noted other important roles in the economy such as production of goods and services and development of skills. 

The Kenya Government’s commitment to foster the growth of SMEs emerged as one of the key strategies in 1986 report. It was reinforced as a priority in 1989 report, a document that set out the mechanisms for removing constraints to growth of MSE sector. In 1992, the government published the MSE policy report. This report was reviewed in 2002, leading to a new policy framework that provides a balanced focus to MSE development in line with the national goals of fostering growth, employment creation, income generation, poverty reduction and industrialization. The overall goal is to, in partnership with the public, private, and development partners, create 500,000 jobs annually over the next four years (a total of 2 million jobs.) The bulky of these jobs are expected to be created in the MSE sector, 88% from the new enterprises and 12% from the growth of existing enterprises (Kenya Agency for the Development of Enterprises and Technology, 2005). The vision 2030 has also emphasized the importance of SMEs in Kenya. Small and Medium Enterprises are noted as a crucial catalyst for achieving vision 2030. 

In practice, most poverty alleviation efforts by states and major development agencies attempt to facilitate take up of an entrepreneurial culture rather than a reliance on relief efforts. Such an orientation to development is driven arguably by several forces: first is that MSEs inevitably form the bulk of economic activity of the poor since these are the forms of affordable engagement. Second, these enterprises are thought to require minimal training to run successfully; although this is debatable. Third and most important, there is a correlation between the existence of MSEs and certain aspects of economic development, particularly employment generation. 

Lack of startup capital remains one of the leading barriers to entrepreneurial activity among would-be entrepreneurs in developing economies. Access to affordable training is another. The concept of microfinance, and especially when accompanied by the development of business skills, has evolved as an institutionalized response to this challenge. As micro finance institutions are developing, they are becoming overwhelmingly commercialized. Though commercial MFIs have the most financial support, their desire to profit prohibits them from being as effective as nonprofit organizations that only seek to help the poor. 

MFIs in Kenya have a large number of low income households and MSEs in the rural and urban areas of Kenya. MFIs gained prominence in Kenya due to the fact that the formal banking sector since independence up to late 2000 regarded the informal sector as risky and not commercially viable(Kamau,2010). The MFIs developed and offered new, innovative and pro-poor modes of financing low-income households and MSEs based on sound operating principles. Since their inception, MFIs have greatly contributed to social-economic empowerment to the beneficiaries and their dependants (Kamau, 2010). 

Various studies conducted on the SMEs in Kenya reveal the influence of microfinance institutions on various aspects of operation of the SMEs. Kiiru(2007) studied on the impact of microfinance institutions on SMEs in Kenya and found out that they had a great impact on employment creation and poverty alleviation. Cooper(2012); Mwangi (2011); Koech(2011) studied on the financial challenges faced by SMEs and found that inadequacies in access to finance are key obstacles to SMEs growth. 

Chestone and Kuhn (2002) in a study on the impact of microfinance services on women empowerment found that microfinance has led to expansion of freedom of choice of women. Koech (2011) in a survey of the financial constraints hindering growth of SMEs found that the factors affecting growth were capital market, cost, capital access, collateral requirements, capital management and cost of registration. Coopper (2012) studied on the impact of microfinance services on the growth of SMEs in Nairobi and found a strong positive impact. 

As the idea of microfinance continued to spread, so many Microfinance Institutions also began to spring up. According to the Association of Microfinance Institutions in Kenya (AMFI), there are 53 microfinance institutions in Kenya, serving about 6.5 million poor Kenyans. Some are banking institutions, NGOs, Christian Organizations and Non-banking Financial Institutions. They are spread across the whole country. However, with the emergence of many MFIs in Kenya, there seem to be some hope for the poor, who without any extra money, have no possibility to save and accumulate wealth. Poor people aren’t always served by banks either because they are not desirable candidates or because they have no money to put into the bank in the first place. If they are able to take a loan from a local bank, they are mandated to pay an interest rate of around 300%. At a rate this high, they can’t take out much money and are stuck repaying the interest on the loan rather than using the money they make for economic development. Micro credit was created to combat this issue. First time loans are generally very small, no more than ksh.20,000 or ksh.30,000. They are usually short term loans to be paid back in 3 to 6 months at an interest rate that varies by institution types. When smaller loans are repaid in a timely manner, the borrower builds credit which allows them to take out larger loans to expand their business (Ondoro& Omena, 2012). Many micro finance institutions require their members to save very small amounts of money in their bank before they are allowed to take out a loan. This isn’t so they have money to claim as an asset, rather it is to teach them how to save. To improve on the loan repayment by the small and medium enterprises, the microfinance institutions offer training to the businesses to facilitate their operations in term of management skills, record keeping and on marketing. The microfinance institutions in collaboration with insurance companies offer the insurance covers to small and medium enterprises, to cushion 
them in the event of unfavorable occurrence (Robinson, 2003). Based on this background of the products provided by microfinance institutions to small and medium enterprises, there is need to determine their effect on the financial performance of the small and medium enterprises.

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THE EFFECT OF CORPORATE GOVERNANCE ON DEBT MANAGEMENT OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVES IN KENYA

ABSTRACT 
This study sought to examine the effect of corporate governance on debt management of deposit taking Savings and Credit Cooperatives(SACCOs) licensed by Sacco’s Societies Regulatory Authority (SASRA) in Kenya. The objectives of the study was to, determine the effect of board composition on debt management, to establish the effect of CEO duality on debt management, to establish effect of director’s remuneration on debt management, to determine effect of board size on management of debt, and establish effect of board meeting on debt management. The study employed a descriptive research design. The target population for this study was 135 deposit taking SACCOs licensed by SASRA in Kenya for the period 2011- 2014. The study employed a purposive sampling method and used a sample size of Twenty seven (27) SACCOs that have been in operation and registered by SASRA since 2011 to 2014. Secondary data for this study was collected from the financial statements reported to SASRA for the period of 2011-2014. Collected data was analyzed using both descriptive and inferential statistics. Mean and standard deviations was used as measures of central tendencies and dispersion respectively. Correlation analysis was used to analyze the degree of relationship between the variables in the study. Further, regression analysis was used to describe the relationship between corporate governance and debt management. Analyzed data was presented using graphs, tables and charts. The findings show that corporate governance explains only a small proportion of changes in debt management as shown by lower coefficient of determination (R2 of 0.119 for Model 1, 0.164 for Model 2 and 0.030 for Model 3). ANOVA tests and regression analysis of the three models indicated that the impact of corporate governance on debts management as measured by debt ratio, debt/equity ratio and interest cover was not statistically significant at 0.05 level of significance (Model 3, p = 0. 8154 with an F value of 0.44, Model 2, p= 0.5463 with an F value of 0.82.Model 1, p = 0.7233 with an F value of 0.57). Therefore, this study fails to reject the null hypothesis that that there is no significant effect of corporate governance on debt management of Deposit taking Sacco’s in Kenya licensed by SASRA.

CHAPTER ONE 
INTRODUCTION 
Background of the study 
Most of the problems bedeviling co-operatives arise from bad governance and poor economic management. While leaders direct and control the organizations, and managers run them, members have authority to demand and enforce good governance in their organizations. Corporate governance principles seek to ensure that leaders act in the best interest of the organization that they lead in order to achieve the objectives for which they were founded. As the world moves towards this governance approach, co-operative societies are no exception. If co-operatives have to remain commercially viable and sustainable enterprises for socio- economic development, they must embrace good corporate governance. Co-operatives are governed and managed by elected committees. These committees are entrusted with the management of societies on behalf of members and employ managers and staff to carry out the day-to-day functions of the societies (Wambua, 2011) 

Savings and Credit Cooperative (Sacco’s) have been playing a key role in improvement of socio economy of citizens of different countries in the world. The Sacco’s members are able to save and access cheaper credit. Members are able to expand their businesses with the ultimate goal of elevating their living standards. Thus, corporate governance in cooperative societies is necessary to promote better standards of management through observance of core principles, values and procedures. The success of a cooperative enterprise is positively related to effective leadership (Klapper& Love, 2002). 

Corporate governance is defined as the process and structure used to direct and manage business affairs of the Company towards enhancing prosperity and corporate accounting with the ultimate objective of realizing shareholder long term value while taking into account the interest of other stakeholders (CMA Act, 2002). Some SACCOs have faced liquidation because the mechanisms and structures put in place were unethical leading to their collapse sinking with members’ money. Deposit-taking SACCOs are prerequisites for savings mobilization among the low income households who have limited access to mainstream commercial banks. They represent a major element of the financial system and provide services to a large number of low income households in Kenya. 

Deposit taking SACCOs has a unique advantage in that their clients are also shareholders. They should therefore undertake aggressive deposit mobilization, creation of internal incentives to attractive savings, insurance programmes to cover member’s savings and loans. Good corporate governance in these SACCOs would ensure better performance. Good corporate governance practice has been suspected to be the driver of survival of SACCOs in Kenya. Therefore this study is sought to investigate the impact of corporate governance on debt management of deposit taking SACCOs in Kenya.

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SOCIO-CULTURAL FACTORS THAT INFLUENCE PUPILS WASTAGE IN PUBLIC PRIMARY SCHOOLS IN KEIYO SOUTH SUB- COUNTY, KENYA

ABSTRACT 
The government of Kenya has provided free and compulsory primary education for all school going children. Irrespective of free education there is significant wastage rate of primary school children in public schools in Keiyo South Sub County. The main objectives of the study were to investigate socio-cultural factors that influence pupils‟ wastage in public primary schools in Keiyo South Sub County. Specific Objectives of the study were: to identify the socio-cultural factors that influence pupil‟s wastage, explain the influence of socio-cultural factors on pupil‟s wastage, identify institutional factors that influence pupil‟s wastage and to explain the influence of institutional factors on pupil‟s wastage. The study was based on systems theory as postulated by Bertalanffy, which explains the relationship between inputs and outputs of the school system. A descriptive survey research design was adopted for the study. The target population comprised of head teachers, class teachers and pupils of public primary schools in Keiyo South Sub County. Stratified sampling technique was used to select schools where the strata were based on school population category. Simple random sampling was used to select the pupils. The sample size comprised of 10 head teachers, 80 class teachers and 200 pupils. The study utilized both primary and secondary data. The research instruments used to collect data were the questionnaire, interview schedule and class registers. The questionnaires were made up of both open and closed-ended questions and were administered by the researcher. The interview schedule was used to collect pupil‟s views collectively, through group interview whereas the class register was used to scrutinize pupils‟ record of school attendance. Data collected was analysed with the aid of Statistical Package for Social Science (SPSS) and specifically the use of frequency and percentages. Data was presented using frequency distribution tables and thematic descriptions. The study findings indicated that while there were so many causes of primary school pupil‟s wastage, poverty was the main cause. The study recommends that pro-active implementation of the policies geared towards a Universal free primary education be enforced and incentives that motivates pupils for example school feeding programmes be initiated or reinstated so that school enrolments go up. The study will inform and serve as a guide to education managers in policy directions towards addressing primary school pupils‟ wastage in the country.

CHAPTER ONE 
INTRODUCTION 
Background to the study 
Education is a human right and Kenya subscribes to this declaration. The ministry of education recognizes that each child is a vital member of society, and that every child‟s education is the key to Kenya‟s development. Children are starting primary school in greater numbers but wastage rates are significant leading to low levels of primary school completion in many countries. Lewin (2009), states that, pupils are enrolled in large numbers in many countries in sub-Saharan Africa but; by the end of the primary school cycle, the enrolment rate drops significantly, even below 50 parent, indicating high pupil wastage in public primary schools. In the USA dropout of pupils is caused by English language when pupils are unable to master the language skills (National Centre for Education Statistics, 1997). Children drop out of school without acquiring the most basic skills Failure to complete basic education represents a significant drain on the limited resources that countries have for the provision of primary education. 

When parents are responsive to children‟s education, they are likely to be competent and develop more interest for school (Connell, 2002). This can help pupil practice study skills, prepare for class, participate in learning activities and develop personal responsibility. The over aged pupils are more likely not to complete basic education cycle. This is due to the facts that, the older the child the opportunity cost of schooling increases significantly with pressure from peer to work or to get married (UNESCO,2005). 

According to Oredein and Oloyede (2007), pupils‟ wastage in school is contributed by teacher‟s factors. The wastage is linked to low academic achievement, incidence of lateness to school, frequent absenteeism and inability to complete the syllabi. Pupils academic success in school is greatly influenced by the socio factors at home where the pupils come from and the school where they learn. Parent engagement in school activities contribute to greater knowledge with school programs. These may enable the parent to guide the child on the importance of schooling. Most parents do not provide proper guidance, appropriate supervision and are unable to clearly communicate their values such as hard work, competent and honest to children. These put the children in an even greater danger of giving in to negative peer pressure which may lead to wastage. Biddle (2001), explains that it is unfortunate that many pupils do not have parents who are actively involved in their lives. These changes in societal may be due to more time being spent by the parents at their place of work and leaving little or no time for their families. 

In Tanzania, students' school achievements are attributed to socio cultural factors notably parents' level of education, mother tongue and gender (UNESCO, 2006). The level of education of the parent has an influence in the child‟s performance. It acts as a guide to the child to further move in education ladder. The parent has an impact on whether students apply for non-government school or government schools. They also determine whether the child receives tuition from the teacher after regular school hours. Report by the Ministry of Education (2007) indicated that 58% of the Kenyan population is living below poverty line. This consequently leads to inability of the poor parents to meet education cost and therefore becomes a barrier to the education of children. 

Wastage rate has been recognised as a problem by UNESCO (2006). Member States have been aware that it was an obstacle to the achievement of the targets Karachi, (1960). The reports published since then, have emphasised the continuing nature of the problem. In addition, individual Member States initiated actions aimed at becoming aware of the problem of pupil wastage. There are several causes of primary school wastage (Anderson, Kerr- Roubicek & Rowling, 2006; Gallagher, 2002). Its intensity varies from country to country, where wastage is higher, it is usually believed to be associated with non-enrolment and a lower percentage of girls than boys in the school system. The ideal situation is that all countries are striving towards 100 per cent enrolment of both boys and girls, and 100 per cent retention at least up to the end of the primary school. Countries striving to attain UPE have to eliminate pupil wastage. Universal Primary Education is not possible in an educational system where pupil wastage exists. 

It is believed that Socio-cultural factors that include all issues that resolve around customs and beliefs of the people play a significant role in influencing pupil wastage. Children are culturally influenced by the way Parents are involved in the development of attitude, values and practices in raising them. The Cultural way of living in totality may include initiation, early pregnancies, peer pressure, poverty, religious practices, beliefs, domestic chores and parental attitude. Studies indicate that in many communities set ups, socio-cultural factors have influence pupil‟s wastage. It is also not known which specific socio-cultural factors contribute to pupils‟ wastage. The girl receives less education than the boys and they tend to dropout or withdraw for socio-cultural reasons. Socio-cultural factors exert pressure from birth, through the child rearing practices by different communities, initiation and marriage to old age. Socio-cultural practices pose as a challenge to drop out of pupils in school hence need to be investigated (Isaiah, 2011). 

Institutional factors may influence school dropout in a particular way, it is also not known which institutional factor influence pupils‟ wastage. The school has a powerful influence on student‟s achievement and wastage. There are many forms of school factors which include and not limited to pupil‟s composition, school resources, structural characteristics of the school and school practices (Rumberger& Thomas, 2000; Ananga (2011). Adu and Olatundun, (2007) stated that teachers‟ characteristics are strongly determiners of students‟ performance in schools. Teachers have a lot of influence on their classroom practices. Teachers should have and apply specific abilities in their subjects which is not limited to guidance and counselling to enable their pupils improve performance. Without their influence pupils who come from low status are more likely to drop out of school causing wastage. Kombo (2005), observed that the relationship style of the head teacher creates a conducive learning environment for pupil. A cordial relationship between the head teacher, teachers and the pupils create conducive environment to learning as discussions are listened to. 

According to Lewin (2009), wastage rate for primary school pupils aged 15 to 19 years old and the survival rate to the end of primary school for pupils aged 10 to 19 years are indicators affected by the degree of drop out and repetition in the system. Institutional factors of gender orientation such as inadequate latrines, sanitary facilities for girls especially in rural schools, lack of school uniform and repetition have contributed to wastage of pupil. The low achievers in schools who are forced to repeat grades increase the chances of dropping out of school. Those pupils who are over-age in their grades perform poorly in their academic work compared to the young pupils, hence marginalization within the school is likely to proceed from poor achievement to academic failure and eventually wastage. 

According to Dachi and Garret (2003); Hunter and May (2003); it highlighted the link between poverty and dropping out from school. It states out poverty as a plausible explanation of school disruption in most schools. Looking at the issue from how people regard schooling and its importance, Pryor and Ampiah (2003) explains that the interactions between schooling, household income and school may or may not lead to pupil‟s wastage. In some villages in Ghana, education is regarded as “relative luxury,” with many villages considering education not worthwhile. Depending on the environment, the school can open or close doors that lead to wastage (Barr, 2005). Socio cultural factors differ from one community to another or from one region to another. Addressing the teachers, parents and the pupils during educational day in Keiyo South Sub County, in the year 2012, education stakeholders, expressed their concern over pupil wastage in Keiyo South Sub County. Community leaders also expressed the same sentiments. Thus, there was need to carry out a study on socio cultural factors that influence pupil wastage in the context of Keiyo South Sub County.

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RELATIONSHIP BETWEEN STRATEGIC PLANNING AND ORGANIZATIONAL PERFORMANCE OF MEDIUM SIZED ENTERPRISES IN NAKURU TOWN, KENYA

ABSTRACT 
The business environment is increasingly becoming uncertain and unpredictable because of globalization, technological changes and trade liberalization. As a result, like large enterprises, SMEs are facing many new and unexpected challenges that threaten their performance and competitiveness. Strategic planning is a management tool that helps organizations focus their energy and resources to ensure that goals and objectives are achieved. The SME sector plays an important role in economic development in terms of poverty reduction and employment creation in Kenya. Previous studies in this area, focused on Strategic planning in large firms and very few studies have been done on the impact of strategic planning on small and medium sized firms. This study determined the relationship between strategic planning and performance of medium sized enterprises in Kenya. The objectives of the study were to determine the relationship between strategic environmental analysis, organizational direction and strategy formulation on firm performance. The study used structured questionnaires to gather primary data from Medium sized enterprises. The structured questionnaire was used on 47 medium sized enterprises. Multiple regression and Pearson’s correlation were used to test the study hypotheses. The results show that environmental analysis, organizational direction and strategy formulation had a positive influence on performance of medium sized enterprises. R2 was 0.424 indicating that strategic planning explains 42.4% variation of organizational performance of medium sized enterprises. The study indicates that strategic planning significantly influences organizational performance, therefore, organizations need embrace strategic planning to enhance performance in their organizations. However, there are other factors besides strategic planning which also influence organizational performance. Therefore, the study recommends further research to identify the other factors which influence organizational performance.

CHAPTER ONE 
INTRODUCTION 
Background of the study 
Globalization has resulted in fierce competition internally and externally to many organizations. However, coping with the ambiguities brought about by such development and how to achieve competitive performance is a real challenge for every organization, small and medium sized enterprises included. Companies have to take appropriate actions to deal with these challenges. 

According to Raduan et al (2009), a business that does something that is distinctive and difficult to replicate has competitive advantage and is likely to be more profitable than its rivals. Pearce and Robinson (2011), assert that from a resource based view strategic planning can result in strategic change which may increase strategy-environment fit, hence can become a source of sustained competitive advantage especially when strategic planning system improves flow of products and services between manufacturers and users. 

Small and Medium Enterprises (SMEs) play a very important role in a nation’s economy. This is true for both developed and developing countries. SMEs constitute a high proportion of a nation’s business activities and generate more employment opportunities than large corporations in recent years. 

Although small and medium size enterprises typically employ a major share of an economy’s total employees, formal plans and cost controls are often only provided on a regular basis and planning instruments are usually only used by a small number of individuals and developed rather intuitively (Brinkmann, 2002). These shortcomings point towards the importance of examining the value of strategic planning for SME’s in detail. 

Medium Enterprise Sector in Kenya 
Medium sized Enterprises play a very important role in a nation’s economy. This is true for both developed and developing countries. They constitute a high proportion of a nation’s business activities and generate more employment opportunities than large corporations in recent years. 

The small and medium enterprises play an important role in the Kenyan economy. According to the Economic survey 2011, of the 503,000 jobs created in 2010, 80.6 percent or 440,400 were in the Small and medium Enterprise sector. Despite their significance, past statistics indicate that three out of five businesses fail within the first few months of operation (Kenya National Bureau of statistics, 2007). 

There is no universal definition for Small and Medium Enterprise (SME). There are different standards about the definition of SMEs in Kenya. A national baseline survey of SMEs carried out in 1999, defines a small enterprise as one which employs 6-10 people, while a medium one is expected to have 11-100 employees (CBS et al, 1999). However there is an SME bill that has been in process in Kenya for more than 10 years, but has not yet been enacted into law. This bill takes a different approach by combining employment with other measures of size. It defines a micro-enterprise as a business activity whose annual turnover does not exceed Kshs.500, 000 and or employs less than 10. 

In spite of their many contributions, Small and Medium Enterprises are ‘plagued’ by high failure rates and poor performance levels (Jocumsen, 2004). To ensure sustained development of the sector, it is vital to understand why some enterprises are more successful than others. Comprehensive of extant studies in SMEs (Shwenk & Shrader 1993) suggest that ceteris paribus, a key determinant of business success lies in the presence or absence of strategic planning and management. 

Strategic planning 
Strategic planning is concerned with the setting of long term organizational goals, the development and implementation of strategy to achieve these goals and the allocation or diversion of resources necessary for realizing these goals (Stonehouse & Pemberton 2002). In practical sense, strategic planning is about competitive advantage. The purpose of strategic planning is to enable a business to gain as efficiently as possible, a sustainable edge over its competitors. 

Research has consistently shown that most small and medium sized enterprises do not engage in strategic planning (Berman et al, 1997; Orser et al, 2000; Sandberg et al, 2003). This is at odds with much of the strategy literature that dictates that enterprises must actively plan for the future to compete effectively and survive (Ennis 1998). Accordingly, SME owner-managers have been accused of being strategically myopic and lacking the long term vision as to where their company is headed (Mazzarol, 2004). The concern is that by neglecting strategic management and planning, SMEs may not achieve their full performance and growth potentials, and their survival could be placed at risk (Berry 1998). 

Strategic planning is more likely in to be, in those enterprises that are innovative, that have more newly patented products and that employ new processes and management technologies and that achieve international growth (Upton et al, 2001). 

With respect to performance, strategic planning and management are more common in better performing SMEs. SMEs that engage in strategic planning, compared to those that don’t, are more likely to be those that achieve higher sales growth, higher returns on assets, higher margins on profit and higher employee growth (Bracker et al, 1988). 

While it is certainly true that SME performance success is driven by more than strategic planning alone, previous findings generally support the contention that there are, on balance, greater advantages to it. However, given the evidence, it is well recognized that strategic planning is rare or nonexistent in the majority of SMEs. In practice, SMEs tend to orientate towards short term operational rather than long term strategic issues and decision making tends to be reactive rather than proactive (Gaskill et al, 1993). In SMEs that claim to plan, plans are frequently ad hoc and intuitive rather than formally written and provide little basis upon which business performance can be measured or analyzed (Kelmar & Noy 1990). 

If the high rate of insolvencies and failure amongst SMEs, relative to larger businesses in the economy are to be taken as a guideline, it is clear that the financial risks involved in managing, owning and investing in small to medium sized businesses are relatively high.

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