Cost Management Strategies for High Performance in the Tea Industry In Kenya

A high performance organization continuously innovates products, processes and services and  creates new sources of competitive advantage by  developing new products and services to respond to market changes.KTDA  manages... [ view full abstract ]

A high performance organization continuously innovates products, processes and services and  creates new sources of competitive advantage by  developing new products and services to respond to market changes.KTDA  manages the cash crop from cultivation to marketing of tea  on behalf of 600,000 farmers. This study looks at four cost management strategies and their effect on  performance. Results indicate that  innovation  helped KTDA  reduce cost of production by Ksh 13.67 per kilogram of made tea and increased the average returns to the farmer  to kshs 74.66 up from Ksh.63.55.Order consolidation led to reduced cost of purchasing and handling of supplies by over 40%. Use of firewood in curing tea and generation of hydro power by factories  led to reduced costs and  improved return to the farmer. Finally the  study found that  FFS had a positive impact on returns,  improved productivity of green leaf, is cheaper and more effective than  extension workers.