Relationship between Financial Planning and Performance Of Tea Firms: A Case of Lipton Teas and Infusion Limited, Kericho County, Kenya

Abstract

Agricultural manufacturing firms, specifically the tea firms, makes a major contribution as a source of livelihood for millions of Kenyans and contributes to Kenya’s economy. However, the performance of tea manufacturing firms in Kenya has been of major concern over the past decades. Many tea companies still witness low financial performance and there is a need to address these issues as many stakeholders have raised concerns. There is little research that has been done in the agricultural firms in Kenya, specifically on the tea firms, while many studies have focused on other industries like the service industry, leaving the tea firms unexplored. This study sought to assess the relationship between financial planning and the performance of Unilever Tea Kenya, Ekattera and now Lipton Teas and infusions in Kericho County, Kenya. The study was guided by the following objectives; to determine the relationship between budgeting, risk management, cash management, and financial performance of Unilever Tea Kenya, Ekattera and now Lipton Teas and infusions in Kericho County. The study was anchored on the theory of budgeting, liquidity performance theory, and moral hazard theory. The study adopted a cross-sectional research design. A target population of 150 employees drawn from the top, middle and lower management employees was considered in the study. A sample size of 109 respondents was obtained scientifically using the Yamane (1967) formula. The study adopted purposive and simple random sampling techniques to select respondents. The study used both secondary and primary data. The primary data was collected using a structured questionnaire, while secondary data was collected from the records at Unilever Tea Limited, Ekattera now Lpton Teas and Infusions. The researcher ensured validity by discussing the content of the questionnaire with the research supervisor in consultation with the experts, where their inputs was incorporated into the final research instrument. Cronbach Alpha Coefficient of 0.896 was used to determine the reliability of the instrument. Data collected was analyzed using descriptive and inferential statistics, where descriptive results was presented in the form of means and standard deviation, while inferential statistics used correlation and regression models. The findings of the study were presented using tables, pie charts, and figures. The findings established that financial planning practices has a positive influence on the financial performance of the tea (Budgeting, r=0.291, P<0.05; Risk management, r=0.584, P<0.05; and Cash management, r=0.699, P<0.05). The study findings will be useful to policymakers in providing guidelines to the managers and policymakers on financial planning in the tea. The findings will also provide valuable information on financial planning so as to improve the organization's performance .