E STIMACIÓN DE LA TEMPERATURA DE ROCÍO DEL KEROSENO

The economic crisis, which started with the crash of the Zimbabwean dollar on the black Friday of 1997 and lasted until 2008 contributed significantly to the already declining performance of manufacturing firms in Zimbabwe (Davies et al. 2012). According to Anderson (2010), an economic crisis is a situation in which the economy of a country experiences a sudden downturn due to several factors, which may be financial, political, and mismanagement. He further indicated that economic crises are characterised by falling GDP, drying up of liquidity, higher levels of inflation, unemployment and low levels of trade and investment. Zimbabwe experienced these challenges from 1996 (UNDP 2010). The challenges brought about by the economic crisis affected several sectors including the manufacturing sector (CZI 2016). According to the CSO (2008: 68), the Zimbabwean economic crisis (1998 -2008) led to hyperinflation of up to 230 million percent.

The hyperinflation contributed to a decline in the general income levels of consumers and a fall in the general demand for manufactured goods (ICAZ 2013; Ellyne 2015; Robinson 2006; Block 2009; Chitambira 2009). The economic crisis also led the shortage of foreign currency, fuel, working capital and power supplies (Chitambira 2009; Block 2009; Kanyenze et al. 2011). Hyperinflation reduced the country’s capacity to import critical equipment and raw materials for the manufacturing of goods (Ellyne 2015; Hanke and Krus 2012; Hawkins, Kanyenze, Dore, Makina & Ndlela 2008; UNDP 2010). These factors added to the challenges of manufacturing firms whose performance was on the decline.

Zimbabwe’s GDP declined to an average of -5% by 1999 (Kanyenze et al. 2011: 45). This negative growth affected the country’s capacity to export its commodities and procure machinery for firms in the manufacturing sector. The firms in the manufacturing sector could not replace obsolete equipment, which affected the competitiveness of the country’s goods (Siyakiya 2014; CZI 2016).

The increased number of imports in the domestic market led to a decrease in the demand for domestic manufactured products, forcing manufacturing firms to reduce production (ICAZ 2013; Gumbe & Kaseke 2009; CZI 2016). Manufacturing firms are still struggling to cope with the competition from imported commodities which, in turn, has made economic recovery difficult. Excessive importation of almost all products, mainly from South Africa and China, has reduced the demand for locally manufactured goods (Mavengere 2011). About 80% of manufactured goods in the country are imported and this has significantly reduced the market for local manufacturing firms

22

(CZI 2010:24). The economic crisis therefore created several challenges for firms in the manufacturing sector. Despite facing the same unfavourable economic conditions, significant variations in the performance of firms have been noted. Several firms in the manufacturing sector have closed, others experienced decline in their capacity utilisation from above 50% to less than 40%, while other firms have improved their capacity utilisation from less than 50% to as high as 75% (CZI 2013:13; Saungweme et al. 2014).

The variations in performance indicate the possible impact of internal factors since the firms are operating in the same business environment. This justifies the need for research focusing on the relationship between strategies and performance of manufacturing firms post 1996. Furthermore, limited study has been done focusing on the relationship between strategies and performance of firms in the current economic crisis. Existing literature also shows variations in the views on the influence of various strategies on performance of firms in economic crisis conditions. This further provides the basis of this study.

2.5 Chapter Summary

In summary, this chapter highlights the impact of the economic crisis on the performance of manufacturing firms in Zimbabwe, as well as the contribution of the economic crisis to the declining performance of the manufacturing sector. The researcher in this study paid special attention to the status and context of the manufacturing sector during the economic crisis, including variations in the performance of the manufacturing firms in question. An additional focal point was the pre-crisis status of the manufacturing sector. It is envisaged that the holistic picture of the manufacturing sector in Zimbabwe, in the past and the challenges faced will lead to a better understanding of this sector. This knowledge is significant in determining the contribution of this study to the manufacturing sector in Zimbabwe.

Chapter 3 reviewed related literature concerning the variables of this study, namely strategy and performance.

23

CHAPTER THREE LITERATURE REVIEW 3.1 Introduction

Chapter 2 established that manufacturing firms in Zimbabwe have experienced significant variations in performance after 1996. Despite operating in the same unfavourable environment, the performance of some firms improved; others, however, experienced a decline in performance, and several firms even closed. This indicates that the source of the variations may be owing to different strategies the firms exercised during the economic crisis. It is therefore important to review the literature focusing on the relationship between strategies and performance in various business environments.

The main objective of this chapter is to review literature focusing on the relationship between the strategies and performance of firms. In line with this objective, the first part of the chapter reviews literature on the theoretical domains focusing on factors affecting the nature, structure, behaviour and performance of organisations. The second part of the literature review focuses on the concept of strategy. The third part focuses on constructs to measure strategies. In Chapter 3 literature on performance in terms of its definitions and constructs to measure performance is also reviewed. The literature that was reviewed mainly focuses on how various strategies influence performance of firms in different business environments. The need and justification for this study was therefore based on the literature reviewed.