Response Strategies to Legal Changes by Plastic Bag Manufacturers in Kenya

Abstract

Organizations survive or collapse partly as a function of their response strategies to challenges or opportunities stemming from the environment. To survive and maintain competitive advantage, organizations have to develop responsive and effective response strategies. The legal environment plays an important role in the operations of organizations. Therefore, managers have to continually scan the legal environment for changes, and develop response strategies that align with the environment, and the organization’s adaptive capacity. The objective of the study was to determine the response strategies adopted by plastic bag manufacturers in Kenya to legal changes. The population of the study covered all the 14 firms based in Nairobi and Eldoret as registered by the Kenya Association of Manufacturers. A cross-sectional survey research design was used for the study and the primary data was collected through the use of semi structured questionnaire. The “drop and pick” method was used in collecting data. Three of these firms had shut down operations due changes in the legal environment and therefore, 11 questionnaires were distributed, 9 firms responded to the questionnaire. This represents a response rate of 64%. Descriptive analysis and inferential statistics was used to analyze the data. Descriptive statistics used included percentages, frequencies as well measures of central tendency that is the mean. Inferential statistics used one sample T- test at a test value 3 and significance level of 95%. The study showed that the Plastic Bag Manufacturing Firms were to a large extent impacted by the legal changes. The study found that the firms used restructuring, retrenchment and cost reduction strategies to a large extent in responding to changes in the legal environment. The study concludes that for plastic manufacturing firms to effectively respond to legal changes, it is paramount that they possess legal astuteness, interpret the legal currents correctly, and develop appropriate adaptive strategies. The limitation of the study was that some of the respondents were not willing to fill out the questionnaire due to confidentiality concerns. The study recommends that the management of plastic bag manufacturers to be judicious during the restructuring process, and do a cost analysis to identify the impact of compliance cost on the firms’ competitive position. The study recommended areas for further research focusing on context, methodology and other variables.