Strategic alliances between domestic and foreign firms in Kenya

Abstract

Strategic alliances are long-term contracts between legally distinct organizations that provide for sharing the costs and benefits of a mutually beneficial activity (Hitt, Ireland and Hoskisson 1997). Both foreign and domestic giants in all industries have realized that they cannot make it on their own and formation of strategic alliances is the only way to stay competitive, and as a result they have made strategic alliances a core part of their overall strategy. This study was about strategic alliances between foreign and domestic firms in Kenya. The research questions were what is the extent of involvement in other strategic alliances? What are the major reasons for forming strategic alliances between domestic and foreign firms? And are strategic alliances between domestic and foreign firms in Kenya effective? The study was a census survey. Data was collected from all the domestic firms in Kenya that have formed strategic alliances with foreign firms. The data was analyzed and the findings indicated that most of the firms formed the strategic alliance because it was a learning opportunity, a way of developing standard products and services for their customers, improving the firm’s growth and supply chain efficiency. Most of the alliances had being in existence for a long period of time and they had met the reasons for forming the strategic alliance to a great extent and others to a moderate extent. The results also revealed the success factors as excellent expertise, common goal, effective training of the partners at all levels, adequate monitoring and evaluation of the resources, support from the government ministries and good rating by international and local firms. In view of the foregoing findings, firms should consider forming strategic alliances with foreign firms. This is because it gives firms a competitive edge and enables the firms to achieve their objectives.