Factors influencing business internalization in motor vehicle sector:A case study of General Motors East Africa

Abstract

Internationalization through export is one of the strategic responses to rising domestic competition, saturated market, low capacity utilization and search for growth. Kenya has experienced mixed fortunes in the vehicle export market. The growth in new vehicle export as w ell as the ratio of export to total sales has been very low. On the other hand, the three motor local motor vehicle assembly plants have remained highly underutilized. Although General Motors East Africa (GMEA), the leading vehicle exporter in Kenya, has allocated substantial resources over the years in the export business, little incremental value has been realized (Kenya vehicle Manufacturers Association Report, 2006). A case study of GMEA was conducted with the objective of identifying factors influencing vehicle export and evaluating effectiveness of the internationalization strategies employed. Primary and secondary data was used. Primary data was collected by use of questionnaires targeting 11 respondents drawn from GMEA senior staff and dealers. The research was conducted between November and December 2007 and 10 responses out of 11 received. Descriptive statistics (Mean, frequency and standard deviation) was used to analyze the data. The key success factors in vehicle export were identified as product quality, warranty, distribution, pricing, technical support, financing, parts support, delivery, brand name and promotion. The main challenges encountered are financial support in export markets, competition from cheap entrants, tariff, availability of market information and foreign exchange fluctuations. To address strategy gaps and improve export business, GMEA will have to strengthen or develop and implement strategies in the areas of pricing, promotion, product offering, distribution and financing. Great opportunity lies with regional integration and vehicle export remains viable. Key Words- Quality, warranty, distribution, pricing, technical support, financing, parts support, delivery, brand name , promotion, small and medium sized enterprises (SMEs), trade liberalization and Key success factors