Response Strategies to Increased Competition by Spare Parts Dealers Franchised by Japanese Motor Vehicle Companies in Kenya

Abstract

Kenya's motor Sector has undergone major transformations since the advent of Structural Adjustment Programs (SAP) in the 1990s. The environmental change created pressure to the firms to adapt their operations to the new conditions. The organizations therefore have to find new ways of copying with and pre-empting the competitive forces facing them. The franchised spare parts dealers are increasingly finding themselves competing with both non-franchised companies and briefcase businessmen who sell a combination of genuine, generic and second-hand spare parts. This research project was a study of response strategies to increased competition by seven spare parts dealers franchised by Japanese motor vehicle companies in Kenya. The two objectives of the study were to establish the challenges of competition these companies faced in the context of changing competitive environment and to document the relevant responses made by the firms. The study established that the changing competitive situation in the Kenyan spare parts sector has posed challenges to the franchise holders. These challenges have risen from changes in the business environment in terms of economic growth that have led to several new entrants joining the industry. Liberalization of the motor industry, legislative changes, increasing level of education among the consumers and technological advancements has also affected how the businesses conduct their activities. The management of these changes has been made more difficult by the presence of all the five forces that determine the competitive situation and profitability in the industry. The research findings indicate that several responses by the franchised spare parts companies to changes in the environment were done. The firms are continuously reorganizing the resources and skills to match with the environmental opportunities and threats faced by the organization. The revision of the strategy at both the strategic and operational levels has been necessary and has necessitated restructuring of business processes, marketing, and culture change among other responses. New technology has also been embraced including up to date computerization of spare parts catalogues and means of communicating with customers.