Strategy and structure relationship in locally owned pharmaceutical manufacturing companies and multinational pharmaceutical companies operating in Kenya

Abstract

This thesis analyzes the changes in strategy and structure in the pharmaceutical industry in Kenya over the past 10 years. The study looks at the development of the pharmaceutical industry in Kenya with an emphasis on determining the changes in strategy and changes in structure, which took place in the 1990s and to establish the nature of the relationship between strategy and structure in the Kenyan pharmaceutical industry. Only one similar study has been carried out in Kenya by Matseshe (1999) who studied the strategy structure relationship in Kenyan enterprises. He concluded that strategy and structure were reciprocal among the companies studied. He further went to test the nature of the relationship and found that amongst the firms studied in the manufacturing industry, strategy and structure drive one another. Although the researcher did not anticipate fp1dings similar to those of Matseshe it is worthwhile to investigate if there are any peculiarities tha.t...canbe discovered, given the different nature of the firms which have been studied and the unique circumstances of the firms, especially given that they operate in a similar industry. To achieve these objectives, primary data was collected by use of a questionnaire targeted at senior managers in the pharmaceutical companies. A census study was carried out on 44 pharmaceutical companies in Kenya out of which 20 were locally owned pharmaceutical manufacturing compames and 24 multinational pharmaceutical companies operating in Kenya. Out of the companies that responded 15 were locally owned pharmaceutical manufacturing companies while 15 were multinational pharmaceutical companies operating in Kenya. The questionnaires were personally administered through a drop and collect later approach. The data collected was analyzed using the SPSS version 10 statistical computer package and the results were presented by use of simple descriptive statistics like means and percentages. Upon the interpretation of the findings, it was found that changes in the strategy of the multinational companies' have been driven by mergers and acquisition, by regional expansion and by new product introduction in the region and these have led to changes in the structure of these companies through an increase in the number of employees, mangers and managerial levels. These changes have had a positive impact on the performance of the organizations and hence the nature of the changes in the strategies of these companies has led to the changes in their structures. -. In the local pharmaceutical compames changes in strategy were driven by regional expansion, increased competition and by new product introduction in the region. Structural changes were mainly an increased work force but no change in the number of managers or managerial levels and no change in the levels of organization structure. These changes in the company structures took place at the same time when changes were taking place in the company's strategies and no change in anyone led to a change in the other. Therefore the changes in strategy and changes in structure were reciprocal.