Strategic Responses by Firms Facing Changed Competitive Conditions: the Case of East African Breweries Limited

Abstract

Political and economic reforms are sweeping the whole world affecting the Soviet Union, Germany, Eastern Europe, Asia, Latin America and Africa. Such reforms have created a fundamental change in the environment in which firms operate. An obvious manifestation of such changes is the liberalisation of trade. Such liberalisation has meant that local firms in Kenya have to contend with unbearable cO,mpetitive pressures from the resilient global companies.The study set out to document the strategic responses adopted by East African Breweries Limited (EABL) to environmental turbulence. The objectives of the study were: - To determine the changes that have occurred in the beer industry with the onset of the liberalisation. To determine what adjustments in products, prices, promotion, distribution, costs structures, market research, staff development and market predisposition the firm has adopted. Primary data was collected using open and closed-ended questionnaires from executives of East African Breweries Limited. The data was thereafter, analysed using tables, mean scores and frequencies. The analysis revealed that EABL has made various changes in its principal brewing and bottling technologies by investing in new equipment so as to make competitive products. The company has also changed the 'basic products by adding new features. Initiatives to penetrate new market niches were also revealed. The firm's philosophiesare now more specific and are directed towards enhancing excellence in customer service. EABL has made changes in the ranking of their goals. Survival nowranks as the most important goal, while before liberalisation, profitability was the most important. The various policies have also been changed. The marketing policy currently advocates for more aggressive approach. The strategic variables have also been adjusted either moderately or significantly. The mOST adjUsted strategies are those of product and promotion. The products havebeensignificantly improved in quality, features and variety. Advertising expenditures have been dramatically increased. In market research the firm has significantly increased information gathering on competitors and customer needs. Efforts are directed towards satisfying the identified customer needs. In cost structure strategies, the study revealed significant improvement in technology and capital investment in information technology. The other strategies suchas pricing and distribution have been moderately adjusted. By undertaking various strategic responses, EABL was able to not only defend its market share but also to increase its profitability and efficiency. The success of EABL is a learning experience for local companies facing or about to face the effects of changed competitive conditions.