Strategic Responses by Firms Facing Changed Environmental Conditions - a Study of Motor Vehicle Franchise Holders in Kenya

Abstract

The on-gomg econonuc reforms have created a fundamental shift in the environment in which firms operate. The major outcome of the reforms is liberalisation of trade. Firms m Kenya are now operating m a competitive environment. The study set out to document the strategic responses of the motor vehicle franchise holders in Kenya to the changed environmental conditions. To achieve this, the objectives of the study were: To determine whether the firms have changed their missions, goals, objectives, policies and plans in response to competition. To determine what adjustments in product, price, promotion, distribution, cost structures, research and development, and market predispositions the firms have adopted in response to competition. Primary data was collected using open-ended and closed-ended questionnaires from a sample of 10 firms which had established in Kenva before the industry was liberalised. The data was thereafter analysed using talbles, mean scores, and percentages. The analysis revealed that in their missions, the firms have made changes in their principal technologies by investing in new equipment so as to make competitive products. They have also changed their basic products by adding new features. Initiatives to penetrate new market niches was also revealed. The firms' philosophies are now more specific and are directed towards enhancing excellence in customer

service. The firms have made changes in the ranking of their goals. Most firms now rank survival to be the most important goal unlike before liberalisation when profitability was more important. The firms have changed their policies, and the policy that almost all the firms have changed is the marketing policy in which more aggressi ve marketing is now adopted. In planning, the firms now adopt participative management than was before liberalisation. Ideas from all levels of staff are now welcome. there are frequent interactions to review the plans and communication of plans is now enhanced in most of the organisations to ensure the understanding of the plans developed. The franchise holders have also made adjustments in their strategic variables either moderately or significantly. The most adjusted strategies are the product strategies in which most firms have significantly improved their product qualities, features and offering of a variety of 'models. In promotion strategies, advertising expenditures have been increased considerably. In research and development, the firms have very much increased information gathering on competitors and customer needs and efforts are directed to satisfy the customers' needs. In cost structure strategies, the analysis revealed significant improvement in technology and capital - . investment in information technology. The other strategies such as pricing and distribution have been moderately adjusted.