Factors that account for operational superiority of multinational companies over local companies-the service industry: a case study of banking sector in Nairobi

Abstract

In recent years, Kenya has undergone a significant econorruc and political transformation conducive to developing a more positive commercial environment. In 1992, multiparty politics was allowed after almost 30 years of single party rule. On the economic front, the Government took positive macro-economic policy reform initiatives: elimination of price and import licensing controls, liberalisation of the foreign exchange system to include market determined exchange rates, development of more disciplined monetary and fiscal policies, and enforcement of greater monetary discipline with respect to the commercial banks. It is within this environment that both local firms and Multinational companies- find themselves operating. However, even though domestic companies have the advantage of operating in their home environment, they have had limited success. The study sought to determine the factors that account for operational superiority of multinational companies over local companies III Kenyan service industry particularly the banking sector. The objectives of the study were; •To determine the factors that gives multinational organisations an advantage over local compames in Kenya, and how these factors enable them to exploit opportunities III Kenya. •To determine the factors that makes the multinationals more successful than local or domestic companies in Kenya. To facilitate this study a list of the 43 registered banks was obtained from the Central Bank of Kenya. Only 25 banks agreed to participate in the research. Of those who did not respond, one was under statutory management while the remaining 18 said that their organisations policies did not allow them to provide them with the information required Through the study it was determined that there are four main factors that account for operational superiority of MNBs over the local banks in Kenya. These factors are human resources, technology, size and bank image. It is these factors that enable MNBs to exploit their opportunities and "have an advantage over the local banks.