Location Decisions by Food Manufacturing Firms in Kenya

Abstract

This study sought to investigate location decisions by food manufacturing firms in Kenya. The objectives of the study comprised of: to establish the key location decision models that are used by food manufacturing firms in Kenya; to determine the factors that influence the location decisions by the food manufacturing firms in Kenya; and to establish the location model that is highly recommended by manufacturing firms in Kenya. Descriptive research design was used to achieve study objectives. The population of interest was all the 71 food manufacturing plants in Kenya. It comprised of any two top management employees (operation managers and managing directors) who make key decisions on firm location. The total number of these top employees is equal to 142. A sample of 40 was selected using simple random sampling method. Primary data was used. The data was collected using semi structured questionnaires. Descriptive statistics were used to analyze data. The study revealed that four key location factors namely roads, ease of doing business, stable social and political environment and reliability, quality of infrastructure and utilities are considered the most important in influencing decisions in locating a food manufacturing firm in Kenya. It was established that Cost-Profit-Volume Analysis is the most used model for locating food manufacturing firms in Kenya. The most recommended model was Cost-Profit-Volume Analysis. This study recommends that policy makers in the food manufacturing industry should use strategic factors such as roads, ease of doing business, stable social and political environment and reliability, quality of infrastructure and utilities in determining firm location decisions. In addition, manufacturing firms in Kenya should use Cost-Profit-Volume Analysis model for locating manufacturing plants. These two methods will enable them have an objective way of deciding where to locate their firms.