Challenges of internationalization of business operations by medium size manufacturing enterprises in Nairobi county, Kenya

Abstract

Internationalization in medium size firms is more often combined with threats than with opportunities. Kenyan manufacturing firms are faced with a lot competition in the current markets. Despite diminishing opportunities in the local market and also in spite of the efforts made by the government towards regional integration, very few medium size firms have internationalized their operations into the regional block. The study sought to determine the challenges of internationalization of business operations by medium size manufacturing enterprises in Nairobi County, Kenya. The research study adopted a cross sectional survey. The population comprised the 102 medium size manufacturing enterprises in Nairobi County, Kenya whose operations have been taken international. 30% (30 firms) of the medium size manufacturing enterprises in Nairobi were selected. The respondents were business unit heads designated as CEOs or Senior Managers, general managers and functional heads from each of the firms. This study collected both primary and secondary data. Primary data was collected using a self administered semi- structure questionnaire while secondary data was obtained from the information published by the firms, industry regulators and government agencies. Data collected was purely quantitative and it was analyzed by descriptive analysis. The descriptive statistical tools such as Statistical Package for Social Sciences (SPSS) and MS Excel helped the researcher to describe the data and determine the extent used. Data analysis used frequencies, percentages, means and other central tendencies. In addition, the researcher conducted a multiple regression analysis. The findings were presented using tables and charts. The study found that there has been a moderate level of internationalization of business operations of the medium size manufacturing enterprises in Nairobi. Internationalization of business operations leads to firms' growth in terms of market share, increase in revenue and capital base, enhanced product quality to meet the demand in the large market and increase in profitability. The main challenges encountered by medium size manufacturing enterprises in Nairobi are financial support in foreign markets, competition by cheap entrants, tariffs, market information and foreign exchange fluctuations. The study recommends increased management involvement at all levels as a key driver in helping ramify quality management further across the firm.