Strategies Adopted by Multinational Corporations to Cope with Competition in Kenya

Abstract

Multinational corporations (MNCs) operate in a global environment unfamiliar in political, economic, social, cultural, technological and legal aspects. Increased competition among multinational corporations and the entry of other players in the Kenyan market necessitate the design of competitive strategies that guarantee performance. Creating strategies for coping with competition is the heart of strategic management which is critical for the long term survival of any organization. This paper examines the strategies adopted by MNCs to cope with competition in Kenya. To establish the strategies adopted by the MNCs, forty questionnaires were administered to senior managers of MNCs targeting 19 percent of the total population of 213 MNCs in Kenya. Stratified disproportionate sampling was used to select the forty MNCs. This study established that MNCs in Kenya have adopted a number of strategies including: better quality, excellent customer service, innovation, differentiation, diversification, cost cutting measures, strategic alliances, joint venture, mergers and acquisitions, as well as, lower prices, to weather competitive challenges. The study found that the most popular strategies adopted by MNCs that were both foreign and locally owned (mixed ownership) were better quality, excellent customer service, lower price, franchising and licensing. The study further found that strategies like innovation, differentiation, diversification and strategic alliances were used more less to the same extent by both types of MNCs. The only strategies that purely foreign owned MNCs were found to use more than the MNCs that were both foreign and locally owned were cost cutting strategies. This study has important implications on the role of board of directors regarding strategies adopted by MNCs in host countries. There were significant differences between the two types of MNCs regarding the strategies that were adopted most.