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Changes In Business Environment In Kenya: A Study Of Their Influence On Food Manufacturing Firms In Nairobi.
| Content Provider | Semantic Scholar |
|---|---|
| Author | Chune, F. M. N. |
| Copyright Year | 1998 |
| Abstract | The study was carried out between May and July, 1998. The principle objective of the study was to identify changes in food manufacturing firms internal corporate behaviuor which may be as a result of changes in the external environment. The firms studied were those in Nairobi. Fifteen food manufacturing firms agreed to participate in the study. Questionnaires were completed and provided information in this report. To assess the influence of changes in external business environment, primary data was collected through personally administered questionnaires. They had both structured and unstructured questions. It was observed that food manufacturing firms studied indicated changes in the internal behaviour due to changes in their external environment. Government policy and competitive activities appear to be the major factors in the external environment that affect internal behaviour. Government's policy should therefore aim at creating an enabling environment for business firms to pursue their business objectives. These changes in the external environment have led firms to concentrate on their brands, competition information gathering and advertising as a competitive strategy. The changing business environment is influencing firms to change the way in which they carry on their operations. Firms have been forced to focus on the external environment and determine which elements they can manage by changing their internal posture. The study reveals various internal changes that have been adopted by firms to react to the changing external environment. 1.1 Background CHAPTER ONE 1.0 INTRODUCTION. The business environment in Kenya has been changing since the country attained independence in 1963. After independence, the new government chose an interventionist approach towards the management of the economy. This was done through policies that gave the state a prominent role in production and regulation of economic activities. This approach included protective trade policies and creation of government monopolies that reduced competition . The interventionist policy led to overvalued exchange rates and large prolonged budget deficits. This undermined long term growth. In the 1970's the government introduced a web of regulations and licences for most economic activities, restriction of trade and allocation of foreign exchange. State owned enterprises were created and given special access to scarce credit. During the same period, the government was unwilling to rely on foreign capital and had an underlying distrust for the allocation of resources through the market forces. There developed negative bias towards the private sector due to distrust of market forces. This was used to justify government interference in economic activities. In addition there occurred too many administrative bottlenecks in the system of government administration. These bottlenecks led to very high costs for private businesses due to inefficient public services. This scenario resulted into serious micro and macro-imbalances in the economy during the period 1980 85. (Swamy G, 1994) Observations made by World Bank indicate that governments in developing countries have regulated purely economic aspects of firm's behaviour hampering competition and often causing high costs in lost output and income (World Development Report, 1991). This government regulation that leads to barriers to entry and exit can do enormous harm by encouraging unprofitable and inefficient firms and discouraging new entrants. Under these restrictive trade practices, benefits accrue to large firms from manipulation of the system itself rather than from innovation or adoption of new technologies and efficient production that would be demanded from the rigour of competitive markets at home and abroad (World Development Report, 1991). From 1986 to date efforts by the Kenyan government have been made to move the economy from an interventionist type to a market driven orientation. The government has attempted to free the market through the implementation of changes like structural adjustment programmes and other regulatory machinery in order to provide an enabling environment for free market operations to thrive. This change in government policy has opened up the economy to intense competition especially in previously protected sectors. The food manufacturing industry has not been spared in this scenario. Imports from other countries have been introduced to the Kenyan market posing threats to local industries. Due to liberalisation of trade and licencing procedures, food manufacturing firms are proliferating and providing competition to existing firms. In order to remain competitive and grow, firms in the food manufacturing industry have to adopt certain corporate postures that will enable them withstand competition providing for survival and growth for the firms. The posturing requires that firms properly study external environment to shield the organisation:s from any external threats and allow them to exploit opportunities identified in the external environments. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://erepository.uonbi.ac.ke:8080/xmlui/bitstream/handle/11295/37831/CHUNE_F._M._N._M.B.A._1998.pdf?isAllowed=y&sequence=3 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
