Competition as a Response Strategy to Globalization by Manufacturing Firms in Kenya

Abstract

Globalization affects local and international firms in many ways. Studies have shown that factors in the internal as well as external environments of firms influence the rate to which globalization will affect them. On the local scene however, no known studies have been done on the response of Kenyan manufacturing firms to counter globalization. In addition, since the concept of globalization is multidimensional and its influence is varied in nature, this study aimed at investigating how manufacturing firms in Kenya have responded to probable pressure from the forces of globalization in order to sharpen their competitiveness. Cross sectional survey design was adopted for the study. The population for the study was the 735 manufacturing firms in Kenya. The target population of the study was CEOs/MDs and their deputies from 545 manufacturing companies in Nairobi and Athi River. Stratified sampling technique was used to categorize the targeted manufacturing firms into sectors where purposive sampling technique was used to sample the respondents for the study. A total of 100 firms from the 14 sectors were targeted by the study out of which 80 responded giving a response rate of 80%. Questionnaire was used to collect primary data. Regression and correlation analysis was done to test the relationship between the study variables. On the relationship between competition and globalization in manufacturing firms in Kenya, the study found that 60% of the respondents indicated to a large extent exploring other markets is a competitive strategy of responding to globalization, 55% of the respondents indicated that to a large extent increasing the range of products produced is a competitive strategy of responding to globalization, 40% of the respondents indicated that to a very large extent innovations are competitive strategies of responding to globalization. The findings from the correlation analysis showed that globalization has a positive relation with competition with a Pearson’s Correlation Coefficient of 0.558 and 0.021 level of coefficient. The null hypothesis that there is no significant relationship between globalization and competition was therefore rejected. The study concluded that manufacturing firms in Kenya have adopted competition as response strategies to globalization. The study recommended that manufacturing firms should reduce the direct cost such as energy while improving the market share.