Uma Sekaran Research Methods Business Pdf Producer Rivales Muc
Linda Berens
There is need for Kenyan small and medium enterprises (SMEs) in particular to focus concern on the orientation of business strategy toward global market strategy, market research geared at obtaining foreign market intelligence, innovation and technology, product adaptation, service orientation, collaborative ventures, and long-range vision as critical factors in making them successful in the international market. They also need to interact effectively with other firms in more or less tightly connected networks of shared production and innovation if they are to succeed in the current wave of globalization. The purpose of this study was to investigate the role of global market strategy on the global expansion of Kenyan firms. The research study used descriptive and inferential design as a chosen design. The researcher used multiple/multivariate regression analysis to determine the functional relationship between the independent variables and the dependent variable. The global market strategy variables considered include the following: market strategy incorporating: global advertising and promotion, external advisory services, foreign market specialization, competitive pricing strategies, and focus on quality products/services; foreign market intelligence on locating markets, trade restrictions, competition overseas, and market and investment opportunities; and logistics and distribution incorporating: handling of documentation, distribution coordination, warehousing, arranging transportation, and collaboration with large firms.
A random sample of 205 firms was drawn out of 440 members of Kenya Association of Manufacturers, based in Nairobi, from the Kenya Association of Manufacturers and Exporters Directory of 2012. The senior management of selected firms was surveyed and 175 firms responded making a response rate of 85 percent. The key finding from the research is that there is a functional relationship between global market strategy and global expansion of SMEs. The implication for practice and policy is that there is a need for collaboration between industry and government in pursuing policies for global expansion and among SMEs and large enterprises particularly in developing capacity and collaboration in global marketing strategy, market intelligence gathering, export promotion and strengthening of foreign trade missions. An early-warning system to alert firms of changes that may lead to potential failure in their global business activities can be developed.
Competitive success in an innovation-driven global economy needs strong local capabilities, and development of capabilities faces numerous market and institutional failures (Lall, 2002: Stiglitz, 1996, 2002). The globalisation of the business environment has made it crucial for small and medium enterprises to look for foreign market opportunities so as to gain and sustain competitive advantage (Aulakh, Kotabe, & Teegen, 2000; Kiran, Majumdar, & Kishore, 2013). It is argued that as more and more firms enter the international business environment, there is increased competition. Technological advancements, declining trade barriers, and others are driving the world economy to become more and more integrated and this rapid globalisation is enabling SMEs to become international in a quicker yet effective manner.
It is argued that African micro and small enterprises (MSEs) need not only focus on looking for funding for start-up and growth of their entrepreneurial business, but also should focus on those critical success factors (CSF) referred to as competitive assets or competences or in general those factors that will make them to compete successfully within a given market. The identification of and pursuance of the CSF will enhance their potential for sustainability and ability to anticipate and respond to changes in the market place. Some of those critical success factors that have been identified include building their capabilities, technical support that would enable them to access capital both locally and internationally as well as sound business systems. In addition, SMEs should focus on production of goods and services of superior quality, understanding customer needs, and meeting them better than their competitors. A vast majority of African MSEs could improve their chances of competing globally if in addition to funding there was sound business support and development services aimed at building MSEs (Katwalo, 2010; Mitanosk, Kojic, Jaksic, & Marinkovi, 2013).
In the Constitution of Kenya, the county governments are assigned trade development and regulation functions, including markets, trade licences, fair trading practices, local tourism, and cooperative societies. Together with other devolved functions such as agriculture, county public works, and planning, it is clear that county governments will play critical roles in MSME sector growth, and therefore, the sector growth will depend on whether these counties will develop an enabling environment and make the licencing process seamless and cost of licences reasonable (KIPPRA, 2013, pp. 196-198).
SMEs play an important role in the achievement of sustainable development goals (SDGs), promotion of inclusive and sustainable economic growth, creation of employment and decent jobs, promotion of sustainable industrialization and fostering innovation and the reduction of inequality (OECD, 2017). However manufacturing SMEs in particular face some challenges which include low innovation and product development, inability to access both domestic and international markets, inability to access affordable credit, tedious and lengthy process in quality standards and certification (KAM, 2018). In addition, they face limited access to markets which is a severe constraint to its growth and competitiveness. Further, as a result of their small sizes, SMEs usually find it difficult to compete in the domestic economy with established enterprises, face competition from imported goods, and lack requisite productive capacity and technologies to meet demand in the international markets. It is argued that some affirmative action and selective interventions and preference schemes by the government can enhance their market penetration. SMEs still find it difficult to access public procurement opportunities compared to large firms (OECD, 2017; KAM Priority Agenda, 2019, p. 34-35).
Micro, small, and medium enterprises (MSMEs) form a large part of private sector enterprises in Kenya. In the survey of the sector of 1999, the sector was estimated to have a total of 1.3 million MSMEs employing 2.3 million people. It was estimated that the MSME sector accounted for 75% of total employment in Kenya and contributed only 18% of GDP (Government of Kenya, 2007; KIPPRA, 2013).
The micro-sized enterprises accounted for 81.1% of employment reported in the MSMEs. It is estimated that about 80% of companies in Kenya are SMEs and contribute approximately 40% of GDP (KNBS, 2016). Despite its success, the Kenyan MSME sector is faced with numerous challenges especially relating to the regulatory regime. The entrepreneurial culture is hampered by unfavorable environment curtailing MSMEs from thriving. This has resulted in a high mortality rate of MSMEs with about 2.2 million businesses being closed in the last 5 years (KNBS, 2016, MSME Basic report p.129). Because of the importance of this sector there is need to pursue research related to expansion of Kenyan firms (see, e.g. a report Deloitte Kenya Economic Outlook, 2016; the World Bank report on Doing Business in Kenya in 2017; A survey by the Kenya National Bureau of Statistics, 2016 MSME Basic report).
For MSMEs to thrive in a competitive world of business, they need to progressively innovate to ensure that their goods and services reach untapped customer needs. However, the MSME 2016 survey showed that that product innovation was present in small establishments engaged in manufacturing, ICT, financial, and health activities. In addition, process and marketing innovations were largely not common features among MSMEs.
The MSME 2016 survey also found that a large proportion of MSMEs did not market/advertise their goods or services at all and instead depended on the quality of products and clientele satisfaction as their marketing tool. The MSMEs business owners expressed their desire for the government to assist in market promotion and to provide an enabling environment for fair competition.
Impediments to global expansion or internalisation by SMEs have been cited as lack of entrepreneurial and technical skills; insufficient management and commercial know-how, language and cultural awareness; lack of adequate equipment and facilities; limited access to information on markets, opportunities, threats, regulation, and laws; limited access to innovative production processes and technology; and restricted access to credit and finance, both access to general finance, and to specific trade finance support (Hall, 2003; UNCTAD, 1999).
There is a need, therefore, to enhance the contribution of SMEs to GDP and to improve their global competitiveness. In addition, for Kenyan firms to be competitive and to be able to successfully expand globally, it is necessary to pursue opportunities for collaboration between industry and government in addressing some of the impediments facing SMEs. Thus, the thrust of this research was to investigate the influence of global market strategy on global expansion by Kenyan SMEs. The study was guided by three specific objectives: firstly, to establish the extent to which market strategy influences global expansion; secondly, to ascertain the extent to which foreign market intelligence influences global expansion; and lastly, to determine the extent to which logistics and distribution influences global expansion.
It is acknowledged that the small entrepreneurial firm has an important role to play in international business especially given that there are strong globalisation pressures that both pull and push the small firm into international markets to ensure its very survival. It is suggested that the concept of entrepreneurship forms the cornership on which all international business activity is based (Mtigwe, 2006). Majority of the small and medium enterprises (SMEs) in Kenya are in the early stages of internationalisation, it is therefore important they develop strategies that they should pursue to compete in the global market. SMEs have many options of organisation structure to use when expanding across borders. There are many examples of organisation structures that they can use to expand globally which include the following: joint ventures, value-adding partnerships, strategic alliances, cooperative agreements, and industry consortia (Mwiti, 2013; Naisbitt, 1994). Firms seek these alternative market entry modes in order to build profitable market share, spread risk, fulfill regulatory requirements, obtain access to innovations and technology, gain access to expertise or attributes possessed by partner enterprises (Young et al., 1989).
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