The Influence of Business Environment on Strategies Adopted by International Audit Firms in Kenya

Abstract

Firms are environment dependent and environment serving. Any significant change in the environment triggers changes in strategy hence change in organizational structure through the acquisition of relevant new skills to deal with the new environmental realities. The success of an organization is determined by both its internal and external environment as stated by Carroll et al. (2014) and hence many companies’ operations depend on the environment for its raw materials and business processes. Documentation of a business strategy is an important aspect of starting and running a business. Thus meaningful business goals and objectives are achieved through setting a clear strategy. In determining a business strategy, a logical analysis of the environment in which a firm operates will both inform and influence the outcome of the business. The study investigated the influence of business environment on strategies adopted by international audit firms in Kenya. The objective of the study was to establish types of business environment facing international audit firms and how business environment affect strategies adopted by international audit firms. The study used a standard questionnaire to collect primary data from eighteen (18) international audit firms. However, only thirteen (13) of the respondent firms completed the questionnaire. The data was then analyzed using SPSS, and the findings presented using tables by giving descriptive statistics including frequencies and percentages. The research findings indicated that business environment within which the international audit firms in Kenya operates affects the strategies adopted by them and thus adjusting the firms' strategies to the changes in the business environment is vital for continuity of operation of the firms. The study concluded that business environment need to be scanned regularly and manangement strategies adjusted to suit the business environment. The study amongst other recommendations recommended more training and mentorship of lady partners so as to meet the one third gender rule in the engagement of audit partners. The limitation in this research entailed challenges in obtaining data due to confidentiality policy in audit firms. There were also challenges caused by hostile political environment during the electioneering period which paralysed transport on certain days and also some audit firms giving leave to their staff. There were also challenges relate to cost that included monies spent on transport to the audit firms, telephone call charges, email charges and opportunity cost due to time involved in conducting the research. The study suggested further research on the cause of fewer ladies’ engagement at partnership level in audit firms and also a research on one specific business environment on strategies adopted by audit companies.