Competitive Strategies Adopted by Motor Vehicle Franchise Holders in Kenya

Abstract

There are a number of franchise motor vehicle dealers operating in the country, with the most established being Toyota (East Africa), Cooper Motor Corporation, General Motors, Simba Colt, Marshalls East Africa, Subaru Kenya and DT Dobie (CF AO). They use a manufacturer-Retailer model - where as franchisees, they sell the franchisors' product directly to the public. The Automotive franchise holders in Kenya are thus primarily involved in the retail and distribution of motor vehicles. The franchisors grants them a license to use their common trade name, or trade mark, in return for a fee, and during the association the franchisors are rendering assistance to the franchisees.

The study sought to establish the competitive strategies adopted by motor vehicle franchise holders and to determine the challenges faced by motor vehicle franchise holders in applying the competitive strategies.Data was collected through a questionnaire method. All the questionnaires were administered through the drop and pick-later method. The response was 79%. The findings of the study indicate that respondents adopt the key competitive strategies ranked from top to least as: intensive staff training, charging competitive prices, offering a wide range of products, use of publicity, differentiated products, product design style, product features, product features, new products launch, advertisements, quality products, brand reputation, market segmentation, customer service, engaging high skilled staff, collaboration with competitors, tight cost control and financing schemes.

The study also established the key challenges that Motor vehicle holders face in implementing the identified strategies ranked from top to least ranking are: high cost of maintaining quality, huge financial requirements, inability to differentiate, inability to differentiate, cost of main skilled staff, changes in exchange rates, increased number of competitors and unpredictable government policies. Pursuant to the above finding it implies that existing franchise holders and new entrants into the industry have to adopt the identified key competitive strategies but also strive to surmount the key challenges identified if they are to survive and be profitable. They have to continually scan the environment for new emerging challenges and adapt their strategies accordingly.