Strategies adopted by multinational pharmaceutical corporations to cope with competiton in Kenya
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Date
2015-11Author
Likuyani, Lihanda B
Type
OtherLanguage
enMetadata
Show full item recordAbstract
the long term, which achieves advantage in a changing environment through its
configuration of resources and competencies with the aim of fulfilling stakeholder’s
expectations. For an organization to not only survive but be successful in the
industry it operates, it has to develop and implement strategies for coping with
competition, which in essence is the heart of strategic management. Multinational
pharmaceutical corporations face dynamic global business environments unfamiliar
in political, environmental, social, technological, economical and legal aspects.
Kenya’s pharmaceutical industry consists of more than fifty licensed manufacturing
units that include local manufacturing companies, large multinational corporations,
subsidiaries and joint ventures. It is a highly dynamic industry where the major
successful strategy employed in coping with competition has been investing in a few
drug molecules, promoting them heavily and turning them into blockbusters.
Increased competition among multinational pharmaceutical corporations and local
companies necessitate the development of strategies that would allow these firms
achieve and sustain competitive advantage. The objective of this study was to
determine the strategies adopted by multinational pharmaceutical firms to cope with
competition in Kenya. To establish these strategies, a cross-sectional survey design
was adopted. Data was collected using a structured questionnaire and was
administered to marketing managers of all the twenty two multinational
pharmaceutical corporations operating in Kenya. Data was analyzed using
descriptive statistics. The key findings were that pharmaceutical MNCs in Kenya
have adopted a number of strategies including cost minimization measures, offering
low price products, differentiation, cost focus strategies, differentiation focus
strategies, concentric growth, innovation acquisitions and mergers, product
development and market development. The study found out that the most popular
strategy adopted was differentiation of pharmaceutical products. The use of high
quality professionals and brand image were the main approaches used to achieve
differentiation strategy. Cost minimization measures, innovation, and product
development were also quite popular. The implications of the study are that local
pharmaceutical firms are able to understand strategies that MNCs adopt to remain
competitive and it makes a contribution to the existing body of knowledge regarding
the concept of strategy in the pharmaceutical industry context. The main
recommendation to multinational pharmaceutical firms is that they should ensure
they have in the board of directors, a member who is originally from the host
country. This will ensure that they are adept in understanding the local business
environment and develop appropriate competitive strategies. One limitation of this
study were that it did not fully investigate the reasons why the various
pharmaceutical MNCs in the study were different in the extent to which they adopted
certain strategies. The second limitation was that the study did not investigate extent
to which various strategies impacted on performance. Further research should be
done to investigate why pharmaceutical firms in the study were different in the
extent to which they adopted the various strategies. An in-depth study is further
recommended to determine the extent to which the various strategies impact on
performance.
Publisher
University of Nairobi