Role of Strategic Planning and Globalization Challenges Faced by Small and Medium Enterprises in Nairobi City County

Abstract

The study1sought to establish1the role of strategic planning in overcoming challenges of globalization for SME’s in Kenya. This study was guided by three theories that include Institution Theory, Contingency Theory and Theory of Competitive Advantage. The research used the descriptive research design. The units of analysis were SMEs operating at Kamukunji Business Centre, Mlolongo, Kikuyu, Thika Road and Langata. The size of1the sample was determined1using the Fisher’s1et al. (2007) 1formula where 70 participants were used. Questionnaires were used to collect information from the population Data gathered was both in qualitative and quantitative in form. Study revealed that SMEs were facing numerous challenges among which include increased technological adoption competition and marketing related challenges. Free trade intensifies competition in every market rendering it nearly improbable for the small enterprises from countries that are less developed to cope with the rough competition. This study concludes that global financial and economic crisis has delimited availability1of capital investment is1a big challenge in under1developing economies. Insufficient investment1and lack of liquid capital1makes the SMEs1more vulnerable to1ongoing threats. This weakness1also makes deprive of1so many associated1strengths ultimately weakening1their position against their1competitors. The study1concludes that MNCs1due to their immense1powers do not let1SMEs flourish to1play competitive role1against them. MNCs make local companies to augment their efforts management or incorporate fresh techniques of marketing employed by the MNCs in international and domestic markets and that entry of the MNCs creates monopolistic sector structure relying on the potential and reaction of domestic companies. This study therefore makes the following recommendations. The government should implement1policies such as1providing loan1guarantees, tax subsidies, credit1for R&D, credit1for startups and alternative1sources of funding1to protect against and help1to recover the1SMES from the1crisis. SMEs should explore avenues to internationalize their business and source capital to purchase sophisticated technology to be able to compete with the developed nations. SMEs should work closely1together in reopening1new markets and technological innovations1such as e-commerce and1e-business in order1to reap the full benefits1of globalization. To mitigate global challenges, firms should embrace continuous renewal and innovation is paramount in coping with globalisation Challenges, adopt ICT, SMEs should keep on developing new products, services and business practices, firms should always aim at being at the forefront of development, firms should often act before the competitors and invest heavily in advertisement.