Response by Kenya Association of Manufacturers to the changes in the business environment facing manufacturers in Kenya
In stable environments organisations are under no pressure to change and past measures of performance could easily be extrapolated to correctly indicate future performance. In the recent past, fundamental forces of change have been experienced in the global business environment. These have resulted in the globalisation, democratisation, economic reforms and trade liberalisation. This turbulence in business environment has put pressure on organisations to be sure that they can effectively meet the fundamental changes that are occurring. Organisations responding to these changes have also realised that their previous strategy and configurations may no longer serve them well. Management of the business external environment (macro environment) is therefore crucial in ensuring a conducive business climate for a better economy. The macro environment consists of broad environmental factors that impact to a greater or a lesser extent on almost all organisations. It is therefore important to identify these issues and in particularly those that are likely to have a differentially large impact on a specific organisation. There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. The PES TEL frame work can help look at the way in which future trends in the political, economic, social, technology, environmental and legal environments might impinge on organisations However it is important not to just list PES TEL factors because this does not in itself tell managers very much. What managers need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them that is each firm must identify the key factors in their own environment. Managers must decide on the relative importance of various factors and one way of doing this is to rank or score the likelihood of a change occurring and also rate the impact if it did. The higher the likelihood of a change occurring and the greater the impact of any change the more significant this factor will be to the firm's planning. In the last 10 years KAM has been practicing strategic management in which management of the manufacturer's external environment has been a critical factor in the success of the advocacy agenda of the Association. The study aimed at determining the response by the Kenya Association of Manufacturers with regards to the change in the business environment affecting the manufacturing sector in Kenya. The Kenya Association of Manufacturers (KAM) is a dynamic, vibrant, credible and respected business association that serves as representative of Kenya's industry. The Association provides an essential link for co-operation, dialogue and understanding with Government, promote trade and investment, uphold standards and represent views and concerns of its members to the relevant authorities. In pursuit of its advocacy agenda, the Association encourages the formulation, enactment and administration of sound policies in order to improve the business environment, reduce the cost of doing business and ensure that Kenya firms attain and maintain world-class competitiveness. The study identified the main factors that influence the change of the business environment in Kenya as political stability, Intellectual Property rights, infrastructure both energy and roads and the legal and regulatory frameworks governing businesses. Political instability was seen to erode investor confidence while competion from counterfeits in the local markets,the high cost of energy, insufficient energy supply and poor roads seemed to increase the cost of doing business in Kenya . The above factors if not well addressed may lead to shrinkage or closure of investments in Kenya. In a bid to improve the business environment in Kenya,the Kenya Association of Manufacturers has engaged various government Ministries, government agencies, parliamentary select committees and offices of the Prime Minister and President. The study revealed that there has been notable improvements in the business environment such as improved political stabilty, improved infrastructure, reduced cost of energy, reduced business licenses, enactment of the anti counterfeit bill etc however there is still room for improvement. It was also observed that KAM's responds to the business environment affecting manufacturers in Kenya by influencing the government through evidence based advocacy (impact). The study noted that the decison to implement or respond to the business envvironment is solely a government's responsibility, as such KAM's role is therefore to lobby the government to take necessary action by identifying the issues affecting the manufacturers, show how much it hurts the manufacturers and propose solutions to the government.