Facility Location and Supply Chain Performance of the Mobile Telecommunication Firms in Kenya

Abstract

In Kenya today, most mobile telecommunication operators situate their business mainly in Nairobi, the capital city. What leads these mobile telecommunication firms to situate their businesses in Nairobi? What factors lead to such business decisions and how do they affect the supply chain performance of the mobile telecommunication firms? This study in addressing the research questions had two main objectives of establishing the factors considered in facility location decisions of the mobile telecommunication firms in Kenya and determine the relationship between facility location factors and the supply chain performance of mobile telecommunication firms in Kenya. This study was a census of the mobile telecommunication operators in Kenya since they were only four focusing on what they consider to be influencing the location of their firms across Kenya. Primary data was collected from the respondents through questionnaires, observations and literature. A total of 20 questionnaires were sent and administered out of which, 19 responded and 1 did not respond giving an encouraging response rate of 95% and only 5% non-response rate. Secondary data from websites, firm documents and direct observations of the industry validated the primary data. Data collected was analyzed using descriptive statistics, ANOVA, regression and correlation analysis in order to address the research objectives. Research findings showed that 63% of the respondents who included managers had no role in determining the location of a facility while 37% had a role in determining the location of a facility. Further findings indicated that proximity to customers influenced facility location decisions of mobile telecommunication firms in Kenya to a large extent. Other findings were that proximity to suppliers affects facility location decisions of the mobile telecommunication firms in Kenya to a large extent and that overall, infrastructure affect affects their facility location decisions to a large extent. x The research recommends that mobile telecommunication facilities should be located close to factors that affect supply chain performance and also the government as the regulator maintain low and competitive operational costs to encourage investments in the mobile telecommunication sector in the country. On whether the data showed any relationship between facility location factors and supply chain performance, it was revealed that proximity to customers therefore had the highest effect on supply chain performance, followed by infrastructure, then government policy, quality of labour and operational costs while proximity to suppliers has the lowest effect on supply chain performance of mobile telecommunication firms in Kenya. The research findings therefore addressed the questions and objectives of the study.