competitive strategies adopted by pharmaceutical firms in kenya by odhiambo agnes adhiambo a ...

84 Pages·2013·0.62 MB·English

COMPETITIVE STRATEGIES ADOPTED BY PHARMACEUTICAL FIRMS IN
KENYA

BY
ODHIAMBO AGNES ADHIAMBO

A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF
BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS, UNIVERSITY OF
NAIROBI.

NOVEMBER, 2013
DECLARATION
This research project is my original work and has not been submitted for a degree course
in this, or any other university.

Signature…………………………… Date…………………………………….
ODHIAMBO AGNES ADHIAMBO
D61/71410/2008

This research project has been submitted for examination with my approval as the
university supervisor.

Signature……………………….. Date……………………………………..
DR. REGINA KITIABI
Department of Business Administration, School of Business
University of Nairobi

ii
DEDICATION
To my family and in particular my husband Basil Odhiambo for the support and
encouragement, to my children Cindy and Arkipo for giving me the reason to study and
work hard.
iii
ACKNOWLEDGEMENT
The successful completion of this MBA program has been as a result of the support from
God, His grace was sufficient all through, Glory and Honor to him.
Special thanks to my supervisor Dr. Regina Kitiabi for her advice, guidance and
suggestions throughout the project.
To my family, especially to my Spouse Basil Odhiambo for constant support and
encouragement throughout my MBA programme,
Appreciation to my classmates for their support in one way or another toward successful
completion of this project and the entire MBA project.
MAY THE ALMIGHTY GOD BLESS YOU ALL!
iv
ABSTRACT
The primary purpose of the study was to study competitive entry strategies adopted by
pharmaceutical companies in Kenya. The target population was managers, head of
departments and top management of pharmaceutical companies in Kenya. The results of
the study were both qualitative and quantitative. Quantitative data collected using a
questionnaire were also analyzed by the use of descriptive statistics using the Statistical
Package for Social Sciences (SPSS) and presented through percentages, means, standard
deviations and frequencies. The information was also represented by use of bar charts,
graphs and pie charts and in prose-form. This was done by tallying up responses,
computing percentages of variations in response as well as describing and interpreting the
data in line with the study objectives through use of SPSS. In assessing competitive
forces and the context within which a company operates, choice of strategy can indeed
seem like a search for a myriad forces pushing and pulling an organization to change and
little by way of established principles to determine what the choice should be. However,
the choice of strategy is fundamental to a company for a number of reasons. The study
recommends further research on governments need to develop effective marketing
systems in the pharmaceutical sector by providing political and social economic changes
in the efforts to give priority for the sector to be effective. There is need for initiatives to
be taken for us to create a sustained and stable competitive strategy and for regional
demand to be able to adjust to foreign technologies needed in the industry. From the
study there is need for competitive advantage as an entry strategy for competitive
strategies on pharmaceutical industry.

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TABLE OF CONTENTS
DECLARATION ................................................................................................................ ii
DEDICATION ................................................................................................................... iii
ACKNOWLEDGEMENT ................................................................................................. iv
ABSTRACT ........................................................................................................................ v
LIST OF TABLES ............................................................................................................. ix
LIST OF FIGURES ............................................................................................................ x
CHAPTER ONE: INTRODUCTION ............................................................................. 1
1.1 Background of the study ................................................................................................. 1
1.1.1 The concept of competitive entry strategy ............................................................... 2
1.1.2 Organizational performance .................................................................................... 5
1.1.3 Pharmaceutical industry in Kenya ........................................................................... 5
1.1.4 Foreign pharmaceutical firms in Kenya ................................................................... 7
1.2 Research Problem ........................................................................................................... 8
1.3 Research objectives ....................................................................................................... 10
1.4 Value of the study ......................................................................................................... 10
CHAPTER TWO: LITERATURE REVIEW .............................................................. 12
2.1 Introduction ................................................................................................................... 12
2.2 Theoretical foundations of strategy:.............................................................................. 12
Game theory and Strategic conflicts in strategic choice. .................................................... 12
2.3 Competitive Strategies .................................................................................................. 14
2.3.1 Differentiation Strategy ......................................................................................... 15
2.3.2 Pricing strategy ...................................................................................................... 17
2.3.3 Cost Leadership Strategy ....................................................................................... 19
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2.3.4 Promotion Strategies .............................................................................................. 21
2.4 Competitive Advantage ................................................................................................. 24
CHAPTER THREE: RESEARCH METHODOLOGY ............................................. 26
3.1 Introduction ................................................................................................................... 26
3.2 Research Design ............................................................................................................ 26
3.3 Study Population ........................................................................................................... 27
3.4 Data collection .............................................................................................................. 27
3.5 Data Analysis ................................................................................................................ 28
3.6 Reliability and Validity ............................................................................................. 28
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION ......................... 30
4.1 Introduction ................................................................................................................... 30
4.2 Demographic Characteristics ........................................................................................ 30
4.2.1 Gender ................................................................................................................... 31
4.2.2 Respondents’ age category .................................................................................... 32
4.2.3 Academic background ........................................................................................... 33
4.2.4 Working experience ............................................................................................... 33
4.2.5 How long have the company been in the competition ........................................... 35
4.4 Competitive advantage .................................................................................................. 36
4.5 Application of Differentiation Strategies as a Competitive entry Strategy ................... 37
4.6 Rate in level of application of differentiation strategies ............................................... 38
4.7 Innovation Differentiation Strategies ............................................................................ 38
4.8 Extent at which company ensures success of its differentiation strategies ................... 40
4.9 Pricing strategy ............................................................................................................. 41
4.10 The extent at which the company uses pricing strategy as an entry strategy in the
market ........................................................................................................................................ 41
vii
4.11 Extent to which pricing strategy as an entry strategy in the market influences
competitiveness of companies ................................................................................................... 42
4.12 Cost Leadership strategy ............................................................................................. 44
4.13 Promotion strategy ...................................................................................................... 45
4.14 Extent at which company use promotion strategy as an entry strategy ....................... 46
4.15 Promotional Strategies ................................................................................................ 47
4.16 Promotion strategy as an entry strategy influences competitiveness of companies .... 48
4.17 Findings in relation to literature review ...................................................................... 50
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 54
5.1 Introduction ................................................................................................................... 54
5.2 Summary of findings ..................................................................................................... 54
5.3 Discussion ..................................................................................................................... 55
5.4 Conclusion .................................................................................................................... 57
5.5 Limitations of the study ................................................................................................ 58
5.6 Recommendations for policy, practice and further studies ........................................... 58
REFERENCES ................................................................................................................ 60
APPENDIX I: QUESTIONNAIRE .................................................................................. 64
APPENDIX II: PHARMACEUTICAL COMPANIES (EU) ........................................... 70
APPENDIX III: KNOWLEDGE GAP ............................................................................. 72
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LIST OF TABLES
Table 3.1: Study Population .............................................................................................. 27
Table 4.2: Competitive advantage .................................................................................... 36
Table 4.3: Rating the level of application of differentiation strategies ............................. 38
Table 4.4: Level of innovation differentiation strategies .................................................. 39
Table 4.5: Extent at which company ensures success of its differentiation strategies ..... 40
Table 4.8: Extent to which pricing strategy as an entry strategy in the market influences
competitiveness of companies .......................................................................................... 43
Table 4.9: Cost Leadership strategy .................................................................................. 44
Table 4.12:Promotional Strategies .................................................................................... 47
Table 4.13: Promotion strategy as an entry strategy influences competitiveness of
companies ......................................................................................................................... 49

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LIST OF FIGURES
Figure 4.1 Gender ............................................................................................................. 31
Figure 4.2: Age category................................................................................................... 32
Figure 4.3: Academic background .................................................................................... 33
Figure 4.4: Working experience ....................................................................................... 34
Figure 4.5: How long have the companies been in the competition ................................. 35
Figure 4.6: Differentiation Strategies ............................................................................... 37
Figure 4.7: Pricing strategy ............................................................................................... 41
Figure4.8: Extent at which the company uses pricing strategy as an entry strategy in the
market ............................................................................................................................... 42
Figure 4.9: Promotion strategy ......................................................................................... 45
Figure 4.10: Promotion strategy ....................................................................................... 46

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