Localization as a Strategic Tool for Multinationals in Kenya

Abstract

The main objective of this study was to assess the role of localization as a strategic tool for Multinationals in Kenya. The study followed a descriptive research design and was guided by the following specific objectives; to establish how MNCs have localized their strategies to adapt to Kenyan market, to articulate the strategic benefits and demerits of Kenyan MNC’s localization, and to establish the effect of localization to MNC’s overall performance. The study targeted 50 MNCs operating in Kenya. The data was collected by way of self-administered structured questionnaires targeted on operation managers. Forty six completed questionnaires were collected. Data was organized in excel spreadsheets and analyzed using SPSS. Regarding how MNCs have localized their strategies to adapt to the Kenyan market the study results revealed that most MNCs do majorly consider local politics and laws and to some extent and have ignored local cultures and languages. The localizing MNCs makes a comparison of product specifications with local requirements, seeks local advice through local officers and partner companies, packages their products to meet local consumer needs, makes product documentation in one local dialect, outsources localization specialists to guide their localization strategies, and employs local officers in most positions with some key positions held by foreign officers. Concerning the strategic benefits and demerits of MNC’s localization in Kenya the study established that localization has more benefits than demerits. The major reason is that it helps customers to identify with the company and its products. Also, findings revealed that localization gives local subsidiary brand control and compliance to access marketing opportunities. This leads to improvement of channel engagement and increased revenues. It also helps the MNC to be locally relevant a factor that enhances sales and longevity in the market in the long-run. However, local customers are often too demanding. Also, localization takes a lot of resources. Furthermore, it is often hard to get competent localization professionals with high technical, language and project management competencies. Sometimes, the costs of localization outweigh the benefits especially if localization strategy is poorly implemented. Regarding the effect of localization to MNC’s overall performance, the study established that localization enhances performance because localization helps to meet target customer’s needs. Additionally, it enhances ties with local distribution channel members, hence better financial results. Also, localization enhances overall cost reduction, optimizes on overall company asset utilization, helps attain revenue targets, and enhances corporate brand image and value in the local market. However, regression analysis revealed a very weak positive relationship between localization and overall MNC performance. The study recommends that future study should focus on specific factors that MNCs localizing in Kenya should consider to ensure successful localization. To this end, the study concludes that multinational companies in Kenya should localize their strategies and products much further in order to enjoy the benefits associated with localization as noted above. However, they should carefully manage costs associated with localization so as to ensure that the costs do not exceed the benefits.