The response of manufacturing firms in Kenya to the introduction of East African community (EAC)customs union

Organisations, in order to function and survrve, have to interact constantly with the outside world, the environment. The operations of any organisation can be described in terms of its "input-transformation-output" process. They get their inputs from the environment and after performing a transformation process with those inputs, produce outputs which they then discharge back to the environment. The environment is constantly changing. This means that organizations are involved in a constant series of exchanges with the suppliers, customers, regulatory agencies and other stakeholders, such as shareholders and trade union, all who are found in the environment of the organisation. \n \n \nThe environmental influences relevant to strategic decisions operate in a company's industry, the total business community, its city, its country and the world. They are technological, economic, physical, social and political. An organisation's ability to cope with the changing environment then becomes the most important determinant of its success or failure in a free enterprise system. In the past 20 months, since the introduction of African Community Customs Union there have been changes in the environment of manufacturing firms in Kenya. These changes have had an impact on these manufacturing firms. \n \n \nThis study sought to find out what manufacturing firms in Kenya consider as opportunities and challenges following the launch of the East African Community Customs Union in January 1, 2005 and to determine how the firms have responded to them. \n \n \nThe research was conducted through a survey. A random sample of 100 firms drawn from the population of 600 firms was surveyed by use of a structured questionnaire and the data analyzed using descriptive statistics: A response rate of 56 per cent was obtained. \n \n \nThe findings revealed that the coming to the fore of the EAC Customs Union heralded changes in the external environment of manufacturing firms in Kenya and that these \n \nchanges, which were manifested in enlarged market and increased competition, presented both opportunities and challenges to manufacturing firms in Kenya. It is these opportunities and challenges that triggered strategic responses, by the Kenyan firms, which included the expansion into neighbouring countries of Uganda and Tanzania, introduction of new products, increase of production capacity and staff rationalisation. \n \n \nAs a result of the findings, it was recommended that organisations should continually scan the environment for any changes and adjust accordingly. It was also recommended that organizations should consider formulating strategies and review them periodically.