Challenges to internationalization of firms within the petroleum industry in Kenya: the case of Kenol Kobil Company Ltd
Onyango, Alfred Atieno
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In the recent past there has been an increase of participation of Kenyan Multinational Enterprises in the international market. This has come about as a response to the forces of globalization which have led to integration of world economies. A number of Kenyan companies like KenolKobil have decided to internationalize to protect their local dominance as well as exploit opportunities in the international markets. This research set out to identifying the various challenges to internationalization with reference to cultural, political, legal and the role played by regional economic trading blocs. The research design was a case study of KenolKobil limited. The study targeted senior employees of KenolKobil Ltd based at the Nairobi headquarters and regional offices in Uganda and Tanzania. A total of seventy two (72) employees were targeted. Data was collected using questionnaires & interview guides. The data collected was analyzed using descriptive statistics. From the research findings cultural challenges include language, cultural diversity, religion, tastes, norms, ethics and nature of material goods. Political challenges include protective government policies, bureaucratic political instability, high tax regimes, political patronage of competitors, existing trade tariffs and high incidences of corruption. Legal challenges included bureaucratic procedures, provision for product local, ownership, malicious litigations emanating from established & disgruntled competitors, poor legislations and bottlenecks in approvals and licensing for business. Challenges presented by regional economic trading blocs include existing trade tariffs, trade quotas, increased competition, lack of common monetary policy, provision for local content, lack of commitment from member countries, bureaucratic procedures as well as conflicting legislations and policies among member countries. Other challenges to internationalization of KenolKobil include price fluctuations, lack of foreign market knowledge, poor transport & communication infrastructures, heavy taxation of petroleum products, lack of storage capacity, government price control of petroleum products in most countries, rivalry from established multinationals and high incidences of corruption among political executives. Limitations in terms of time and financial resources were encountered during the project. The project achieved its objectives of identifying challenges to internationalization of firms in respect to cultural, political, legal and role of existing regional economic trading blocs.