The paper is an evaluation of the influence of multinational corporations in Kenya and evaluates whether or not they have benefited Kenyan citizens. Many theories have been advanced in explaining the origin, development and motivation of multinational corporations’ investments globally. Multinational corporations (MNCs) are motivated by factors either internal to the investment or external to the location. The determinant of expansion of these firms may mean there is need to produce and sell goods and/or services in a number of countries. This is either through exports or through direct investment in these countries.
But first of all, what is a multinational corporation? A multinational company or business has offices, shops or factories in several countries. Multinational corporations are business corporations based in one particular country as the mother country with subsidiaries in other countries. They may also be defined in the context of the expertise and the origin of staff. They qualify as so if the extent of their staff establishment reflects a global representation both locally and internationally in their subsidiaries. This paper seeks to discuss the Internalization Theory in explaining the emergence of multinational corporations in a developing country-in our case, Kenya. Based on her experience, we shall discuss the import of the Internalization Theory in understanding the emergence of at least 2 multinational corporations.
Table of Contents
INTRODUCTION
CHANDARIA ENTERPRISES
KENYA COMMERCIAL BANK
CONCLUSION
Research Objectives and Core Themes
The paper examines the relevance of Internalization Theory in explaining the growth and international expansion of multinational corporations within the context of a developing country, specifically Kenya. By analyzing the historical development and strategic operations of two major entities, the study explores how these firms utilize internal knowledge, diversification, and resource pooling to navigate market uncertainties and compete globally.
- Application of Internalization Theory to firm expansion
- Evolution of business models in emerging markets
- Case studies of the Chandaria Group and Kenya Commercial Bank (KCB)
- Role of capital reinvestment and product diversification
- Strategies for mitigating risks in developing economies
Excerpt from the Book
CHANDARIA ENTERPRISES
The Chandaria Group is a family firm of Kenyan Asians who expanded their business first in Kenya and then abroad. P.P. Chandaria, the grandfather, moved to Kenya from India in 1914 and started business as a hawker. Between 1917 and 1940 business developed from hawking to retailing then to wholesaling in the 1930s. In the late 1920s, the family invested in elementary processing in tanning and wattle in Thika and in a small aluminium factory in Mombasa called Kenya Aluminium in 1929. Between 1940 and 1948, the Chandarias independently started a dhow passenger service between Jamnagar in India and Mombasa. So far, we can see the Chandaria business had not diversified internationally in trade and distribution.
However, this was to change in the 1948-1958 decade when the Chandarias made an explicit decision to move their financial and managerial resources in Kenya into manufacturing. In 1948, they set up Pure Food Products to make pasta for the Italian prisoners-of-war following the 2nd World War. The family soon after sold Pure Food Products in order to concentrate on Kenya Aluminium through which a whole range of aluminium products from household utensils, wire products to hurricane lamps were made.
Between 1958 and 1970 is when the family diversified and expanded in Africa. This was after the take-over of East Africa Match Co. in which an integrated steel plant did all operations from furnaces to rolling and finishing and into the production of matches. This business shows diversification in production.
Summary of Chapters
INTRODUCTION: Defines multinational corporations and establishes the study's focus on the Internalization Theory as a framework for understanding corporate emergence in Kenya.
CHANDARIA ENTERPRISES: Details the historical evolution of the Chandaria family business, tracing its growth from a hawking operation to an international manufacturing conglomerate.
KENYA COMMERCIAL BANK: Examines the origins and development of KCB, highlighting its transition from colonial-era banking to an expansive regional financial institution.
CONCLUSION: Synthesizes the findings, confirming that both examined entities reflect the principles of Internalization Theory through strategic concentration and internal resource management.
Keywords
Internalization Theory, Multinational Corporations, Kenya, Chandaria Enterprises, Kenya Commercial Bank, Foreign Direct Investment, Economic Development, Market Expansion, Diversification, Manufacturing, Banking, Corporate Strategy, Capital Investment, Emerging Markets, Industrialization.
Frequently Asked Questions
What is the core focus of this research paper?
This paper focuses on explaining the origin and expansion of multinational corporations in Kenya by applying the Internalization Theory to specific Kenyan business entities.
Which theoretical framework is central to this analysis?
The research primarily utilizes the Internalization Theory, which posits that firms expand internationally to economize on market transaction costs and keep innovation within the firm.
What is the primary research objective?
The objective is to determine how the Internalization Theory effectively explains the growth and multinational transition of major companies operating within a developing country like Kenya.
Which research methodology is employed in this work?
The work employs a qualitative case study methodology, examining the corporate history and strategic development of two specific organizations: the Chandaria Group and Kenya Commercial Bank.
What does the main body of the paper cover?
The main body provides an overview of Internalization Theory, followed by detailed historical analyses of the Chandaria Group and Kenya Commercial Bank, tracking their growth from local operations to regional expansion.
Which keywords best characterize this study?
The study is characterized by keywords such as Internalization Theory, Multinational Corporations, Kenya, Economic Development, and Corporate Strategy.
How did the Chandaria Group successfully expand its operations?
The Chandaria Group expanded by reinvesting profits into manufacturing, acquiring existing firms, and leveraging technical knowledge developed in Kenya to enter foreign markets.
In what way did Kenya Commercial Bank (KCB) demonstrate multinational tendencies?
KCB demonstrated these tendencies by diversifying its services, pooling internal resources, and expanding its branch network across East African borders into Tanzania, Southern Sudan, Uganda, and Rwanda.
- Citation du texte
- Mbogo Wa Wambui (Auteur), 2011, The Emergence of Multinational Corporations in Kenya. A Discussion of the Internalization Theory, Munich, GRIN Verlag, https://www.grin.com/document/322605
