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Strategic Factors Influencing the Growth of the Local Fashion Industry in Nairobi County

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Strategic Factors Influencing the Growth of the Local Fashion Industry in Nairobi County STRATEGIC FACTORS INFLUENCING THE GROWTH OF THE LOCAL FASHION INDUSTRY IN NAIROBI COUNTY BY PAULA MUMBI KARIUKI UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA SUMMER 2020 STRATEGIC FACTORS INFLUENCING THE GROWTH OF THE LOCAL FASHION INDUSTRY IN NAIROBI COUNTY BY PAULA MUMBI KARIUKI A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirements for the Degree of Masters in Business Administration (MBA) UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA SUMMER 2020 STUDENT’S DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution, or university other than the United States International University- Africa for academic credit. Signed_____________________________ Date__________________________ Kariuki, M. Paula (ID 657302) This project has been presented for examination with my approval as the appointed supervisor Signed_____________________________ Date__________________________ Dr. Mary Mutisya. Signed_____________________________ Date__________________________ Dean, Chandaria School of Business ii COPYRIGHT All rights reserved. Compliance with copyright restrictions necessitate that no part of this project may be stored or reproduced in a retrieval system, or transmitted in any form without prior written permission of the copyright owner. However, the project may be used for brief quotations and citation in further researches and critical review of articles. © 2020 by Kariuki, M. Paula iii ABSTRACT This is a study of the fast-paced fashion industry in Nairobi County which has grown tremendously but the following strategic factors namely government policy, financial access and competition influence its growth hence the study. The general objective of this research was to assess the main strategic factors that are crucial in the growth of the Kenyan fashion industry and to find out if the said strategic factors truly influence the growth of the fashion industry in Nairobi County. The study was addressed through the following specific objectives; assessing the role of government policy in the local fashion industry, to determine the role of the level of access to microfinance for entrepreneurs’ in the local fashion industry and establishing the level of competition in the local fashion industry. A descriptive research design was applied to this study which helped in finding out if the strategic factors influence the growth of the local fashion industry in Nairobi County through Judgmental sampling procedure of a sample size of 36 fashion houses selected from a target population of 50. Excel and Statistical Package for Social Sciences (SPSS) were used for data analysis in the study to analyze descriptive and inferential statistics data. These included mean, median, mode, linear of Regression and Pearson coefficient to help in determining the relationship of the variables. Data was represented through pie charts, tables and graphs. The study results indicated the influence of government policy, Access of finance from Micro-financial institutions and competition have on the growth of the fashion industry. The correlation test between Government policies and Growth indicated that there was no significant relationship between the variables since the result was above the standard of 0.05 at 0.81, hence no influence of government policy on the growth of the fashion industry. The study established that the role of government has no significant influence on the growth of the fashion industry. The study findings were a majority of the fashion houses had not accessed financial assistance despite the benefits it accrues to their businesses because of the challenges faced in accessing funds from micro-financial institutions. The correlation test between access to finance and the growth of the fashion industry showed that there was no significant relationship in this study. The significance value (p) 0.175 was greater than the iv standard (0.05) hence the level of access of finance to the SMEs in the fashion industry does not influence on the growth of the fashion industry in this study. Finally, the study established that the correlation analysis between competition and the growth of the fashion industry had a weak positive significant relationship between the two variables where the significance value (p) was 0.046 which is less than 0.05. This indicated that there was a significant relationship between competition and the growth of the fashion industry. The regression test indicated that competition influences 15.2% on the growth of the fashion industry, which means a unit of competition increases the growth of the fashion industry by 15.2%. The study concluded that the majority of the respondents felt that the policies put in place do not favor the fashion industry even though they seemed not to be fully equipped with enough information on government policies since they never participate in policymaking forums as stakeholders; while for the Cluster policy through the professional association was associated with hindrances that are rooted within them and therefore most fashion businesses do not join them. The study also concluded that SMEs in the fashion industry are aware of the financial funding benefits but the requirements of accessing it are the major challenges hindering them to access funding from Micro financial institutions, the biggest challenge been the high interests charged; the others were loan securities and credit constraints. The conclusion on competition in the study is that fashion businesses are fully aware of the looming competition in the industry as well as their causes and they have resorted to boost their brand visibility by attending seminars and promoting their brands on social media. On the government policies on the growth of the fashion industry, the study recommended for coming up with a professional association with non-partisan representatives with affordable membership fees for easier joining of the fashion businesses. The professional association will help all fashion businesses/houses in coming together and advocating for policies that favor the industry, that way they participate as stakeholders. The study also recommended for non-conventional funding like Sacco’s and also applications to Non-Governmental Organizations that give grants or financial aids to Small and Medium-size Enterprises, when it comes to access of funding in the Micro financial institutions. v The study recommended an increase in creativity for the fashion businesses/houses to stand out as a brand by creating unique apparel and to patenting their ideas to avoid stealing of their ideas. As for fair competition it recommended for government restrictions on imports to avoid counterfeit smuggled apparel in the country. vi ACKNOWLEDGEMENT I would like to thank God for giving me this opportunity to be able to learn and to push myself to the limit and to believe in myself. I’m grateful to my supervisor Dr. Mary Mutisya for guiding me through the process and for challenging me to bring out the best results possible. My family for the support and guidance they have always given me and my friends who advised and gave me guidance through the entire process. The USIU fraternity for their support and willingness to help when in need. vii DEDICATION This research project is dedicated to my late mum Jenifer Ndinda, my dearest siblings Duke Waireri and Agnes Wanjiru and my best friend William Mbotela for the tender kindness, advice, and moral support that they offered during this study period. To my dad and partner for their moral support and financial assistance. viii TABLE OF CONTENTS STUDENT’S DECLARATION ....................................................................................... ii COPYRIGHT ................................................................................................................... iii ABSTRACT ...................................................................................................................... iv ACKNOWLEDGEMENT .............................................................................................. vii DEDICATION................................................................................................................ viii LIST OF TABLES .......................................................................................................... xii TABLE OF FIGURES ................................................................................................... xiii LIST OF ACRONYMS AND ABBREVIATIONS ..................................................... xiv CHAPTER ONE ................................................................................................................1 1.0 INTRODUCTION........................................................................................................1 1.1 Background of the Study ...............................................................................................1 1.2 Statement of the Problem ...............................................................................................6 1.3 General Objective ..........................................................................................................7 1.4 Specific Objectives ........................................................................................................7 1.5 Hypothesis......................................................................................................................7 1.6 Rationale of the
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