Situational analysis of the BDS Market : empirical evidence from Kenya

Abstract

The paper analyses the situational forces in the Business Development Services (BDS) market in Kenya showing how BDS Providers’ (BDSPs) strategically respond to the forces in their environment. The study was done through the use of grounded theory methodology on eleven BDSPs, four micro and small enterprises (MSEs) and two BDS facilitators in Kenya over twelve months between May 2008 and August 2010. The study established that BDSPs operate under weak regulatory framework which encourages unfair competition longside donor agencies who continue to give free and/or subsidized services. The study also revealed that BDS services are largely unappreciated by MSEs many of who are operating under serious resource constraints. In addition, some of the MSEs do not appreciate professionalism. BDSPs respond to the situational forces in their environments using a number of strategies which evolve over time namely: client, product, differentiation, price, self-regulation diversification, and a simultaneous competition and collaboration. The study revealed paradoxical relationship between donor agencies and BDSPs showing how on one hand, BDSPs perceive donor agencies negatively as distorting the market by compromising small scale entrepreneurs’ willingness to pay for services and on the other hand, benefiting from the donor support.