It’s just because we are in a very corrupt country with inefficient systems that’s why we have to grind through these dirty tricks like evading taxes, having connections with those in the government etc to succeed
In an organized efficient country, the business edge relies solely on your brain and IQ, no dirty tricks.
You have to reason out how you will lower production costs to sell the best produce at the cheapest price while still ensuring you make a decent profit. And also you have to consider other business factors like location, innovation, aesthetics etc to have an edge
Exactly. I tried to do a location study for my business and it just occurred to me that it really doesn’t matter where I’m placed…as long as I can afford the rent, I’ll sell. In western countries there are studies done on the traffic flow, customer segments etc… …hapa, all the theory goes out the window.
In strategic management, we consider a business successful only if it abides by the law and we say that anything that does not abide by the law is not sustainable. If you are not paying taxes, then you are not competing and that is not a competitive advantage because you are competing with thieves not businesses.
[B]In strategy, there are 3 competitive advantages:
differentiation - where you sell something different from competitors.e.g. bmw 3 series vs toyota premio
focus - where you target a part of the market to create a niche and specialize on them e.g Ferarri, Rolls Royce, Bugatti…they focus on rich people.
cost leadership - where u sell the same thing others sell but ur costs are so low that ur able to sell cheaper than anyone else.e.g. jambojet vs KQ.[/B]
That is all. There is nothing like tax evasion as a competitive strategy.
You may import ur electronics and evade taxes but kra is guaranteed to catch up with you one day and you will lose all that profit you think you have made plus even more than you put into your business. Same thing with tenders, you are better off winning your tenders without kickbacks and knowing people. There are many privately owned successful companies in Kenya that operate fully legally and quietly without making noise. They do not engage in government procurement and pay their taxes legally. The problem in Kenya is that the few people who do business corruptly or evade taxes like to show off by driving big v8s and they like media attention so it looks like they are successful but there are many who are also successful, legal and living quiet and comfortable lives. When these big investment firms want to invest in companies, they normally do not like a company whose main business is tenders especially with govt because they know it is not sustainable. They prefer market driven ventures. Kenyans need to embrace the concept of leveraging on legit business to get investors to help you grow. You can’t attract an investor if you are evading tax coz they know that if you can evade govt tax then you will also cook books to evade giving them their fair share.
One way of getting cost-leadership is through tax evasion. Hii masomo ya class 2 does not apply in real life and if you are a day over 18 years you should know that already. Applying your business studies and CRE word for word in a corrupt business environment like Kenya is likely to guarantee business failure. Don’t be naive. You can’t win against competitors who cheat at every chance. About facing justice, yada yada, it will take ages for you to get caught and even if you get caught you will buy your way out anyway. It is low risk. Also, example umepeana ya Jambo Jet is funny juu KQ owns Jambo Jet so the joke is on you. Do you even bother to check Jambo Jet tickets before you board their planes juu zimeandikwa KQ all over??
You just sound full of excuses. The reality on the ground is that there are many people running successful and legitimate corporates. It’s just that the few corrupt ones are noise makers. You cannot go far evading taxes in Kenya. A small fish like you will end up in jail. I can assure you that KRA has sealed most loopholes recently, they have the data on tax evaders and they can pounce at their pleasure…their only problem is when to pounce on these traders. Try buy a car worth a significant value or property and you will know who kra is…these days you pay for duty for a car or pay for stamp duty and the system flags you if your kra returns do not meet the threshhold for whatever ur buying. The moment you buy some cars you are on their radar even if you do not know it. KRA has boosted their intelligence in recent months and tax evasion has been on the decline.
You try that electronics business or any other tax evasion and see how it will go. You can think ur clever but they will get to you once you try make a move on buying an asset or once they are done with the big fish.
Yes, they are very understaffed now. But make no mistake, they now have the data from various sources and are applying intelligence tools on a need basis. They can pull the trigger on anyone the moment you make a significant move. They have started with the Keroches and Humphrey Kariukis coz of value but many people will be nabbed. You may make tens of millions but when they eventually come for you, you will lose all that money and even remain negative. Remember they are by law allowed to audit around 5 years back if Im not wrong. Sometimes the cost if chasing small money is not worth it for them. But the day you try do something significant they will get to you. KRA is very patient.
