Sources of sustainable competitive advantage among milk processing companies in Kenya

Abstract

The study sought to achieve three objectives: to determine the sources of sustainable competitive advantage; to establish the strategies for achieving sustainable competitive advantage and to determine the challenges of gaining and sustaining a Sustainable Competitive Advantage among milk processing companies in Kenya. A census survey was conducted to facilitate the achievement of the study objectives. The population of interest comprised of all milk processing companies in Kenya. There were a total of 23 milk processing companies in Kenya at the time of the study (e- Dairy Systems Directory 2009/2010). The study made use of primary data which were largely quantitative. These data were collected using semi-structured questionnaire. The respondents were Corporate Planning/Strategy Managers, Commercial Managers and/ or National Sales and Marketing Managers of the targeted companies. Analysis of data was guided by the objectives of the study. The study used descriptive statistics to analyze the data due to the descriptive nature of the data that were collected. The data analyzed were presented in tabular form for ease of interpretation and reporting. The study found out that of the 18 milk processing companies in Kenya that completed and returned the questionnaires, 77.8% had been in operation for more than five years while 11.1% and 5.65% had been in operation for less than three years and between 3 to 5 years respectively. It was also established that 66.7% were privately owned, 27.8% were both foreign and locally owned while 5.6% were government owned. The results further indicated that 61.1% operated within Kenya, 27.8% operated within East Africa region and 11.1% operated beyond East Africa. On the formulation of strategies to counter competition, 94.4% responded in the positive while 5.6% responded in the negative. The study concludes that the milk processing companies in Kenya employ a combination of sources of sustainable competitive advantage to stay competitive in the turbulent business environment. There is no single source of sustainable competitive advantage that could be used universally in the dairy industry to achieve the desired objectives among all milk processing companies in Kenya.The sources include effective leadership, continuous learning, highly motivated and loyal employees, superior products or customer service, business networks and coalitions, superior skills/capabilities and high level of customer service quality. Further the study concludes that the milk processing companies in Kenya have employed various strategies for sustainable competitive advantage. The strategies include product development, product differentiation, market development, cost leadership and related diversification. Others are strategic alliance, unrelated diversification and cooperation / tacit collusion strategies. The study recommends that milk processing companies in Kenya need to employ a variety of sources of sustainable competitive advantage which complement each other to achieve sustainability in the competitive business environment. The sources include effective leadership, continuous learning, highly motivated and loyal employees and superior skills/capabilities of personnel.