An Application of Porter’s Theory of the Competitive Advantage of Nations in Determination of the Competitiveness of the Kenyan Tea Export Industry

Abstract

The Tea export industry plays a very crucial role in the Kenyan economy as tea is one of the main foreign exchange earners. In fact Tea has overtaken tourism to become the country's number one foreign exchange earner. Although the tea industry has been completely liberalized, government control exists under the Tea Board of Kenya whose directors are directly elected by key stakeholders in the industry. As the global environment changes, it is important that the tea exporting firms assess the changes with a view to enhancing their competitiveness. Porter in his theory of competitive advantage points out that there are four primary determinants of competitiveness of firms; factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. The objectives of study were to determine the competitiveness of the Kenya Tea export industry using Porter‟s theory of the competitive advantage of nations and to establish any other factors other than those suggested in the theory that could influence the competitiveness of Kenya‟s tea export industry. Literature review was gathered from various authoritative sources with more emphasis on more current and relevant literature from renowned authors in strategic management. The research design used was a descriptive survey approach which targeted 67 registered tea exporting companies in Kenya located within the city of Mombasa. The data collection tool used was a questionnaire with closed and open-ended questions guided by the contents of the literature review and aimed at achieving the set objectives. The targeted respondents were the Managing directors of the firms. The results obtained from the questionnaire were first summarized in a data preparation process and results were analyzed using the descriptive analysis and use of graphical techniques. Tables were used to show percentages and trends in the data. In order to measure the spread of the data over the sample population, mean scores and standard deviations were calculated using the SPSS package. The study revealed that the tea exporting firms in Kenya apply the Porter‟s theory of competitive advantage but also considered other factors in enhancing their competitiveness in the industry.