Value Chain Management: A Survey Of Practices Of Large Manufacturing Firms In Kenya

Abstract

In the global environment of the 21st century, a business can no longer afford to be only domestically oriented. One of the most important phenomenon of the 20th century has been the international expansion of the industry. Successful Value Chain Managers all over the world are finding it necessary to broaden their sourcing and marketing considerations which offer more opportunities by turning to Value Chain Management Strategies in order to attain competitive advantage through effectiveness, efficiency and differentiation. Value Chain Management has been identified as a very important link between trading blocks, partners in different countries, partners in the same country and generally competitors in the domestic and global markets. These organisations have embraced the concept of the extended enterprise in order to meet the demands of domestic and international competition and have also learned to recognise and manage the Value Chain in order to remain competitive. Value chain management, as it has evolved in the last decade or so, has developed a solid theoretical foundation based on well known value chain principles. This project indicates that many of these value chain management principles can be applied equally and efficiently in both the domestic and global markets. It is, however, in the global market place where value chain becomes a truly efficient weapon in the battle for competitive supremacy. Organisations which accepted this fact are in a position to regard the world as their market and gain the advantage of the world volume of trade. New international markets are opening up for large Kenyan manufacturers and similarly, Kenyan markets are opening up for international competition (e.g. WTO, AU, COMESA, IGAD & EAC). It is therefore important for Kenyan organisations to view Value Chain as both a domestic and international phenomena. However, Kenyan manufacturing firms are lagging behind in implementing integrated value chain management systems and by implication, are unable to fully exploit the advantages offered by the global market place. This study reports that limited integration exists among value chain management partners, there is little understanding of costs and performance measurements along the chain and that there is little appreciation of the advantage of information technology. These issues are fundamental to basic value chain management principles and therefore also competitiveness. World-class competitors with a competitive advantage based on superb global value chain management operations are already competing in Kenya and will be threatening many of the markets where local manufacturers could earlier compete efficiently. Implementing value chain management should therefore become part of the business strategy of forward looking Kenyan manufacturers.