Competitive Strategies Adopted by Fish Processing Firms in Kenya

Abstract

Over the past 20 years, the fisheries sub-sector has gradually evolved from a domestic consumption oriented industry to an export oriented industry with value added processing being applied. According to a report by the Fisheries department of the GOK of 2003, the fisheries sub-sector provides employment and income to over 500,000 Kenyans engaged in fish production and related enterprises. In terms of contribution to the gross domestic product (GDP), Kenya's fishing industry has accounted for 0.3% of GDP for the period 1999-2003. Kenya’s annual average production for the period 1999-2003 was 171,000 metric tonnes with a value of approximately Kshs 8 billion in 2003. Another report by the Export processing Zone Authority of 2005 indicates that about 30% of the fish is exported to countries in Europe and other non-European countries. Some fish is sold fresh while a significant proportion is processed for later consumption. In Kenya, there are the Artisanal Fish Processors (AFPs) consisting of artisanal fishermen operating small fishing boats in inland lakes and marine waters who prepare dried and smoked fish mostly for local market and the Industrial Fish Processors (IFPs) who have state of the art fish processing machinery, storage facilities and fish harvesting vessels. The IFPs process, package and then freeze or chill their fish for export and to a lesser extent for consumption in Kenya’s urban areas. They equally have well established middlemen and distribution channels to ensure that their products reach the intended consumers. IFPs’ have become the industry’s driving force and are the main focus of this study. The firms in this industry like in any other industry face global competitive challenges which need to be addressed to assure them of continued survival and profitability. To achieve this, they have to adopt strategies to enable them compete effectively. The study sought to establish these competitive strategies adopted by these firms. The study targeted all the 13 Fish Processing Firms (FPFs) in Kenya with 12 of them responding representing 92% response rate. These companies deal in different fish species including Nile Perch, prawns, lobsters, octopus, tuna, cuttlefish and squids and mainly produce chilled or frozen fish for both the domestic and foreign markets with only one firm targeting the foreign market exclusively as revealed by the study. The study established that resource based strategies like state of the art machinery and equipment, proprietary knowledge in fish processing and efficient distribution channels are used to a greater extent in this industry. Differentiation strategy by offering unique product attributes to customers also ranked highly. Based on the findings of this study, it is recommended that a hybrid strategy that combines both the resource based as well as the differentiation strategies be adopted to maintain competitiveness. Further research that links the competitive advantages associated with each strategy is also highly recommended.