Influence of Strategic Capabilities on Competitive Advantage of Sugar Companies in Western Kenya

Abstract

The sugar industry contributes about 15 percent to the country’s agricultural GDP and supports an estimated 25 percent of the country’s population. The general objective of the study was to assess the influence of strategic capabilities on competitive advantage of sugar companies in Western Kenya. The specific objectives of the study were: To assess the influence of human resource capability on competitive advantage of sugar companies in Western Kenya; To determine the influence of technology capability on competitive advantage of sugar companies in Western Kenya; To establish the influence of material capability on competitive advantage of sugar companies in Western Kenya; To assess the influence of financial capability on competitive advantage of sugar companies in Western Kenya; To establish the influence of strategic capabilities on competitive advantage of sugar companies in Western Kenya and to determine the moderating influence of Government regulatory policy on the relationship between the strategic capabilities and competitive advantage of sugar companies in Western Kenya. The target population was composed of six sugar companies; the respondents were 727 senior and middle level managers and the sample size consisted of 88 respondents. The primary data was collected using a questionnaire pretested for validity and reliability. The study adopted descriptive and correlation research designs and descriptive and inferential statistics were used to analyze the data. Out of 88 questionnaires sent out, 64 questionnaires were received giving a response rate of 73%. Logit, correlation and hypotheses analyses established a statistically significant positive relationship between technology capability, material capability and competitive advantage. Hypothesis testing established that Government regulatory policy statistically significantly moderates the relationship between strategic capabilities and competitive advantage of sugar companies in Western Kenya. The conclusions drawn from the study findings are that technology and material capabilities which are within the control of the firms are critical for achieving competitive advantage and the Government regulatory policy determines the extent to which the sugar companies in Western Kenya enjoy competitive advantage. It is recommended that each firm pays more attention to sugarcane management, conducts effective and efficient factory maintenance, prioritizes its financial usage in areas that make a difference and introduces measures to reduce costs of production. The Government on the other hand should implement sugarcane area zoning, zero rate value added tax on sugar, provide subsidized fertilizers to farmers and privatize the state-owned sugar mills to provide the industry with competitive edge impetus in the COMESA region. Further research should be carried out on the Influence of strategic capabilities on competitive advantage of privately owned sugar companies in Kenya for the generalization of study results and research on the suitable ratios for total liabilities to total assets and total liabilities to net cash from operations for companies enjoying competitive advantage in COMESA region to provide benchmark for the region’s sugar industry.