Analysis of Cost Leadership Strategy Influence on Organizations’ Competitiveness of Sugar Firms in Kenya

Abstract

Due to increased competition which is brought about by liberalization and deregulation, organizations are faced with greater demands to be flexible, responsive and efficient in order to be more competitive. As a result of this, organizations are faced with a lot of challenges in their effort to remain competitive and the Kenyan sugar firms are no exemption. The purpose of the study was to analyze influence of cost leadership strategy on organizations’ competitiveness of sugar firms. The study was based on the following theories; competitive advantage, generic framework and resource based. To be able to achieve the study objective, it was essential to establish the associations between the different variables associated with the study variables in relation to the sugar firms hence descriptive cross-sectional research design was used in this study. The study’s target respondents were twenty (20) managers from every sugar firm and its affiliated farmers’ sugar cane out grower firms. In order to simplify the process of sample size determination for researchers, Krejcie & Morgan (1970) created a table based on the formula which shows the population of study and the expected sample size. According to the table, when the population is 240, then the sample size should be 148. Therefore the sample size of this study was 148. Questionnaires were the data collection instrument of this study mainly to collect the primary data and they were administered to the respondents by the researcher himself. Before the data was subjected to statistical analysis, it was subjected to factor analysis in order to prove the data suitability for statistical analysis. Correlation analysis was carried out in order to measure strength of association between cost leadership strategies. The model summary or goodness of fit model results also demonstrated that cost leadership strategy had explanatory power over organizations’ competitiveness of sugar firms’ in that it accounted for 53.2 percent of its variability (R square = .532) hence the study rejected hypothesis H₀₁ and states that the influence of low cost leadership strategy on organizations’ competitiveness was statistically significant. The study therefore concluded that there was a statistically significant influence of cost leadership strategy on organization competitiveness therefore this study conclude that sugar firms management in Kenya should make more efforts in employing cost leadership strategies in an efforts to improve on organizations’ competitiveness.