Responses by cement companies to the strategic challenges posed by competition in the Cement Industry in Kenya

Abstract

The cement manufacturing industry is a very vital sector in the development of the country. The June 2010 Monthly Economic Review prepared by CBK indicates that Cement consumption has been gradually rising reflecting increased economic activity in the economy. The industry has also seen the entry of two new cement companies which are funded by foreign cement giants. All these factors have therefore posed challenges in the industry and it therefore becomes important to develop strategies that will counter these challenges.

This study sought to find out responses by cement companies to the strategic challenges posed by competition in the cement industry in Kenya. The objectives of the study were to determine strategic response strategies by cement manufacturing firms to competition and to compare strategic responses between multinational cement companies and the indigenous cement companies in Kenya. The study adopted a descriptive design in its methodoly.

A census study was used since the population was small. Primary data was collected by questionnaire method. Of the four targeted companies, only three participated and were therefore included in the study namely; Bamburi Cement Company, East African Portland Cement Company, Athi River Mining. Top management individuals of Mombasa Cement Company declined to participate in the stud, hence it was left out of this study.

The result of this study showed that there have been various changes in the industry including increase in demand and entry of other players. The main strategic response that was found to be common between both the multinational cement companies and the indigenous cement companies was expansion of production capacity. All companies studied were found to be involved in expansion of production capacity in order to meet demand and capture more market.

Other similar responses included product pricing, packaging of products and new products strategies. The cement manufacturing companies involved in the study had instituted change in the organization in order to respond to competition in the industry. The implementation of change had been successful for most of these companies.