Kenya’s competitiveness in the floriculture industry: a test of porter’s competitive advantage of nations model
From humble beginnings half a century ago, Kenya’s floricultural sector has grown to dominate Africa’s and, indeed Europe’s flower exports. Between 1995 and 2002, Kenyan flower export earnings grew by more than 300%, in a period when overall export growth was only 40%. Kenya has now become the largest producer in Africa and the leading supplier to Europe, producing approximately $200 million in cut flowers and foliage annually. Nearly all of it is exported, with 94% of the exports going to the competitive European Union market. The country's flower exports now control 32% of the European Union market, consolidating the lead Kenya achieved in 2000 after edging out Israel and Columbia. Porter (1990) argues that with regard to national competitiveness, the central question to be answered is why firms in particular nations achieve international success in distinct segments and industries. The factors that he found to explain international success and the creation of competitive advantage were linked into the now well-known competitive advantage of nations model. The framework presents the major determinants of competitive advantage as well as how they interact with one another. The four determinants are factor conditions, demand conditions, related and supporting industries and the context for firm strategy and rivalry. Two exogenous factors, government and chance influence the functioning of these four major determinants. This study determines whether Kenya’s flowers are competitive in the world market on the one hand and whether this competitiveness can be explained by the factors in Porter’s diamond model on the other hand. The study used the survey research design and drew its population from all the 49 registered members of the Kenya Flower Council (KFC) as at August 11, 2007. Primary data gathered with the help of a structured questionnaire was analyzed using percentages, mean scores and standard deviations to enable comparison. In some situations, frequency tables and graphs were used for presentation. Secondary data on world trends in flower export market share by country was collected from the floriculture-based bodies within and without Kenya. The results show that Kenya’s flowers are competitive in the global market and that this can be attributed to factor conditions, the investment friendly Kenyan culture and good climate, government policy, supporting local organizations and the deliberate involvement of flower firms in marketing and corporate strategies.