EFFECT OF ENERGY MANAGEMENT PRACTICES ON ATTAINING COMPETITIVE ADVANTAGE AMONG MANUFACTURING FIRMS IN KENYA: A CASE OF SELECTED MANUFACTURERS IN NAIROBI COUNTY

Abstract

Studies on energy management have focused principally on environmental conservation, reduction in operation and production expenses, energy savings, lower utility bills, and minimization of energy wastage. However, the gains of energy management practices can be transferred to competitive advantage strategies among manufacturing companies in Kenya so as to boost their efforts in attaining competitiveness. Success in managing competitive advantage arises out of a firm’s ability in identifying and implementing actions that can give the company an edge over its rivals and attain competitive advantage. Manufacturing firms in Kenya are the highest consumers of both electricity and petroleum products. Literature reviewed showed that a sizeable number of multinational companies have left the Kenya market due to high energy costs. In this regard, the study posits that there is need to transfer the gains of energy management practices to competitive advantage strategies. The study objectives were: to determine the effect of implementing energy management regulations on attaining competitive advantage, to examine the effect of implementing company energy management policy on attaining competitive advantage, to assess the effect of implementing energy efficient technology on attaining competitive advantage, and to assess the effect of energy expenses on attaining competitive advantage among manufacturing firms. The study adopted a survey research design, with a study population of 1,459,870 employees employed by manufacturing firms in Nairobi County. A sample of 399 respondents was selected randomly from selected firms in Nairobi County and its surrounding areas. Questionnaires were used to collect primary data while secondary data was obtained by reviewing previous studies in the area of study. Data analysis was done using descriptive statistics (mean, standard deviation, and frequency distributions). Inferential statistics included correlation for test of association, chi-square for test of agreement and regression for test of hypothesis. The study found that energy management regulations, company energy management policies, energy efficient technology and energy expenses are significant predictors of competitive advantage with an explanatory power of 44.8%. The study also revealed that employees are not adequately informed on energy management practices in the sector. Average energy expenses in the sector stood at 10.5% of the total revenue. The study showed that gains from energy management practices can be transferred to competitive strategies such as product differentiation, reduced energy costs, and increased profits. The study recommends that manufacturing firms should consider energy management practices as part of their core strategic agenda in assessing and reviewing their energy management practices. The government agencies and Kenya Association of Manufacturers should assist in implementing energy management regulations, through stakeholder involvement at firm level, offering incentives and rebates in acquisition of energy efficient technologies. Future studies may focus on the influence of firm size, inflation and taxes on competitive advantage. It should be noted that energy management practices yield enormous benefits to all stakeholders and that the practice should not only be considered a competitive tool but rather as a universal practice in attaining competitive advantage.