Exploring the Implications of Low-Cost Leadership and Differentiation Strategies in the East African Community Market: A Perspective of Local Firms.

Abstract

Over the past few decades, East African countries have made tremendous economic, social and political progress and are seeking to consolidate this growth with the formation of the East African Community. The Global Entrepreneurship Summit held in Kenya’s capital Nairobi in July 2015 highlighted the competitiveness of local firms in the region as having the potential to contribute to high-value added activities through innovation and entrepreneurship. Nonetheless, there are general concerns as to whether local firms can maintain their competitive advantages in the new environment of economic integration especially with the increasing entry of more resource endowed players from abroad. This conceptual paper explores the capacity of local firms to maintain their competitive edge by evolving into low-cost producers and/or differentiators. Specifically, the paper presents arguments in support of the differentiation strategy being followed by fledgling manufacturing local firms. While recognizing the limitations for local firms along this path, the paper identifies areas from previous research which address the question of upgrading from big emerging markets such as China, India, Argentina and Brazil and suggests areas that can guide future research aimed at helping local firms to be successful differentiators.