You are on page 1of 57

CHAPTER ONE

INTRODUCTION
1.1

Background of the Study

One of the biggest challenges companies face is meeting rising customer expectations in a
competitive marketplace. Customers today, expect to get more for less; and if they dont get it,
theyll move on to a company that can give it to them. Because of this, executives struggle to find
the balance between lowering operational costs and meeting customer demands. Given factors
such as homogenization of products, shortening product-to-shelf cycles and the ever shortening
technology cycle, the way to sustainable competitive advantage may not lie in changes in the
product, promotion, or pricing strategies, but rather in improving ancillary services. Such service
improvements are most likely to yield a sustainable positional advantage in the market when
implemented through changes in the corporate infrastructure - people, technology, facilities
and/or strategic corporate relationships. Porter (1985), Bowersox, Mentzer, and Speh (1995),
Bourlakis and Bourlakis (2006), and Markley and Davis (2007), reveal some insight into this
with each referring to logistics as instrumental and central to providing Sustainable Competitive
Advantage (SCA).
The Council of Logistics Management (1991) defined logistics as the process of planning,
implementing, and controlling the efficient, effective flow and storage of goods, services, and
related information from point of origin to point of consumption for the purpose. It is the process
of anticipating customer needs and wants; acquiring the capital, materials, people, technologies,
and information necessary to meet those needs and wants; optimising the goods- or serviceproducing network to fulfil customer requests; and utilizing the network to fulfil customer
requests in a timely way (Tilanus, 1997). Simply to say, logistics is customer-oriented operation
management.
Unlike a product change or enhancement, achieving logistics superiority is a capability difficult
to imitate because it involves changes in the people, technology, facilities and/or strategic
corporate relationships infrastructure of the company. Logistics has traditionally been considered
a matter of operational activities, squeezed between the prerequisites set by the marketing and
production functions, with a secondary role in the strategy of the firm. When production is in
focus, logistics is used as a buffer stock to support a production push philosophy. When
marketing is in focus, logistics has to carry a speculation stock to support a market expansion
philosophy with short lead times (Abrahamsson, 2008).
1

The efficiency and effectiveness of the logistics operation has a considerable influence not only
on the business performance but also on the customers perception of the quality of the products
and services provided by the plant. If inbound material flows from the supplier are erratic, the
firms internal operation will not be able to sustain their production strategies without a high
level of safety stock. Similarly, if the flows of finished goods to the customer are unreliable, the
firms customer base will be dissatisfied. Accordingly, logistics is strategically important in many
industries as it is central to achieving competitive advantage (Bowersox, Closs, & Cooper, 2010).
The SACCO movement in Kenya is billed as the largest in Africa and among the top ten globally
(Wanyama, 2009). With over KES 230 Billion in assets and a savings portfolio estimated at KES
190 Billion the SACCO movement in Kenya constitutes a significant proportion of about 20% of
the countrys savings. SACCOs have thus become vital components of Kenyans economy and
social development. In 2007, there were 5,122 registered SACCOs, with a total membership of
6,286,000 (Ministry of Co-operatives Development and Marketing, 2008). One of the major
challenges facing SACCOs today is the considerable competition from banks and microfinance
institutions (MFIs), which are perceived by clients to be more transparent, and as having better
governance and operational systems. Banks and MFIs generally have much smaller Boards and
management which allows them to make quick operational decisions to adapt to market changes.
Banks have better strategic direction, better operational systems and transparent decision making
processes. They are also quicker in developing new products and providing clients with quick
access to funds as they are more liquid compared to SACCOs.
Founded in 1976, as a union banking section of Kisii Farmers Co-operative Union (KFCU),
Wakenya Pamoja Sacco Society Ltd. (WPS) became autonomous in 1992, under the name Gusii
Rural Farmers SACCO Society Limited (GFRS). Over the years WPS has undergone major
governance reforms which have facilitated for the following: change of name from GFRS to
WPS; decision to expand geographically, WPS now serves three counties which include Kisii,
Nyamira, and Homabay; decision to increase her scope beyond tea and coffee to include value
chain financing, microfinance, business development and asset financing; and the formation of
strategic alliances with other organizations including CIDR (Center for International
Development and Research), and PAMIGA (Participatory Microfinance Group for Africa), to
provide more value-added services to her members. In her bid to remain competitive WPS has
gone as far as opening up the common bond and modifying her by-laws to be more
accommodative of the members needs. These changes have, however, done very little to improve
2

WPS productivity, as like most SACCOs, WPS continues to face the challenges of competition,
together with weak governance and operational systems.
A particular challenge, however, for WPS, is determining how to remain competitive and relevant
given the stiff competition from other financial service providers, given that it does not have the
monopoly on the provision of microfinance, value chain financing, or proceeds processing
services. Any change in the product features, promotion, or price strategies has only a temporary
impact in the financial market, as they are quickly met by countermoves from the competitor. For
example, if WPS lowers the bank charges, one competitor comes up with a product that attracts
no bank charge. The question managers now face is how to maintain or rather prolong the
benefits that accrue from implementing a particular strategy.
Logistics operations have been a matter for the creation of what Porter (1996) labels operational
effectiveness, limited to facilitate short term profitability in a hypercompetition race towards a
productivity frontier. In recent years, however, the view of logistics has changed. Today we see
several empirical examples of companies such as Wal-Mart, Dell and Hewlett Packard (OMarah
and Hofman, 2009) where logistics has a clear role in the strategy of the firm and is a driver for
corporate level profitability and growth. These companies have in common superior logistics
systems that are utilised as strategic weapons against competitors.
Developing and/or enhancing the logistical capabilities in WPS will give way to superior,
logistics performance that will lead to cost reduction and increased customer satisfaction. When
these capabilities are linked to WPS marketing strategy it will potentially prolong the accrued
advantages resulting in increased market share and profitability which is SCA. A key marketing
strategy that can potentially create and maintain SCA is termed as logistics leverage, which is
defined here as the achievement of superior, infrastructure-based logistics performance, which when implemented through a successful marketing strategy - creates recognizable value for
members.
In this sense, if the information-based capabilities are enhanced in WPS, other value added
services that may include SMS and Mobile Banking, will accrue. The marketing team can then
put in place a strategy that concentrates on pushing the additional services the members will
enjoy up above the normal homogeneous products being offered by other competitors. When
shopping around for a service provider, members are bound to go for the one with more value
3

added services. Logistics leverage leads to value-added maximization for the member, therefore,
as a marketing strategy it facilitates for the achievement and maintenance of SCA. This is
because it requires changes in the corporate infrastructure and as such, cannot readily be matched
by the competition. The purpose of this study was to determine how strategic logistics/marketing
linkages can be utilized by WPS to achieve and maintain SCA.
1.2

Statement of the Problem

The Co-operative movement in Kenya has generally traversed two main eras, namely the era of
state control and that of liberalization. In the era of liberalization, the role of the government was
redefined from one that sought to control the co-operative development to one that now seeks to
regulate and facilitate autonomy. With this, the monopoly of co-operatives was removed,
consequence of which, co-operatives now have to compete with other enterprises in the market.
SACCOs that had been able to retain and attract new members through natural affiliation,
stemming from the common bond amongst them now find themselves barely able to survive.
Competition from the mainstream commercial banks and MFIs who are perceived to be more
transparent, and having better governance and operational systems has prompted SACCOs to
seek ways to achieve SCA given their lack of adequate institutional capacity. Unlike a product
change or enhancement, achieving logistics superiority (because it involves changes in the
people, technology, facilities and/or strategic corporate relationships infrastructures of the
company) is a capability difficult to imitate thus can potentially create SCA, regardless of
whether managers define their market as competitor-focused or customer-driven. Achieving SCA
through leveraging logistics is likely to achieve and maintain competitive superiority. The study
sought to establish the relationship between logistics leverage and the achievement of SCA for
WPS.
1.3

Objectives of the Study

The general objective of the study was to determine how strategic logistics/marketing linkages
can be utilized by WPS to achieve and maintain SCA.
The specific objectives of the study were to:
i)

Establish logistical capabilities that can create SCA for WPS.

ii)

Evaluate key infrastructural issues that need to be resolved to achieve strategic


logistics/marketing integration.

iii)

Assess the inherent benefits of Logistics Leverage for WPS.


4

1.4

Research Questions

i)

What logistical capabilities can create SCA for WPS?

ii)

What

key

infrastructural

issues

need

to

be

resolved

to

achieve

strategic

logistics/marketing integration?
iii)

What are the inherent benefits of Logistics Leverage for the organization?

1.5

Scope of the Study

The study assessed logistics leverage in relation to the achievement of sustainable competitive
advantage in SACCOs. It was conducted within WPS. The sample of the study consisted of
employees, delegates and members and or members of WPS. It was conducted within a period of
three months, from July to September 2012.
1.6

Justification of the study

This study sought to provide relevant information on how WPS and the SACCO sub-sector in
general, can use logistics leverage to build sustainable advantages (differential and cost) that will
enable them to compete successfully in the current financial business environment. In addition to
this, the study also sought to provide relevant information on the direction future researches on
building and enhancing SCA will take
1.7

Limitations of the Study

The study did not include the entire population of WPS because not everyone has an
understanding of how the SACCO operates. Secondly, the respondents views and opinions could
be biased, and the subjectivity of the answers given could give data that is not representative of
the whole population; thus, distort the results of the study.
1.8

Operationalization of Terms

Capabilities:

Capabilities will be defined as those attributes, abilities, organizational


processes, knowledge, and skills that allow a firm to achieve superior
performance and sustained competitive advantage over competitors.

Logistics:

It is the process of anticipating customer needs and wants; acquiring the


capital, materials, people, technologies, and information necessary to meet
those needs and wants; optimising the goods- or service-producing
5

network to fulfil customer requests; and utilizing the network to fulfil


customer requests in a timely way
Logistics Leverage: This will be defined as the achievement of superior infrastructure based
logistics performance which when implemented through a successful
marketing strategy leads to cost reduction and increased customer
satisfaction. It creates recognizable value for members and cannot be
easily imitated by competitors.
Sustainable Competitive Advantage (SCA): The increase in market share and profitability
facilitated by the implementation of some unique value-creating strategy
not simultaneously being implemented by any current or potential
competitors along with inability to duplicate the benefits of this strategy.

CHAPTER TWO
LITERATURE REVIEW
2.1 Marketing Strategy
Marketing strategy has adjusted over the years to challenges from competitive and economic
pressures. During the 1960s, marketing strategy primarily focused on developing long-range
forecasts and budgets. Since this was a period of economic boom, management had the luxury of
long term planning horizons. During the 1970s, many organizations adopted a product
management structure, whereby each product was managed by one or more managers. However,
market volatility, in the form of high inflation, high unemployment, and a wave of consumer
discontentment, proved this strategy ineffective in maintaining competitive positioning. The
1980s brought increased global competition that negatively impacted consumer loyalty. The
1990s were marked by amazing growth in information technology. Such growth paved the way
for the development of strategic supply chain relationships, shorter product to market time, and
gave momentum to the growth in consumer power via the Internet.
The Information Age is being shaped by technological, cultural, and economic factors that have
great momentum. Such forces are symbiotic and mutually reinforcing and this is accelerating the
pace of change. A new information economy is emerging, led by the firms that create and deploy
various information technologies (Castells 2011). In the foreseeable future, the leadership of the
information economy is likely to pass to information intensive and information-aggressive firms.
These are firms that use information as a raw material and use IT to transform and redefine their
business. The new information economy will reshape markets and transform the nature of
marketing. Business processes, including transactions at the end customer level, are getting
informationalized. Market transactions are moving into the virtual cyberspace. In
informationalized value chains, end customers may have opportunities to reach deep into the
organizations serving them and to influence the distribution, production, configuration, and even
creation of products and services.
As these trends accelerate, they will create challenges for existing major brands. Such brands will
have to come up with new ways of projecting brand equity and maintaining consumer loyalty in
cyberspace (Aaker & Joachimsthaler 2009). These new forms of marketing may open up many
opportunities for new players who, unburdened by the legacies of the Industrial Age, can create
innovative business models tailored specifically to the Information Age. Businesses find ways to
remain competitive by implementing strategies that assure a sustained competitive advantage.
7

Porter (1985) defines competitive advantage as sustaining superiority of interrelated activities


within the firm. A firm experiences competitive advantages when its actions in an industry or
market create economic value and when few competing firms are engaging in similar actions
(Barney 2002). Barney goes on to tie competitive advantage to performance, arguing that a firm
obtains above-normal performance when it generates greater-than-expected value from the
resources it employs. Although several researchers have used different nomenclature, they each
describe a similar underlying premise, that firms must not only achieve and implement corporate
strategies to bring about superiority in the market, they must sustain it.
How to maintain such an advantage given factors such as the homogenization of products and
shortening product-to-shelf cycles is a question that most organizations ask. A careful review of
the work by Porter (1985), Bowersox et al. (1995), Bourlakis et al. (2006), and Markley et al.
(2007), reveal some insights. Each refers to logistics as instrumental and central to providing
sustainable competitive advantage. Unlike a product change or enhancement, achieving logistics
superiority (because it involves changes in the people, technology, facilities and/or strategic
corporate relationships infrastructures of the company) is a capability difficult to imitate. In
addition, regardless of whether managers define their market as competitor-focused or customerdriven, achieving sustainable competitive advantage through leveraging logistics is likely to
achieve and maintain competitive superiority.
2.2 Logistics Leverage
2.2.1 Logistics
Council of Logistics Management (1991) defined logistics as that part of the supply chain
process that plans, implements, and controls the efficient, effective forward and reverse
flow and storage of goods, services, and related information between the point of origin
and the point of consumption in order to meet customers requirements. Johnson and
Woods definition (cited in Tilanus, 1997) uses five important key terms, which are
logistics, inbound logistics, materials management, physical distribution, and supplychain management, to interpret.
Logistics describes the entire process of materials and products moving into, through, and
out of firm. Inbound logistics covers the movement of material received from suppliers.
Materials management describes the movement of materials and components within a
firm. Physical distribution refers to the movement of goods outward from the end of the
8

assembly line to the customer. Finally, supply-chain management is somewhat larger than
logistics, and it links logistics more directly with the users total communications network
and with the firms engineering staff.
The commonality of the recent definitions is that logistics is a process of moving and
handling goods and materials, from the beginning to the end of the production, sale
process and waste disposal, to satisfy customers and add business competitiveness. It is
the process of anticipating customer needs and wants; acquiring the capital, materials,
people, technologies, and information necessary to meet those needs and wants;
optimising the goods- or service-producing network to fulfil customer requests; and
utilizing the network to fulfil customer requests in a timely way (Tilanus, 1997).
The Council of Supply Chain Management professionals (CSCMP 2007) defines logistics
management as that part of the Supply Chain Management that plans, implements, and
controls the efficient, effective forward and reverse flow and storage of goods, services,
and related information between the point of origin and point of consumption in order to
meet customer requirements.
2.2.2 Logistics Capabilities
The capability of the logistics system is a critical part of the firms success in times of
time and quality based competition (Mentzer et al. 2004). The term capabilities
reflects the major role of strategic management in adapting, integrating and reconfiguring
resources, organizational skills and functional competencies to respond to challenges of
the external environment. Capabilities determine a companys capacity of general
efficiency and ability. They are distinctive competencies that consist of attributes,
abilities, organizational processes, knowledge, and skills that allow a firm to achieve
superior performance.
Helfat and Peteraf (2003) define organizational capability as the ability of an organization
to perform a coordinated set of tasks, utilizing organizational resources, for the purpose of
achieving a particular end result. Logistics capabilities are demonstrated to be a source of
competitive advantage (Lynch et al. 2000, Zhao et al. 2001). A review of the research
indicates that logistics capabilities can be grouped in a variety of ways. Stank et al (2005)
cited five broad categories of capabilities in their review of the logistics literature
9

including: customer focus, time management, integration, information exchange, and


evaluation. In their exploitation of the role and structure of logistics in the context of the
theories of the firm Mentzer et al. (2004) grouped logistics capabilities in four categories
including: 1) demand-management interface capabilities; 2) supply-management interface
capabilities; 3) information-management capabilities; and 4) coordination capability.
Based on a review of the logistics capability literature, Esper et al (2007) found that the
capabilities most frequently discussed in the literature include customer-focused
capabilities, supply management capabilities, integration capability, measurement
capability and information exchange capability.
2.2.3 Logistics as a Marketing Strategy
A key marketing strategy that can potentially create and maintain SCA is termed as
logistics leverage (Fugate et al. 2008). Logistics leverage is defined as the achievement of
superior, infrastructure-based logistics performance, which - when implemented through a
successful marketing strategy - creates recognizable value for members. Logistics
leverage can help firms achieve and maintain a positional advantage through both types
of competitive advantage conceptualized by Porter (1985): cost and differentiation.
Managers following a cost advantage strategy achieve a cost leadership position if they
can sustain lower costs. Cost advantage is sustainable if there are entry or mobility
barriers that prevent competitors from imitating its sources. The investment in
infrastructure required for logistics leverage constitutes such barriers to entry. Further,
Porter cites linkages as a driver to sustainability. Linkages are ties which require
coordination across organizational lines or with independent suppliers or channels. In
essence, the flow and storage aspects of Porter's definition of linkages is logistics.
The second advantage is differentiation. A rm differentiates itself from its competitors
when it provides something unique that is valuable to buyers beyond simply offering a
low price. Differentiation advantage occurs when a rm is able to obtain from its
differentiation a price premium in the market that exceeds the cost of providing the
differentiation. Every rm has opportunities for differentiating its offering to customers,
although the range of differentiation opportunities depends on the characteristics of the
product. The sustainability of differentiation depends on two things, its continued
perceived value to buyers and the lack of competitor ability to imitate. Again, Porter
(1985) defines a driver of sustainability that is logistics related.
10

The driver entitled, The sources of differentiation are multiple, is defined as, The
sustainability of a differentiation strategy is usually greatest if differentiation stems from
multiple sources, rather than resting on a single factor such as product design. This driver
to sustainability is directly related to logistics as defined by the American Marketing
Association, as the structure of intracompany organizational units and extra-company
agents and dealers, wholesale and retail, through which a commodity, product or service
is marketed. Again, competitors wanting to copy logistics leverage attained by another
firm will find it difficult because it requires unique, experienced, and well-coordinated
relationships between multiple parties in the channel. Thus, a superior logistics channel
structure can lead to competitive advantage (Markley, 2007), and the infrastructure nature
of this superiority makes it difficult to imitate. Therefore, the competitive advantage is
sustainable.
Changes in corporate infrastructure are the keys to the sustainability of logistics leverage.
For example, strategic corporate relationships can lead to an alliance that the competition
cannot readily match. A logistics alliance is an extension of the superior skills of each
partner to do value-added activities within the supply chain. Such an alliance can also
lead to innovative new products and processes that become valuable resources in the
overall marketing strategy.
2.3 Logistics within the Firms Competitive Philosophy
If logistics is to help a firm enhance competitive position, then it must be properly positioned
within the firm's competitive philosophy or, to use Drucker's (1994) terminology, within the
firm's theory of the business. Drucker (1994) notes that a firm's long-term success depends on the
relevance of its business theory and the resulting stream of strategic decisions that lead to the
development of appropriate core competencies. In essence, the firm's business theory addresses
two important issues: What to do and how to do it better than anyone else. Is logistics a relevant
value-added activity that can provide a firm with a distinctive advantage?
To answer this question we must view logistics in the context of the issues Drucker (1994)
identified as critical to determining the relevance and effect of a firm's theory of business:
management's understanding of its competitive environment; management's ability to identify
appropriate strategic objectives that will guide resource development and deployment;
11

management's understanding of the nature and value of its own resources as well as how to mold
those resources into core competencies or strategic capabilities that will lead to both competitive
advantage and long-term market leadership; management's ability to periodically and correctly
evaluate its competitive positioning to make sure those assumptions regarding environment,
objectives, and resources fit reality and that a logical consistency exists among these three areas;
and management's ability to constantly "push the envelope" to enhance existing skills and
develop new ones such that the organizational culture recognizes and encourages learning at all
levels.
These five areas provide a framework for linking the dominant theories of strategic managementcontingency theory, industrial organization theory, and resource-based theory-while highlighting
the vital importance of logistics in today's competitive environment. Indeed, integrating these
theories helps position logistics as an important and strategic domain. Starting with contingency
theory, these five points suggest the sequential environment-strategy-performance relationship
that is vital to building any core competence. That is, by understanding changes in the
competitive environment together with the firm's inherent resources, management can
appropriately focus competitive efforts on building relevant competencies that will enhance firm
performance. A failure to understand either the environment or the firm's resources will result in
a misguided strategy and poorly conceived and developed competencies.
The need for a full understanding of the dynamic external competitive environment is
underscored by the industrial organization perspective, which claims that unique market forces
and imperatives should drive strategic decision making. In short, the firm's strategic initiatives
should be derived from current and future market requirements. Several elements in today's
competitive environment, including increased time and innovation capabilities among worldclass firms, greater reliance on supply-chain relationships, shifting channel power, and the
globalization of competition, all point to greater opportunities to use logistics for enhanced
competitiveness (Esper et al. 2007). The industrial organization approach can help managers
understand how these and other environmental conditions affect their firm's competitive
potential.
While industrial organization theory helps managers both analyze the external environment and
anticipate emerging threats and opportunities, it does not focus on developing and structuring
firm resources to improve competitiveness. Using those resources to achieve a hard-to-replicate
12

differential advantage is the focus of the resource-based view of strategy. The emphasis is on
building organizational skills and processes that enable a firm to deliver distinctive, costcompetitive products. Today, the importance of on-time delivery, unique service offerings, and
cost efficiency in complex and dynamic channels all point to logistics processes that could, if
properly managed, perform as critical capabilities/core competencies (Sandberg et al. 2011).
Bringing the two strategic perspectives together yields better insight into the external competitive
environment and the internal characteristics of the firm. Managers thus better understand what
needs to be done (industrial organization perspective) to achieve competitive success as well as
how a firm's internal resources (resource-based perspective) can be developed to accomplish key
strategic objectives.
2.4 Logistics and Sustainable Competitive Advantage
The actual term of SCA emerged in 1985, when Porter discussed the three major ways companies
can achieve sustainable advantage i.e. cost leadership, differentiation and focus. It is also
noteworthy that a distinction is made between a competitive advantage and a sustained
competitive advantage. Barney (1991) argues that the first means the implementation of a
strategy that is not followed by current or potential competitors, while the latter means not only
the possession of such a strategy, but its non-duplicability as well. To act as a potential source of
a sustained competitive advantage, a resource has to posses the following attributes: be valuable,
rare, inimitable, and non substitutable (Barney, 1991). Besides it is also argued that resources
have to be relevant (Grant, 1998) and dynamic (Johnson et al., 2005). These additional features
are emphasized taking into consideration such circumstances of the contemporary business world
as hyper-competition, rapidly changing environment and volatile customer needs and
expectations, which clearly necessitate dynamic core competencies, i.e. organizational ability to
adjust and develop competencies to meet the needs of the fast altering environment.
In this sense, came closest to a formal definition of SCA by stating that a firm is said to have a
sustained competitive advantage when it is implementing a value creating strategy not
simultaneously being implemented by any current or potential competitors and when these other
firms are unable to duplicate the benefits of this strategy. Based on both Barneys work and the
definitions of each term provided in the dictionary, SCA is defined as the prolonged benefit of
implementing some unique value-creating strategy not simultaneously being implemented by any
current or potential competitors along with the inability to duplicate the benefits of this strategy.

13

Strategy researchers and practitioners have been putting persistent effort in an attempt to
understand and unravel potential sources of competitive advantage. In their search for an answer,
they have been looking into both external and internal environments of the organization. Though
both, external and internal perspectives are undoubtedly relevant to the development of business
success, until the 1990s, a considerably greater attention was given to the external environment
approach, and the strategic analysis mainly focused on the industry environment and competitive
positioning of the organization (Barney, 1991, 1995; Grant, 1991, 1998).
In the 1990s, however, having realized that traditional sources of competitive advantage, such as
natural resources, access to financial resources, technology, protected or regulated markets and
economies of scale had become increasingly easier to imitate and thus lost their strategic power,
strategy researchers and practitioners started searching for new strategic possibilities. As a result
a resource-based view (RBV) of the firm was developed, in which the focus of strategy
specialists shifted from the external environment to the internal context of the organization, and
the greatest emphasis was laid on the crucial role of organizational resources and capabilities,
which were viewed as a strategic foundation of the organization and the primary source of
competitive advantage (Barney, 1991; Grant, 1991, 1998). Proponents of this view argued that
organizations should focus on acquiring, deploying, developing, and retaining their resources
rather than the competitive position in the market (Colbert, 2004).
Following the resource-based view, rapid changes in technologies and customer preferences
make the market-focused strategy too unstable for building a long-term strategy; instead,
business strategy should be based on the deployment and development of the unique features of
organizational resources and capabilities (Grant, 1991, 1998). Accordingly, resources have to be
utilized in bundles, or combinations, which then lead to the development of organizational
capabilities that can be viewed as a source of competitive advantage. Therefore, firms may
succeed in establishing an SCA by combining skills and resources in unique and enduring ways.
By combining resources in this manner, firms can focus on collectively learning how to
coordinate all employees efforts in order to facilitate growth of specific core competencies.
Examples of logistical capabilities include information based, flexibility and benchmarking.
Information-based capabilities comprise of information technology (IT) and information sharing.
It has been widely accepted that firms can achieve a competitive advantage by cost reduction or
differentiation with the proper implementation of IT. Information sharing is the key to
14

information-based capability because it requires many invincible skills and initiates situations
which are difficult to imitate that is, value-added maximization and cost minimization.
Benchmarking, an activity under the logistics learning capability is a critical step in process reengineering which can lead to improved performance (Esper et al., 2007). Benchmarking
originated in the military arena since, as The Art of War (written about 500 B.C. by the Chinese
General Sun Tzu) points out, if you know your own capabilities and those of your enemy you
need not fear the results of a hundred battles. The exibility capability emphasizes adaptability to
unexpected circumstances (Li et al., 2006; Esper et al., 2007). Although exibility can be
assessed in several ways (for example strategic exibility, manufacturing exibility, marketing
exibility), in this study logistics exibility, which implies an integrative and customer-oriented
perspective would be relevant.
The potential of logistics as a source of sustainable competitive advantage rests on its ability to
affect firm performance. The activities managed under the logistics umbrella provide an area of
unique organizational skills and processes that can be developed into a distinctive capability,
which suggests that logistics can be used as an appropriate response to a changing competitive
environment. The literature supports this view, pointing to the linkage between superior logistics
practice and enhanced firm performance.
Drucker (1994) emphasized the importance of logistics, suggesting that greater understanding of
it would unlock its potential to help firms compete. Several logistics strategies, including
postponement and speculation have shown how they could simultaneously improve customer
service and reduce overall costs. Bourlakis et. al (2006), discussed the importance of logistics to
firm strategy, emphasizing that integrating logistics activities is critical to competitive effect.
More recently logistics has been called the next source of competitive advantage because it
provides an opportunity to achieve substantial cost savings while enhancing operational
flexibility and creating value for members.
Novack et al.(2003) determined that logistics managers feel logistical activities do add value to a
firm's output and can act as source of strategic differentiation. While the linkage between
logistics practice and firm performance has not been conclusively demonstrated through
empirical research, the literature strongly suggests that logistics capability can help a firm
improve its competitiveness. A unique opportunity now exists for managers to develop and
position logistics capability as a central component of their firm's theory of business. The
15

resource-based theory of the firm views logistics capabilities as an intermediate variable linking
logistics resources to firm performance.
2.5

Logistics in Organizations Overall Strategy

If the proposed linkage between logistics capability and firm performance is empirically
validated, an appropriate question is: What can be done to develop high level logistics capability?
From the perspective of resource-based theory, the effective allocation of resources is the answer.
Two vital resources that can facilitate the development of critical capabilities are the strategic
planning process and the organization's information support system.
An explicit and systematic planning process has been identified as an important antecedent of an
organization's competitive success (Steiner 2010). Systematic strategic planning is positively
related to both firm growth and profitability. Its role is to establish a firm's direction by
evaluating long-range objectives, alternative approaches, and the means to monitor future
planning. For strategic planning to succeed, it must identify the most appropriate competitive
priorities and, thus, the most beneficial value-added capabilities. Thus, the strategic planning
process influences a firm's ability to effectively allocate and organize resources to build and
sustain those capabilities that will lead to better organizational performance (Sandberg et al.
2011). The effective development and allocation of logistics resources is particularly important in
a complex global operating environment replete with demanding members.
Today, an organization's information system should both support the strategic planning process
and help develop a logistics capability by providing information that is not readily available to
competitors. Information helps establish organizational goals as well as manage and monitor the
processes that are used to attain these goals. More than just providing insight into competitive
dynamics, good information is critical to the control of daily operations. The effective sharing of
information helps breakdown organization politics and functional fences and helps to develop a
common understanding of the competitive environment (Steiner 2010). Unfortunately, while
research has shown that accurate, relevant, and timely information is vital to developing
resources into a strategic capability, useful information is often unavailable. The historic fact that
logistics information systems have not adequately provided useful data, combined with the
realization that information is central to both strategic and control issues that facilitate logistics
excellence.

16

In summary, today's competitive environment is one in which logistics activities are well
positioned to help firms obtain a competitive advantage. Effective use of logistics as a
competitive weapon requires that firms develop unique logistical skills and processes. If these are
targeted correctly to meet existing and emerging customer requirements, then they will improve
firm performance in terms or reduced costs and increased customer satisfaction. A
comprehensive approach to planning combined with a high level of information availability can
help the firm allocate and develop its resources into such a distinctive value-added logistics
capability (Sandberg et al. 2011).

2.6 Strategic Logistics/Marketing Linkages


Although marketing and logistics often receive some degree of integration, two catalysts existing
in the business environment are working to make logistics superiority, and its strategic
integration with marketing, a necessity for many companies. Understanding these catalysts better
positions how logistics can be deployed as a key strategic resource. In Porter's (1985) value
chain, one of the four support activities (procurement) involves logistics and all of the five
primary activities involve logistics (inbound logistics, operations, and outbound logistics),
marketing (marketing activities), or both (service). It is interesting to note how these functions
are so important and inextricably linked in the value chain and suggests that increased focus be
placed on effectively coordinating their interaction.

In spite of marketing and logistics holding a strong and mutual interdependence, it is common to
find barriers in the relationship between them in the practical field, as well as in the academic
field (Svensson, 2002). In relation to the perception each function has of the other, Ballou (2006)
highlights the fact that marketing and manufacturing professionals ignore the importance of
logistics. These professionals see logistics as a doer of the immediate needs of transportation and
warehousing, instead of treating it as a function that controls the integration of the supply chain.
Organizations that maintain collaborative relationships between marketing and logistics work
easily with the mutual understanding of responsibilities, shared ideas and information, as well as
dedicating themselves to joint problem solving (Ellinger, 2000). On the other hand, the lack of
integration between these functions may affect cooperation, resulting in poor organizational
performance.
17

As to the ways to reach integration, Murphy et al. (1996) found in the interfunctional integration
literature, 14 managerial techniques that may be utilized to improve the marketing and logistics
cooperation. These include: support of the high level managers; common goals and performance
indicators; jointly made work projects; agent that manages the connections among the functions;
information sharing; coordination committees

to discussing issues of interest of the two

functions; logistics training for marketings people and the inverse; mutual negotiation for
problem solving; incentive systems evolving sharing of earns and risks; unify the marketing and
logistics departments; job rotation among professional of the two functions; promotion of
informal interaction among two function professionals; to use a neutral interceptor (third party or
from another area) to solve problems from the two functions; and the implementation of a
cooperation philosophy.

The support of the high level managers, the information sharing and a cooperation philosophy
implementation, are the more widely utilized techniques (Murphy et al. 1996). The
implementation of these techniques, demands more for changes in the corporate culture, than
formal changes, or substantial expenses. The foundation of future marketing and logistics
integration is strategic. The focus of logistics has been and will primarily continue to be upon
cost drivers, i.e. skills and resources that generate efficiency.

The integration of marketing and logistics is necessary to bring the logistics sources of advantage
into the realm of effectiveness, or drivers of differentiation. This will only occur and result in
positional advantages if the leverage logistics can bring to marketing is realized. This leverage
can only be realized by recognizing and exploring, both within the practitioner and academic
communities, the strategic linkage between marketing and logistics wherein logistics skills and
resources are translated into effective drivers of differentiation. Where this integration is
accomplished, strategic positioning of the marketing/logistics integrated firm as cost efficient and
customer effective will result (Daugherty et al. 2009). It will be incumbent upon marketing to
emphasize these superior performance outcomes to achieve sustainable competitive advantage.

18

Firms that have successfully implemented such coordination are now building corporate
strategies that exploit logistics competency. By focusing on logistics competency the leading
logistics performers are providing tangible and significant benefits to customers (Bowersox et al.
2010). The net result is the creation of a meaningful competitive advantage. The exploitation of
logistics competence offers a meaningful way to create value-added services not achievable in
other ways. Such positioning requires defining critical business processes from a logistics
perspective. Such value-added processes have spawned the development of new channel
institutions. The combination of more effective delivery at a lower cost translates to increased
value. Thus, what have traditionally been logistics cost drivers are becoming drivers of
differentiation. Again, the shift from cost driving logistics activities to logistics drivers of
differentiation requires the integration of marketing and logistics activities and strategic plans.

A major premise of this work is that logistics competency can be created, but unless the firm is
positioned to exploit it, little strategic significance will result. One way to leverage logistics
excellence is to establish hierarchies and reporting relationships that maximize the integrated
potential (Daugherty 2009). However, since logistics is a customer satisfaction impacting
function and its significance as a competitive marketing tool has been demonstrated, logistics
should logically be more closely aligned organizationally with marketing.

Logistics leverage has to be consciously created through the actions of marketing and logistics
managers within the firm. Key issues to be resolved include the creation of value-added services,
top management vision, strategic alliances and partnerships, interfunctional teams, the orientation
of marketing, organization structure, marketing intelligence, channel member programs, and the
nurturing of sole-source relationships. Once these issues are resolved, the firm will be positioned
to effectively integrate logistics competence into marketing strategy to create sustainable
differential advantage.

2.7

Benefits of Logistics Leverage


19

The most popular indicators of marketing effectiveness and competitive advantage are market
share and profitability. Firms that are able to create value for their members by satisfying their
needs and wants generally increase their market share. Logistics, the last point of contact
between the firm and its members has a direct impact on member satisfaction and, thus indirectly
impacts market share. Logistics has historically been concerned with cost reduction. Leveraging
logistics success can reduce costs and increase customer satisfaction and, therefore, positively
influence the firm's profitability. Profitability is a desirable outcome because it creates
shareholder value. When consistently and substantially maintained, it ensures the firm's longevity
(Bourlakis et al., 2006; Markley et al., 2007).

Future research and management issues are very much related to the effort to create logistics
leverage. Managers and researchers a like need to become more concerned with the buyer
behavior implications of changes in the marketing/logistics member service package. Buyer
attitudes and behavior can be expected to change with integrated marketing/logistics efforts.
Whether this altered behavior will be for the good or detriment of the company, and in what
degree, lies within the realm of buyer behavior and service quality research-both applied and
academic (Daugherty, 2011).

2.8 Conceptual Framework


Logistics leverage, taken as the independent variable is the achievement of superior infrastructure
based logistics performance, which when implemented through a successful marketing strategy,
result in cost reduction and increased member satisfaction. This eventually results in increased
market share and profitability which are the ultimate measures of SCA, the dependent variable.
This will, however, only be possible if strategic logistic/marketing linkages are achieved. Figure
2.1 further illustrates this.
Figure 2.1: Conceptual Framework
Independent Variable

Dependent Variables
Sustainable Competitive

Logistics Leverage

Advantage
Cost reduction
Increased customer satisfaction

20

Increased Market share


Increased profitability

Successful Strategic
Logistics/Marketing Linkages
Moderating Variable
Source: Researchers Conceptualization (2012)

CHAPTER THREE
RESEARCH METHODOLOGY
3.1

Research Design

This study was conducted through the survey research design. Survey research is used to answer
questions that have been raised, to solve problems that have been posed or observed, to assess
needs and set goals, to determine whether or not specific objectives have been met, to establish
baselines against which future comparisons can be made, to analyze trends across time, and
generally, to describe what exists, in what amount, and in what context (Isaac & Michael, 1997).
Kraemer (1991) identified three distinguishing characteristics of survey research. First, survey
research is used to quantitatively describe specific aspects of a given population. These aspects
often involve examining the relationships among variables. Second, the data required for survey
research are collected from people and are, therefore, subjective. Finally, survey research uses a
selected portion of the population from which the findings can later be generalized back to the
population. The study was concerned with identifying the relationship between logistics leverage
and the achievement of a sustainable competitive advantage.

It specifically intended to

investigate the relationship between strategic logistics and marketing in attaining SCA.
3.2 Study Area
21

The study was conducted in Wakenya Pamoja SACCO Society Ltd (WPS) headquarters, located
in Kisii Town. The SACCO has a membership of approximately 102,000 members both dormant
and active including delegates (directors and non-directors), and members of staff (Managers and
other employees).
3.3

Target Population

The study targeted a population of 482 WPS members, staff and delegates as represented in Table
3.1. The members only included those with savings amounting to KES 300,000 and above, based
on the December 2011, WPS Statement of Deposit Return.

22

Table 3.1: Distribution of the Target Population


Target
Members with savings above KES 300,000 (as per the December 2011
Statement of Deposit Return)
Staff
Delegates
Total
Source: WPS Financial Returns (2011)
3.4

Population
128

Sampling Size and Sampling Procedure

Stratified sampling was used to select the sample size and respondents for the study. The target
population was divided into three strata which included the employees, delegates and members.
These were further subdivided into sub-strata as shown in Table 3.2. This technique ensured that
subgroups were proportionately represented and accounts for differences in characteristics
therein (Onen and Oso, 2008). Yamane (1965) simplified sample size calculation formula was
used to arrive at the sample size of the study:
n

N
1+ N(e)2

where:
n is the sample size,
N the population,
e the level of precision (sampling error) of 0.05.
The sample size from each stratum was arrived using the following formular
nh =(Nh/N)*n
where:
nh is the sample size of each stratum
Nh the population in the stratum
N the total population of the study
n the total sample size of the study

23

204
150
482

Table 3.2: Distribution of the Sample Size


Target Population
Category
Employees
Delegates
Members
Total
Source: Researcher (2012)
3.5

Sub-Target Population
Managers
Other Employees
Directors
Other Delegates
Members and/or Member

Target Population

Sample Size

25
179
14
136
128
482

Data Collection Instruments and Procedure

According to Mugenda (1999) research instruments are the means by which primary data is
collected. According to Gauthier (1979), the questionnaire works as an essential communication
means between the researcher and the respondents. Selltiz (1977) stated that the questionnaires
that have a chance to come back are those of attractive presentation, short, clear and easy to fill.
In addition, questionnaires are more convenient; and they can be administered to a large number
of individuals simultaneously (Tuckman, 1999). Based on these ideas, the researcher developed a
questionnaire after critically examining questionnaires used by other researchers with related
studies and used it as the main data collection tool. The questionnaire comprised of both the
closed and open ended questions.
The nature of the data to be collected, the time available, the financial resources at the disposal of
the researcher and the objectives of the study also guided the selection of this tool. The study was
primarily concerned with the views and opinions of the respondents. Such information can be
best collected through the use of questionnaires (Touliatos and Campton, 1988). Primary data
was collected from the 220 respondents using structured questionnaires. The researcher used two
research assistants to administer the questionnaires as some respondents required further
clarifications on the questions asked. Data was collected within the duration of two weeks.

24

12
82
6
62
58
220

3.6 Validity and Reliability of the Data Collection Instrument


3.6.1 Validity
Validity refers to the degree to which an instrument measures what it is supposed to
measure. According to Kothari (2004), validity can be determined by using a panel of
persons who shall judge how well the measuring instrument meets the standards. The
researcher pre-tested the questionnaire on 10 non-respondents to test its effectiveness and
efficiency in collecting the required information.
3.6.2 Reliability
For research data to be reliable, data collection instruments must be reliable. This means
that the tools must have the ability to consistently yield the same results when repeated
measurements are taken under same conditions (Lokesh, 1992). To ensure that individuals
do not vary in their responses if the instruments are administered a second time, the
researcher used two trained research assistants to administer the questionnaires hence
provided clarifications when need arose.
3.7

Data Analysis and Presentation

The weighted mean, percentages and frequency counts were used to analyze the data. The
weighted mean was used to analyze responses on likert items. Percentages were used to show the
particular frequency of respondents preferring a particular alternative, while data from openended questionnaire items was grouped into broad themes that were converted into frequency
counts. Results were summarized in tables, charts and graphs, giving implications of logistics
leverage on sustainable competitive advantage for WPS.

25

CHAPTER FOUR
DATA ANALYSIS AND FINDINGS
4.1 Response Rate
The data for this study was collected within the duration of two weeks, using semi-structured
questionnaires administered to WPS members (58), employees (94) and delegates (68). All the
220 questionnaires were completed and returned to the researcher by the research assistants
commissioned to assist in the administering the questionnaires. This represented 100% response
rate which very good for use in the research (Mugenda and Mugenda 2003).
4.2 Sample Demographics
4.2.1 Distribution of the Period of Membership
The study sought to establish the number of years the members, delegates and employees
had been members of the SACCO and the results are presented in table 4.1.
Table 4.1: Analysis of the Membership Period
No. of Years Respondents have Members of WPS
21 and Above
16 20
11 15
6 10
15
Less than 1
Total
Source: Field Survey (2012)

26

Frequency
56
76
24
33
26
5
220

Percentage
25%
35%
11%
15%
12%
2%
100%

Figure 4.1: Distribution of the Membership Period

1 5 ; 12%

Less than 1; 2%
21 and Above; 25%

6 10 ; 15%

11 15 ; 11%
16 20 ; 35%

Source: Field Survey (2012)


Majority of the respondents (81%) indicated that they have been WPS members for over
10 years. Further analysis of the data revealed that the ones who stated to have been
members for less than 10 years were from the business community and the civil service, a
target market recently ventured into. This implies that WPS has been able to retain its
members over time, regardless of the stiff competition from the other financial
institutions.
4.2.2 Distribution of Members Sources of Income
The study sought to find out the sources of income of the members, and the results are
presented in the figure 4.2:

27

Figure 4.2: Distribution of Members Sources of Income

Civil Servants; 14%

Business; 14%

Agricultural Based; 71%

Source: Field Survey (2012)


As Figure 4.2 indicates, most of WPS members (72%) generate their income from
agricultural activities, 14% from salary proceeds from the civil services and 14% from
businesses. This implies that although WPS has undergone major governance reforms,
over the years, with an aim to diversify and increase its scope beyond tea and coffee
farmers, this is yet to be fully actualized. It is important to note that although the
microfinance and value chain credit facilities have brought in new members the same do
not maintain their savings with the SACCO. Further analysis of reasons why this is so
would enable the SACCO to further improve their savings products and services to tap
savings and deposits from these new markets.
4.2.3 Reasons why Members prefer WPS
The study also sought to find out the reasons why members chose to remain with WPS
given the increased amount of financial service providers offering the same products
and/or services. The following, were listed as some of the reasons: WPS is a community
based organization that is working towards poverty eradication by providing financial
services to the community hence members felt the need to make their contribution to its
success by getting financial services from it; WPS offers a variety of products and
services that meet the needs of its members; Through the delegates system of
management, shareholders/members felt that they were directly involved in the decision
28

making process hence had the power to influence the WPS output; Some members felt
that the mission of the WPS which is to increase stakeholders wealth through viable and
sustainable investments built upon a foundation of innovation and financial strength was
one that they could identify with; Ease in the processing and payment of agricultural
proceeds through the mobile pay point services; WPS offers cheap credit facilities i.e.
offers low interest rates compared to other financial service providers; and convenient and
easily accessible. The above information was summarized and the results presented in
table 4.2.
Table 4.2: Reasons why Members choose to remain with WPS
Category
Community Based Organization
Competitive Products and Services
Involvement in decision making
Convenience and accessibility
Source: Field Survey (2012)

No. of Respondents
84
134
125
196

Percentage
38%
61%
57%
89%

The stated reasons were grouped into for broad categories and presented in table 4.2.
Majority of the respondents (89%) stated that they chose to remain members of WPS
because it was convenient and easily accessible. WPS has a branch network of 12, with 6
pay points and operates mobile pay points for all tea and coffee payments that ensure that
it brings its services to the members doorstep. With 89% of the respondents
acknowledging this effort, this implies that there is potential for WPS to develop
logistical competency by further developing this logistical capability and leveraging it to
achieve SCA.
61% of the respondents stated that they chose to remain members of WPS because it
offered competitive products and services. Apart from the fairly affordable interest rates
and charges on the credit facilities being offered, members also felt that the terms and
conditions for the given products and services were good, compared to those of other
financial service providers. The fact that the members were involved in the decision
making process of the SACCO was also a major factor why members chose to remain
with the SACCO as they felt that they had a final say on how their money was being
invested.

29

4.3 WPS Products and Services Market Appeal


The study sought to establish how WPS products and services compared to other financial
service providers in the market. These were measured using a 5-point likert scale ranging from
5(very satisfactory) to 1(not satisfactory). The respondents were asked to give their extent of
satisfaction with the presentation of WPS products and services in terms of features, pricing,
promotional strategies and the customer service. The findings are represented in the table 4.3.

86
77

Neutral

Satisfactory

4
163
73

3
13
64
57
48

2
46
29
57

Satisfactory Not

Product/Service Features
Product/Service Promotion
Strategies
3
Product/Service Pricing
4
Customer Service
Source: Field Survey (2012)

5
44
9

Satisfactory Fairly

1
2

Satisfactory Very

Table 4.3: Analysis of WPS Product and Services Market Appeal


S/No.

f i
f i wi

f iw
fi

1
220

911

4.14

220
220
220

649
621
604

2.95
2.82
2.75

28
48
38

From the results in table 4.3, apart from product/service features which had the highest score
with a mean of 4.14, respondents were of the opinion that WPS promotional strategies (2.95),
product and/or service pricing (2.82) and customer service (2.75) were not at par with the
competition. This implies that although WPS offers products/services whose features are at par or
better than the competition, activities that are meant to increase their market appeal, that is,
promotional strategies and customer services are under developed which affects its ability to
achieve SCA.

30

Figure 4.3: WPS Product and Services Market Appeal


4
3.9
3.8
3.7
Rating

3.6
Rating

3.5
3.4
3.3
3.2
Product/Service Pricing

People

Factors measuring market appeal

Source: Field Survey (2012)


It is important that businesses get the right marketing mix to ensure that they get the best result
on the marketing expenditure incurred. As indicated in figure 4.3, WPS needs to find the right
mix of promotions that will have effective results. Finding the correct balance not only requires a
complex marketing plan and accurate measurement of marketing effectiveness, but also
consideration of the current business environment. By doing this, WPS will significantly reduce
the marketing expenditure and as such reduce the overall operating costs significantly.

4.4 WPS Capabilities in relation to SCA


The study further sought to identify factors, which when changed/improved/enhanced would
result in SCA for WPS. The factors were measured using a 5-point likert scale ranging from
5(strongly agree) to 1(strongly disagree) and the results were summarized in the table 4.4.

31

Disagree

Neutral

5
110
70

4
79
110

3
31
31

77
90
40

66
50
70

37
40
80

40
40
20

70

100

30

20

50

100

50

73

105

42

f i

DisagreeStrongly

Product/Service Features
Product/Service
Promotional Strategies
3
Product/Service Pricing
4
Customer Service
5
People
(Delegates,
Directors, Managers, Other
Employees)
6
Technology
(Information
System in place)
7
Facilities
(location,
building)
8
Strategic
Corporate
relationships
(WPS
Partners)
Source: Field Survey (2012)

AgreeStrongly

1
2

Agree

Table 4.4: Analysis of Factors that can result in SCA


S/No.

f i wi

f iw
fi

10

20

220
220

959
901

4.36
4.10

220
220
220

840
850
770

3.82
3.86
3.50

220

880

4.00

220

820

3.73

220

911

4.14

The first three factors in table 4.4 relate to product changes and enhancement, while the rest
relate to infrastructural issues that can be developed into logistical capabilities. The respondents
were of the opinion that of all the factors listed in table 4.4 above, changing/
improving/enhancing the product/service features would result in SCA ranking it highest with a
mean of 4.36 followed closely by promotional strategies at 4.10. To act as a potential source of
SCA, a resource has to posses the following attributes: be valuable, rare, inimitable, and non
substitutable (Barney, 1991). As was discussed in the background of the study, given the factors
such as homogenization of products, shortening product-to-shelf cycles and the ever shortening
technology cycle, the way to SCA may not lie in changes in product, promotion, and pricing
strategies, because these can easily be copied or met with countermoves from the competition. It
is important to note that in table 4.3, respondents indicated that in comparison with other
financial service providers, they found WPS products/services satisfactory. This implies that
WPS needs to identify another strategy to ensure that it achieves a SCA.

32

Figure 4.4: Factors that can result in SCA for WPS

Rating

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Rating

Factors that can result in SCA

Source: Field Survey (2012)


The respondents were of the opinion that enhancing the strategic corporate relationships (4.14)
and technology (4.00) would lead to SCA for WPS, while changing/enhancing /improving the
people was ranked lowest with a mean of 3.50 implying that most of the respondents were
neutral about whether or not people would significantly improve the current situation. An
emerging concept for logistics capabilities research and management practice is that different
capabilities can support different value disciplines or strategic emphases. Morash et al. 1996
identified customer closeness or intimacy and operational excellence as the two major value
disciplines.
The first value discipline stresses the external customer, external customer interfaces, and
external goals and objectives. It often embraces product or service differentiation and service
enhancements from logistics capabilities such as time advantages or customer services. The
second value discipline is related to an organization's operational capabilities and it emphasizes
product availability, convenience, and low total distribution cost. In this sense, the two factors
can be further developed into logistical capabilities that address the two value disciplines.
In addition to this, the current business era is characterized by constant change, turbulent and
volatile financial markets, shorter product life cycle, diverse customer requirements, and
increased uncertainty of demand (Agarwal et al. 2007). While any one of these conditions would
33

be challenging for a firm to deal with, the collective bundle has prompted firms to seek ways to
cope with this new environment. Through his research van Hoek (2001) found that one of the
most important lessons for achieving competitive advantage in the modern business environment
was that companies have to be aligned with suppliers, the suppliers of the suppliers, customers
and the customers of the customer, and even with the competition in order to streamline
operations. Within the current context of competition, we can perceive the emergence of a new
paradigm of business management based on the fact that companies no longer compete isolated
or individually among themselves, but through the various supply chains they belong to. Mentzer
et al. 2001 declare that the success of an organization depends on its managing skills or capacity
to integrate partner organizations into business, creating and coordinating its relationship
networks.
Development of successful strategic corporate relationships would result in logistical capabilities
that can be leveraged to enhance WPS SCA. Given its ranking in table 4.4, this implies that the
stakeholders of WPS understand the current business environment and that the SACCO can
enhance its SCA by building strategic corporate relationships. WPS has over the years partnered
with among others, CIDR and Co-operative Bank. The result of partnership with CIDR has been
the development of the microfinance and value-chain finance departments. The SACCO has used
the SACCOLINK platform provided by Co-operative Bank to introduce ATM and Mobile
Banking services to their members. WPS can further develop and manage these
relationships/partnerships/alliances to maximize the returns.
The second factor that can be used to develop logistical capabilities as ranked by the respondents
is technology with a mean of 4.00. This implies that WPS can achieve a sustainable competitive
advantage with the proper implementation of Information Technology (IT) by cost reduction or
differentiation. In this sense, instead of looking at IT as a support function only, WPS can build a
business model around its IT function, increase its efficiency and effectiveness and this will
automatically result in increased returns, and such a strategy cannot be easily copied by the
competitors as it will be unique to the organization.
Logistics encompasses upstream (materials management) and downstream (physical distribution)
flow of goods, services, and related information. Information management capabilities acquire,
analyze, store and even distribute tactical and strategic information both inside the firm and
within a supply chain (Zhao et al. 2001). Three components are associated with this capability:
34

information technology, information sharing, and connectivity. Information-management


capabilities are needed to leverage information exchange of market-related data in a timely
manner for improved coordination and decision making among supply chain members. This
implies that by building superior information-management capabilities and in this case IT, the
higher will be the level of integrated logistics capabilities.
4.5 WPS Competitive Philosophy
The study sought to determine the relevance and effect of WPS theory of business using the five
critical issues identified by Drucker, 1994. Using a 5-point likert scale ranging between 5(to a
very large extent) to 1(to no extent at all) directors, manager and employees were asked give their
opinion on the extent to which they felt that WPS management understood the five issues and the
results are summarized in the table 6.

Understand its competitive


environment
2
Have the ability to identify
appropriate
strategic
objectives
3
Understand the nature of its
own resources as well as
how to mold these into core
competencies or strategic
capabilities
4
Have
the
ability
to
periodically and correctly
evaluate its competitive
positioning
5
Have the ability to enhance
existing skills and develop
new ones
Source: Field Survey (2012)

10

35

f i

To no extent at all

extentTo negligible

Neutral

To a very large
extent

S/No.

To a large extent

Table 4.5: Analysis of the Relevance and Effect of WPS Theory of business

4
30

3
35

2
25

57

43

32

42

16

38

43

19

35

40

15

f i wi

f iw
fi

100

325

3.25

100

357

3.57

100

316

3.16

100

319

3.19

100

320

3.20

The responses in table 4.5 ranged between to a large extent and neutral with most responses
bordering towards neutral i.e. a mean of 3. This implies that the management of WPS does not
clearly understand the firms theory of business and as such does not have in place a competitive
philosophy. Drucker (1994) notes that a firms long-term success depends on the relevance of its
business theory and resulting stream of strategic decisions that lead to the development of
appropriate core competencies. The responses in table 4.5 further imply that the strategic
planning aspect of WPS is not fully developed.
If logistics is to help WPS enhance its competitive position, it must be properly positioned within
the firms theory of business. The strategic role of logistics has also been recognised among
logistics scholars in recent years (Autry et al., 2008; OMarah & Hofman, 2009), and the link
between logistics performance and strategic management has been emphasized (Cheng and
Grimm, 2006; Ketchen; Esper et al., 2007; Hult et al., 2007). In particular, the resource based
view of the firm (RBV) has shown to be fruitful for the exploration of the role of logistics in the
strategy of the firm. As such, RBV explains why some companies outperform others over time
(Barney & Clark, 2007). From a resource based perspective, the notion of logistics resources as
being the main source of a companys competitive advantage is not new. Esper et al. (2007)
discuss customer focused capabilities, supply management capabilities, integration capabilities,
measurement capabilities, and information exchange capabilities. In this sense, WPS
management has to involve logistics in the strategic planning process from the onset to ensure
that it is embedded in the firms competitive philosophy.
4.6 Strategic Logistics/Marketing Linkages
4.6.1 Relationship between the Marketing and Logistics Department
The study sought to find out whether the directors, manager and employees were aware of
the roles, duties and responsibilities of both the marketing and logistics department. 60%
of the respondents said they were aware while 40% were not. The study further sought,
using a 5-point likert scale ranging from 5(strongly agree) to 1(strongly disagree),
respondents opinion on whether there was a collaborative relationship between the
marketing and logistics department. The results are summarized in table 4.6.

36

Table 4.6: Analysis of the relationship between the Marketing and Logistics

4
30

3
17

39

17

43

DisagreeStrongly

Disagree

There
is
a
mutual
understanding
of
responsibilities
2
There are shared ideas and
information
3
There is joint problem
solving
Source: Field Survey (2012)

Neutral

5
13

AgreeStrongly

S/No
.

Agree

Department
f i

f i wi

f iw
fi

60

236

3.93

60

227

3.78

60

227

3.78

Results from table 4.6 indicate that there is a collaborative relationship between the two
departments with respondents agreeing that there was a mutual understanding of
responsibilities, with a mean of 3.93, and that there was free sharing of ideas and
information, together with joint problem solving with a mean of 3.78 respectively.
As the global business environment has become more complex and turbulent, firms are
increasingly looked into collaborative organizational structures to gain efficiency and
effectiveness. Given its unique role, logistics can create a firms supply chain capability
by linking systems and operational interfaces to reduce redundancy while maintaining
operational synchronization (Mentzer et al. 2004). The internal and external logistics
coordination capabilities contribute to process integration and development of
collaborative relationships within the supply chain. The relationship that is implied to
exist with the marketing and logistics department of WPS can be further
enhance/developed to ensure the logistical capabilities are leveraged to achieve a SCA.
4.6.2 Techniques for improving the Cooperation between the two departments
The study further sought to find out techniques that would be effective and efficient in
improving the cooperation between the marketing and logistics functions. Using a 3-point
likert scale rating between 3(effective) and 1(not effective), respondents were asked to
give their views on what strategies they thought would prove both effective and efficient.
The results are summarized as in table 4.7.

37

1
2

Support of the high level


managers
Setting of common goals and
performance indicators

3
70

2
25

71

17

f i

EffectiveNot

S/No.

Neutral

Effective

Table 4.7: Analysis of Techniques for improving Marketing/Logistics Linkages


f i wi

f iw
fi

1
5

100

265

2.65

12

100

259

2.59

100

276

2.76

Introduction of Agents to manage


the connection

76

24

4
5

Information sharing
Setting
up
coordination
committees
Logistics
training
for
the
marketing people and the inverse

44
44

36
39

20
17

100
100

224
227

2.24
2.27

47

44

100

238

2.38

Mutual negotiation for problem


solving
Incentive
systems
involving
sharing of earnings and losses

44

28

28

100

216

2.16

37

37

26

100

211

2.11

9
10

Unifying the two departments


Job
rotation
among
the
professionals of both departments

32
50

42
25

26
25

100
100

206
225

2.06
2.25

11

Promotion
of
informal
interactions among the two
functions professionals
Use a neutral interceptor to solve
problems from the two functions

65

20

15

100

250

2.50

35

40

25

100

210

2.10

Implementation of a cooperation
philosophy
Source: Field Survey (2012)

53

32

15

100

238

2.38

6
7
8

12
13

From the table 4.7, introducing an agent that manages the connection among the functions
was ranked the most favourable technique with a mean of 2.76. This implies that
respondents agree that this technique would work better in facilitating the integration
between the two departments. Coordination entails the alignment of actions between
participating parties. Coordination is often difficult because of the lack of shared and
accurate knowledge about the decision rules that others are likely to use and how ones
own actions are interdependent with that of others. This explains why both the
management and staff of WPS were of the opinion that the technique that would work
most effectively and efficiently would be the introduction of an agent that manages the
38

connections among the functions. It is important however, to note that coordination


problems can still arise even when cooperation is achieved. Incentives, sanctions,
monitoring, reward, and punishments can help achieve cooperation but are not sufficient
to achieve coordination and the second technique of support of high level managers
comes into play.
In recent years increasing attention has been paid to the management of inter functional
interfaces. Perhaps the most important from a logistics perspective is the interface with
marketing. While empirical evidence is sparse, a number of studies indicate that this
interface is often fraught with conflict and disagreement. Because these disagreements
have the potential to adversely affect corporate profits and customer service, concerted
efforts must be undertaken to reduce conflict and improve cooperation between the
marketing and logistics functions. In table 4.6, respondents responses ranged between
neutral and agree, of their being a collaborative relationship between the marketing
and logistics departments. This is a clear indication that there is room for improvement.
Top management support is perceived to also be important and a technique that can be
used for enhancing cooperation between logistics and marketing. Respondents rated the
support of high level managers second, with a mean of 2.65. Setting of common goals and
performance indicators was also rated highly, with a mean of 2.59, implying that
respondents were also of the opinion that this technique would be effective in improving
marketing/logistics linkages. The results in table 4.8 indicate that the techniques that are
perceived to be effective such top management support, information sharing, instilling a
philosophy of cooperation, and establishment of mutual goals, are neither revolutionary
nor sophisticated. Instead, these techniques are based upon relatively simple concepts and
"common sense," yet are frequently overlooked in the hustle and bustle of daily business
practices. Implementation of the techniques generally involves a change in attitudes and
corporate culture rather than formal organization change or massive expenditures. This, in
turn, suggests that major improvements in interface relations between marketing and
logistics may be attainable within a relatively short period of time, with minimal
disruption,

and

at

very

reasonable

cost.

In addition to this, it is important to note that firms that appear most successful in their
interface dealings tend to rely upon a comprehensive set of enhancement techniques
39

rather than just one or several. In addition, these firms tend to employ techniques that
actively involve all levels of management, from top management to the supervisory
levels. This suggests that efforts at cooperation enhancement must be comprehensive as
well as pervasive throughout the firm in order to be successful. An organizations ability
to effectively achieve functional and supply chain integration is essential to respond to the
demands of uncertain business environments (Grant, 1996). The resource-based view of
the firm emphasizes coordination across functional areas as a resource to sustaining a
competitive advantage. Critical functional areas within the firm represent the firms
capabilities that help to sustain competitive advantage.
4.7 Benefits of Logistics Leverage
4.7.1 WPS ability to build Logistics Competence
The study further sought to establish the ability of WPS to build logistics competency.
The ability was measures using a 5-point likert scale rating between 5 (strongly agree) to
1(strongly disagree) and the results are summarized in the table below:

40

Establish hierarchies and


reporting relationship that
maximize the integrated
potential
between
marketing and logistics
(e.g. customer teams)
2
Creation of value added
services
3
Change top management
vision
to
incorporate
logistics leverage as a
source of SCA
4
Build effective strategic
alliances and partnerships
5
Institute Inter functional
teams
6
Change
marketing
orientation to focus on
logistical capabilities (skills
and resources) as the
drivers of differentiation
7
Change
its
marketing
intelligence
Source: Field Survey (2012)

4
63

3
11

25

55

15

26

56

29

Disagree

Neutral

5
16

DisagreeStrongly

Agree

S/No
.

AgreeStrongly

Table 4.8: Analysis of WPS ability to build Logistics Competency


f i

f i wi

f iw
fi

5 100

380

3.80

100

400

4.00

11

100

401

4.01

53

100

402

4.02

50

28

17

100

423

4.23

45

40

15

100

430

4.30

59

26

15

100

444

4.44

The results in table 9 indicate that WPS has the ability to change its marketing
orientation, intelligence, institute inter functional teams, build effective strategic alliances
and partnerships, change top management vision, create value added services, and
establish hierarchies and reporting relationships that maximize the integrated potential of
marketing and logistics, ranking them at a mean of 4.44, 4.30, 4.23, 4.02, 4.01, 4.00, and
3.80 respectively. This implies that respondents agree that WPS has the ability to build
logistics competency.
Changes in corporate infrastructure are the keys to the sustainability of logistics leverage.
In this sense, for example, effective strategic corporate relationships can lead to an
alliance that the competition cannot readily match. A logistics alliance is an extension of

41

the superior skills of each partner to do value-added activities within the supply chain.
Such an alliance can also lead to innovative new products and processes that become
valuable resources in the overall marketing strategy. The starting point for WPS, however
would be to come up with a competitive philosophy that addresses the issue of what to do
and how to do it better that anyone else.
4.7.2 Benefits of Logistics Leverage
The study sought to find out the likely inherent benefit of logistics leverage. A 5-Point
likert scale ranging from 5 (strongly agree) to 1 (strongly disagree) was used to measure
the respondents opinion on the inherent benefits. The results are summarized in the table
4.9.

Creation of value for the


members by satisfying their
needs and wants
2
Increase the WPS Market
Share
3
Reduction in the overall
organizational costs
4
Increase WPS profitability
Source: Field Study (2012)

42

58

35

45

45

35

Disagree

4
50

Neutral

5
45

2
5

DisagreeStrongly

Agree

S/No.

AgreeStrongly

Table 4.9: Analysis of the inherent Benefits of Logistics Leverage


f i

f i wi

f iw
fi

1
100

440

4.40

100

442

4.42

20

100

415

4.15

20

100

425

4.25

The results indicate that both the managers and employees were in agreement that
logistics leverage would lead to increased market share, ranking it as the highest with a
mean of 4.42. Creation for value for customers was ranked second with a mean of 4.40.
Increased profitability and reduction in overall organizational costs were ranked lowest at
4.25 and 4.15 respectively. With the results showing that all aspects were ranked above 4
(agree), it implies that respondents agree that logistics leverage would result in increased
market share and profitability.
Logistics capabilities have both internal and external dimensions. Internally, logistics has
to work closely with other functions to plan, coordinate, and integrate cross-functional
42

activities. From a strategic perspective, logistics has the ability to coordinate and integrate
interdependent activities across major functional areas. Consequently, logistics personnel
have the unique capability to actively coordinate with other functions inside the company.
Externally, by expanding logistics beyond the firm structure to include customers and
suppliers, logistics can generate benefits such as productivity, operational efficiency, and
enhanced customer value.

43

CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Finding and Discussion of Results
The purpose of the study was to determine how strategic logistics/marketing linkages can be
utilized to achieve and maintain SCA. With the ever changing business environment, SACCOs
that have been able to retain and attract members through natural affiliation stemming from the
common bond amongst them, now find themselves thrust in an environment that requires them to
compete with other financial service providers. Competition from the mainstream commercial
banks and MFIs who are perceived to be more transparent, and having better governance and
operational systems has prompted SACCOs to seek new ways to achieve SCA. Unlike a product
change or enhancement, achieving logistics superiority is a capability that is difficult to imitate
and can potentially create SCA. In summary, the study sought to establish the relationship
between logistics leverage and the achievement of SCA, and to achieve this, three objectives
were addressed: to establish logistical capabilities that can create SCA for WPS; to evaluate the
key infrastructural issues that need to be resolved to achieve strategic/marketing integration: and
to assess the inherent benefits of Logistics Leverage for WPS.
The first objective was to establish logistical capabilities that can create SCA for WPS. The key
to winning and keeping customers is to understand their needs better than competitors. A
company gains competitive advantage by the extent to which it can position itself as providing
superior value to selected target markets as compared to competitors. If a company positions its
products as offering the best quality and service, it must deliver on the promised quality and
service. Thus, positioning begins with actually differentiating the companys marketing offer so
that it will give consumers more value than competitors do. Achieving logistics superiority
involves changes in the people, technology, facilities and/or strategic corporate relationship, that
is, the infrastructure of the company, and the resultant outcome is a capability which when
leveraged can result in SCA. The study indicated that members, directors and employees (Table
4.4) were of the opinion that strategic corporate relationships and technology with a mean of 4.14
and 4.00 respectively, were factors that if improves/changed/enhanced would result in SCA for
WPS. They ranked facilities and people at 3.73 and 3.50 implying that while these were logistical
capabilities that would be utilized, the final outcome would not have a greater impact like the
former.

44

The second objective was to evaluate key infrastructural issues that need to be addressed to
achieve strategic marketing/logistics integration. The study established that WPS did not have a
competitive philosophy in place (Table 4.5). It also established only 60% of the directors and
employees clearly understood the specific duties, roles and responsibilities of the logistics and
marketing departments. While it was agreed that there was a collaborative relationship between
the two departments, introducing an agent that manages the connections among the functions, the
support of high level managers and setting of common goals and performance indicators were
indicated as the most effective techniques to improve the relationship with a mean of 2.76, 2.65
and 2.59 respectively.
The third objective was to assess the inherent benefits of logistics leverage for the organization.
The study indicated that WPS has the ability to build logistics competence (Table 4.7.1), with the
ability to change its marketing intelligence being ranked the highest with a mean of 4.44. If
logistics, however, is to help a firm enhance competitive position, then it must be properly
positioned within the firms competitive philosophy. Drucker (1994) notes that a firms long term
success depends on the relevance of its business theory and the resulting stream of strategic
decisions that lead to the development of appropriate core competencies. The study revealed that
the management of WPS (table 4.5) did not clearly understand the firms business theory that is,
what to do and how to do it better than anyone else, as they were rated average on their
understanding of the five key issues raised by Drucker (1994) that are critical to determining the
relevance and effect of the firms theory of business. It is only after these issues are addressed
that WPS will be able to accrue the inherent benefits of logistics leverage that the study revealed
to included creation of value for members, increase of the market share and profitability, together
with facilitating for the overall reduction of the organizational costs (table 4.9).
As discussed in chapter two, logistics leverage can help a firm achieve and maintain positional
advantage through both types of competitive advantage conceptualized by porter (1985). For
WPS, it provides a way to control costs, achieve differentiation and as such come up with
strategies that are all inclusive and cannot be copied by competitors as they are infrastructure
based.

45

5.2 Conclusion
The study investigated logistics leverage in the development of efficient marketing strategies.
This was in light of the need for SACCOs to come up with strategies to enable them to utilize the
opportunities presented by market liberalization. The study specifically sought to establish, the
logistical capabilities that can create SCA for WPS; evaluate the key infrastructural issues that
need to be resolved to achieve strategic logistics/marketing integration; and assess the inherent
benefits of logistics leverage for the organization.
The study established that: the strategic corporate relationships and alliances, and technology
were corporate resources that could be developed into logistical capabilities resulting in SCA.
This complex bundling of resources is to be considered as valuable, rare and difficult to imitate
for competitors (Barney & Clark, 2007). Key infrastructural issues to be addressed to achieve
strategic logistics/marketing linkages include the development of a competitive philosophy, and
using the techniques of introducing an agent that manages the connection among the functions
and support of the high level managers; and that increased market share and profitability are the
inherent benefits of logistics leverage. In view of these findings, the study concluded that
logistics leverage appears to be a viable aspect of marketing strategy. How viable, where it is
effective and where it is not, and the nuances of logistics leverage are all questions that can be
addressed by testing testable hypotheses and designing future research to test them.
The study also concluded that there are other ways of obtaining competitive advantage that do no
primarily involve product, promotion or price based strategies. Even for commodity products, the
potential exists to differentiate the product/service offering in the eyes of the customer by
leveraging the delivery aspect of the mix. The critical aspect of changes in infrastructure as a
component of logistics leverage in a successful marketing strategy cannot be over-emphasized.
Without the infrastructural changes the competition can easily match the changes in the market
place. The infrastructure changes are the key to creating sustainable positional advantage through
logistics leverage. Changes in corporate infrastructure are the keys to the sustainability of
logistics leverage. For example, strategic corporate relationships can lead to an alliance that the
competition cannot match. A logistics alliance is an extension of the superior skills of each
partner to do value-added activities within the supply chain. Such an alliance can also lead to
innovative new products and processes that become valuable resources in the overall marketing
strategy. The challenge to managers is to identify such infrastructure sources of competitive
advantage in their logistics systems.
46

Finally, no success can be achieved without strong coordination and collaboration between
marketing and logistics. Much of the logistics leverage plans are driven by insightful market
research and the superior logistics performance will not have an impact upon the customer
without effective marketing communication. Managers striving to achieve positional advantage
through logistics leverage must recognize the role logistics can play in marketing strategy and
realize that this role involves inextricably intertwining the two functions to achieve successful
marketing strategy, one that has been demonstrated to result in more efficient operations, more
satisfied customers, increased market share, and high profitability. Considering the role of
logistics in the strategy of the firm, it is clear that the utilisation and view of logistics is not
congruent with the classical view on logistics as a function detached from corporate strategy, in
which logistics is a tool for hypercompetition towards a productivity frontier (Porter, 1996).
However, a rapidly changing and volatile environment (Eisenhardt & Martin, 2000; Esper et al.,
2007) suggests a situation where the productivity frontier is constantly moving, and where
sustainable competitive advantage can be gained by continuously operating at this frontier
(Gagnon, 1999).
5.3 Recommendations
In the problem statement, it is clearly put out that SACCOs are facing new challenges occasioned
by the era of liberalization, which include competition from the main commercial banks and
MFIs who are perceived to be more transparent, and having better governance and operational
systems. This being the case, the underlying premise is that SACCOs must not only achieve and
implement corporate strategies to bring about superiority in the market, they must sustain it. How
to sustain such an advantage given factors such as the homogenization of products and services,
and shortening product-to-shelf cycles is a question most organizations, including SACCOs ask.
As the role of logistics grows and takes on greater importance in achieving the overall goals of
the organization, logistics needs to meet the challenges and improve its performance to support
those goals. Some areas of opportunity include: greater participation in setting organization
strategy and the strategic planning process; TQM; identification of opportunities for using
logistics as a marketing strength; JIT logistics; the use of quick response (QR) and efficient
consumer response (ECR) techniques; improved logistics information systems; greater
participation of logistics professionals on work teams; appropriate understanding and use of

47

outsourcing, partnerships, and alliance; greater understanding and appropriate allocation of


technology; and green marketing.
5.4 Areas for Further Research
An area for further research identified relates to the cost and imitability of logistics capabilities.
The present research identifies potential areas that can be developed into logistical capabilities
which when leveraged can result in SCA. Building such logistics competence, for example, the
development of information related capabilities, relies on technology and equipment such as
computers, EDI, barcoding, satellite transmissions, and the like, investment in which, translates
into high costs and given that every organization has unlimited access to the same kind computer
hardware and software imitability may be high. If this study is carried out, it will identify which
logistics capabilities have lower costs and lower imitability than others thus resulting in more
cost cutting by organizations.
Secondly, to fully understand and explain the role of logistics in the strategy of the firm is still in
its infancy, and requires further research efforts. This study reveals another area of research,
which is further clarification and classification of logistics related capabilities. In particular, the
emergent literature on knowledge management in logistics research (Esper et al., 2007; Hult et
al., 2007) might be a promising field of literature to be combined with a resource based view.

48

REFERENCES
Abrahamsson, M. 2008. The role of Logistics in Corporate Strategy, Northern Lights in Logistics
& Supply Chain Management, Copenhagen Business Schools Press.
Agarwal, Ashish, Ravi Shankar and Manoj Tiwari (2007). Modeling the Metrics of Lean, Agile,
and Leagile Supply Chain: An ANP-Based Approach, European Journal of Operational
Research
Barney, J. and Clark D., 2007. Resource-Based Theory: Creating and Sustaining Competitive
Advantage, Oxford, Oxford University Press.
Barney, J. B. (2002). Gaining and Sustaining Competitive Advantage, 2nd ed. Reading, Mass.:
Addison-Wesley
Barney J. B., (1995). Looking inside for competitive advantage. Academy of Management
Executive.
Barney, J.B., (1991). Firm resources and sustained competitive advantage. Journal of
Management.
Bourlakis M. and Bourlakis C., (2006). Integrating logistics and information technology
strategies for sustainable competitive advantage. Journal of Enterprise Information
Management.
Bowersox, Donald J., John T. Mentzer, and Thomas W. Speh (1995). Logistics Leverage.
Journal of Business Strategies.
Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2010). Supply Chain Logistics Management (3rd
edition ed.). Boston, Mass.: McGraw-Hill.
Castells, M. (2011). The rise of the network society: The information age: Economy, society, and
culture, Wiley-Blackwell.
Colbert, B.A.(2004). The complex resource-based view: implications for theory and practice in
strategic human resource management. Academy of Management Review.
49

Daugherty, P. J., H. Chen, et al. (2009). Marketing/logistics relationships: influence on


capabilities and performance. Journal of Business Logistics.
Drucker, P. F. (1994). The Theory of the Business. Harvard Business Review.
Ellinger, A.E., Daugherty, P.J., Keller, S.B., (2000). The Relationship between
Marketing/Logistics Interdepartmental Integration and Performance in US Manufacturing
Firms: an empirical study. Journal of Business Logistics.
Esper T.L., Fugate B.S., et al. (2007). Logistics learning capability: sustaining the competitive
advantage gained through logistics leverage. Journal of Business Logistics.
Fugate, B. S.; Flint D. J., et al. (2008). The role of logistics in market orientation. Journal of
Business Logistics.
Grant R.M. (1998). Contemporary Strategy Analysis: Concepts, Techniques, Applications.
Malden: Blackwell.
Grant R.M. (1991). The resource-based theory of competitive advantage: implications for
strategy formulation. California Management Review.
Johnson G., Whittington R. (2005). Exploring Corporate Strategy. (7th ed.) Harlow: Financial
Times Prentice Hall.
Harrison, A.; Van Hoek R. I. (2008). Logistics management and strategy: competing through the
supply chain, Prentice Hall.
Li, S.; Ragu-Nathan B. et al. (2006). The impact of supply chain management practices on
competitive advantage and organizational performance. Omega.
Markley M.J. and Davis L. (2007). Exploring future competitive advantage through sustainable
supply chains. International Journal of Physical Distribution & Logistics Management.

50

Mentzer, J.T, Min S. and Bobbitt. L., 2004. Toward a unified theory of logistics. International
Journal of Physical Distribution & Logistics Management, 34 (8), 606-27.
Ministry of Cooperative Development and Marketing (2008), Cooperative Development Policy,
2008, Nairobi, Ministry of Cooperative Development and Marketing
Murphy, P. R. and Poist, R. F. (1996) Comparative views of logistics and marketing practitioners
regarding interfunctional co-ordination. International Journal of Physical Distribution &
Logistics Management.
Novack, R., Rinehart, L., Wells, M., (1992). Rethinking concept foundations in logistics
management. Journal of Business Logistics.
OMarah K. and Hofman, D., 2009. Top 25 supply chains. Supply Chain Management Review.
Porter, M.E., Millar, V.E., (1985). How information gives you competitive advantage. Harvard
Business Review.
Porter, Michael (1985). Competitive Advantage: Creating and Sustaining Superior Performance.
New York: The Free Press.
Republic of Kenya (2004a); The Cooperative Societies (Amendment) Act, 2004, Nairobi,
Government Printer
Republic of Kenya (2004b), The Cooperative Societies Rules, 2004, Nairobi, Government Printer
Republic of Kenya (1997a) Sessional Paper No. 6 of 1997 on Cooperatives in A Liberalized
Economic Environment, Nairobi, Government Printer.
Republic of Kenya (1997b) Cooperative Societies Act, 1997, Nairobi, Government Printer
Republic of Kenya (2008a), Economic Survey 2008, Nairobi, Central Bureau of Statistics,
Ministry of Planning and National Development

51

Republic of Kenya (2008b) The SACCO Societies Act, 2008, Nairobi, Government Printer
Sandberg E. and Abrahamsson M. (2011) Logistics capabilities for sustainable competitive
advantage. International Journal of Logistics.
Stank, T. P., Davis B. R. and Fugate B. S., (2005). A strategic framework for supply chain
oriented logistics. Journal of Business Logistics.
Steiner, G. A. (2010). Strategic planning, Free Press.
Svensson, G. (2002) Supply chain management: the re-integration of marketing issues in logistics
theory and practice. European Business Review.
Wanyama F.O.(2009), Surviving Liberalization: The Co-operative Movement in Kenya, ILO
Yamane, T. (1967). Elementary sampling theory, Prentice-Hall Englewood Cliffs, NJ.

52

APPENDIX
QUESTIONNAIRE
Instructions

Please DO NOT write your name anywhere on this questionnaire as the information collected
will be confidential and used for the purposes of this study only.

Answer the questions provided honestly and if need be ask for clarifications.

Please tick () the appropriate box to confirm your answer.

Introduction
With increased competition from other financial services providers i.e. Commercial banks and
MFIs, SACCO membership is on a decline prompting SACCOs to rethink their strategies to cope
with challenges being posed in the dynamic environment in which they exist in while keeping in
mind their limited resources. This study will seek to establish the relationship between logistics
leverage and the achievement of SCA for WPS. Logistics leverage is the achievement of superior,
infrastructure based logistics performance which when implemented through a successful
marketing strategy results in cost reduction and increased member satisfaction.
Background Information
1.

Please tick () the category that you fall under


i) Member
[

Agriculture-Based

Business-Oriented

Civil Servant

Manager

Other employee

Director

Other Delegate

ii) Employee

iii) Delegate

2.

Please indicate by ticking () the appropriate box, the number of years you have been a
member of WPS.
53

3.

Less than 1 Year

1 5 Years

6 10 Years

11 15 Years

16 20 Years

21 Years and Above

Briefly state why you choose to be a member of WPS


________________________________________________________________________
____________________________________________________________

Section I: To be answered by all Respondents


4.

In your opinion, how would you rate the following aspects of WPS products and services

In

your

opinion,

do

you

agree

that

if

the

factors

Not

Fairly

Neutral
2

listed

below

are

changed/improved/enhanced, it would result in giving WPS an edge over the competition

Employees)
Technology (Information System in place)
54

Strongly
1

Disagree

Product/Service Features
Product/Service Promotional Strategies
Product/Service Pricing
Customer Service
People (Delegates, Directors, Managers, Other

Disagree

Agree

Strongly
5

Neutral

for a considerably longer period of time while creating recognizable value for members?

Agree

5.

Satisfactory

Product/Service Features
Product/Service Promotion Strategies
Product/Service Pricing
Customer Service

Satisfactory

Satisfactory

Very

Satisfactory

in comparison with other financial service providers that you are familiar with?

Facilities (location, building)


Strategic Corporate relationships (WPS Partners)
Section II: To be answered by Members of Staff and Directors

strategic objectives
Understand the nature of its own

To negligible
2

all To no extent at

extent

To a large
4

extent

Understand its competitive environment


Have the ability to identify appropriate

large extent

Neutral

In your opinion, to what extent, does the management of WPS


To a very

6.

resources as well as how to mold these


into core competencies or strategic
capabilities
Have the ability to periodically and
correctly

evaluate

its

competitive

positioning
Have the ability to enhance existing skills
and develop new ones
7.

Are you aware of the roles, duties and responsibilities of both the Marketing and
Logistics departments?
]

Yes

No

If your answer to 6 above is YES, do you agree that there is a collaborative relationship

55

Strongly

Disagree
2

Disagree

5
There is a mutual understanding of responsibilities
There are shared ideas and information
There is joint problem solving

Neutral

Strongly

Agree

between marketing and logistics and that:

Agree

8.

9.

In your opinion, which of the following techniques would be effective in improving

Not
1

Support of the high level managers


Setting of common goals and performance indicators
Introducing an agent that manages the connections among the

Effective

Effective

Neutral

cooperation between marketing and logistics?

functions
Information sharing
Setting up coordination committees
Logistics training for the marketing people and the inverse
Mutual negotiation for problem solving
Incentive systems involving sharing of earnings and losses
Unifying the two departments
Job rotation among the professionals of both departments
Promotion of informal interactions among the two functions
professionals
Use a neutral interceptor to solve problems from the two
functions
Implementation of a cooperation philosophy

Establish hierarchies and reporting relationship


that maximize the integrated potential between
marketing and logistics (e.g. customer teams)
Creation of value added services
Change top management vision to incorporate
logistics leverage as a source of SCA
Build effective strategic alliances and partnerships
Institute Inter functional teams
Change marketing orientation to focus on
logistical capabilities (skills and resources) as the
drivers of differentiation
56

Disagree

Agree
4

DisagreeStrongly

Neutral

In your opinion, do you agree that WPS has the ability to do the following?
AgreeStrongly

10.

Change its marketing intelligence

Thank you.

57

Strongly
1

Disagree

their needs and wants


Increase the WPS Market Share
Reduction in the overall organizational costs
Increase WPS profitability

Disagree

Agree

Strongly
5
Creation of value for the members by satisfying

Neutral

Do you agree that Logistics Leverage will result in following benefits?

Agree

11.