Competitive advantage of Sido Supported Small scale furniture industries against imported furniture in Dar es Salaam and Arusha regions, Tanzania

Abstract

In Tanzania, furniture industries play a significant role in fostering socio-economic development and poverty alleviation. Previous research has not fully addressed factors affecting competitive advantage of small scale furniture manufacturing industries in Tanzania while there is influx of furniture import. This study analyzed factors affecting competitive advantage of SIDO supported small scale furniture industries in Dar es Salaam and Arusha regions. Specifically, the study characterized SIDO supported small scale furniture industries, compared the profitability, analyzed the determinants of consumers’ willingness to pay as well as factors affecting competitiveness of SIDO supported small scale furniture manufactures using a sample of 337 respondents who were purposively sampled, whereby 127 were drawn from SIDO supported manufacturers, 76 from furniture importers and 134 furniture consumers in Dar es Salaam and Arusha cities. Quantitative and qualitative techniques were used to analyze data. The study found that furniture industry was mainly dominated by males. Level of education and initial capital were found to be low for small scale furniture industries owners compared to imported ones. Small scale furniture industries were found to generate low profit compared to imported furniture. Consumers’ preferences on locally made and imported furniture were 82% and 83% respectively influenced by education, price, design, quality, age, income and household size. On the aspect of willingness to pay for furniture, the study revealed that consumers were willing to pay more for imported furniture than for locally made furniture. The factors that significantly affected willingness to pay for furniture products were age, household size, quality, income, design, brand and knowledge. The results of the regression analysis tested at p<0.05 showed that age of iii the firm (β = 0.471, p = 0.034), initial capital (β = 0.260, p=0.000), number of employees (β = 0.099, p=0.000), price (β = -0.244, p = 0.000), location (β = -0.189, p = 0.000), diversification (β = -0.112, p = 0.015) and networking (β = 0.053, p = 0.008) significantly affected competitiveness of the SIDO supported small scale furniture industries. The recommendations emanating from the study are to allocate sufficient start-up capital, hire adequate number of employees and ensure effective utilization of employees for successful operational performance of the enterprises as well as ensure effective utilization of networking potentials for resource sharing and market access. It is expected that these findings will provide insight to the small scale furniture manufacturers on approaches to use when producing furniture items basing on market needs.