Issues in Business Management and Economics
Vol.2 (10), pp. 186-192, October 2014
Article ID BM082, 007 pages
Copyright © 2014 Author(s) retain the copyright of this article. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 3.0 International License
Original Research Article
Strategic capacity utilization and competition: An analysis of competitions in Nigerian flour industry
C. Chris Ofonyelu
Department of Economics, Adekunle Ajasin University, Akungba Akoko,Ondo State, Nigeria.
Author Email: chijiokechris(at)yahoo.com
The competition in Nigerian flour industry has deepened within the last one decade. The rivalry was triggered by the rapid growth in capacity utilizations of the flour firms in the past few years. Using Chiappori and Salanie test statistics, the study examined the link between acquisition of strategic capacity utilization and firm competitiveness. The data used were drawn from sales invoices made by 6 major flourmills between January 2005 and June 2014. Evidence from the study revealed that the firms capacity utilization correlate positively with competitiveness. For the firms, acquisition of additional productive capacity reduced costs and enhanced competitiveness. Based on the test statistics, the largest firms were observed not to be the most positively correlated. The study suggests that the flour industry may continue to grow in capacity as much as the present nature of competition subsists.
JEL Classifications: L13, M13
Key words: Strategic investment, Production capacity, capacity utilization, competition