Development strategy of the government gives priority to local industries which consider the technological capacity of the country and which are smooth and suitable to the technological transformation to substitute imports. Align to this developmental direction many local and foreign direct investors were attracted to the metals and engineering sector. Reinforcement bar manufacturing industries are one of these categories which produce the main input for construction sector of the country. As many investors were attracted to these industries the design capacity of industries producing this product were increasing from year to year and reached currently on 4,754,874 ton per annum. These companies are operating with low capacity utilization as 32% capacity utilization in 2014/15 which was decreased to 6.79% in 2019. Report of 2019 indicated that on average 57.51% of reinforcement bar yearly consumption are imported. The objective of the study is to identify factor that highly affect consumer purchasing decision, whether there is evidence based quality difference between local and imported reinforcement bar or not, the product that have higher price and to identify the more available product in the market as per consumer need. For the purpose of this study primary and secondary data has been collected through different data collection mechanisms, and data were analyzed using descriptive statistics and factor analysis. The result revealed that quality is the major factor that highly influences consumer shift from local to imported reinforcement bar followed by availability. However, tested quality result of secondary data indicates that local reinforcement bar have higher quality than imported. This contradicts the consumers view. Moreover, all primary and secondary data analyzed shows that local reinforcement bar is more available in market than imported and price of imported is higher than local. As quality problem arises from products produced from scrap manufacturers should strongly control the quality of products produced from scrap through installation of necessary laboratory facilities, manipulation of chemical composition at melting stage, determination of rebar grade and should price accordingly. Government also should contribute its share by tightening its quality control method. Furthermore, to increase the supply of local industries the government should intervene to increase availability of raw materials locally through the development of iron ore by direct reduction iron (DRI) process.
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Date
2020-06
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Addis Ababa University
Abstract
Development strategy of the government gives priority to local industries which consider the
technological capacity of the country and which are smooth and suitable to the technological
transformation to substitute imports. Align to this developmental direction many local and
foreign direct investors were attracted to the metals and engineering sector. Reinforcement bar
manufacturing industries are one of these categories which produce the main input for
construction sector of the country. As many investors were attracted to these industries the
design capacity of industries producing this product were increasing from year to year and
reached currently on 4,754,874 ton per annum. These companies are operating with low capacity
utilization as 32% capacity utilization in 2014/15 which was decreased to 6.79% in 2019. Report
of 2019 indicated that on average 57.51% of reinforcement bar yearly consumption are imported.
The objective of the study is to identify factor that highly affect consumer purchasing decision,
whether there is evidence based quality difference between local and imported reinforcement bar
or not, the product that have higher price and to identify the more available product in the market
as per consumer need. For the purpose of this study primary and secondary data has been
collected through different data collection mechanisms, and data were analyzed using descriptive
statistics and factor analysis. The result revealed that quality is the major factor that highly
influences consumer shift from local to imported reinforcement bar followed by availability.
However, tested quality result of secondary data indicates that local reinforcement bar have
higher quality than imported. This contradicts the consumers view. Moreover, all primary and
secondary data analyzed shows that local reinforcement bar is more available in market than
imported and price of imported is higher than local. As quality problem arises from products
produced from scrap manufacturers should strongly control the quality of products produced
from scrap through installation of necessary laboratory facilities, manipulation of chemical
composition at melting stage, determination of rebar grade and should price accordingly.
Government also should contribute its share by tightening its quality control method.
Furthermore, to increase the supply of local industries the government should intervene to
increase availability of raw materials locally through the development of iron ore by direct
reduction iron (DRI) process.
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Keywords
Consumer switch, quality, availability and price, factor analysis, DRI