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The Dairy Industry in Kenya promotes human nutrition, reduces poverty and creates job opportunities to those people in the dairy value chain. Dairy companies perform various activities in the milk value chain which include; milk collection, cooling and bulking, transportation, processing, packaging and marketing the end products. These activities contribute significantly to the cost of milk and therefore the need to enhance differentiation.Analyzing these activities and their interrelationships assists the processor to find sources of competitive advantage. Milk is a perishable product and its critical handling is very important to the processors. Therefore the survival of any company will depend on its competitive advantage over its competitors. Each company has an obligation to win consumers' confidence in provision of quality product and at a competitive price. This book therefore seeks to examine value chain analysis as a strategic tool to enhance competitiveness in the dairyindustry in Kenya. The book also seeks to raise key issues to the main actors in the dairy industry.