Many organizations today are focusing on becoming more competitive, by launching competitive strategies that give them an edge over others. To do this, they need to craft differentiation strategies (Micheal, E. Porter 1985). However, most sugar firms have not been able to formulate these strategies required to gain competitive advantage. This calls for a strategic fit of an organization’s core competence levels, technology, leadership styles, markets, culture, people, and environmental influences, which is an emerging paradigm in the study of strategic management. This paper focuses on the challenges facing the implementation of differentiation strategies in the sugar industry in Kenya. To guide this study, two specific objectives were used: (1) To find out the differentiation strategies used by the sugar industry in Kenya, (2) To establish the challenges faced by the sugar industry in Kenya in implementing differentiation strategies. Two research questions were tested. A sample of Mumias Sugar Company limited was purposely selected, as the largest sugar manufacturing company in Kenya was used.