The dynamic business environment is ingrained with high levels of competition eulogizing the need for salient functional strategies to stay afloat. Thus, the management of the manufacturing industry must formulate and implement functional strategies which would guarantee their competitiveness. However, after years of policy mending through strategic framework and government interventions the sugar factories in Kenya are still under- performing with low productivity culminating to low competitiveness and massive indebtedness within the industry. It is in this regard that the study was designed to assess the effect of functional strategies such us financial, marketing, production, human resources on competitiveness of sugar industries in western Kenya as moderated by government interventions. The study relied on institutional theory, Porters generic theory and resource-based view theories. In a bid to effectively achieve this, the study adopted a cross-sectional study design based on samples drawn from across the sugar industry in western Kenya. The study relied on all heads of departments and supervisors of all the five sugar firms which are 98 purposively selected. Data was collected by use of a questionnaire from the respondents and analyzed by use of both inferential and descriptive statistics using SPSS version 25. From the study findings correlations among the functional strategies and competitiveness were significant. With a moderator the variables jointly explained 66.6% (R2= 0.666) variation in competitiveness of sugar industry with a significant F change at ρ<.05. In conclusion government intervention significantly influences the relationship between functional strategies and competitiveness of sugar industry. The management of sugar industry should formulate and implement functional strategies in line with government interventions to effectively enhance their competitiveness.