Strategic responses of petroleum firms in Kenya to challenges of increased competition in the industry

Abstract

Liberalization of the Kenyan economy and particularly the petroleum sector in 1994 has witnessed unprecedented competition in this once lucrative petroleum industry. The study set out to document the strategic responses of the oil firms in Kenya to challenges of increased competition. To achieve this, the objective of the study was: - To determine the measures taken to respond to challenges of increased competition. Primary data was collected using open-ended and closed-ended questionnaires from a census of 9 firms. The data was thereafter analysed using tables, mean scores, and percentages. The analysis revealed that firms have made changes in their missions and their technologies and that there have been considerable attempts to diversify from the markets originally served. Firms' philosophies are now those aimed at achieving maximum customer satisfaction. It was also established that firms have changed their ranking of goals. Survival as a goal is more important now as opposed to the pre liberalization era when profitability was seen as the ultimate. In the area of planning, firms have now embraced participatory planning and that plan reviews is more frequent now. This is because of the constant changes in the business environment and the need to adjust accordingly. Petroleum firms have also made adjustments in most of their strategic variables. Those variables that have been adjusted substantially are product strategies in which most firms have taken product quality as a top priority and seek to eliminate product contamination. They have also continuously introduced new products to meet the ever-changing customer needs. In promotion strategies, advertising expenditure has increased considerably with the use of various advertising media. In research and development, the firms have increased information gathering on competitors and customers needs with a view to maximising customer satisfaction. In cost structure there has been substantial move to cut down on costs through such measures as retrenchment. In social responsibility, there has been a move by most firms to be more caring to the local communities through such things as donations to the needy like children homes etc. In line with this is the fact that such issues as health, environment and safety are taken seriously. Other strategies such as pricing and distribution have also been enhanced.