Competitive priorities and trade-offs in physical distribution of Kenya oil industry

Abstract

Because of the increased competition and liberalization of oil industry in Kenya, it has become imperative for the players to identify the dimensions through which to compete. This study was based on twenty four oil companies processing crude oil at Kenya Petroleum Refineries with the objective of identifying the competitive priorities that the firms employ, the constraints to achievement of these competitive priorities and any trade-off between them in physical distributions. Primary data was collected for the purpose of this study by use of closed ended and open ended questionnaires. Part I of the questionnaire collected general information about the firms while part II collected information to meet the objectives of this study. Data was analyzed using descriptive statistics of frequencies, proportions, means as well as listings. Kruskal- Wallis test for non parametric independent group comparisons was used to analyze the trade-offs between quality, time, cost and flexibility competitive priorities. The findings of this study indicate that the four competition priorities of quality, cost, time and flexibility are employed by the firms and are above average in level of importance. Quality related priorities however were found to be more important than the other three. This study also found out that the various competitive priorities are affected by different constraints. The research-.. further found out that quality as a competitive priority was significantly more important than the other three at 0.05 level of significance. In view of this study's findings some recommendations have been made. One, Kenya Oil companies should use the prioritization of quality, cost, time and flexibility in developing physical distribution policies and objectives. The government needs to facilitate oil business by enhancing the capacity of its logistics organizations that have been found out to constrain the achievement of physical distribution objectives. Oil companies need to lobby to the governments for representation in formulation of regulatory policies and legislations.