Strategies used by the major oil companies to create competitive advantage for their service stations in Nairobi

Abstract

Organizations exist as open systems and hence they are ill continuous interaction with the environment in which they operate. The environment in which the organizations operate is never static. All organizations lend themselves to this environment, which is highly dynamic, chaotic, and turbulent such that it is not possible to predict what will happen and/or when it will happen. Consequently, the ever-changing environment continually presents opportunities and challenges. The oil industry in Kenya plays a significant role in the economic development of the country. It contributes 4% to the Gross domestic product (IEA, 2001). Like other firms the industry has been going through change. Liberalization of the sector in 1994 removed some of the barriers to entry and the industry has since then witnessed an increased number of new entrants (Murage, 2000). This has made competition become in the industry stiffer and hence the need to develop competitive strategies that will create competitive advantage for the firms for survival and prosperity. The study was designed to determine the strategies used by the major oil companies to create competitive advantage for their service stations in Nairobi. The study was carried out as a descriptive research. Semi-structured questionnaires were used to collect data from the five major oil companies, which formed the population of study. The questionnaires were administered to the Retail and Marketing managers of the oil companies through personal interviews. Two questionnaires were filled for each company. SPSS was used to generate data, which was analyzed using descriptive statistics. Overall, the research revealed that the major oil companies use cost leadership and diversification as strategies to try and gain competitive advantage for their stations. The research also revealed that other strategies like differentiation, focus, market penetration, product development and market development have not been used a lot by the major oil companies, Kenya.