An investigation of the strategic responses by major Oil companies in Kenya to the threat of new entrants

Abstract

The study sought to investigate the strategic responses by the major oil companies in Kenya to the threat 0f new entrants into the industry. It was based on the five oil companies which started their operations before the market was liberalized to allow new competitors. The objectives of the study were firstly, to investigate the strategic responses that the major oil companies have used to counter the threat of new entrants into the industry. Secondly, to identify the future challenges posed by the new entrants and the likely strategic responses by the major oil companies. The study was based on primary data which was collected using a questionnaire using personal interviews as the mode of collection. The data obtained from the five major oil companies was then analyzed and interpreted using descriptive statistics primarily Proportions, Percentages and the Mean. The findings of this study reveal a number of strategic responses used to counter the threat of new entrants into the Kenyan oil industry. In responding to the changes, the major oil companies used a combination of generic strategies including cost leadership, differentiation, market focus, segmentation, penetration and development of new markets. We also established that majority of the major companies in responding to the threat of new entry changed products and services offered, the market segment served and had also effected a change in technology. In view of the findings, a few observations have been made. Firstly, companies in an industry where there is a threat of new entry need to proactively anticipate and strategically respond to the changing environment. Secondly, there are a number of strategic options available for companies intending to respond in the face of new and