Managerial and organizational factors influencing strategic change a study of oil companies in Kenya

Abstract

Changes are increasingly occurring in the environment in which oil firms operate; to continuously align their strategies with the environment, firms should change their strategies by adopting new strategies, such as merger, acquisition, diversification, integration, downsizing divestment and new product development. The motivation of the study was the fact that the long-term success of an organ ization depends on how the organization changes its strategy following the changes in the environment. Some organizational and managerial characteristics may influence on these changes and need to be examined. This study sought to investigate the influence of managerial and organizational characteristics on strategic changes of oil companies in Kenya. The objectives of the study were firstly to investigate the strategic changes adopted by the oil companies, which includes companies that were operating in Kenya before the liberalization and those entered the market after the liberalization, and secondly to investigate the organizational characteristics influencing the strategic changes, and then the managerial characteristics influencing these changes. By focusing on oil companies currently operating in Kenya the study targeted all the 32 oil companies registered by the Ministry of energy, 32 questionnaires were administered through the drop and pick later method, based on a primary data collected from respondents using questionnaires, the data was then analyzed, using descriptive statistics, primarily percentages, absolute values, mean and stand deviations. The findings of the study were that oil companies adopted strategies such as product development, mergers acquisitions, integration, diversification, divestment, downsizing and new market development. On the characteristics of the company ownersh ip was found to be high initiator of change. The study also found the market share of the company and the company market experience to have a greater influence on strategic change, company ownership especially local ownership was found to have high degree of influence on strategic change of the oil companies. On the managerial characteristics of the study found that chief executive and top management education have greater influence on strategic changes. Few of the . companies that had chief executives succession within the last ten years were found to have high degree of chief executive influence, but over all top managers were rated higher on influencing the strategic changes than the chief executive. Conclusions and summary were drawn from the study which indicate that oil companies experience strategic changes, and that company market share and company age in the market influence strategic change, managerial education infl uenced strategic change to great extent. The study recommends that oil companies need to closely monitor their strategic environment alignment, and to be flexible in changing their strategies they need to introduce managerial and organizational factors that trigger strategic changes. Despite the limitations the study can still be valid and may shed more light on the Kenyan oil industry and the local business environment as whole. Further research is suggested on strategic changes in other industries, as the environment in which the oil companies operate continues to change further research on how these changes affect the changes of their strategies could be more useful.