Strategic Response To The Dynamic Economic Environment Of The Oil Marketing Companies In Kenya
Abstract
As recently as 10 years ago, people thought they knew most of what they needed to know
about strategy. Portfolio planning, the experience curve, Michael E. Porter’s five forces–
tools like these brought rigor and legitimacy to strategy at both the business unit and the
corporate level (David). These traditional strategy approaches can soundly answer this
central question in stable environments, however these approaches are not directly
applicable to dynamic environments and there is currently no final and complete answer that
determines the causes for a company's failure or success with their strategies in dynamic
environments (Wirtz&Schilke, 2007, pp. 295-296).Having an up-to-date strategy is
especially important for companies operating in the oil industry, since this industry, with its
global and investment-demanding nature tends to be very turbulent and cyclical. The
purpose of this study was therefore to establish the strategic response to a dynamic
economic environment of oil companies in Kenya. The study set to address the strategic
responses applied by oil marketing companies in Kenya and the impact of these strategic
responses and the best suited strategic responses for the Kenya oil marketing industry.To
achieve this, the study adopted a descriptive study of oil companies in Kenya. The target
population of this study was all 55 oil marketing companies in Kenya. Census method was
used is based on the fact that the entire population is sufficiently small with only 55
companies. Data collection was conducted through the use of questionnaires and analyzed
through descriptive statistics in order to draw conclusions. The collected data was first
coded statistically and thereafter analyzed with the use of a statistical package; SPSS in
percentages and frequencies. Thereafter the results were presented via graphs, charts, tables
as well as pie charts. The result on strategic response were analyzed in four categories;
strategic response being used by oil marketing companies and how the respondents view the
extent of their application by the companies, how respondents view the impact of various
strategic response to dynamic economic environment of oil marketing companies in Kenya
and a combination of strategic response to determine the best for the dynamic economic
environment of oil marketing companies in Kenya. The last part looked at respondent’s view
of the best strategic response to dynamic economic environment. The findings revealed that
most oil marketing companies use to a great extent strategic alliances (64 percent), focus
market (50 percent), joint ventures (50 percent), as well as corporate diversification (34
percent) as strategies in responding to dynamic economic environment. Further, the results
revealed that some strategic responses have low application but would have high impact if
they were utilized. Such strategies as Acquisitions and Mergers and Differentiation Strategy
both with 67 percent impact have low application of 2 percent and percent respectively.
Respondents view Acquisitions and Mergers, Strategic Alliances and Joint Ventures as the
most suitable strategic responses to dynamic economic environment of the oil marketing
companies in Kenya. The study therefore recommends blending of strategic response that
are best suited for the market dynamics; when going for strategic alliances, companies
should consider combining this with either joint venture in operations as this provides a
platform for cost reduction due to economies of scale, while when a company is considering
corporate diversification, it is recommended to combine this with mergers and acquisitions
as this provides a faster and established approach to the market diversification as compared
to starting from scratch.
Citation
Master Of Business Administration School Of Business, University Of Nairobi. March, 2013Publisher
School of business,