Strategies adopted by oil marketing firms in Kenya to remain competitive

Abstract

A competitive strategy aims at gaining and maintaining competitive advantage over business rivals. For a firm to formulate appropriate strategies that will enable it respond effectively to environmental competitive pressures, it is prudent that the firm understands the underlying sources of the competitive pressure in its industry. Following the liberalization of the industry in 1994, the petroleum market in Kenya experienced fundamental environmental changes that resulted in enormous increase in competition forces. In the wake of the diminishing profits resulting from increased competition in the industry, petroleum firms have had to employ various strategies to seek competitive advantages in order to remain operational and competitive. The purpose of this study was to determine the strategies adopted by oil marketing firms in Kenya to remain competitive. The study employed a descriptive survey research design. The population of this study was the oil-marketing companies in Kenya. A questionnaire was used to collect data from 48 CEOs, business development managers and the marketing managers of oil marketing firms. The data obtained from the respondents was analyzed through descriptive data analyzing techniques by employing a social science software program. The study found that majority (54%) of the respondents indicated that there was a high practice of proper capacity utilization; storage facilities, blending and filling plants; 71% indicated that there was a high strategic location of storage, filling and loading facilities A significant number (84%) indicated that there was consistent product availability. A significant number (79%) of respondents also indicated that there was high use of high equipment and facility reliability. A significant number (76%) indicated that their oil firms used segmented markets as a method of competitive advantage. A significant number (75%) of the participants indicated that there was high investment in local network expansion by increasing number of stations. The study concluded that the strategies adopted by the oil firms included the cost leadership strategy, differentiation strategy, focus strategy and market expansion strategy. The researcher also concluded that cost leadership and focus strategies were the most widely used competitive strategies. The researcher also concluded that the cost leadership strategy, differentiation strategy, focus strategy and market expansion strategy were effective in enhancing the competitiveness of the oil firms. The researcher recommended that the firms should focus on adopting majority of cost leadership strategies to ensure that that their profit margin increases .The researcher also recommended that the government through the Energy Regulation Commission ensure that the players in the oil marketing business compete on a level ground by enforcing the energy act fully and getting rid of unscrupulous marketers.