Competitive Strategies And Performance Of Oil Marketing Companies In Nairobi County, Kenya

Abstract

Competitive strategies involve a unique way of competing in a particular market. This can be achieved by a company learning a distinctive way of competing in different sets of markets. In an attempt to compete differently to achieve organizational objectives leads to the three generic strategies that is differentiation, cost leadership and focus strategy. The strategy on focus has two variants; cost focus and differentiation focus. Porter argued that for every firm that is competing in any sector, it must have either explicit or implicit competitive strategy. The firm’s position in the industry determines the firm’s profitability level in the industry whether it is below or above the industry average. Sustainable competitive advantage in the long run is the fundamental basis in the company’s profitability. There is a variation in the firms operations on the competitive strategies used in Kenya’s Lubricants Market after liberalization and introduction of price controls for main fuels and unified valve in Liquefied petroleum gas has created unsettling and very competitive conditions in the markets. There is need for marketers of Lubricants to adopt the competitive strategies for them to survive in the market. The oil marketing companies in Kenya is facing challenges that include reduced profit margins, inadequate infrastructure, increased competition with entrance of small independent dealers, price caps and lowering quality standards and these as a results forces the big Oil marketers out of the continent for they shift the attention to productive activities and lucrative exploration. Since local firms are unable to raise resources for acquiring Oil firms, they are still dominated by foreign investors. The main objective of the study was to investigate the effects of competitive strategies on performance of oil marketing companies in Nairobi, Kenya. In the current study, the specific objective of the study how pricing strategy, positioning strategy, differentiation strategy and focus strategy on the performance of oil marketing companies in Nairobi County, Kenya. The study was supported by Competency theory, Resource based theory, Neo institutional theory and Theory of competitive advantage. Descriptive research design was used in this study. The five main oil marketers in Kenya were the target population. The companies were selected since they have the highest market share. The study used qualitative and quantitative techniques in analyzing the data. Statistical Package for Social Science (SPSS) software were used to generate descriptive and inferential statistics which were interpreted using mean, standard deviation, percentages, frequencies and coefficients. A Multiple regression was presented to indicate effect of independent variables on organizational performance of petroleum industry. Multiple regression was chosen for its ease of understanding and was the most suitable analysis method.