Strategy Formulation And Performance Of Selected Firms In Oil And Gas Industry In Kenya

ABSTRACT

With the unstable business environment, stiff competition, stringent regulatory requirements, fuel adulteration and volatile world market prices, oil and gas firms in Kenya are constantly facing problems in the course of doing business. There is therefore need for proper formulation of strategies that capture the industry dynamics and that are based on thorough understanding of the industry for swift responses whenever needed. The study sought to establish the influence of strategy formulation on the performance of major oil and gas firms in Kenya. The research objectives that guided the study were; to establish influence of strategic intent, strategic assessment and strategic choice on performance of major oil and gas firms in Kenya. The study variables were strategic intent, strategic assessment and strategic choice as the independents variables with firms’ performance as the dependent variable. The study is anchored on dynamic capability, institutional, contingency and solution based theories. The study employed descriptive survey design. The population for this study was 76 oil and gas firms in Kenya from which six firms were selected through purposive sampling based on preliminary information available. A census was done on top management to obtain 62 respondents consisting of managers, general managers and chief executive officers who filled the questionnaires. Data was analyzed using Statistical Package for Social Sciences (SPSS Version 24.0) software. Quantitative data was analyzed descriptively and inferentially. Analysis involved use of percentages, mean and standard deviation and presented in form of charts and tables. The study found that strategy formulation positively and significantly influenced performance. The study concluded that there is a strong relationship (R value= 0.832) between strategy formulation and performance of major gas and oil firms in Kenya. Further, strategy formulation was found to influence 78.7% of the total variance in performance of the firms. The study therefore recommends that the management of the organizations should do proper communication of strategic intent for stakeholders to identify with it. Organizations should also do periodic strategic assessment to improve market intelligence and economic analysis. Moreover, management should select strategies that cut back on all unnecessary expenditure, expand market and service stations to capitalize on brand.