International Entry Strategies Adopted by Kenya Oil Marketing Companies Within the Common Market for Eastern and Southern Africa

Abstract

Kenyan oil marketing companies entering the Common Market for Eastern and Southern Africa markets do so in search for new markets for petroleum products. The oil industry in Kenya has witnessed regulatory checks to liberal trade by the Government. The oil industry players’ internationalization process across borders could be a consequence of many factors ranging from saturation of domestic market, tight industry regulations and new opportunities arising from regional integration of COMESA member countries. This research project was a study on the entry strategies adopted by Kenyan oil marketing companies in their internationalization initiatives to the COMESA region. The study objectives were to determine the entry strategies adopted by Kenya Oil Marketing companies within COMESA region and secondly to evaluate the effectiveness of entry strategies adopted. The guiding theory framework for the study was based on the Uppsala internationalization theory and dunning’s eclectic OLI theory. The study adopted a cross-sectional descriptive survey research design on a census of 13 petroleum companies that have internationalized, drawn from a total population of over 70 oil marketing companies operating in Kenya. A census survey was conducted with questionnaires administered to 65 respondents, data was collected and analyzed by Statistical Package for Social Sciences, SPSS in order to yield measurable parameters such as mean, standard deviation and percentages. The respondents were drawn from senior management who provide strategic decisions on their firm’s internationalization process. The study findings revealed export entry strategy was the most adopted followed by mergers with majority acquisition and thirdly acquisition of foreign firms. The least used were licensing and franchising and wholly owned from start Greenfield process. The least expensive and profitable were exports, majority mergers and acquisitions of foreign firms in that order. The study findings therefore showed that there is a significant positive relationship between type of entry strategy adopted and its effectiveness with regard to cost and profitability. The researcher proposes oil marketing firms should be more innovative by using a variety of entry modes and enhance research on foreign markets to effectively penetrate COMESA regional markets. The value of the study will be of benefit to international and domestic oil industry firms, policy makers, the Government regulatory agencies and academic scholarly work.