| dc.description.abstract | The petroleum industry in Kenya has undergone changes that have tremendously affected
the state of competition in the industry. The most recent fundamental development in the
industry was its liberalization in October 1994 that led to the entry of new firms into the
industry's operations. Among the new entrants are firms commonly referred to as
Independent Petroleum Dealers (IPDs). Some of these IPDs have formed an association
known as the Kenya Independent Petroleum Dealers Association (KIPEDA). The IPDs have
intensified competition in the industry as documented in researches carried out in the
industry. To survive in the industry, firms have had to employ various competitive strategies.
Some concerns have been raised about the operations of the IPDs. They are said to be
employing strategies not in line with the set industry standards of operation. These include
putting up inferior filling stations, compromising on outlet safety standards, adulteration of
fuels, diverting fuels destined for export into the local market and operating mobile filling
stations (Muchai 1999,2000). There is also concern by the IPDs over their ability to stake
out a competitive position in the retailing of petroleum products in an industry currently
dominated by six major players: Agip Kenya, Shell/BP Kenya, Caltex Oil (Kenya),
KenollKobil, Mobil Petroleum (Kenya) and Total Kenya . •.
This study sought to establish and document the various competitive strategies employed by
the IPDs who are members of KIPEDA to compete effectively in the industry. It also
documents the competitive challenges they are experiencing as they operate in the industry.
The current membership of KIPEDA stands at 27 firms. However due to difficult economic
times being experienced in Kenya at present, 4 of the outlets are currently non operational.
Hence the study carried out a census on 23 firms.
The data was collected through the questionnaire method. 10 questionnaires were
administered through personal interviews with the respondents while 4 were administered
through the drop and pick later method due to the unavailability of the owners. Overall the
response rate was 61%.
The findings of this study indicate that the respondents employ relatively similar competitive
strategies. The main strategies used by respondents were having consistent lower prices
and reducing their overhead costs. The most utilised competitive strategies were identified
as identifying reliable suppliers and using suppliers with shorter delivery lead time.
The least utilised competitive strategies were those identified with the unique operations of
IPDs that is flexibility to source their supplies from any suppliers and those that require large
working capital requirements. Key challenges faced were identified as contending with stiff
competition from established outlets, insufficient funds for advertising, having few outlets,
fluctuating prices, low sales and increasing overhead costs. Based on calculated mean
scores, highly ranked competitive challenges were identified as low customer confidence
and negative publicity. On the extent to which certain issues were a challenge to the
members they indicated that financial requirements was a challenge to a great extent.
Summary data on key characteristics of the respondents shows a multiplicity of similar
characteristics. The findings established that all the respondents were Kenyan investors and
the first of the respondents to start operating in the Kenyan market did so in 1996, two years
after the sector was deregulated. This could be attributed to the regulatory, structural and
economic barriers to entry operating in the industry even after its deregulation, as indicated
by some of the competitive challenges the respondents are still contending with including
financial requirements, negative publicity and low customer confidence. | en |
