A study on strategic groups in the oil industry in Kenya
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Date
2008Author
Musindi, Christian
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Strategic groups represent collections of firms that are similar on key strategic
dimensions. Because opportunities are not evenly distributed across an industry, some
industry segments offer better profit potential than others. Firms occupying one niche
may be tempted to expand or to change strategies in order to exploit opportunities as they
arise in other areas of the industry. The oil industry in Kenya has a diverse number of
firms with varying degree of complexity and scope of operations. The industry is
therefore a highly dynamic environment characterized by new entrants and exit of major
firms as well as others engaging in joint operations and acquisitions in attempt to align
their businesses to the changing environment.
This research evaluates the strategic groups 111 the oil industry in Kenya with the
objective of establishing the existence of strategic groups in oil industry in Kenya,
identifying the mobility barriers that define these groups and finding out how these
groups responds to the dynamic market. Cross sectional survey design is used where 32
oil companies are surveyed out of 47 to give a representative picture of the oil industry in
Kenya.
The oil industry in Kenya is found to consist of five strategic groups separated by
mobility barriers whose boundaries tend to be narrowing with time allowing movement
of some firms across group. The movement of firms across group is found to be a
deliberate action aimed at maximizing returns of the oil firm and strategic positioning for
future sustenance of the firm.
During targeting of respondents in the survey, it was realized that some firms remained
dormant although they were registered. It was difficult to get in touch with appropriate
respondents from these firms hence; the research could not establish their strategic
position in the industry limiting the research to active oil firms. Further research is
therefore recommended to find out the why these firms were formed and what made them
become dormant after setting out their vision.
Citation
MBASponsorhip
University of NairobiPublisher
University of Nairobi School of Business, College of Humanities and Social Sciences