A study of strategy choice at the Kenya Pipeline Company using Ansoff's grand strategies matrix
Abstract
The Kenya Pipeline Company is a state corporation established by the government of
Kenya under the Companies Act and answerable to the Ministry of Energy for the
purpose of transporting petroleum products from Mombasa to the hinterland using a
pipeline system. A key corporate strategic planning issue arising from its situational
analysis is its dependence on a single revenue generating stream. Any interruption to this
stream may destabilize the company‟s activities hence the need to expand its business
opportunities.
The four Ansoff growth strategies offer KPC many opportunities to effectively compete
in the energy sector and face emerging challenges. The purpose of this study is therefore
to determine how KPC is responding to the global and local challenges through the use of
the Ansoff‟s Business Unit Strategy Model. The study would determine to what extent
the Ansoff matrix had been applied by KPC to develop strategy choices and also establish
the challenges facing the firm in making them.
The research design employed in this respect is a case study and data was collected using
an interview guide consisting of structured and unstructured questions. Respondents
included the Chief Executive Officer and senior managers selected from the various
departments to try and capture the different dimensions that Ansoff‟s growth strategies
may manifest themselves.
Changes that were found to have occurred in KPC that would influence strategy choice
included management structure changes adoption of new technologies while
infrastructural incapacities necessitated the need to expand capacity. External changes
included proposed new pipelines and discovery of oil deposits in the region.
The study found that market penetration pricing was not used by KPC while the push
strategy was adopted by proposed constructions in new locations in the region. Market
development was being achieved through capacity enhancement thus bringing the
products closer to the customers. New products to be handled by KPC included LPG
ix
which is being developed on a “fast track basis”. However product development on the
basis of adding new features to existing products was not done in KPC. Although KPC‟s
mandate allows it to diversify into other areas this was not significantly undertaken
although there was potential for it to be developed.
Challenges faced by KPC in making strategy choices mainly emanated from its being a
state corporation hence need to get approvals to undertake the viable options. Business
operation challenges based on the staffing levels, corporate governance issues lack of
staff empowerment were cited as being major challenges.
The study recommends that KPC makes intensive but strategic use of the four Ansoff‟s
growth opportunities.
Publisher
University of Nairobi
Description
MBA Thesis