Response Strategies Adopted by Tullow Oil Companyin Kenya to Changes in External Environment

Abstract

Organizations are environment serving and dependent have to align well to cope with the ever changing business environment. Every organization depends on the environment for its survival and prosperity. Today‟s business environment is dynamic, complex and uncertain. Thus, every organization encounters numerous changes in its environment and needs to adapt its strategies in response to these changes.The study soughtto establishing the changes that have occurred in Tullows external environment that affect the operations of Tullow Oil Company in Kenya and the response strategies adopted by Tullow to respond to these changes. The study was guided by contingency theory also known as it all depends theory and open system theorywhich predicts that response strategies are essential due to the fact that organizations are open systems and have a continuous interface and interaction with the external environment and as such these strategies will be triggered by the changes. The research design used was a case study as it allowed indepth analysis of the data the company. The study used both primary and secondary data. primary data was collected by conducting a personal interview with respondents from top management of Tullow while secondary data was collected from previous research, articles and journals. The data collected from the respondents was analyzed using content analysis because the data was qualitative in nature. The study findings reveal that changes in the external environment of Tullow are mainly fluctuation of global oil prices, fluctuation in exchange rate, political instability caused by long electioneering period, poor physical infrastructure, local content requirements and management of expectations of residents, fast paced rate of technological changes in the industry, lack of demarcation of roles of policy makers, lack of legal certainty ,changes in the regulatory framework governing production or reserve sharing ratio, environmental regulations among others. The study found out that the company did not respond to all the changes in the environmental conditions but to those changes which were deemed to impact on the company‟s activities to a large extent. The Strategic responses to address these changes included formation of strategic alliances, partnerships and collaborations with different stakeholders, adoption of innovation and new technology, diversification of the portfolio or asset, implementation of integrated waste management system, corporate social responsibility, cost leadership strategies, focus and retrenchment. The study recommended stakeholder engagement through working closely with national government, county leaders, local leaders, members of parliament, and chiefs among others in all their activities to enhance good working environment for Tullow oil .The study suggested that in order to understand strategic responsible for change at Tullow oil a further study should be carried out with other international upstream oil companies in the industry using a cross sectional studies to find out where there are any differences in the environmental challenges or the strategic.