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.