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Effects of Price Regulation on Company Performance of Oil Marketing Companies in Kenya Case Study: Total Kenya Limited

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dc.contributor.author Kimathi, Stella Nkatha
dc.date.accessioned 2017-08-28T06:21:15Z
dc.date.available 2017-08-28T06:21:15Z
dc.date.issued 2017
dc.identifier.uri http://erepo.usiu.ac.ke/11732/3324
dc.description A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) en_US
dc.description.abstract Kenya imports all its fuel through the Open Tender System, whereby petroleum products are purchased by a single company for the entire market on the basis of a public tender and shared among all marketing companies in proportion to their share of the market. Over the years, fuel price dynamics became relatively volatile which resulted into the regulation of fuel through the ERC in December 2010. (Kojima, 2010). The purpose of this research study was to evaluate the effect of price regulation by the Energy Regulatory Commission on the company performance of Oil Marketing Companies in Kenya, with Total Kenya Limited as the case study. It was guided by the following research questions: Does price regulation affect the return on equity of oil marketing companies in Kenya? How has price regulation influenced the earnings per share within the oil marketing companies in Kenya? Finally, what impact does price regulation have on the sales trend of oil marketing companies in Kenya? This study adopted a causal research design. Causal studies are concerned with learning how one variable produces changes in another. The study sought to establish and explain the relationships among variables, in this case, price regulation on petroleum products against company performance of oil marketing companies. The audited financial statements and management reports for the period between 2008 to 2012 were used for collection of data. The data was analyzed by use of a computer Statistical Package for Social Science (SPSS) and Microsoft office 2007 application and presented in graphs and tables. The study findings revealed that the re-introduction of oil price regulation had a negative impact on both return on equity and earnings per share of petroleum firms in Kenya. The company performance as measured by EPS and ROE was better/ higher in the period preceding price regulation. Thus a negative effect on company performance. However, there was a positive impact on sales after the re-introduction of price regulation in the petroleum industry. The company performance as measured by sales was lower in the period preceding price regulation. Thus a positive effect on company performance using the sales variable. The study concluded that there was an inverse relationship between price regulation between price regulation and both return on equity and earnings per share but on the other hand, there was a positive relationship between price regulation and sales growth. The study recommends refinement of the ERC pricing formula to ensure that it accommodates and addresses the concerns raised by the major stakeholders in the industry to ensure protection of the oil sector’s profit margins and subsequently enhance company performance. Further, Total Kenya should strive to operate efficiently by minimizing their operating expenditures and direct cost so that an increase in Sales would automatically translate to an increase in profitability (measured in terms of ROE and EPS). en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject Price Regulation en_US
dc.subject Company Performance en_US
dc.subject Oil Marketing Companies en_US
dc.subject Kenya en_US
dc.subject Total Kenya Limited en_US
dc.title Effects of Price Regulation on Company Performance of Oil Marketing Companies in Kenya Case Study: Total Kenya Limited en_US
dc.type Thesis en_US


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