Abstract:
The purpose of this study was to explore the key issues creating turbulence in the Kenyan Oil Industry with specific focus on increased competition and changing nature of consumers and their needs and the impact these had on organization profitability. It also explored the key success factors that had been employed by the leading organizations in the Industry. The study was guided by the following specific objectives: (i) To establish the existence of increased competition, (ii) To establish the changing nature and needs of the consumer, (iii) To establish the impact of increased turbulence on an organizations� profitability. The research was a case study of Kenya Shell Limited (KSL) Retail Service Stations. KSL had a population of 87 Retail stations countrywide with 52 situated in Nairobi Region. The study was limited to Retail Stations situated within Nairobi and split into 3 geographic regions; Central, East and North. A representative sample size of 35 retail stations was selected out of which responses were received from 29 retail stations. Information was collected using a questionnaire developed by the researcher. Data was analyzed using descriptive statistical techniques including calculation of mean, mode, standard deviation and further utilized regression tests to measure the existence and strength of relationships between the variables. Data was analyzed using Statistical Package for Social Sciences (SPSS) and result presented in pie charts, bar graphs and tables. The findings indicated that competition was continuously on the increase. Organizations were employing varied strategies to tackle increased competition. It was noted that there was a need to closely watch the fairly new group of competitors; Independents and NOC (Government Owned) whose market share was gradually on the rise. Changing nature and needs of consumers was mixed; 50% were in agreement while 50% were either neutral or disagreed, Customers who felt they had received excellent service and value for their money were bound to come back though in East region it was noted that price was the major determinant driving purchase. 80% of the population felt their business environment was constantly changing and the changes were not easily predictable. Organization's therefore needed to improve the monitoring of the environment, formulation of strategies and response time across the board. The study concluded that both Increased Competition and Changing Nature and Needs of consumers had a significant impact on turbulence and organization profitability. Organizations therefore needed to engage in new strategies through ensuring a top down focus of all staff on the changes in the business environment with real time issue management. On changing nature and needs of consumers organizations needed to regularly employ the services of market research to quickly establish changes if any from consumers end. The study recommended the need to utilize the option of strategic alliances or diversification. Strategies needed to be differentiated on the basis of locations given the varying needs. Given the fact that the products in the industry were fairly undifferentiated it was important for organization to strive for differentiation through additional value adding services that improved the final offering. Further research is recommended on the other variables that are impacting turbulence in the oil industry especially the economic and government issues. Chaos and Complexity theory is also a fairly new approach which needs to be explored further.