Effects Of Changes In Business Dynamics On Budget Performance Of Oil Marketing Companies In Kenya

Abstract

The last decade has seen tremendous changes in the Kenya’s oil marketing industry. Similarly, There has been a great growth in the industry from number of players to factors that determine effective performance in the industry. These changes can affect the performance of budgets in different ways. Changes in volume sold can greatly affect the overall performance of a company since the sale of product forms the basis of deriving the bottom line to all companies as to whether they cope or not. Undoubtedly, the changes market share is a factor to budget surviving the harsh environment that has become even worse due to entrants of new and aggressive smaller companies competing for the same market. This study was carried out to determine the effects of four major dynamics on the performance of budgets. The study used a descriptive research design. The target products in this study constituted three main oil products retailed at the service stations namely Premium Motor Gasoline (PMS), Automotive Gas Oil (AGO)and Illuminating Kerosene (IK). This study analyzed these dynamics between January 2011 and December 2015. The analysis on the movement of the four variables indicates a change in the same direction, a confirmation that indeed changes in these dynamics affects the performance of the OMCs budgets in a similar manner. This study however concludes that fluctuations in ullage allocation do not highly affect the budget performance of the OMCs. The study is therefore consistent with previous studies that suggest that many other factors including exchange rate, taxes, spillage, dealer margins, transport rates as well as speculation affects the performance of companies in oil marketing industry in Kenya.