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Employing Strategy in a Competitive Environment
Introduction
Competition among businesses has enabled investors to seek better ways of remaining at the top of various business activities. The struggles to dominate the business world and expand markets to interior regions push companies to invest in marketing strategies. Doubtless, all companies are willing to pay a considerable amount of money to ensure they control and dominate international and local markets (Magretta 2011). This report explores how Bidco Oil Refineries Limited employs various strategies in a competitive environment despite challenges facing it.
Background
Bidco Oil Refineries Limiteds history dates back to 1970 when it began its operations in Nyeri, Kenya under the leadership of Mr. Bhimji Depar Shah. Initially, the companys main activity was garment manufacturing; however, it relocated to Nairobi in 1985 and started manufacturing soap and other related products. The Bidco Oil Refineries plant was set up in Thika in 1991; consequently, becoming a significant turning point in its operations. The company focused on manufacturing soaps, fats and edible oils that were in high demand.
The companys operations have multiplied leading to the acquisition of other companies like Elianto from Unga Group Limited (Kenya) in 1998, Shivji and Sons Limited (Tanzania) in 1999 and leading brands from Uniliver (East Africa) in 2002. Currently, this company has considerable markets in SADC and COMESA blocks and operates in more than 13 countries. Even though, this short background shows a smooth path to excellence this company faces enormous threats that hinder the realization of its goals.
Environmental Threats
This company gets raw materials from natural products like plants and animals. Therefore, the company is bound to be affected by any challenges that interfere with the ecosystem. Consequently, environmental challenges are inevitable threats that hinder its operations and sustainability.
The greatest threat is global warming that has affected crop yields and lowered animal production in the East African region. Constant crop failures are becoming the order of the day as animal products diminish due to droughts. However, this company has partnered with other like-minded organizations and established the Nairobi GreenLine Project that plans to plant 250,000 trees along the perimeter wall of the Nairobi National Park. These organizations include the Kenya Wildlife Service, Kenya Association of Manufacturers and the Nairobi National Park.
Secondly, unpredictable climatic conditions have become common occurrences in Kenya leading to crop failures and animal deaths. Droughts and floods are common in most parts of the country making it difficult for the company to predict its annual yields. However, the company is shifting focus from relying on naturally produced corn and sunflower to artificial crop production and animal husbandry (Magretta 2011). This ensures that despite unpredictable climatic conditions the company continues to have a constant supply of raw materials.
Lastly, crop pests and diseases are common in most parts of East Africa. This leads to poor yields and wastage, since most products affected, are disposed of as wastes. The company has partnered with Kenya Agricultural Research Institute (K.A.R.I.) and other agricultural research organizations to identify appropriate remedies to the problem of pests and diseases. These are significant steps towards increasing corn and maize supply to the company to ensure there is an uninterrupted supply of raw materials.
Evaluation of the Companys Strengths
The company has a competitive advantage based on its capital base, market penetration, product diversification and rich history. It has sufficient operating capital and continues to generate profits that have enabled it to acquire three companies either as a whole or a significant brand from a known company.
It uses this immense capital as a propeller to continue dominating the market.
Secondly, it commands major trading blocks in East and Central Africa and has invested in Kenya and Tanzania as its operational headquarters. This shows there is a considerable clientele base for its products within and outside the East Africa region. It should continue producing quality and affordable products to maintain its market hold and expand its operations to other regions.
Thirdly, the company has diversified its production to include edible oils, fats, soaps and animal feeds. These are basic products used daily by the East African population; therefore, their demand continues rising due to population increase. Lastly, the company has a rich history dating back to post-independent Kenya. Its involvement in environmental conservation and other cooperative social responsibilities (the seed crushing plant in Nakuru, Kenya provides reasonable market and prices to soya beans and sunflower farmers) wins the trust and confidence of the African population.
It also plays a significant role in helping alleviate hunger, fighting the jigger and HIV scourges among other activities. These aspects give this company a competitive advantage over others; therefore, leading its competitors in sales.
Chief Competitor
The company experiences stiff competition from Kapa Oil Refineries Limited that manufactures oils, cooking fat, detergents, margarine, and a variety of beauty products. However, despite the challenges posed by this company Bidco has developed marketing strategies that include promotional campaigns to create product awareness among the population. Secondly, it is focusing on producing quality but cheap goods that are available at smaller and affordable prices.
In addition, it is actively involved in environmental conservation and hunger alleviation as strategies aimed at promoting product awareness in many nations. Lastly, it is restructuring its management and staffing policies to ensure the locals do not only benefit from quality products but also participate in their production.
Strategy Modification
Competition for limited demand continues to exist despite high global inflation rates. Competition ignores the fact that economies decline due to various reasons. However, companies can modify their strategies to continue competing effectively in the marketplace (Thompson 2010). This process involves restructuring internal and external policies to increase the chances of making profits and minimizing expenses.
First, a company may resort to hiring part-time staff on contracts rather than hiring permanent employees. Hiring expertise enables companies to get high-quality technical and financial assistance without incurring heavy expenses (Magretta 2011). Secondly, companies may diversify their production to ensure they maximize the market demands by producing a variety of goods consumed daily. In addition, there is the need to produce cheap but quality goods by seeking alternative and cheap raw materials. This also includes producing goods in small quantities that are affordable for the average and low-income earners (Stern 2010). Lastly, companies can seek tax exemption for a period to ensure the declining economy does not halt their operations.
Impacts and Response to Global Competition
Global competition has significant impacts on both local and multinational companies. It dictates the pricing of commodities and this controls major business activities including exchange rates, import and export policies, and international relations. Businesses must keep in touch with major global competitors to ensure they are aware of international market prices, standards, and policies that regulate international trade activities (Doyran 2011). This enables businesses to restructure their policies and staffing guidelines to reflect international standards; therefore, conforming and transforming their operations to international levels.
Conclusion
Competition helps businesses identify effective ways of meeting market demands and enables consumers to get quality goods at affordable prices. However, governments should ensure there is healthy competition among companies to avoid the use of economic sabotage strategies by unscrupulous people.
References
Doyran, M. (2011). Financial Crisis Management and the Pursuit of Power: Global Finance. Farnham: Ashgate.
Magretta, J. (2011). Understanding Michael Porter: The Essential Guide to Competition and Strategy. Boston: Harvard Business Review Press.
Stern, C. (2010). The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives. New York: Wiley.
Thompson, A. (2010). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: McGraw-Hill.
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