CHALLENGES OF INDEGINOUS OIL COMPANIES IN ETHIOPIAN MARKET DUE TO INTERNATIONAL OIL COMPANIES OPERATION

Abstract

In their attempt to attract Foreign Direct Investment (FDI), most African countries have liberalized trade and attempted to create enabling environment in recent decades. Ethiopia, like many African countries, took some steps towards liberalizing trade and the macroeconomic regime. This paper attempts to study the challenges of indigenous oil companies in Ethiopian market due to the operation of international oil companies. The study gives an extensive account of the main face up to the local oil companies. The research has conducted to portray the local company challenges in the industry due to the operation of foreign companies, by focusing on their financial capability, branding, expertise knowledge and experience in the industry, structure and formation of the local companies respondents were approached. The research has been descriptive by using both primary and secondary data through interview, questionnaires and secondary data respectively. The above mentioned parameters addressed in through questionnaire and by interviewing the selected employees of the local companies. In addition their overall performance has been analyzed by using secondary data. The research result demonstrated that the local companies are not competitive enough, as they have immense gap in all parameters mentioned above. They are not competent in terms of financial capability, creating awareness about their products, knowledge of the business and structure and formation of the company. As finance is the main element to operate all business activities, local companies should be able to manage their working capital and efficiently control their resource and have a real power over their stakeholders the like of dealers and transporters. Beating the negative attitude and lack of awareness from the customer side towards the local company and their products are also expected from the indigenous firms, as branding play a great role in today’s business environment. Giving more emphasis to the business operation rather than making a structured and well designed organization, the local companies are not competent enough. The researcher suggests that following recommendations: they have to develop ensuring strong interface between their stakeholders, implement clear and effective credit policy, hire and train and retain expertise, develop a strong operational manual and organizational structure