Competitive Strategy and Organizational Performance of Telecommunications Industry in Kenya

Abstract

The objective of the study was to establish the impact of competitive strategy and performance of telecommunication sector in Kenya; and to identify competitive strategies that the players in the telecommunication sector use to remain competitive in the market. The study was guided by Resource based view, Market based view and knowledge based view theory. Cross-sectional research design was adopted and targeted four major telecommunication firms operating in Kenya, that is; Safaricom Limited, Airtel Limited, Telkom Kenya and Equitel Limited. The unit of observation was the managerial staff of the four telecommunication firms who are involved in formulating strategic decisions for the firm. Primary data was collected through a questionnaire which had closed and open ended questions. The data was analysed using qualitative and quantitative procedures. Qualitative procedures involved use of regression analysis while quantitative data collected was analyzed using percentages, frequencies, means and standard deviation which was aided by SPSS software. Regression analysis was also adopted to establish the relationship between the variables. The study found out that the telecommunication companies in Kenya adopted differentiation strategy, market focus strategy and cost leadership strategy. On market focus strategy, the study found out that the companies segmented products based on benefits sought by the customers. On differentiation strategy there was an indication that the companies had adopted differentiation strategies by differentiating their products and services from their rivals.On cost leadership strategy, it was found that the companies used cost strategy to increase the market share and keep ahead of competition. The study concluded that there is a positive and significant relationship between the competitive strategies adopted; that is, differentiation strategy, market focus strategy, cost leadership strategy, and organization performance of the companies in the telecommunication sector in Kenya. The study recommended that they continue investing in new technology and coming up with unique products so that they can differentiate themselves; the companies should also benchmark their differentiation strategy with other service industry firms in the market. The study also recommended that the telecommunication companies in Kenya should continue innovating and developing new products as well as doing aggressive marketing for them to be and remain competitive.