Application of price leadership strategy by Essar Telecom Kenya Limited
The main purpose of this study is to provide insight into strategy formulation and more specifically to the application of price leadership strategy by ETKL. A low cost leader in any market gains competitive advantage from being able to produce at the lowest cost. Price leadership strategy has its roots from the Porter's generic strategy of cost leadership. It is a strategy which involves the firm winning market share by appealing to cost-conscious or pricesensitive customers. This is achieved by having the lowest prices in the target market segment, or enhancing customer value. The objectives of this study are; to determine application of price leadership strategy by ETKL and secondly to establish factors that influenced ETKL in choice of price leadership strategy. It is apparent that successful application of a strategy is an all-inclusive process that requires all stakeholders in the organization to play their part if success is to be achieved. This study has confirmed that that ETKL has applied price leadership to fight competition in the market. With this application, the company has been in a position to retain its market share and at the same time retain industry average profits. The study has further confirmed that a number of factors have influenced ETKL in choosing price leadership strategy which were employee participation in planning, company's goals and objectives, target market and organizational environment. This study has employed case study research guide and an interview guide was used to collect primary data. The interview was personally administered through personal interview and probing the interviewees from three departmental heads. Information contained in the interview guide included position held, departments the respondents were currently, working duration the respondents have worked at ETKL, nature of competition within the industry, strategy formulation, role of senior management in strategy implementation, factors influencing strategy formulation and finally environmental factors affecting the application of price leadership strategy. Various themes emerged from the interview conducted. To help encapsulate the objectives of the study, content analysis was used to analyze the data. From the findings of the study, ETKL has successfully formulated and implemented price leadership strategy. For a successful strategy choice, senior management have a direct influence on the application and implementation of a strategy. They provide a role model for other managers to use in assessing the salient environmental variables, their relationship to the organization, and the appropriateness of the organization's response to these variables. Top management also shapes the perceived relationships among organization components. The study further found that leadership is considered critical to the successful application of the chosen strategy. In particular the study has found that the role of the senior management in strategy application is fundamental since it is seen as a catalyst closely associated with and ultimately accountable for the success of a strategy. The management's actions and perceived seriousness to a chosen strategy will influence employee commitment to implement.