Impact of Generic Competitive Strategies on Organizational Performance in the Telecommunications Industry: A Case of Safaricom Limited

Abstract

The general objective of this study was to examine the impact of generic competitive strategies on organizational performance in the telecommunication industry, a case scenario of Safaricom Kenya Limited. The study specific objectives of the study was to establish how cost leadership strategy affects organization performance, to examine how focus strategy affects organization performance and to analyze how differentiation strategy affects organization performance. A descriptive research was adopted to collect information from respondents on their perceptions of low cost leadership, focus and differentiation strategies on performance of organization. Correlational was used to describe relationship between the independent variables: low cost leadership, focus and differentiation strategies against dependent variable organization performance. The target population for this study were Safaricom employees at Nairobi Headquarters. The sample size was 125 employees from different departments of Safaricom. Out of the total of 125 questionnaires given only 100 were correctly filled and returned giving a response rate of 80%. SPSS was used to enter, clean and analyze the coded data. Pearson’s Correlation coefficient analysis was used to analyze the relationships between the different variables. Tables were used in presenting the study findings. The first objective on low cost leadership and organization performance revealed that a majority of respondents stated that economies of scale affected organization performance. Capacity utilization of resources and reduction in operations time and costs were other factors of low cost leadership that affects organization performance. The following factors of low cost leadership were also identified by respondents as to affect firms’ performance: efficiencies in operations hence cost control, mass production and distribution, creating linkages with service providers and suppliers. The second objective on focus strategy and organization performance showed that majority of the respondents stated that Safaricom practices segmentation based on benefits perceived by the customers, Safaricom practices segmentation based on physiological aspects of the customers, Safaricom practices segmentation based on social class of the customers, Safaricom practices segmentation based on income level of the customers.The third objective on differentiation and organization performance revealed that majority of the respondents stated that the following differentiation strategies enhance organization performance: differentiation based on product/service, differentiation based on price, differentiation based on place, differentiation based on promotion/ advertising campaign, differentiation based on personnel, differentiation based on image and differentiation based on technological leadership. The study showed a positive significant correlation between organization performance and the strategies in study: low-cost leadership, focus and differentiation. The study concluded that telecommunication companies in Kenya can adapt low cost leadership strategy to increase performance. The study shows how economies of scale and capacity utilization of resources are important factors that affect performance. It was also pointed out that segmentation based on income level of the customers as also had an influence on performance of the organization. This study concluded that differentiation affect performance at Safaricom through product/service, promotion/ advertising campaign, personnel differentiation. The study recommended firms in telecommunication to embrace and effectively apply cost leadership. The management should be alert ensuring a proactive approach to gain competitive advantage. As the markets become dynamic and consumers more irregular and fickle, the companies need some form of market segmentation to maximize on profits. Other studies should be done on other strategies and Porters models should be incorporated for more research to explain organization performance.