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Introduction
The success of an industry relies on the strategies formulated and developed to reach the customers within the component organizations. Services or goods are prepared or manufactured and supplied to customers through distribution channels. A business must spy its directions in a strategic way to ensure that all organizations run in an appropriate way. An evaluation determines the paths available for expansion, weaknesses that pull the industry down, threats that would lead to total failure and strategies of profit maximization. It is, therefore, vital to lay an exhibit evaluation that will summarize these strategies in a company. In a bid to perform this task, I will make a comprehensive evaluation of a communication industry by assessing Safaricoms information, performance, structure, and its relation to the surroundings.
Industry
Safaricom limited refers to a communication industry in Kenya that provides services of information delivery within and outside the country. It is an established industry that is transacting many businesses in the region involving the establishment of effective communication in Kenya. It has many organizations that operate money transactions, products selling, service delivery among other activities. M-pesa is an organization that helps Kenyans in easy delivery of money and enables a wide range of transactions such as payments and deposit services. It has also established shops where it sells communication devices such as phones, computers, and accessories for communication products. It enables payment through the credit card, therefore, allowing a wide range of opportunities to access payment options. The establishment and formation of a barrier to penetrate the market is a key factor empowering the success of the industry. The nature of this barrier for the interested industries, such as Zain, shows a clear distinction in parts of the Porters five forces. For these reasons, I decided to choose this industry for the evaluation.
Porters Five Forces
New Entrants Threat
The entrance of new industries in the communication industry is a factor of fear in Safaricom limited. When industries enter the market, they initiate sharing of income and lead to profit reduction. To counter this, Safaricom established a strategy of demanding customer loyalty. For instance, the costs of calls delivered to alternate networks are higher than those delivered within the network. Also, since this industry initiated these services in the country, it has the majority customers that enable availability of economies of scale. This allows for the establishment of affordable prices that the alternate industries cannot afford due to low or no profits. The cost of investing is significant considering that an arising industry must build stations throughout the country. Safaricom has established channels to supply their products and services throughout the country. These channels are a part of the industry and are not, therefore, accessible to the other industries.
The other barrier in the countrys communication industry involves the restrictions due to laws and regulations. An arising communication industry must possess a patent and other legal documents and approvals before they initiate progress. The processes to attain these qualifications are tough and conspicuous to handle without a lot of humility and patience. A starting industry must, therefore, be considerate about the time of attaining these legal conditions. Generally, an easy entry to the communication industry is a significant threat to the development of this industry.
Suppliers Bargaining Power
The suppliers of products in the industries have little power over them (Bensoussan & Fleisher 2008). For instance, the supplies of mobile phones provide a wide range of suppliers. The industry can, therefore, shift from one company to the other in quality of efficient and cost effective products and services. Additionally, the intensity of technological growth has established a strong network that minimizes scarcity in the globe today. Therefore, the technological products are sold by organizations within Safaricom at easy supply. Also, products or services that are sold or delivered in Safaricom shops have substitutes. Substitution is a factor that provides alternative ideas in case the present supplier is reluctant. A supplier for this industry does not have a lot of power to bargain due to these restrictions. This allows the industry to provide adequate, quality and cost effective products and services to its customers. In other cases where the bargaining power of the supplier is high, suppliers enjoy the market due to scarcity of products or services, few substitutes and suppliers, and lack of loyal customers.
Customers Bargaining Power
Safaricom was the gateway to technology establishment in Kenya. It provided a system of communication and captured the virgin nation technologically. Since it is the initiator and facilitator of communication technology, it was able to attract many loyal customers. It integrated fast and prevented the entrance of other industries into their vision. The industry, therefore, grew to provide efficient services and established strategies of discouraging lack of loyalty within the country. For example, it is able to increase the prices of services that are not within its functionality. Messaging services to the Yu network are higher than those between people using the Safaricom network. It is, therefore, evident that customers have little power to bargain for prices in this industry. They lie on the mercies of the industry and the regulations of the government.
Threat of Substitute Products
Substitution of products and services from this company has a vital concern (Kluyver 2000). When the industry introduced the money transfer system, Zain provided an alternate system called Zap to perform the same role. Every service introduced by Safaricom became a subject of substitution. However, this industry does not have fears of substitution. The confidence arises due to customer loyalty. In this case, many customers prefer using their common network for all operations. Customers are reluctant to have other money transaction networks. Also, money cannot be sent to other networks. Therefore, most people prefer using the Safaricom service that the majority of people are already using. This implies that customers are not ready to shift from their original network provider. However, this reluctance to shift is more out of force than willingness. If there was an alternate network sharing half of the Kenyan population as customers, the substitution would lead to competition and effective services. Although, other industries seem determinate in establishing substitutions, the routes and strategies of performing this initiation are narrow and require sacrifice. For example, Zain network must tolerate losses when marketing its products and services, and increase the number of loyal customers with an aim of achieving their communication and popularity objectives.
Degree of Competitive Rivalry
Competition is the key to cost effectiveness, and quality products and services (Denison 1989). It arises due to the availability of complementation and substitution of goods and services. Safaricom provides competition by providing quality services throughout the country. For instance, the transmission stations are spread widely in the country. This facilitates the ability to attract more customers than other networks without the stations cannot reach. For example, when the other networks provide 2G internet connection, Safaricom provide 4.7G internet connection. The speed of this network is fast, which is efficient for use by all individuals within the country at affordable prices. Other, rivalries in competition involve offers and promotions from the two industries. Presently, Safaricom is offering a night shift data that are added as 50% data bought above 500 Kenyan shilling. Other networks try to destroy the famous nature of the industry by changing its name. For instance, an advertisement was made by the media through an entertainment program where this industry was referred to as Sufferingcom. In Kenya, there are four other competing communication industries which have not attained the standards to compete with Safaricom. The industry is, therefore, reluctant to compete with them. It performs its operations, such as offers and promotions, without the sense of competition. It is, therefore, a dominant industry that is affected merely by the competitor. In fact, some of the industries involved communication tries to establish contracts and agreement with this leading organization because they can only run at its mercy and that of the government. This has led to a kind of monopolization of the communication sector.
Important Forces
Forces on M-pesa
The rivalry existing between this organization and other organizations from communication industries shows the importance of the protection offered by preventing the open entry to the market (Jack & Suri 2011). The services offered by Zap and Yu cash are substitution of the previous work performed by Safaricoms M-pesa. The barriers for customers loyalty, lack of willingness to change and discouragement of switching have facilitated the success of this industry. Law and regulations enacted by the government restrict the free access to the market because the attaining of these approvals is hard and requires time. The initiation of a well established transaction system requires high investment because the agent must be distributed to offer services. In case many centres are not established, people would need to move long distance withdrawals. Early initiation and development of the M-pesa services dominated the largest population of customer and established a network that is hard for customers to shift from at their own will. These channels of service delivery are complicated and require an established networking to work. If few agents are available in the system, few transactions occur and prevent credibility and workability of the system. M-pesa has defined systems that allow for money delivery at areas of two kilometres for half of the population in Kenya (Mbiti & Weil 2011). The barriers are conspicuous and persistent in ensuring that entrance remains tough for the few arising industries.
The establishing organizations offer low charges to transfer money. Their main objectives in doing this are penetrating the market. However, levels of loyalty remain at the same state and prevent success of other interested industries. Other factors encourage strict loyalty. For instance, money transactions cannot be performed between M-pesa to Yu cash. This ensures that customers using Yu cash move long distances in search of the withdrawal centres. It is clear and concise that people cannot make these movements when leaving M-pesa services behind.
M-banking Forces
Unique supplies are regarded with high value and paid considerably. This ensures that the industry is supplied with the product at all time due to the competitive prices. In most cases, Safaricom tenders are signed and operated by large firms such as Equity bank. The diverse nature of interaction allows Safaricom to consider initiating business interaction by other organizations providing the same services or selling the same products. For instance, the industry with banking organizations such as cooperative bank, Barclay, and Central Bank among others when establishing an effective money transaction through M-banking. M-banking is a system that enables the interaction of a mobile money transacting organization called M-pesa and banks in the company (Batchelor & Kashorda 2009). The organization allows withdrawals and deposits to banks through the mobile phone and M-pesa operator. The operators are scattered countrywide to enhance service efficiency and reduce the travelling distances. This attracts service suppliers to be incorporated in the system. In fact, instead of requesting for supply of services, all banks have entered the system willingly. This industry has an integrated system that eradicates suppliers power to potential system facilitators.
Safaricom Shops
The forces that determine the success of this industry in the formulation and progress include competition and suppliers bargaining power. The products that are sold in these shops include phones, IPods, laptops and the accessories. There are many shops that sell similar products in Kenya. This industry encounters competition and it establishes strategies to facilitate its fitting into the market. For instance, it advertises its products on the media to enlighten customers about its products. It has many strategies of attracting customers. These include providing warrants for goods sold. The broad nature of the industry and its popularity warrants trust of buying since customers believe that the industry sells quality products at regulated prices.
Communication Sector
The voice call and messaging services are the most tangible resources owned by these industries. It is a leading industry that has proved dominant in the market due to the achievement of a large number of loyal customers. It has established a strong and diverse communication network that has enhanced advertisement in the country. For instance, there is the establishment of accessibility to the world news through Dstv channel that is facilitated by this industry. It is the most profitable and advanced sector in the industry. It involves calling, connecting to the internet and sending messages through the phone. It targets on populating the networks of communication to people in and outside the country. The call contact system is a fast and efficient way of delivering information. It has a self initiated need to all customers. Therefore, the customer must use the service since it saves time and money. The internet is a vital tool in the learning sector to deliver published books within seconds of browsing. Learners are able to gather for information from the internet within a short period of time. For instance, a book published 2000 miles away can be accessed within a few seconds after publication. This facilitates the education sector by providing fast and intricate education determining the lives that people live.
The rise of the Zain network is a threat in trying to improve the bargaining power of customers. For instance, the current cost is 3 shillings per minute of calling to all networks. On the other hand, Safaricom charges 4 shillings for calls within the network and 5 shillings for calls outside the network. Individuals using the Zain network have an advantage of saving one shilling every minute s/he calls within the network and 2 when s/he makes calls to Safaricom network. However, considering that the number of customers on the Safaricom networks is significant, individuals hate calling to other networks due to high call rates. These factors reduce the bargaining power of customers and make the industry a price-maker. In other words, if this industry decides to eliminate other networks, such as Yu, Orange, and Zain in exception of competition law, it could lead to their closure. This is a significant force that marks the lines of establishment and development in the dominated market.
Services Delivery to Customers
A well established management ensures that the industry has a strong foundation towards the achievement of its vision (Baye 2000). When the management fails to realize diversion from the industrys vision, the industry runs under uncontrolled and undirected situations and has high chances of failure (Schellenberger 1969). Furthermore, we must acknowledge that the key reason for industries in every context is to supply people with their needs. If an industry cannot prove reliable for the suppliers and the customers, then it is a subject to failure. Proper management strategises and plans an industry by evaluating its strategies of performance and checking the activities within the organization closely. By doing this, industry is directed on the right path to initiate, establish, and develop the procedure that will enact its stability and success.
Safaricom is not only a profit making organization. It has established systems to enhance the interaction with its customers, citizens, and the government. The industry aims at providing customers with quality services. In this part, I will describe how Safaricom delivers services to customers with the aim of achieving its organizational goals. In so doing, I will lay an evidenced base to support this fact.
Offers
Competition is not the main factor that drives this industry into launching offers. The main aim of the industry is promoting the costumers in their operations. As mentioned previously, the effects of substitution are countered by customers loyalty to the network and price regulation. The main agenda is a way of appreciating the loyalty of the customers and promoting them. For instance, there was an offer that targets at promoting customers during the Jamhuri day held on 12th December 2012. They were promoted by a 50% increment on airtime bought from M-pesa. In this event, more than 200,000 individuals bought the credit at the end of the day. This implies that Safaricom has the essence of attaining its vision and not targeting profit alone.
Sponsors
For the welfare of the organization and citizens, the industry launches scholarships to citizens of the country. The sponsorships are announced to all potential citizens and allocated to the most competitive candidates. This strategy initiates the development of a supportive industry to its surrounding. Citizens are able to learn the necessity of education in life and strive toward excelling in education. It also proves its considerate nature to all customers.
Study Mode
This industry not only provides internet connection for efficient educational strategies, but also has a study mode section. The industry provides materials for education through the internet with little or no costs. This availability of study materials improves the status of education and shows a clear direction towards the achievements of their goals. The free educational materials display the outside-in perspective when strategizing their operations. Their objective in this strategy is to facilitate the understanding of people about the availability of study material in their site. The future target is to initiate a learning environment for people. They, therefore, invest capital without receiving profit at the moment.
M-pesa
The initiation and establishment of this organization is used as a significant investment to reach the present state. Initially, there were losses related to limited market penetration, national registration and availability of resources. After a lot of patience and tolerance, the organization established grew into a profit making organization. The money transactions performed initially were ineffective to serve the whole country. Today, more than twenty million Kenyans can withdraw money without moving a distance of 2 kilometres.
Warrant
Trust is a key facilitator that enhances the buying of a costly product. Safaricom created the strategies of building trust by providing warrants that are promising to the customers. For instance, phones have warrants that range for one year. If customers buy a phone from their shops, they can repair reasonable faults that the phone develops within the year. This is a strategy that aims to create trust. In the future, the industry will be able to sell the product easily to customers due to trust.
Shares
The industry sold its shares to the citizens last year. This implies that it has become a beneficial asset for Kenyans to enjoy. In so doing, the industry got ownership within the country and people appreciated the nature of their performance. Other communication industries have never sold their share to the citizens. It is a considerate issue to Kenyans because they can feel that ownership. When making calls, they appreciate that the money they use will remain within the economic boundaries.
Entertainment
Entertainment has become a point of incredible advertising strategies (Sandhusen 2000,). The media programs, such as Tahidi High on citizen television, are programs that update people in the country freely. The initiation of the program and its continuation is a matter of funding by the industry. The investments made on these programs aim at making profits in the future. They inform people and facilitate advertisement within the program. It, therefore, enhances the appreciation by the citizens and targets the future of the industrys success. At the beginning of year 2012, the industry gathered companies within the country in a music contest. In this contest, they invited local music artists to attend and compete among themselves (Narver 1967). As a result, many talents were discovered and developed amongst the youths. This ensured value maximization of the customers and the development of the company. Another crucial entertainment to the customers that supports the customers and the success of the industry is the use of Skiza tone. In the case of Skiza tones, the industry aims at developing the local musician to advertise their products through the phone. When people call their friends, the phone switches into a music track that the caller listens to before their friend picks up the phone. This helps the music artists to advertise their product through the Skiza tones. At the same time the industry benefits from the fee that the musicians pay.
Welfare of Needy People
Safaricom industry is also concerned with the welfare of needy individuals and groups. They take the responsibility by helping their needy customers using those customers who are financially stable. For example, the industry carried out the Kenya for Kenyans initiative program. This program was developed during the year 2010 when there was a national drought. Actually, the president of Kenya declared the drought as a national disaster. This drought lead to the famine across the country. However, there are arid and semi-arid areas in the country. They include Turkana, Mandera, Wajir and some parts of Kamba. The drought had affected these areas with much severity than the rest of the country. On this light, the industry approached the government which allowed them to start a program that could help the challenged areas. They developed the Kenya for Kenyans program. In this program the industry sent a private message to each customer. They requested the customers to donate one Kenyan shilling. Since the industry has about eighteen million subscribers, it was targeting to fetch approximately 18 million Kenyan shillings from the program.
Fortunately, most of the subscribers would donate more than one shilling depending on their abilities. Most expectedly, the industry managed to fetch about ninety two percent of the targeted amounts. This was incredible assistance to the people living in those marginalized areas. In addition, Safaricom involved itself in helping a child who had a spinal cord problem. A hospital outside Kenya was to diagnose the problem. The child needed a lot of funds that the parents could not afford. They approached the industry to help them in raising money for their child. The industry heeded to their call. As a result, they developed a program that requested their subscribers to donate money through the M-pesa program. In this case, they needed the customers to either donate five or ten Kenyan shillings. Consequently, they afforded to collect a remarkable amount helping to diagnose the child.
Future Target
The tolerance of losses with a goal of penetrating the market by other industries is a factor of concern. In a bid to increase and maintain the number of loyal customers, these industries invest and make losses until their objectives are reached. Zain delivers calls at 3 shillings per minute to improve the number of customers in its network. In this way, the company attains customers in its progress for future rewards.
Registration of Customers
The industry also works together with the Communication Commission of Kenya aiming at registering their customers using the identity cards. Before this program, the government had noted that most criminals used mobile phones to carry out their criminal activities. Through the Communications Commission of Kenya, the government requested the industry to register all their subscribers. The industry authorized all customers to register their phone numbers along their identity failure to which the industry would deactivate their phone numbers. The industry managed to curb the criminal actions that some of the customers carried out against other customers. In this response, it aims to switch off unregistered networks regardless of their investments. This shows the need to interact and work on securing the nation for the sake of the nation.
Conclusion
The evaluation above is crucial in managerial performances. It acts as a guide for the industry by making the basis of decision making. It shows the components that the company should retain and the ones it should abandon.
References
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Baye, M 2000, Managerial economics & business strategy, McGraw-Hill, Boston: Irwin.
Bensoussan, B & Fleisher, C 2008, Analysis without paralysis: 10 tools to make better strategic decisions, FT Press, Upper Saddle River.
Denison, E 1989, Estimates of productivity change by industry: an evaluation and an alternative. Brookings Institution, Washington.
Jack, W & Suri, T 2011, Mobile money the economics of M-PESA, National Bureau of Economic Research, Cambridge.
Kluyver, C 2000, Strategic thinking: an executive perspective, Prentice Hall, Upper Saddle River.
Mbiti, I & Weil D 2011, Mobile banking the impact of M-Pesa in Kenya, National Bureau of Economic Research, Cambridge.
Narver, J 1967, Conglomerate mergers and market competition, University of California Press, Berkeley.
Sandhusen, R 2000, Marketing, Barrons, Hauppauge.
Schellenberger, R 1969, Managerial analysis, Irwin, Homewood.
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