Diversification as a competitive strategy in Radio Africa ltd

Abstract

Kenya has had one of the fastest growing media industries in East Africa both in terms of numbers of players, revenues and even in technological advancement as indicated in the digital migration plan. According to industry regulator CCK, there are approximately 106 radio stations in the market, about 20 TV stations and about 8 newspapers. Total advertising revenues to the industry stood at approximately KShs 30 billion as measured by media consultancy firm, Synovate-Kenya. However, this measurement accounts for all the media exposure of the advertising brands without considering discounts or bonuses hence may overestimate the actual value of the industry. With a CAGR of about 31.2%, this has been one of the fastest growing sectors of the economy. With the liberalization of the economy, many players were licencesed by the industry regulator, CCK, and the government as a result fierce competition in the media industry. In order to survive, some of the competitors have opted for diversification strategy. Radio Africa Ltd has adopted this strategy. Other notable players that have adopted this strategy include media houses like The Nation Media Group, The Standard Group Ltd, and Royal Media Service. The aim of this study was to determine how diversification has been applied as a competitive advantage for Radio Africa Ltd. The study has studied various strategic management issues among them competitive advantage, diversification, SWOT and PESTEL analysis. All these strategies have been worked alongside the study’s objective of determining how diversification has been applied as a competitive advantage for Radio Africa Ltd. This study will be beneficial to various groups .Firstly the study will help the shareholders determine whether it is worthwhile to diversify. Secondly, the study will be used by the government and its agencies especially CCK in determining and setting of rules on diversification and allocation of extra frequencies to any one particular media house. Thirdly the study will also aid the competitors in establishing the competitive advantages gained through diversification. This study will also benefit researchers because it will contribute to the existing literature in strategic management and stimulate a basis for further research. The study will aid financial institutions make sound decisions when lending funds to media houses. Being a primarily qualitative study data was collected through in –depth interviews and interview guides from four senior managers of Radio Africa Ltd, and the responses taken through content analysis in order to measure the semantic content and main themes. The results of the study show that diversification is a strategy that can drive a company towards achieving a competitive advantage and or benefits. However, diversification can only be fruitful if the environment under which the organization is operating within is enabling. The limitation of the study was the sensitivity of the information and unwillingness of the managers interviewed to disseminate some information.