Strategic alliances and competitive advantage:A case study of Safaricom limited

Abstract

This was a case study of Safaricom limited, analysing strategic alliances adopted and competitive advantage gained by Safaricom ltd. The research objectives of the study were to establish the strategic alliances that Safaricom engaged in and to establish the extent to which these strategic alliances were sources of sustainable competitive advantage for Safaricom. The study adopted a case study design so as to undertake an in-depth and comprehensive inquiry. The study interviewed six senior managers (Chiefs of divisions and a head of department) in the Company. Content analysis was used to analyse the data and generate relevant results. The key findings from the study were that Safaricom engaged more in equity alliances as compared to joint venture alliances and no instances of contractual alliances were noted. Some of the most notable alliances were; Strategic alliance with Vodafone PLC which led to the innovation of M-PESA. M-PESA has been a constant revenue steam for Safaricom, contributing 8% of Safaricom’s annual revenue. It has also given banking services to the rural and many un-banked Kenyans and has been hailed worldwide as the greatest Mobile service innovation of the decade. Strategic alliance with One Comm Ltd has helped Safaricom get a 79.6% data market share in the emerging data industry in the country. Data is expected to be the greatest revenue stream for Safaricom in years to come, primarily because marginal revenues in the traditional voice services have been decreasing over the years. An alliance with JTL helped Safaricom realize significant savings in capital and operational expenditures when Safaricom opted to network traffic. Other key alliances were the alliances with commercial banks and several utility firms in the country.The study therefore concluded that udy therefore concluded that Safaricom had gained a sustainable competitive advantage as a result of entering into strategic alliances. Had the company not engaged in the above mentioned alliances, it would not have gained the market share and the market leadership that it currently has. The recommendations of the study is that similar studies be replicated across all other mobile telephony providers in order to be able to access whether strategic alliances can lead to competitive advantages to the telecommunications industry in Kenya as a whole. Another recommendation was to have a similar study to evaluate if the firms that have partnered with Safaricom have realized any competitive advantages.