The value chain analysis in Telkom Kenya

Abstract

The objectives of this study were to determine the value chain activities that constitute the value chain in Telkom Kenya and also to establish Key factors influencing the value chain activities in Telkom Kenya. Value chain analysis is undertaken in order to understand the behavior of costs & the sources of differentiation (Shank and Govindearajan, 1993). In the telecommunication industry differentiation is achieved by creating a perception amongst targeted customers that the services offered as a whole are unique in some important way, usually by being of higher quality. The appeal for differentiation is strong for telecommunication firms, for which image & perception of quality are important. This perception allows the firms to charge higher service fees, so as to outperform the competition in revenues without reducing costs significantly. According to Porter (1980), the business of a firm can best be described as a value chain in which total revenues minus total costs of all activities undertaken to develop & market a product or service yields value. Firms in the Telco industry have a similar internal value chain, which includes activities such as marketing and contract management, service provisioning, network infrastructure operations, equipment procurement, service development, billing, developing co-operative agreements and providing customer service. The research design used for this study is that of the value addition process in an dynamic telecommunications environment. The principal advantage of such a research method is that it can collect a great deal of data about strategic value proposition choices that Telco firms have made with reference to the external environment. The data analysis method is qualitative. Data presentation is in the content that was analyzed from in-depth interviews. Firms that undertake value chain management practices seriously in their organization often aim to improve their performance in terms of, for example, higher profits, better responsiveness to the market, and long-term competitive advantage.