Strategic alliance between Safaricom and Equity bank in the money transfer service

Abstract

Since the introduction of liberalization in Kenya and the world becoming a global village, stiff competition among firms has increased to high levels forcing companies to devise ways of staying relevant in the market. Companies in Kenya have formed strategic alliances both locally and internationally so as to be able to compete successfully in a market that keeps on changing. Competition has been seen increasing from one period to another especially in the service industry. This has been attributed by increase in technology, improved innovations and high demand for efficient and effective services by customers. Equity bank has been seen growing very fast and increasing the market share rapidly. This has been successive through the introduction of various services that suit the low income earners. But the bank has been facing competition from other banks especially; Co-operative bank and Commercial bank of Kenya. Thus the bank projected that to be viable in the market, they need to partner with Safaricom Ltd- a mobile service operating company to facilitate easier way of money transfer. Safaricom Ltd also, has stayed in the Kenyan market for the last ten years. It has the largest market share of over 14 million customers. With its introduction of M-PESA- a money transfer service through the phone, it has attracted many customers all over the country and have shown loyalty over the service as being cheaper and efficient. In relation to this also the company faces competition from other mobile operators especially Zain Kenya and Orange Telecom that offer the same services. This has therefore generated price wars between the companies hence resulting to lowering of prices in the market. In regard to this Safaricom Ltd projected its viability by partnering with other financial institutions like the equity bank to facilitate easier way of money transfer. In this study I will find out the factors that determine the start of an alliance between Safaricom Ltd and Equity bank and the challenges that face the alliance.