Value chain analysis and competitiveness of applications service providers in the Telecommunications industry in Kenya

Abstract

The aim of the study was to determine key competencies and capabilities that are attributed to the success of Application Service Providers in Kenya, to establish effectiveness of optimizing the value chain to create competitive advantage and to identify challenges that application service providers face in adopting value chain models. The study adopted cross-sectional survey conducted on application service providers in Kenya. Data was collected from 12 application service provider firms based in Nairobi through questionnaires and analyzed using statistical package for social scientists and presented in tables. The study findings indicate that most application service providers employed value chain concepts in their operations and the key competencies and capabilities were identified to be long term relationships with customers, possession of multi-skilled workforce and efficiencies in operations. Findings indicate that companies employed differentiation strategy to survive the highly competitive environment and achieved customer satisfaction by maintaining excellent customer service, providing high quality services and through achievement of short lead time for the delivery of services. It was established and that most companies had applied deliberate measures to ensure customer satisfaction and most managers were receptive to change. The study recommends that application service providers should adopt a hybrid value chain model that employs differentiation strategy and customer satisfaction aspects highlighted above in order to gain and maintain a competitive advantage that will ensure profitability is maximized. The study also identified challenges faced by application service providers that include poaching of experienced staff by competitors, financing issues and unpredictable government policies and management of these companies should devise strategies to deal with them