Effects of Strategic Alliance on Competitive Advantage in Airtel Kenya Limited

Abstract

Strategic alliances have gained popularity in the Kenyan telecommunication industry becoming increasingly favorable choice for companies that intend to achieve competitive advantage over rival firms. Firms are faced with rapid changing global trends and dramatic economic development, it is always impossible for firms to grow individually. This study examines the effects of strategic alliance on competitive advantage at Airtel Kenya Ltd. The study adopted a case study design so as to undertake an in-depth and comprehensive inquiry in strategic alliances adopted and competitive advantages gained by Airtel Kenya Ltd. The research objective was to establish the effects of strategic alliance on competitive advantage at Airtel Kenya Ltd. Primary data was collected through interviewing seven senior managers who were involved in the formation of the strategic alliance by virtue of their position in the company. Secondary data was obtained in the form of relevant documented materials on strategic alliances, news papers, research reports, books, journals and website press releases. The data obtained in qualitative form was analyzed through content analysis. This approach helps in getting areas of consensus and disagreements from various interviews done and the already documented data. The key findings of study indicate that Airtel Kenya engaged in strategic alliances with the aim of gaining competitive advantage in the market through partnership with banks, airlines, internet providers, mobile handset makers and health insurance firms with the aim of growing their subscriber base, improve revenue and strengthen their brand identity. The benefits behind the motives for formation of strategic alliances were transfer of new technologies, creating customer value, leveraging on economies of scale and scope, gaining access to specific markets and distribution channels, reduce operational costs. The key challenges were unclear goals and objectives setting, performance risks, mistrust issues, cultural differences, change in technology, regulatory barriers and differences in target market. Moreover, turbulence in the market, resources constraint, market uncertainties, risk sharing and technology transfer were a constant challenge faced by the management team. The study indicated Airtel Kenya‟s motive to form strategic alliances with dominating domestic firms in the airline, commercial banking and insurance industries had implications on practice and support of theory building. It recommended that Airtel Kenya should continue to partner with other service providers in order to gain market share and also impact positively on the livelihoods of the citizens to boost its brand image and credibility. The study recommended on policy that the policy making process by government agencies should be prudent in sealing loopholes that lead to unwarranted legal barriers by rival firms. The study had limitations in terms of the scope of the study, time and resources. The study recommended that further research should be replicated in other mobile phone service providers in the country and the results of the findings be compared for more accurate generalization as well as on firms that partner with Airtel Kenya.