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Safaricom Company’s Strategy and Competitors Case Study

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Updated: Nov 15th, 2020

Industry and Competitor Analysis

The case study presents several opportunities for Safaricom and its closest competitors. First, the globalizing markets create the possibility of growth through acquisitions. While a large share of the company was acquired by Vodafone in 2000, it is possible to assume that the size and scope of Safaricom’s operations allow it to conduct several small acquisitions to generate revenue (Hitt et al. 1). This assertion can be partially confirmed by the history of Safaricom’s previous successful acquisitions as well as similar strategies pursued by Bharti Airtel upon its entering the continent (Hitt et al. 7). Another opportunity is Kenya’s relatively diversified economy, which facilitates a platform for prolonged economic viability and customer payment capacity.

It also secures the steady increase in demand for their services, since the modernization of the economy necessitates the involvement of modern communications, online accessibility, and, in many cases, makes the presence of e-payments a desirable option. Thus, M-PESA, one of Safaricom’s services that offer mobile-based microtransactions, provides additional opportunities for enlarging customer base and increasing customer loyalty and satisfaction. Finally, the availability of emerging markets in other African countries can be considered an opportunity. During its lifespan, Safaricom has demonstrated a good understanding of the specifics of the local social-economic and social environment, which suggests that its eventual penetration to local markets can be successful.

However, several threats should be acknowledged as pertinent to the described case. First, despite its relative diversification, the Kenyan economy remains relatively unstable when compared to most developed and some developing countries. For instance, several events that occurred in 2008, including drought, a surge of fuel prices, and the effect of the economic crisis which impacted Kenya’s partners, resulted in a severe economic setback. In addition, Kenya is characterized by restrictive government regulations that are being addressed in accordance with the changing political landscape. While there is a tendency towards improvement in all identified areas, it is reasonable to expect a slow pace of the change and uneven scope of improvements, and, by extension, the threat of underperformance and emergence of unforeseen setbacks in the short term. It is also worth pointing out that the described situation is relatively similar in many African countries that are considered possible targets for expansion, which somewhat undermines the possibility of profitable acquisitions. Finally, the information and communication technologies segment is currently among the most densely populated in terms of global competition, with a significant number of world leaders in the industry taking the direction of expansion into developing markets. In other words, the case of partial acquisition by Vodafone can be expected to reoccur on a larger scale in the foreseeable future.

The review of the Safaricom’s competitors allows us to identify three companies that can be considered formidable: Bharti Airtel, Telekom Kenya, and Etisalat Emirate Telecommunications Company. Of the three, Telekom Kenya is the one most familiarized with the economic, social, and cultural background of the region, which remains its strong point. In addition, the partnership it formed with Orange Group strengthens its position in the market and secures access to additional resources. However, it has the least diversified market and, therefore, demonstrates the least capacity for global-scale growth. Etisalat Emirate Telecommunications Company, which is present in both African and Middle East markets, has a much more encompassing market reach, with coverage of up to 98 percent in certain countries (Hitt et al. 9).

Some of its subsidiaries, such as Etisalat Nigeria, have proven to be successful enough to occupy a portion of the continent’s biggest market. In addition, the company has an alternative to M-PESA, known as Easy Wallet, which offers financial transaction possibilities to its customers, thus undermining the opportunities of Safaricom. Finally, Bharti Airtel has a comparatively similar set of strengths, including the diversification of operations on the global scale, the experience of dealing with the Asian and African audiences, an established brand name, and a wide variety of products and services. However, it also has one definitive feature that facilitates the decisive advantage over its competitors, namely, the unique “Minutes Factory” business model. The low cost and, by extension, accessibility of its services remain among the most important advantages with regard to the economic situation of the region and allows us to consider Bharti Airtel Safaricom’s main competitor.

Value Chain Analysis

The information presented in the case allows us to identify marketing, sales, and service as the stages which allow for the most value-added. In addition, support activities have a significant impact on the Safaricom’s performance, with human resource management being the most prominent component.

The operation segment of the Safaricom’s value chain includes the installation of the equipment responsible for establishing access to the Web, as well as the possibility to make calls. In the case of Kenya, this segment does not rely on fixed-line access and instead moves directly to the mobile device-oriented services. Considering the growing presence of mobile devices capable of Internet access among the population and the historically limited infrastructure, such an approach is the most promising for the country (Hitt et al.2). Based on this information, we can conclude that the country-specific conditions do not offer sufficient flexibility on this stage for generating additional value without introducing major logistical and financial expenses. Outbound logistics, on the other hand, facilitates one of the company-specific strengths, considering the presence of a dealership network that directly and indirectly employs more than 20,000 people. The network is supported through a variety of initiatives that include training, transportation means and services, commission on data for certain providers, and short-term credits.

The sales stage is comprised of several options for Internet access, such as Sambaza Internet and Night Shift, dedicated services for data storage and transfer, several mobile services with different sets of incentives, and a customer loyalty rewards program. Finally, the company offers its customers the opportunity to easily transfer small sums of money via mobile devices using their M-PESA money transfer service. The service is constantly improved through the involvement of partners such as the Commercial Bank of Africa, which allows them to expand the distribution network and eliminate the technical inconsistencies within the system (Hitt et al. 3). Finally, the marketing stage is characterized by the strong orientation towards customer needs and expectations, most prominently through the recent “Niko na Safaricom” program. The program was launched in 2010 and aimed at increasing customer loyalty and minimizing customer turnover through improved communication, education of the consumers, and involvement with the community.

The central message of the campaign was the emphasis on the Kenyan origin of the company as one of the reasons behind its success and the communication of the commitment to both the country and the community as the preferred direction of operations. It can be said that Safaricom managed to turn its geographic background into an advantage through the well-placed marketing campaign. Finally, it should be mentioned that human resource management is among the most important support activities. Two aspects need to be acknowledged as crucial to the company’s success. First, the determination to provide equal opportunities for male and female employees has led to the 30% representation of females in the company, which is a significant achievement for the cultural and social environment in the country (Hitt et al. 5). Second, the company’s attention to employee engagement and satisfaction results in steady improvements in both metrics, as indicated by the survey (Hitt et al. 6). This indicator along with the information presented above allows us to assert that the company’s value chain facilitates the commitment of the employees and loyalty of the customers.

Bharti Airtel’s value chain is comparable to that of Safaricom, with one notable exception. The sales segment relies more on the affordability of the services, which is achieved through the implementation of the “Minutes Factory” business model. The said strategy ensures the lowest cost of voice communication, thus ensuring the strong attractiveness of the service. In addition, the company is well-represented in 20 countries across Asia and Africa. For a large-scale communication provider, such size means the involvement of economies of scale that, in turn, ensures a high-profit margin without the need to raise prices. It is worth mentioning that the company is strongly oriented at the domestic market similar to Safaricom.

However, since it is based in India, its primary focus does not involve African countries, undermining its appeal compared to Kenya-oriented Safaricom. In addition, its representation on the continent is currently below 25%, which suggests a somewhat weaker position in the market. Although it cannot be considered a major weakness, its effect can add to the overall involvement of at least a small segment of the audience. The services offered by Airtel in Kenya include the Kopa Credo, a mobile call crediting system that increases affordability, insurance that covers certain models of iPhones, and a Catholic portal that contains religious information for its customers and is accessible through the provider’s internal network (“Services”). However, there is no indication of an area-specific technological or human resource strategy that can be considered an advantage. Therefore, we can conclude that financial attractiveness remains the strongest link in Airtel’s value chain while Safaricom has several marketing strategies that emphasize customers’ cultural values.

Mission and Vision Statements

Safaricom does not explicitly state its vision and mission. Nevertheless, it can be derived from the strategy of their brand. In particular, the strategy mentions transforming lives as the core mission of the company (“Our Strategy”). The primary approach to reaching the intended goal is through interaction with the customers, understanding their needs, and delivering relevant solutions that offer value unsurpassed by their rivals. Notably, the description is not limited to the clients and lists other stakeholders such as business partners, employees, policymakers and regulators, the society, and even future generations (“Our Strategy”). The latter suggests that the healthy and profitable community, as well as the state of Kenyan society, on the whole, is included in the company’s vision. It also suggests that corporate integrity and accountability are present in the vision statement. It should also be mentioned that the means of reaching the formulated mission include the democratization of data (e.g. improvement of access to the information on the Internet), delighting the customers (ensuring the superior level of satisfaction and commitment), and the YOLO program that provides focus on younger population in order to facilitate support and thus increase the sustainability of the society in the long term.

Airtel’s Kenyan department does not feature a unique mission and vision statements, which allows us to assume that it utilizes the global mission and vision of the company. The former is stated briefly as “hunger to win customers for life” (“Airtel’s Mission, Vision, and Values”). The vision is focused on the enrichment of the lives of Airtel’s customers, although the sole approach mentioned in the vision statement is through providing an exceptional experience and, by extension, winning long-lasting loyalty and commitment. It can be plainly seen that the statements do not mention other stakeholders other than the clients and provide only three approaches for their facilitation: high responsiveness to the customers’ needs and desires (being “alive”), recognition of the diversity of the target audience and adoption to the unique expectations by embracing change (being “inclusive”), and empathizing with the feelings and attitudes of the customers by employing respect, humanity, and honesty (being “respectful”) (“Airtel’s Mission, Vision, and Values”). By looking at the information above it becomes clear that Airtel values its customers and attempts to address their needs and expectations, but the ultimate goal of this approach is customer loyalty rather than broader recognition of social and cultural responsibilities.

Strategy Evaluation

Safaricom’s current strategy of innovation and technological superiority coupled with cultural and social awareness is aligned well with the mission and vision statements identified above. Most notably, the aspect of understanding both voiced and unvoiced needs of customers can be traced as a motive behind the Niko na Safaricom campaign, which holds customer loyalty stimulation and customer turnover reduction as its main goals. In other words, the company takes proactive stance towards meeting the expectations of their audience. The fact that it was voted as the most valuable brand in Kenya in 2012 serves as a confirmation of the campaign’s success and, by extension, as a benchmark in assessment of vision compliance.

Another notable area of that is identified as one of the company’s strengths and can be isolated as a component of its vision is the orientation towards the cultural needs and values of the Kenyan population. The ability to appeal to the broader concept of well-being of the community rather than a focus on customer retention allows for a more favorable response from the Kenyans. The part of the strategy that acknowledges the specifics of younger audiences not only serves as a crucial component of the corporate social responsibility program but also facilitates long-term support for the economic feasibility of the environment and, by extension, contributes to the buying power of the next generation of customers. Besides, such approach addresses the identified threats of the industry associated with the economic and social landscape of the country. More specifically, the orientation toward the needs of the community and enhancement of the information channels can be thought of as adding value to the overall economic capacity of the country. Aside from the direct benefits, they are expected to eventually alleviate the economic instability, decrease the crime rate that plagues Kenya, and stabilizes its financial state.

Airtel’s strategy is also evidently aligned with its vision and mission statements. As was said above, the company’s most prominent strength is its pricing scheme maintained through a unique business model. Such approach allows decreasing the cost of the services and products without compromising the profit margin and, thanks to this, maintaining the competitive advantage. Due to this fact, Airtel currently offers the Internet and mobile access which supersedes those of Safaricom in terms of speed, traffic volume, band breadth, and price (Sudi). Considering the current state of economic recovery following the global recession and challenging conditions caused by the natural disasters, it is tempting to consider Airtel’s situation as advantageous. However, being an international company, it does not prioritize the interests of the community, focusing instead on satisfying specific interests of the target audience.

It should be pointed out that this weakness cannot be considered a misalignment with the company’s strategy since neither mission nor vision list community needs as being within the priorities. The vision does mention enrichment of the customers’ lives through exceptional experience, which is fulfilled by the variety and quality of the provided services. It is also worth acknowledging that it addresses the diversity of the population and provides cultural incentives, such as the Catholic portal freely accessible through the internal network. Nevertheless, Airtel’s strategy lacks breadth in addressing the needs of the community, which can be viewed as a reason behind its gradually declining market share (Mohammed). Thus, we can conclude that both companies show evidence of exploiting their strengths and following their identified mission and vision statements. However, Safaricom’s strategy delivers greater value to Kenyan population in the long run, while Airtel’s focus on accessibility and diversity is insufficient for maintaining competitive advantage.

Works Cited

Airtel, Web.

Hitt, Michael, et al. Strategic Management Cases: Competitiveness and Globalization. Cengage Learning, 2012.

Mohammed, Omar. Quartz, 2015, Web.

“Our Strategy.” Safaricom, Web.

“Services.” Airtel Kenya, Web.

Sudi, Dan. Tuko, 2016, Web.

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