OPERATIONS MANAGEMENT STRATEGIES AND MOBILE

PHONE COMPANIES IN KENYA: A COMPARATIVE STUDY OF

SAFARICOM AND AIRTEL KENYA

BY

KIGO CATHERINE WANJIKU

A RESEARCH PROJECT SUBMITTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
A DEGREE IN MASTER OF BUSINESS ADMINISTRATION,
SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI

NOVEMBER, 2015
 DECLARATION
This research project is my original work and has not been presented for examination or
award in any other University.

Signature………………………… Date………………………………..…

Catherine Wanjiku Kigo,

D61/79353/2012

This research project has been submitted for presentation with my approval as the
University Supervisor.

Supervisor’s Signature…………………………. Date…………………………………

Dr. X. N. Iraki

Lecturer, University of Nairobi

ii
 DEDICATION
This research project is dedicated to my family for love, support and encouragement.

iii
 ACKNOWLEDGEMENTS
I would like to acknowledge the support from the lecturers in the school of business,
University of Nairobi and in particular acknowledge the support given by my supervisor,
Dr. XN Iraki, for taking me through the research process from proposal writing to
presentation and through to analysis and conclusions. His skillful guidance, constructive
criticism, patience and suggestions supported the efforts to get this research project
successfully completed.

I’m grateful to all the respondents who sacrificed their precious time to respond to the
study questionnaire. I’m also gratitude to the Almighty God for the free provision of care,
health, and strength He has accorded me. I’m deeply my MBA colleagues and all those
whose who supported me in one way or another, may our dear Lord bless you!

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 TABLE OF CONTENTS
DECLARATION............................................................................................................... ii
DEDICATION.................................................................................................................. iii
ACKNOWLEDGEMENTS ............................................................................................ iv
ABBREVIATIONS AND ACRONYMS ....................................................................... vii
LIST OF FIGURES ....................................................................................................... viii
LIST OF TABLES ........................................................................................................... ix
ABSTRACT ....................................................................................................................... x
CHAPTER ONE: INTRODUCTION ............................................................................. 1
1.1 Background of Study .................................................................................................... 1
1.1.1 Operation Management .......................................................................................... 2
1.1.2 Mobile Phone Companies in Kenya ....................................................................... 4
1.1.3 Safaricom Limited .................................................................................................. 5
1.1.4 Airtel Limited Kenya ............................................................................................. 6
1.1.5 Comparison between Safaricom and Airtel Kenya ................................................ 7
1.2 Research Problem ......................................................................................................... 8
1.3 Research Objective ....................................................................................................... 9
1.3.1 Specific Objectives ................................................................................................. 9
1.4 Value of the Study ........................................................................................................ 9
CHAPTER TWO: LITERATURE REVIEW .............................................................. 11
2.1 Introduction ................................................................................................................. 11
2.2 Theoretical Framework ............................................................................................... 11
2.2.1 Resource Based View Theory .............................................................................. 11
2.2.2 Systems Theory .................................................................................................... 12
2.2.3 Dynamic Capabilities Theory............................................................................... 13
2.3 Telecommunication Industry ...................................................................................... 14
2.4 Operational Strategies ................................................................................................. 15
2.4.1 Differentiation Strategy ........................................................................................ 15
2.4.2 Cost Leadership Strategy ..................................................................................... 16
2.4.3 Supply Network Strategy ..................................................................................... 17
2.4.4 Risk Management Strategy .................................................................................. 18
2.4.5 Capacity Utilization Strategy ............................................................................... 18
2.5 Empirical Review........................................................................................................ 19
2.6 The Future of Telecommunication Industry ............................................................... 20

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2.7 Summary of Literature ................................................................................................ 22
2.8 Conceptual Framework ............................................................................................... 22
CHAPTER THREE: RESEARCH METHODOLOGY ............................................. 24
3.1 Introduction ................................................................................................................. 24
3.2 Research Design.......................................................................................................... 24
3.3 Population of the Study............................................................................................... 24
3.4 Sample Design ............................................................................................................ 24
3.5 Data Collection ........................................................................................................... 25
3.6 Data Analysis .............................................................................................................. 25
CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION ................ 27
4.1 Introduction ................................................................................................................. 27
4.2 Operation Management Strategies .............................................................................. 27
4.2.1 Product differentiation.......................................................................................... 27
2.2.2 Cost Leadership Strategy ..................................................................................... 29
4.2.3 Supply Network Strategy ..................................................................................... 30
4.2.4 Risk Management Strategy .................................................................................. 31
4.2.5 Capacity Utilization Strategy ............................................................................... 32
4.3 Operation Management Strategies and Organization Performance ............................ 33
4.3.1 Regression Analysis on Operations Management Strategy and Performance ..... 34
4.4 Future of Telecommunication in Kenya ..................................................................... 36
4.5 Discussion of the Findings .......................................................................................... 37
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS .. 41
5.1 Introduction ................................................................................................................. 41
5.2 Summary of the Findings ............................................................................................ 41
5.3 Conclusion .................................................................................................................. 42
5.4 Recommendations ....................................................................................................... 43
5.5 Limitations of the study .............................................................................................. 44
5.5 Suggestions for Further Research ............................................................................... 45
REFERENCES ................................................................................................................ 46
APPENDICES ................................................................................................................. 49
Appendix I: Questionnaire ............................................................................................ 49

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 ABBREVIATIONS AND ACRONYMS
CA : Communications Authority

CAK : Communications Authority of Kenya

CCK : Communication Commission of Kenya

GDP : Gross Domestic Product

vii
 LIST OF FIGURES
Figure 3.1: Conceptual Framework .............................................................................................. 23

viii
 LIST OF TABLES
Table 4.1: Product Differentiation Strategies ............................................................................... 28
Table 4.2: Cost Leadership Strategies .......................................................................................... 30
Table 4.3: Supply Network Strategy............................................................................................. 31
Table 4.4: Risk Management Strategy .......................................................................................... 32
Table 4.5: Operation Management Strategy and Performance ..................................................... 33
Table 4.6: Model Summary .......................................................................................................... 34
Table 4.7: Analysis of the Variance .............................................................................................. 35
Table 4.8: Model Coefficients ...................................................................................................... 36
Table 4.9: Future of Telecommunication Industry ....................................................................... 37

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 ABSTRACT
In the past few years, the mobile industry has grown steadily outperforming other
sections of the Kenya’s economy with an approximate growth rate of 20% annually.
However, the industry is dominated by Safaricom with 67.1 per cent market share. The
other players in the industry that include Airtel and Orange telecom have been struggling
to increase their market share each having 10.8% and 20.2% market shares by end of year
2014. However, Safaricom has continuously innovated and adopted operational strategies
that continue to position the firm on top of increase in completion. In response, Airtel has
also been adopting operational strategies such as outsourcing in order to gain competitive
advantage in market. Though the theories (Stakeholder and Resource Based theory) have
tried to establish the core determinants of the types of strategies implemented in the
mobile service providers, the studies conducted have shown mixed results as to which
management strategies are adopted by organizations. Empirical evidence show that a lot
focus has been given to strategies adopted by the mobile service providers. The studies
however have not given much emphasis on the operation management strategies as most
of the studies have investigated the concept of strategy as a whole. Moreover there is no
study that has adopted a comparative approach to determine the operation management
strategies adopted by Airtel Kenya and Safaricom. This study sought to bridge this gap
by comparing the operational strategies adopted by the firms and whether the strategies
account for differences in performance for the firms. This study adopted descriptive
research design using a comparative approach in obtaining information about operations
management strategies adopted Safaricom and Airtel. The target population of the study
comprised of the operation managers of the shops of both Airtel Kenya and Safaricom
mobile service providers that are located in Nairobi. The study used primary and
secondary data. Primary data will be collected using questionnaires which are chosen due
to them being time saving and convenient for obtaining a wide range of information. Data
was analyzed analyzed using frequencies, mean and standard deviation. Open ended
question on other strategies will be stated and strategies compared between the two firms.
To compare and contrast the operation management strategies among the two firms, the
key operations management strategies were identified for each firm using the means and
compared. Their similarities will be determined using the frequencies and means used.
Multiple regression analysis was used to determine the effect of operations strategy on
organization performance. Statistical Package for Social Sciences (SPSS) was used to
analyze data. The study found that the key strategies adopted by the firms related to
product differentiation, supply network, risk management, capacity utilization and to a
less extent cost leadership strategy. While the firms were found to have related strategies,
the firms differed in the level of adoption of specific strategies. The study also found that
operation management strategies affect performance of the firms. Adoption of superior
operations management results in increased profits in the mobile company, elevated
customer base, influence the effectiveness of the firm’s practices and leads to reduced
operations costs of the mobile company. The study recommended that mobile
telecommunication firms and other firms in other industries to adopt operations
management strategies that are superior in their respective industries and ensure the
management should ensure that their firms are leaders in adoption of most efficient
strategies.

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 CHAPTER ONE: INTRODUCTION

1.1 Background of Study

Organizations are faced with uncertainties in attainment of their objectives and this poses
threat to their success (Crown, 2004). In attempt to encounter these threats, the
organization ought to manage their operations. Over the recent years the nature and
dynamics of operation management systems has changed drastically due to the
advancement in technology. Organizations have been forced to formulate strategies to
cope with the growing frequency and magnitude of changes in technology and
managerial methods (Lewis, 1998).

Operations management strategy refers to the set of decisions related to goals, resources
and operational capabilities of an organization (Hayes, 2005). Through the operation
management strategies, the firm is able to not only conduct its daily operations
efficiently, but also to gain competitive advantage thus improving the profitability of the
firm. Various operation management strategies have been identified by scholars such as
quality products, efficient supply chains, inventory control and cost efficient practices.
The studies done however have shown that the strategies differ from firm to firm
(Bertrand and Fransoo, 2002).

Operation management differs from other areas of management in that it addresses both
the physical and human elements of the organization (Drejer et al, 1998). It highly
influences how the financial performance of the firm is and hence determining the
success of the business. The field of operation management has however been critical due
to lack of plausible grand theories as compared to other more mature disciplines such as
sociology and economics (Amundson, 1998; Meredith, 1993). The available theories
indicate that the stakeholders and the available resources are what greatly determine the
type of operation management strategy put in place by organizations. The resource based
view for example argues that sustained competitive advantage and improved performance
by a firm may be realized by exploiting resources that are valuable, rare, imperfectly
imitable and non-substitutable (Crook, Ketchen, Combs & Todd, 2008).

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The mobile phone industry has in the recent past been growing at a fast rate. Economic
Survey (2015) indicates that the mobile telephone capacity grew by 18.2 per cent from 55
million in 2013 to 65 million in 2014. Despite this growth the mobile penetration is still
low as it only rose by 3.4% between 2013 and 2014 (Economic Survey, 2015). The
mobile telecommunication industry is regulated by the Communication Authority of
Kenya. The industry has few operators which can be attributed to the large initial capital
required to start the mobile phone companies, stiff regulations and high tax regime
pertaining to mobile telephony. The industry is faced with stiff competition with the few
service providers yearning to gain the upper hand in market share. So as to strive in the
competitive market, the mobile phone providers are forced to evaluate their operation
management through formulation of strategies. This study aims to shed more light into
these operation management strategies by focusing on the comparative operation
management strategies of the two leading mobile service providers in Kenya; Safaricom
and Airtel Kenya.

1.1.1 Operation Management

Operation management refers to a transformation of how the firm conducts its daily
operations (Harry and Schroeder, 2000). Slack et al, (2004) define operation management
as the decisions and actions which set the role, objectives and activities of the running of
a particular organization. Operation management goes hand in hand with operation
management strategies; which are strategies put in place so as to ensure the operation
management succeeds in playing the role it was intended for. Mintzberg & Waters (1985)
view operations management strategy as a pattern, implying a consistency in strategic
decisions and actions over time. Slack and Lewis (2011) further defines operation
management strategies as a chain factors which facilitate the process of conversion of a
firms' input into output.

Strategic management is one of subjects under discussion and increasingly attractive

fields of development management. This is attributed to the fact that through strategic
operation management, the management of the firm is able to position and relate the
organization to its environment in a way that it will continue its success and secure the
firm's future operations (Jorfi and Jorfi, 2011). For long various operation management

2
topics have emerged such as aggregate planning, inventory control, material requirement
planning, scheduling, and quality control have been examined by quantitative modeling
and simulation (Bertrand & Fransoo, 2002). Thus the raise in concern the benefits
assumed to be brought out by operation management strategies. Slack and Lewis, (2011)
argue that through operation strategy the firm is able to make appropriate decisions and
efficiently use the firm's resources, reducing the firms' operation costs.

Effective operations strategies need to be consistent and contribute to competitive

advantage through; highlighting opportunities for operations to complement the business
strategy, making operations strategy clear to the rest of the organization and provide the
operating capabilities that will be required in the future (Hayes et al., (2005). Conversely
the nature of operation management is not static as it varies from firm to firm depending
on the nature of the products or services of the organization. The success of a firm is
brought about by efficient strategy operations (Islam, and Ali, 2011). Hill (1995) supports
the argument postulating that operation management strategy is enveloped in response to
the environment into which the organization operates.

An appropriate operations strategy is essential to an organization not only as it will

determine the extent to which its business strategy can be implemented, but also as its
operations can be a source of competitive advantage. The efficiency of an operation
management strategy is measured by the performance of operations and the attainment of
the set operation objectives. There are five possible operations performance objectives:
cost, quality, speed, dependability and flexibility (Slack et al., 2004). The objectives are
only realized if the strategies are well formulated and implemented. In addition through
operational management strategies broad policy goals are linked to individual
management actions.

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1.1.2 Mobile Phone Companies in Kenya
The mobile phone industry has changed drastically in the recent past and has portrayed an
upward trend since year 2000 (World Bank, 2012). Initially all the telecommunications in
Kenya were controlled by the state-owned monopoly (Kenya Posts and
Telecommunications Corporation) until 1998 when the Kenyan Parliament passed the
Kenya Telecommunications Act. This lead to diversification of the telecommunication
industry with the licensing of newly privatized companies, Safaricom and Ken Cell (now
Airtel Kenya) were licensed by CCK to provide mobile services. The number of mobile
service providers has increased since then and currently there are three mobile telephone
networks in Kenya namely Safaricom, Airtel, Telkom-Orange (CA, 2015). Due to
increased competition, Essar telecom (Yu mobile) quit the Kenyan mobile phone industry
reducing the firms from four to currently three.

The mobile phone service industry in the Kenya has recorded very highest growth. By
2015, the mobile subscriptions had risen by 7.4 per cent to stand at 33.6 million with a
projected growth rate of 6.8% per annum (Economic survey, 2015). Currently, Safaricom
is the leading mobile network operator in Kenya in terms of revenue and customer base
having over 21.6 million subscribers. Airtel is the second largest with approximately 5.3
million subscribers, followed by Orange-Telkom with 3.4 million subscribers (CCK,
2014).

The mobile phone service providers in Kenya are regulated by the Communications
Authority of Kenya (CA). CA is mandated by law to license all systems and services in
the communications industry, including telecommunications, postal/courier and
broadcasting. The CA executes its mandate along with its establishing Act, The Kenya
Communications Act (No. 2 of 1998) and as amended by the Kenya Communications
(Amendment) Act, 2009. It provides the framework for regulating the communications
sector in Kenya (CA, 2014).

The mobile industry has greatly contributed to the growth of the country’s economy with
a contribution of 7.6% to the GDP having revenue of KES 173.6 billion in year 2015,
registering a 6.9 per cent increase (Economic Survey, 2015). Thus for several years
running, the sector has emerged to be the leading source of government revenue

4
especially through taxation (Gobabo, 2014). The industry is very competitive in terms of
the competitive strategies deployed by the mobile companies. This is evidenced with
frequent advertisings on competitive strategies in the media such as cheaper prices and
diversified product services all in attempt to lure more subscribers. Though the leading
service providers, Airtel Kenya and Safaricom offer similar products and services, they
highly differ in their tariffs, offers and advertising strategies implemented by the firms.

1.1.3 Safaricom Limited

Safaricom Ltd was established in 1993 as a department of Kenya Posts and
Telecommunications Corporation. It was then incorporated on 3 April 1997 under the
Companies Act as a private limited liability company and converted into a public
company with limited liability in May 2002. Safaricom has grown steadily to control over
65% market share in nine years (Safaricom, 2014). Currently Safaricom is global
multibillion company offering pre-paid and postpaid services to over 21.6 million
customers on data, mobile voice and money transfer.

Safaricom has 270,000 retails and 43 shops to ensure adequate distribution of products
and services. In addition to that it offers M-Pesa services and also sells a range of devices
(Safaricom, 2014). The number of subscribers of Safaricom has grown steadily for the
last decade recording a high of 78% of the total market share (CCK, 2014). Safaricom
has strengthened her leadership in the mobile market over the years by adoption of
innovative products, marketing and operational strategies. In addition, Kenya Revenue
Authority named Safaricom as the top tax payer for the 2011/2012 financial year. Over
the years, the company's profits and sales have been increasing due to its innovative
culture and proactive strategies (Safaricom, 2014).

Safaricom was the first company to develop a mobile phone-based money transfer
service, M-Pesa though other companies have emulated the same. The company aims at
diversifying even more in offering services such as managed services in information
technology, which involves providing data storage, software and hardware leasing to
third parties (Gabo, 2014). Safaricom employs over 1500 people mainly stationed in
Nairobi and other big cities like Mombasa, Kisumu, Nakuru and Eldoret in which it
manages retail outlets. Currently, it has nationwide dealerships to ensure customers

5
across the country have access to its products and services (Safaricom, 2014). Having
invested over KES 28.78 billion, Safaricom Limited highly prioritizes its management
and competitive strategies in attempts to retain its dominance in the Mobile Industry
despite the competition faced (Safaricom, 2014).

1.1.4 Airtel Limited Kenya

Airtel Network Kenya Limited was launched in Kenya in 2000 as Kencell and rebranded
to Zain in 2008 and finally Airtel in 2010. These changes in name were occasioned by
changes in ownership of the company. Its current name Airtel Kenya was adopted after
acquisition and rebranding of Zain group by Bharti Airtel Limited, an Indian corporation.
Bharti Airtel limited is leading global telecommunications company with operations in 20
countries across Asia and Africa and has its headquarters in New Delhi. The company is
ranked amongst the top 4 service providers globally. In Kenya however, Airtel Kenya is
currently the second largest in terms of the number of subscribers.

Airtel Kenya offers a wide variety of products ranging from wireless services, mobile
commerce, fixed line services, money transfer and internet solutions (Airtel, 2014). In
addition, the company offers pre-paid and postpaid services, messaging, mobile number
portability services, bill payment services, top ups, and Internet-services. The Quarterly
report by CCK for 2013/2014 indicate that Airtel increased its subscription by 17.6%
showing that it is gaining more popularity among the mobile users.

Though Airtel faces stiff competition from other mobile service providers, specifically
Safaricom, the company has been able to increase it yields over the years. This is not
outstanding to the fact that Airtel has continuously tried to adopt various strategies
including pushing for regulatory change to make the industry more open to completion.
Airtel has also been adopting certain competitive strategies which include strategic
outsourcing and renting of infrastructure, international brand value and industry
economies of scale (Sande, 2014). Also the recent introducing of a mobile internet
service known as Airtel UnlimiNet has greatly influenced the performance of the
company.

6
1.1.5 Comparison between Safaricom and Airtel Kenya
Safaricom and Airtel Kenya compare in respect ownership, industry, services offered and
strategies adopted. Both firms are similar in that they operate in the same industry,
market and offer similar services. Both firms have offer data, voice and wide range of
corporate services. In response to the rise in competition, both firms have diversified their
operations to retailing of mobile phone handsets and partnering with other companies to
additional services including insurance. Both firms have also invested highly on mobile
money infrastructure with the mobile money business being conducted in similar way
with exception on brand names. Since the firms operate in similar industry, they are both
regulated by the Communication Authority of Kenya and subject to similar regulations.

The firms however differ greatly in diverse ways. In respect to ownership, Safaricom is a
public company listed in the Nairobi Securities Exchange. Hence, in addition to
regulation by Communication Authority, the firm is also regulated by the Capital Markets
Authority and Nairobi Securities Exchange. This is contrary to Airtel Kenya which is a
private company owned by Bharti Airtel (an Indian firm). This therefore means that
Airtel is expected to be more flexible since it is subject to lesser regulation than
Safaricom.

The firms also differ in market share with Safaricom dominating the mobile
telecommunication industry. While the two firms had a three years difference in entry to
the market (Safaricom 1997, Kencel 2000), the rate at which the firms gathered market
share can be attributed to the strategy the firms adopted. Airtel (then Kencel) targeted the
top market clientele while Safaricom developed products and services targeting the mass
market. Change in ownership of Airtel over years also continued to influence the market
share of both firms.

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1.2 Research Problem
In the past few years, the mobile industry has grown steadily outperforming other
sections of the Kenya’s economy with an approximate growth rate of 20% annually
(World Bank Economic Update, 2010). However, the industry is dominated by Safaricom
with 67.1 per cent market share (CA, 2015). The other players in the industry that include
Airtel and Orange telecom have been struggling to increase their market share each
having 10.8% and 20.2% market shares by end of year 2014 . However, Safaricom has
continuously innovated and adopted operational strategies that continue to position the
firm on top of increase in completion. In response, Airtel has also been adopting
operational strategies such as outsourcing in order to gain competitive advantage in
market. This is in line with Jorfi and Jorfi (2011) argument that firms ought to carefully
evaluate their operation management strategies to remain competitive.

Though the theories (Stakeholder and Resource Based theory) have tried to establish the
core determinants of the types of strategies implemented in the mobile service providers,
the studies conducted have shown mixed results as to which management strategies are
adopted by organizations. Ochako (2007), who investigated the strategic issue
management practices by mobile telephone companies operating in Kenya, a case of
Safaricom limited and established that in response to competitive environment,
Safaricom adopted the 3 porter's generic strategies among others. Similarly Wambua,
(2014) conducted a study on the relationship between operations strategy and business
performance in the mobile service providers in Kenya. The study established various
operation strategies to be cost, quality, flexibility and speed of provision of services. This
is line with the findings of Kapto and Njeru (2014) and Wanjiru, (2010). In addition
Michieka (2008) studied the application of competitive strategies to the challenges of
increased competition faced by Safaricom airtime dealers in Nairobi Central Business
District and found that various strategies have been applied such as expansion,
diversification, corporate social responsibilities, and joint ventures among others. On the
contrary Aila et al (2015) conducted a study on effective management of strategic issues
in the Insurance Industry, Kenya and found out that most insurance companies in Kenya
had strategic issues affecting their operations due to the strategies kept in place being not
diversified.

8
These studies show that a lot focus has been given to strategies adopted by the mobile
service providers. The studies however have not given much emphasis on the operation
management strategies as most of the studies have investigated the concept of strategy as
a whole. Moreover there is no study that has adopted a comparative approach to
determine the operation management strategies adopted by Airtel Kenya and Safaricom.
This study therefore sought to bridge this gap by comparing the operational strategies
adopted by the firms and whether the strategies account for differences in performance
for the firms. The study sought to answer the research questions; how different are the
operation management strategies put in place by Safaricom and Airtel Kenya?

1.3 Research Objective

The general objective of this study was to compare the operation management strategies
adopted by Safaricom and Airtel Kenya.

1.3.1 Specific Objectives

The specific objectives of the study were;

i. To identify the key operation strategies adopted by Safaricom and Airtel Kenya.
ii. To compare and contrast the operation management strategies among the two
firms.
iii. To determine the relationship between the operation management strategies
adopted and the firm performance.
iv. To evaluate the future of the telecommunication industry in Kenya.

1.4 Value of the Study

The findings of this study are beneficial to the management team of Safaricom and Airtel
Kenya. The findings have highlighted the operation management strategies in the firms.
Due to the study being comparative in nature, the management of both the mobile service
providers are able to compare their operation management strategies. This will enable
them identify gaps in their operation management strategies and through which they may
enhance operation performance.

9
The findings of this study are of great benefit to policy makers. Information that was
obtained from the study has provide information that the Ministry of Information and
Communication and Communications Authority of Kenya can use to assess and improve
implementation of the registration and regulation of the telecommunication industry that
is core towards achieving Vision 2030 in Kenya.

The findings of this study intend to make a significant contribution to the known
knowledge on operation management strategies. Academicians and researchers are able
to find information on operation management that would assist in addressing some of the
gaps that exist in this area. In addition the study form guideline for future researches that
will be conducted on operation management strategies.

10
 CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction
This chapter reviews the existing theoretical and empirical literature on operation
management strategies. The chapter reviews different context of the study and the
empirical evidence relating to the study. The chapter ends with summary of the literature,
an overview of the research gap and the conceptual framework.

2.2 Theoretical Framework

This study was guided by the following theories, resource based theory, systems theory
and dynamic capability theory. These theories as discussed below gave the theoretical
background in explaining the study variables.

2.2.1 Resource Based View Theory

Resource Based View Theory as proposed by Wernefelt (1984). The theory holds that the
organization’s resources determine the nature of organization's practices. The theory tries
to explain the relationship that exists between business operations and the resources of a
firm (Hoffer and Schendel, 1978). According to the theory, for any business operation to
be undertaken, the company resources ought to be carefully evaluated. These resources
include; human resources, physical resources, capabilities, the financial resources as well
as the intangible resources (Barney, 1991; Wenerfelt, 1984).

Resource Based View Theory also holds that firms with abundant resources are more
likely to perform better than the firms with unlimited resources. However so as to gain
competitive advantage, the management should ensure proper evaluation and utilization
of the available resources so as to suit the company’s needs. A resource is considered
strategic if it is valuable, not substitutable, rare or specific and inimitable in order to
contribute to improving the performance of the firm (Karimi, 2014).

11
Though Resource Based theory is critiqued by various scholars who argue that the firm's
resources is not a great strategy in gaining competitive advantage as the resources may be
replicated by other its competitors (Thompson et. al, 2007), this study finds the theory of
importance. It is important to the study in that it relates the major determinant of the type
of operation management strategies put in place by the mobile banking companies to be
the available resources. Thus if the firm has the appropriate resources, it’s more likely to
have well placed operation management strategies. The resources form the basis of power
and dominance of organizations (Scott, 2003).

Similarly, the theory's implication to the study is that the strategies put in place by
Safaricom and Airtel will be highly determined by the available resources. This is
attributed to the fact that a firm cannot implement an intended strategy if it does not have
the required strategies. Thus the strategies available in the mobile phone companies are
based on the resources available in the firms. Therefore the mobile phone companies
ought to carefully analyze the available resources so as their strategies to achieve the
intended purposes and gain competitive advantages.

2.2.2 Systems Theory

The Systems Theory was initially proposed by Ludwig, (1940) and later advanced by
Rosh Ashby (1956) and has since then been modified and used in various disciplines.
Systems theory is a theory of business management that explains the influence of the
external environment to the business. The theory tries to describe the complex
relationships between people, tasks, and technologies and helps us to see how these can
be used to enhance organizational performance (Pasmore and Sherwood, 1978).

The theory holds that the business is a system which is influenced by the external factors,
which maybe other businesses operating in the same industry. The external businesses
highly determine the type of strategies put in place by the firm. This is due to the fact that
in order for a firm to gain competitive advantage, it has to evaluate the strategies put in
place by its rivals, how to overcome them and even formulate better strategies (Karimi,
2014). This indicates that organizations exist in situations whereby they have
interdependence with one another. Therefore the organization’s decisions will be
predetermined by the type of external pressure on the firm.

12
Hence basing argument on this theory, the type of operation management strategies
adopted by a mobile phone services provider, is based on the type of strategies put in
place by other mobile phone providers. This is seen whereby if a rival firm introduces a
new strategy in market, the firm has to come up with counter strategies to limit the
competitive advantage. The Systems Theory comes in handy in explaining the reason
behind the high competition in the mobile phone industry and also in explaining the
reason behind the similarities of operation management strategies thus adopted by the
study in evaluating the operation management strategies in Mobile Phone Service
providers

2.2.3 Dynamic Capabilities Theory

The Dynamic Capabilities Theory was introduced by Teece and Pisano (1994) as an
extension of the Resource Based Theory. Dynamic Capability refers to the specificity of
certain resources to firms and are not easily imitated. Dynamic capabilities theory
examines how firms integrate, build and reconfigure their internal and external firm-
specific competencies into competencies that match their turbulent environment (Teese,
Pisano and Shuen, 1997). In essence the Dynamic Capabilities Theory tries to make use
of competences that are unique to firms to gain competitive advantage and explains how
these competences are developed, deployed and protected (Teece et al., 1997).

The theory holds that firms with greater dynamic capabilities will outperform the firms
with smaller dynamic capabilities. Additionally, the theory focuses on how firms use
dynamic capabilities so as to gain competitive advantage by responding to and creating
appropriate environmental changes. Thus according to this theory, the firm with a greater
dynamic capability is more likely to have more advanced strategies put in place.
Safaricom which is larger than Airtel is theorized to have an upper hand in gaining the
competitive advantage as compared to Airtel. Therefore what matters most is not the
available resources but the uniqueness of the resources and how well they are integrated.

13
2.3 Telecommunication Industry
Telecommunication refers to the exchange of information between two entities by the use
of electric signals, cables or electromagnetic waves. Telecommunications is one of the
fastest growing industries in the world as it is even expected to have more mobile
subscriptions than the global population by the end of year 2020 (Singh, 2014). Globally,
based on their large market shares and profits the leading telecommunication industries
include; Telstra, Nippon Telegraph & Tel, America Movil, Deutsche Telekom,
Telefonica, Soft Bank Corp, Vodafone, AT&T Inc., China Mobile and Verison
Communications (Telecommunications Survey, 2014).

In Kenya however the telecommunication industry is not extensively diversified as it has

only three major mobile phone companies namely, Safaricom, Airtel Kenya and Orange
Telkom of which Safaricom and Airtel Kenya are the leading companies. Since 2000, the
sector has outperformed all other players in the Kenyan economy, growing on average by
approximately 20% annually (World Bank Economic Update, 2010). The sector is of
importance to not only the economy due to the large revenue it remits, but also to the
improvement of the live hood of the citizens as it facilitates in the day to day operations
and enhances the operations of most businesses.

The telecommunication is unique with firms in the industry imitating the strategies
adopted by other firms. It is different from other industries in terms of regulation and the
future of the industry. While it may be easy for the firms to enter other industries like
manufacturing, the capital requirement and strict regulation by the government through
the Communication Authority acts as major hindrance to entry. Further, the
telecommunication industry has high growth potential. This is due to the continued
population growth, increased mobile penetration and the need to provide more services
through mobile phones (Singh, 2014).

14
2.4 Operational Strategies
In every open market scenario there exists competition between firms which produce
similar or almost similar products and is a similar case in mobile industry. The
competition is brought about by the rivalry that exists among the mobile companies. This
rivalry has been evidenced by the price wars which each mobile operator aims greatly at
shadowing the others by lowering their prices for voice calls, text and internet access. As
a result, very competitive prices have been fixed by the different operators in and when
one operator adopts a certain strategy, the other firm introduces a related strategy (Sande,
2014). For example, in 2015, when Safaricom introduced 300% bonus promotion to
promote voice calls, Airtel introduced 500% bonus. The competition is intensified even
higher by the frequent advertisements of the mobile companies in the media. In order to
gain competitive advantage against the competitors while still being able to efficiently
manage the firm operations, the management of firms has to formulate efficient
operational strategies. These include but not limited to; differentiation strategy, cost
leadership strategy, supply network strategy and risk management strategy.

2.4.1 Differentiation Strategy

This refers to a situation where a firm yearns to provide goods/ services that have a
distinguishing factor in market (Reilly, 2002). This is attained if the products/ services
provided by the firm are completely different from what other firms are providing. The
key factor for developing differentiation as an effective strategy method is identifying
what exactly will make a particular firm's product unique from the rest, this may be
through; enhancing the quality of service, boosting the image of the firm, graphical reach,
involvement in client organizations, product, enhanced delivery system, and the
marketing approach have been suggested to differentiate a firm (Davidson, 2001).

Through differentiation the firm targets in achieving product and service quality. Bitner,
Booms and Mohr (1994) define service quality as ‘the consumer’s overall impression of
the relative inferiority / superiority of the organization and its services’. Thus the firms'
operation will be managed in that the company's products will have a special sensitivity
by the customers thus help in building the customer loyalty. Through this the firm will be
able to increase its performance greatly. The differentiation strategy is eminent in the

15
mobile phone industry whereby each mobile company aims at making their services and
products unique. To begin with their network each mobile company has taken a different
approach in ensuring the diversity of network coverage. Some focus on the quality while
others focus on the geographical coverage.

These companies have also been differentiating their products in terms of packaging and
presentation where each has a distinct color. For example, Safaricom identifies her
products with green, Zain with pink and purple, Orange with color orange and YU with
black, red and green. On the internet service, the firms have differentiated their service by
having the fasted internet. While Airtel and Orange have been only offering 2G and 3G
network, Safaricom launched the 4G network. This is irrespective of company like
Orange struggling to implement 3G network in various towns. Additionally, Orange
Telkom has introduced a very affordable phone known as Kaduda phone with Safaricom
and Airtel promoting data enabled phones in attempt to grow their data market.
Safaricom also introduced of late has been running a 300% on airtime while Airtel
introduced 500% bonus airtime. All these are in attempts to make their products unique
and boost customer loyalty.

2.4.2 Cost Leadership Strategy

Cost Leadership is one of Porter's generic strategy which focuses on a firm gaining
competitive advantage through providing services/products of a lower cost as compared
to other firms (Malburg, 2000). The lower costs of the products/ services are
hypothesized to lure more customers thus increasing the profitability. So as to gain cost
advantage, the firm has to be efficient in production and operations thus reduce operation
costs. The cost leadership strategy comes really hand where the only distinguishing factor
in the market is the cost. A firm that strives to have the lowest cost in the industry offers
its products and services to a broad market at the lowest prices. Cost Leadership Strategy
may however cause the firm to incur additional costs in operations and this may reduce
the profitability (Malburg, 2000).

The mobile phone companies in Kenya have been very keen in reducing the costs of their
operations. The mobile companies adopt various moves to reduce costs on their end for
example operating online to reduce on use of paper and now communication within is

16
thorough emails and not paper, reducing the levels of management which cuts corporate
overhead and having long term contracts with suppliers who are able to supply at low
prices (Sande, 2014). The cost leadership is also achieved through efficient marketing
and distribution of products. This reduction in costs therefore enables the company to be
able to sell their products and services at low prices to their customer.

2.4.3 Supply Network Strategy

Supply network strategy relates to the process of purchasing and logistics in firms. This
entails onto how the company is connected in its business operations with customers,
suppliers and the stakeholders (Jorfi and Jorfi, 2011). The supply network highly
determines the operation nature of the firm in that if the supply network is efficient, the
firm will be able to able to obtain goods in time and provide the goods to the customers
whenever needed. All operations need to consider their position in this network, both to
understand how the dynamic forces within the network will affect them, and to decide
what role they wish to play in the network. Due to the supply network being very critical
for the performance of any firm, various new supply network strategies have emerged
such as lean procurement.

Lean procurement as described by Harland et al, (2007) is the demand driven supply
chains require lean procurement methods whose goals are to eliminate waste in all
procurement cycles, prevent shortages, reduce inventory investment and reduce
procurement lead time and cost. Thus, applying lean methods to procurement function
and purchasing activities can dramatically increase a company's performance and profits
the management therefore is of the mandate to ensure that the supply network
management is efficient to cater for all the firms supply's (Jorfi and Jorfi, 2011).In the
telecommunication Industry, the using e-procurement and 5S (sort, straighten, shine,
standardize, and sustain) to enhance the supply has been adopted by most firms. This
ensures the availability of goods and products whenever needed. In the
telecommunication industry, the supply network such as is used so as ensure
maximization of the firm's resources.

17
2.4.4 Risk Management Strategy
Risk Management strategy is concerned onto how the management secures its operation
against risks which might occur. It comprises the activities and actions taken to ensure
that an organization is conscious of the risks it faces, makes informed decisions in
managing these risks, and identifies and harnesses potential opportunities (Comcover,
2008). Some of the operational risks result in an increase in the organizations’ operating
cost while others lead to a decrease in the organization’s revenue for example the loss of
a customer to competition due to poor service. The risk management entails
understanding the nature of the business, identifying and assessing the risks the firm faces
and how to counter this risks (Rejda, 2008).

Risk management is an operation management strategy in that through managing the

risks a firm is likely to encountered, disruptions which would have been caused by an
occurrence of a risk will be prevented or known how to be dealt with thus improving the
operation performance.In the telecommunication industry, various rick management
strategies have been adopted by various mobile service providers. This includes;
developing products that meet different needs of the different customer segments to avoid
the risk of financial loss, having insurance arrangements with an insurance company
where insurance premiums are paid regularly and insuring all goods in transit and
undertaking insurance cover against any unpredictable (Okonjo, 2014).

2.4.5 Capacity Utilization Strategy

Capacity utilization is a measure of the extent to which the productive capacity of a
business is being used (Oxford, 2009). It can be defined as the percentage of the total
capacity achieved at a particular time and is always measured in production units.
Capacity strategy is attained based on the efficient use of the available infrastructure and
resources of the company. This ranges from the production to the supply sections of the
firms which ensure efficient running of the firm's practices. The capacity utilization is
important for the thriving of the firm in that it is a determinant of the productive
efficiency of a particular company. Additionally, the capacity utilization drastically
reduces the unit costs thus enabling the firm to gain competitive advantage against the
rivals.

18
As such the capacity utilization can be achieved through minimizing the production
activities. In the telecommunication industry, the capacity utilization is eminent whereby
the mobile companies yearn to improve their financial performance through utilization of
the available resources. For example upon the dissolution of Essar, Airtel acquired its
subscribers whereas Safaricom acquired its infrastructure and this greatly enhances their
output (CCK, 2014). Therefore a company that is able to effectively utilize its capacity is
more likely to perform better hence gaining competitive advantage.

2.5 Empirical Review

The operation management strategies have been linked to be a key tool in the success of
the mobile provider companies (Sande, 2014). The strategies not only make the firms
adaptable to market pressures, but also enhance the firm's internal capabilities hence
making it flexible. This section therefore reviews the studies done on the area of interest
and identifies the gaps the study will bridge.

Michieka (2008) studied the application of competitive strategies to the challenges of

increased competition faced by Safaricom airtime dealers in Nairobi Central Business
District. The study found that various strategies have been applied such as expansion,
diversification, corporate social responsibilities, and joint ventures among others. The
study however focused entirely on Safaricom and this could be the actual representation
in other mobile companies such as Airtel and Telkom Kenya.

Wanjiru, (2010) investigated competitive strategies adopted by mobile phone companies

in Kenya. The study found that mobile phone companies had adopted several strategies
which include cost leadership, differentiation, marketing strategies, diversification,
expansion, technology strategies, customer service and corporate social responsibly and
according to the respondents, all of them have been successful to their companies. The
study was able to identify the strategies generally without comparison of the strategies
adopted by each individual company. This study aims at shedding more light to this.

19
Kapto and Njeru (2014) conducted a study on the strategies adopted by mobile phone
companies in Kenya to gain competitive advantage. The study found out that there
existed a strong relationship between strategies adopted by the mobile phone companies
to gain competitive advantage, cost leadership, differentiation and focus also positively
affected competitiveness. Therefore the purpose of adopting competitive strategies is to
enable institutions promote healthy competition. Though the study was able to establish
the effect the strategies have in gaining competitive advantages, it did not
comprehensively compare the competitive strategies adopted by the leading mobile
service providers; Safaricom and Airtel Kenya.

Wambua, (2014) conducted a study on the relationship between operations strategy and
business performance in the mobile service providers in Kenya. The study established
that operations strategy was used to a great extent in all the four mobile service providers
in Kenya. It was further realized that cost, quality, flexibility and speed of provision of
services affected business performance to a great extent. The study gave much
consideration to the effect the strategies implemented by the mobile companies have on
the performance other than the available strategies in each firm. This study aims at filling
this gap through comparing the operation management strategies in Safaricom and Airtel
Kenya.

2.6 The Future of Telecommunication Industry

With millions of additional investments flowing in and subscriber numbers rising across
the country, the telecommunication sector has surpassed the point of being of high
potential to the point of high growth (Communication Review, 2012). The
telecommunications market is constantly expanding due to liberalization, government
support and support and product and service innovation and this expansion is just the
beginning as much more is expected in the future. Mobile money service has become
more relevant and its importance is expected to be immense. The use of mobile payment
has mostly been for personal needs but now constantly being used more for payment of

20
goods and service. This is expected to increase telecommunication revenues and
importance of the industry.

The future of the telecommunication industry, though it may not easily pre-determined
lies greatly on ICT and advancements in the internet technologies. The Global Internet
Speed Report released in March 2012 ranked Kenya after Ghana as the second country in
Africa with the highest internet speed. The internet was introduced in Kenya in 1993, and
the first commercial internet service provider (ISP) began operating in 1995 and has
really improved since then (Francisca, 2000). Currently the mobile service providers
offer broadband services with 2-G, 3-G and even recently 4-G internet speeds and this
has greatly boosted and the technological improvements in telecommunications as
operations are now faster and more enhanced. Moreover there is provision of wireless
internet connection which enables users to use internet connections in there gadgets
conveniently without the use of cables. As the internet facilities are still emerging of the
day, much is to be expected in the future.

In spite of surveillance of the internet and mobile phones becoming a growing concern in
Kenya over the past years as due to the increase in cyber security threats (CCK, 2012),
the telecommunication industry has improved over the years and is yet to improve more.
The number of mobile companies has also increased with the recent introduction of a new
mobile service provider, Equitel. Thus with the advancement in ICT and technology, the
future of the telecommunication industry, despite being very competitive which calls for
continuous strategic competitive analysis by players in the industry is to be expected to
provide much more in future in attainment of Vision 2030.

21
2.7 Summary of Literature
The telecommunication industry in Kenya is a vital aspect of the Kenyan economy and
has advanced greatly over the years and much is to be expected in future. The sector is
however highly competitive as there are few mobile service providers. These necessities
the mobile phone companies to pay great attention to their firm operations if they are to
obtain profits of which operational strategies have been identified to come in handy.

Empirical literature gives much focus on the strategies adopted by the mobile companies
as evidenced by the numerous studies in the sector and there seems to be no consensus as
to the strategies to be implemented by firms. The available literature also does not
establish the relationship which exists between operational strategies and performance.
Additionally there are no studies done on operation management strategies especially in
the mobile service industry comparing the two leading service providers; Safaricom and
Airtel. This study intends to address this knowledge gap that exists by establishing and
comparing the operation management strategies adopted by Safaricom and Airtel, Kenya.

2.8 Conceptual Framework

The conceptual framework as illustrated by figure 3.1 shows how the independent
variable (financial performance) is affected by the dependent variables (cost leadership
strategy, differentiation strategy, capacity utilization strategy, risk management strategy
and supply network strategy). The operation strategies put in place by the mobile
companies if effectively implemented and managed will enable the firm gain competitive
advantage against the rivals and thus improving the financial performance. Thus there
exists a direct link between the dependent and independent variables of the study.

22
Figure 3.1: Conceptual Framework

Independent Variable Dependent Variables

Cost Leadership Strategy

Differentiation Strategy
Financial Performance
 Profitability
 Increase in customer base levels
 Reduced operation costs
Capacity Utilization  Effective firm practices

Risk Management Strategy

Source: Researcher, 2015

23
 CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction
This chapter presents the research methodology that the researcher employed so as to
facilitate achievement of the study’s objectives. The chapter consists of the research
design, population, sample population, data collection method and finalizes with the data
analysis.

3.2 Research Design

The research design represents the scheme or outline adopted by the researcher so as to
obtain answers to the particular research problem of the study. This study adopted
descriptive research design using a comparative approach in obtaining information about
operations management strategies adopted Safaricom and Airtel. This research design
was the most appropriate as it aided in determining the way things are as it helps in
establishing the current status of the population under study while enabling close
association between the variables (Mugenda and Mugenda, 2003).

3.3 Population of the Study

The target population of this study comprised of the operation managers of the shops of
both Airtel Kenya and Safaricom mobile service providers that are located in Nairobi.
This target population is chosen since it is nearer to the researcher and thus collection and
follow up of the data will be easier. As such Safaricom has 22 shops (Safaricom, 2015)
and Airtel has 5 shops in Nairobi (Airtel). These 27 shops will form the study target
population.

3.4 Sample Design

Due to the population being small and manageable, a census approach was used where
the whole target population was studied. This is in line with Mugenda and Mugenda
(2003) argument that if the population is small, the whole population is to be undertaken
so as to allow obtaining of valid and reasonable information. Thus a census approach was

24
undertaken so as to cover all the 27 operation managers of the two mobile service
providers’ shops.

3.5 Data Collection

The study used primary and secondary data. Primary data was collected using
questionnaires which are chosen due to them being time saving and convenient for
obtaining a wide range of information. The questionnaires consisted of both close ended
and open ended questions which are useful in obtaining detailed information from the
respondents. In order to cover the research objectives, the questionnaires was subdivided
into section A on the general information of the respondents, section B on the operational
strategies put in place by the firm whereas and section C on the operation strategy and
performance and section D on the future of telecommunication industry. The
questionnaires were administered through a drop and pick method so as to give the
respondents an ample time in filling them. The questionnaire to be used in this study is
shown in Appendix I.

Secondary data collected related to the performance measure of the firm. Both financial
and non financial measure data was collected. Financial data collected included revenue,
assets and return on assets while non financial measures were the number of subscribers.
Five years data for the period 2010 to 2014 was collected from the company financial
publications and communication authority publications.

3.6 Data Analysis

Data analysis refers to the process of obtaining meaning information from the collected
data (Kombo & Tramp, 2006). Before processing the responses, the completed
questionnaires were checked for completeness and comprehensibility to ensure
consistency. The data was then edited, classified and coded.

To identify the key operation strategies adopted by Safaricom and Airtel Kenya, data
collected was analyzed using frequencies, mean and standard deviation. Both open and
closed ended question on operations strategies were used.

25
To compare and contrast the operation management strategies among the two firms, the
key operations management strategies were identified for each firm using the means and
compared. Their similarities were determined using the frequencies and means used.

To determine the relationship between operations management strategies and

organization strategies, multiple regressions and hypothesis testing were used. The null
hypothesis that there is no relationship between operation management and performance
was tested at 95% confident level using the t-test. Operations management score was
achieved by determining the score of each firm from the questionnaires. The findings
were also assessed from the responses on the extent to which operations management
strategies affect performance.

To evaluate the future of the telecommunication industry in Kenya, various statements

were evaluated using means, frequencies and standard deviation. This provided
information of the expected future of the telecommunication industry.

26
 CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION

4.1 Introduction
This chapter contains detailed research findings and discussion on operations strategies
adopted by Airtel Kenya and Safaricom. The data was analyzed in reference to the
research objectives and findings presented using tables. The data collected was analyzed
and interpreted in line with the objective of the study mentioned in chapter one which
was to compare the operation management strategies adopted by Safaricom and Airtel
Kenya.

4.2 Operation Management Strategies

This part sought to determine the strategies put establish the various operations
management strategies put in place by the mobile operators. Further, the strategies were
compared using means to differentiate them between firms.

4.2.1 Product differentiation

The study sought to determine the extent to compare product differentiation between
Safaricom and Airtel. The respondents were required to indicate by ticking against a
number appropriate with regard to the operations strategy employed by your company
using a scale of 1 to 5 where 1 was to not extent, 2, small extent, 3 to moderate extent, 4
to great extent and 5 to very great extent.

To a very large extent, respondents indicated that Safaricom had adopted innovative
culture that encourages adoption of innovative market strategies while Airtel had adopted
innovative culture that encourages adoption of innovative market strategies to a moderate
extent as shown in Table 4.1. The bigger standard deviation on Safaricom than Airtel
implies that the respondents varied more on the strategy adopted by Safaricom. Hence, in
respect of culture, Safaricom has adopted more innovative culture than Airtel. To a great
extent, for both companies, the respondents indicated that the companies’ products were
always designed to look completely different in the market. This indicates adoption of
almost similar operation strategy relating to product differentiation.

27
Table 4.1: Product Differentiation Strategies
Company Airtel Safaricom
Differentiation Strategy Mean Std Std Dev
Dev Mean
The company has innovative culture that
encourages continuous adoption of innovative 3.4839 0.2951 4.774 0.6594
market strategies 2
The company products are always designed to
look completely different in the market 3.5806 0.4414 3.935 0.8015
5
The company has leadership product design
aimed at ensuring quality product 2.5806 0.2858 4.871 0.3214
0
Product development is participatory with a
department tasked with sole role of product 4.6452 0.3005 1.548 0.3935
development. 4
Quality of product and services offered is key
consideration by the firm 4.3871 0.3580 4.903 0.2319
2
Products offered by the firms are those
specifically needed by the market 2.2258 0.3887 3.322 0.3794
6
Overall
3.4839 0.3449 3.892 0.4645
5
Source: Research Data (2015)

To a very large extent, Safaricom had adopted leadership product design aimed at
ensuring quality product while Airtel had adopted this strategy to moderate extent. This
means that while both firms were keen on ensuring product quality, Safaricom was found
to be keener on this strategy. To a very great extent, Airtel had product development that
was participatory with a department tasked with sole role of product development while
Safaricom had participatory product development to small extent. This indicates that
Airtel had adopted product participatory strategy more than Safaricom. To a large extent,
both firms had quality of product and services offered as key consideration by the firm
and hence indicating similarity on the strategy.

28
To a small extent, Airtel had products offered specifically needed by the market while
Safaricom had products offered specifically needed by the market to moderate extent.
Overall, Airtel had adopted product differentiation strategies to a moderate extent while
Safaricom had differentiation strategies to a large extent. Hence, Safaricom had adopted
superior product differentiation strategies. These findings compared with those of Sande
(2014) that as a result of increased competition in the industry, as a firm adopts a certain
strategy, the other firm introduces a related strategy.

2.2.2 Cost Leadership Strategy

The study sought to determine the cost leadership strategies applied by Safaricom and
Airtel Kenya. A likert scale of 1 to 5 was used. To a very large extent, respondents
indicated that Airtel runs its operations in most efficient way to reduce operational costs
as presented in Table 4.2. Respondents indicated that Safaricom run its operations in
most efficient to reduce operational costs to a small extent. To a very large extent,
respondents indicated that Airtel had their operational tasks well structured within
departments and sections to ensure efficiency to a very large extent while Safaricom to
small extent.

To a large extent, respondents indicated that Airtel continuously sought innovative ways
to reduce operational costs while Safaricom was to a small extent. Respondents indicated
that Airtel had adopted superior cost management techniques to a large extent while
Safaricom had adopted superior cost management techniques small extent. To a moderate
extent, respondents indicated that Airtel was an operational cost leader in the industry
while Safaricom had adopted cost leadership to a moderate extent too. Overall, Airtel had
cost leadership strategy to large extent while Safaricom had adopted cost leadership
strategies to a small extent. Therefore, Airtel had adopted superior cost leadership
strategy than Safaricom indicating variation on operational strategies adopted by the
firms. The difference in strategies adopted agrees with Ochako (2007) finding that in
response to competitive environment, competitors may adopt similar strategies which
may differ depending on management discretion.

29
Table 4.2: Cost Leadership Strategies
Airtel Safaricom
Cost Leadership Strategy Mean Std Dev Mean Std Dev
The company runs its operations in most 4.6774 0.3548 2.0968 0.4080
efficient way to reduce operational costs
Operational tasks are well structured within 4.7097 0.3365 1.9677 0.3566
departments and sections to ensure
efficiency
The firm is continuously seeking innovative 4.0645 0.4019 2.1290 0.3409
ways to reduce operational costs
The company has adopted superior cost 3.6538 0.1832 2.3548 0.2452
management techniques
The firm is an operational cost leader in the 3.1935 0.6475 2.7419 1.5659
industry
Overall 4.0598 0.3848 2.2581 0.5833
Source: Research Data (2015)

4.2.3 Supply Network Strategy

The study sought to compare the supply network strategies adopted by the firms. To a
large extent, Safaricom had adopted most modern supply chain techniques while Airtel
had adopted modern supply chain to a moderate extent. The company supply chain
network was well defined and structured to ensure efficiency in operations management
to a moderate extent for Airtel and to very large extent for Safaricom. To a large extent
and very large extent for Safaricom and Airtel, the respondents indicated that there was a
department solely tasked with supply chain network. Overall, Safaricom had adopted
supply chain network strategy to a very large extent while and Airtel had adopted supply
chain strategies to a large extent. The results are presented in Table 4.3.

30
Table 4.3: Supply Network Strategy
Airtel Safaricom
Supply Network Strategy Mean Std Dev Mean Std Dev
The firm has adopted most modern supply 3.3226 0.4172 4.3710 0.2760
chain techniques
The company supply chain network is well 3.5938 0.3075 4.6129 0.3833
defined and structured to ensure efficiency
in operations management
There is a department solely tasked with 4.4194 0.3678 4.8355 0.1154
supply chain network
Overall 3.7786 0.3642 4.6065 0.2582
Source: Research Data (2015)

4.2.4 Risk Management Strategy

This part sought to determine the risk management strategies applied by Safaricom and
Airtel. A five point likert scale was used. Both Airtel and Safaricom to a very large extent
were found to recognize and appreciate that their operational strategies were faced by
risks. At Airtel, to a small extent, risks facing operations were analyzed before a strategy
was implemented and preventive measures taken. At Safaricom, to a large extent, risks
facing operations were analyzed before a strategy was implemented and preventive
measures taken.

At both firms, to a very large extent, there was a risk department tasked with
identification and management of risks. To a large extent, Airtel had adopted satisfactory
risk management strategies while Safaricom had adopted satisfactory risk management
strategies. Overall, both Airtel and Safaricom had adopted risk management strategies to
large extent as shown in Table 4.4.

31
Table 4.4: Risk Management Strategy
Airtel Safaricom
Risk Management Strategy Mean Std Mean Std Dev
Dev
The company recognize and appreciate that its 4.6129 0.3324 4.6452 0.3668
operational strategies are faced by risks
Risks facing operations are analyzed before a 2.2258 0.2440 3.6452 0.3553
strategy is implemented and preventive
measures taken
There is a risk department tasked with 4.8065 0.4585 4.9355 0.6028
identification and management of risks
The company has adopted satisfactory risk 4.4839 0.3531 4.6452 0.5398
management strategies
Overall 4.0323 0.3470 4.4677 0.4662
Source: Research Data (2015)

4.2.5 Capacity Utilization Strategy

The study also sought to determine whether the firms were applying capacity utilization
strategies to gain competitive advantage. For both firms, 100% of the respondents
indicated that the firms were applying capacity utilization strategies to gain competitive
advantage. The respondents were also required to state the exact strategies applied. For
Airtel, the respondents indicated that the firm was partnering with other service providers
at a cost to utilize idle capacity at a fee, cheaper pricing where there was idle capacity,
running promotions to ensure full capacity utilizations and decommissioning idle
capacity to reduce operational costs. For Safaricom, the respondents indicated that the
company was utilizing capacity strategy by pricing cheaply where the capacity was not
put to optimum, running promotions and development of products capable of ensuring
optimum use of capacity. The findings on firm strategies compared with those of
Wambua, (2014), Kapto and Njeru (2014) and Wanjiru, (2010) who established that
various operation strategies to be cost, quality, flexibility and speed of provision of
services.

32
4.3 Operation Management Strategies and Organization Performance
The respondents were required to rate the extent operation management strategies
influence the performance of the mobile phone companies using a scale of 1 to 5 where 1
is to not at all, 2, small extent, 3 to moderate extent, 4 to great extent and 5 to very great
extent. To a large extent, the respondents indicated that operation management strategies
had resulted in increased profits in both companies.

For Airtel, the respondents indicated that the operations management strategies adopted
had elevated customer base to a moderate extent while for Safaricom to a large extent.
These findings indicate that operations management strategies have effect on
organization performance. Further, operation management strategies were found to
influences the effectiveness of the firm’s practices to a large extent for Airtel and to a
very large extent for Safaricom. Further, operation management strategies had resulted to
reduced operations costs of the mobile company to a moderate extent for both Airtel and
Safaricom. The respondents were also required to indicate the other ways operation
management strategies had influenced financial performance. The respondents indicated
that the operations strategies had improved customer service, the quality of services
offered by the operators and the number of products offered as presented in Table 4.5.

Table 4.5: Operation Management Strategy and Performance

Airtel Safaricom
Operation management strategies Mean Std Dev Mean Std Dev
The operation management strategies have 4.2079 0.4853 4.2673 0.3975
resulted in increased profits in the mobile
company
The elevated customer base of the mobile 3.2277 0.4565 3.6667 0.4911
company has been contributed greatly by
the operation management strategies
The operation management strategies 4.2871 0.4551 4.6059 0.5519
influences the effectiveness of the firm’s
practices
The operation management strategies result 2.8515 0.4240 3.4851 0.5774
in reduced operations costs of the mobile
company
Overall 3.6436 0.4553 4.0063 0.5045
Source: Research Data (2015)

33
The null hypothesis that there is no relationship between operation management and
performance was tested at 95% confident level using the t-test. Performance was
measured using five years average performance for each firm. Operations management
score was achieved by determining the score of each firm from the questionnaires. Mean
difference in performance was compared with mean difference in the operations
management strategies adopted by both firms. The t value obtained was 4.7304 while the
critical t at 95% (two tailed, degree of freedom 2) was 2.57. This implied that the
computed t was falling on the rejection area and hence null hypothesis that there is no
relationship between operation management and performance was rejected and
alternative hypothesis that there is relationship between operation management and
performance was accepted.

4.3.1 Regression Analysis on Operations Management Strategy and Performance

Multiple regressions were carried out to determine the relationship between various
operations management practices and performance. The results are shown in Table 4.6
below. The coefficient of correlation obtained was 0.7502 which indicates that strategic
management practices have positive and significant effect on performance of the firms.
The coefficient of determination of 0.5628 indicates that operation management
strategies account for 56.28% of performance. The findings agree with those of Islam,
and Ali (2011) who found that the success of a firm is brought about by efficient strategy
operations and hence adoption of superior operations strategies compared to competitors
lead to higher organization performance.

Table 4.6: Model Summary

R R Square Adjusted R Std. Error of the
Square Estimate
0.7502 0.5628 0.4262 0.6540
a. Predictors: (Constant), Cost leadership strategy, supply network, capacity utilization,
risk management, product differentiation
Source: Research Data (2015)

34
The analysis of variance results shown in Table 4.7 indicate that operation management
strategies have a significant effect on performance since the p value of 0.0135 is less than
0.05. This implies that operations management account for a significantly for changes in
organization performance.

Table 4.7: Analysis of the Variance

Sum of df Mean Square F Sig.
Squares
Regression 8.809799 5 1.76196 4.119779 0.013511
Residual 6.842928 21 0.427683
Total 15.65273 26
a. Predictors: (Constant), Cost leadership strategy, supply network, capacity utilization,
risk management, product differentiation
b. Dependent Variable: Company Performance
Source: Research Data (2015)

The model coefficients are shown in Table 4.8 below. However, the p values of all the
specific operations strategies are not significant since they are greater than 0.05. To
ascertain whether there existed multicollinearity between the study predictor variables,
Tolerance and VIF (variance inflation factor) statistics were obtained through SPSS.
Multicollinearity occur where VIFs is greater than 10 while tolerance is less than 0.1. For
all variables VIF statistics were less than 10 and tolerance levels for all variables were
greater than 0.1. Hence, there was no multicollinearity between the independent
variables. This implies that the significance of the model was not out of multicollinearity
but due to operations strategies adopted. The insignificant of the coefficients statistics
implies that operations management strategies singly do not have significant effect on
organization performance.

35
Table 4.8: Model Coefficients
Unstandardize Std. Beta t Sig. Toleranc VIF
d Coefficients Error e
-
0.32
-1.392 1.371 1.01
5
(Constant) 5
Product
1.77 0.09
Differentiatio 0.602 0.339 0.422 0.486 2.059
8 4
n
Supply 0.73 0.47
0.143 0.194 0.158 0.594 1.683
Network 7 2
Risk 1.15 0.26
0.292 0.254 0.261 0.531 1.885
Management 1 7
Capacity 0.12 0.90
0.018 0.143 0.022 0.892 1.122
Utilization 6 1
Cost
1.31 0.20
Leadership 0.328 0.25 0.232 0.87 1.149
1 9
Strategy
a. Dependent Variable: Company Performance
Source: Research Data (2015)

4.4 Future of Telecommunication in Kenya

The respondents were required to rate the expected future of the telecommunication in
Kenya using a scale of 1 to 5. To a very large extent, the respondents indicated that the
telecommunication industry will experience a higher growth rate as compared to the
previous years as shown in Table 4.9. To a small extent, respondents indicated that entry
of new companies to the industry is hardly expected. This could be due to the high entry
barriers in the industry. To a very large extent, competition in telecommunication was
expected to intensify in the future likely due to attractiveness in the industry and demand
from the customers for cheaper and high quality services. The industry was also expected
to be more regulated to a large extent.

In the future to a very large extent, innovations and adoption of superior operational
strategies will dictate performance of telecommunication firms and the industry is
expected continue to play immense role in delivery of diversified services through mobile
services to a large extent. The industry was expected to remain attractive to foreign and
local investors to a small extent. The possibility of future merge of the different mobile
companies remains and the data services provided by the mobile companies is likely to
36
intensify even more to a large extent. To a very extent, mobile companies are expected to
improve the efficiency of the services they provide. The findings on future of the industry
compared with projections of CA (2015).

Table 4.9: Future of Telecommunication Industry

Statement Mean Std Dev
The telecommunication industry will experience a higher growth 4.5960 0.4680
rate as compared to the previous years
Entry of new companies to the industry is hardly expected 2.4604 0.5111
Competition in telecommunication will intensify 4.5298 0.4559
The industry will become more regulated 3.8961 0.4357
Innovations and adoption of superior operational strategies will 4.7179 0.3552
dictate performance
The industry will continue to play immense role in delivery of 3.8515 0.3634
diversified services through mobile services
The industry will remain attractive to foreign and local investors 1.6535 0.3430
There is possibility of future merge of the different mobile 1.7475 0.3240
companies
The data services provided by the mobile companies is likely to 4.1485 0.3558
intensify even more
The mobile companies will improve the efficiency of the services 4.7575 0.3422
they provide
Source: Research Data (2015)

4.5 Discussion of the Findings

The general objective of this study was to compare the operation management strategies
adopted by Safaricom and Airtel Kenya. Notably, these firms are the main players in the
mobile telecommunication industry with big differences in performance. All the study
objectives were achieved as discussed below.

The first specific objective of the study was to identify the key operation strategies
adopted by Safaricom and Airtel Kenya. The key strategies adopted by the firms were
found to relate to product differentiation, supply network, risk management, capacity
utilization and to a less extent cost leadership strategy. These findings compared with
those of Sande (2014) that as a result of increased competition in the industry, as a firm
adopts a certain strategy, the other firm introduces a related strategy. This leads to firms
in a certain industry having closely similar strategies. Further, Ochako (2007) established

37
that in response to competitive environment, Safaricom adopted the 3 porter's generic
strategies among others.

The second specific objective was to compare and contrast the operation management
strategies among the two firms. While the firms were found to have related strategies, the
firms differed in the level of adoption of specific strategies. Airtel was found to have
adopted product differentiation strategies to a moderate extent with a mean of 3.4839 and
standard deviation of 0.3449 while Safaricom had adopted product differentiation
strategies to a large extent with a mean of 3.8925 and standard deviation of 0.4645. Airtel
had adopted cost leadership strategy to large extent (mean of 4.5098) while Safaricom
was found to have adopted cost leadership strategies to a small extent (mean of 2.2581).
To a very large extent, Safaricom had adopted supply chain network strategy (mean of
4.6065) and Airtel had adopted supply network strategy to a large extent (mean of
3.7786). On adoption of risk management strategies, both Airtel and Safaricom had
adopted risk management strategies to a large extent (mean of 4.0323 and 4.4677 for
Airtel and Safaricom respectively).

The study also sought to determine whether the firms were applying capacity utilization
strategies to gain competitive advantage. For both firms, 100% of the respondents
indicated that the firms were applying capacity utilization strategies to gain competitive
advantage. The respondents were also required to state the exact strategies applied. For
Airtel, the respondents indicated that the firm was partnering with other service providers
at a cost to utilize idle capacity at a fee, cheaper pricing where there was idle capacity,
running promotions to ensure full capacity utilizations and decommissioning idle
capacity to reduce operational costs. For Safaricom, the respondents indicated that the
company was utilizing capacity strategy by pricing cheaply where the capacity was not
put to optimum, running promotions and development of products capable of ensuring
optimum use of capacity. The findings on firm strategies compared with those of
Wambua, (2014), Kapto and Njeru (2014) and Wanjiru, (2010) who established that
various operation strategies to be cost, quality, flexibility and speed of provision of
services.

38
The third specific was to determine the relationship between the operation management
strategies adopted and the firm performance. To a large extent, the respondents indicated
that operation management strategies had resulted in increased profits in the mobile
company with a mean of 4.2079 and standard deviation of 0.4853 for Airtel and mean of
4.2673 and standard deviation of 0.3975 for Safaricom. For Airtel, the respondents
indicated that elevated customer base of the mobile company had been contributed
greatly by the operation management strategies (mean of 3.2277 and standard deviation
of 0.4565) while to a large extent for Safaricom with a mean 3.6667 and standard
deviation of 0.4911. Operation management strategies were found to influences the
effectiveness of the firm’s practices to a large extent for Airtel (mean of 4.2871) and to a
very large extent for Safaricom (mean of 4.6059). Further, operation management
strategies had resulted to reduced operations costs of the mobile company to a moderate
extent for both Airtel (mean of 2.8515) and Safaricom (mean of 3.4851).

The null hypothesis that there is no relationship between operation management and
performance was tested at 95% confident level using the t-test. Performance was
measured using five years average performance for each firm. Operations management
will be achieved by determining the score of each firm from the questionnaires. Mean
difference in performance was compared with mean difference in the operations
management strategies adopted by both firms. The t value obtained was 4.7304 while the
critical t at 95% (two tailed, degree of freedom 2) was 2.57. This implied that the
computed t was falling on the rejection area and hence null hypothesis that there is no
relationship between operation management and performance was rejected and
alternative hypothesis that there is relationship between operation management and
performance was accepted.

The same was confirmed by multiple regression analysis where a coefficient of

determination of 0.7502 was obtained. This indicated that strategic management practices
have positive and significant effect on performance of the firms. The coefficient of
determination of 0.5628 indicates that operation management strategies account for
56.28% of performance. The findings agree with those of Islam, and Ali (2011) who
found that the success of a firm is brought about by efficient strategy operations

39
The final objective was to evaluate the future of the telecommunication industry in
Kenya. To a very large extent, the respondents indicated that the telecommunication
industry will experience a higher growth rate as compared to the previous years (mean of
4.5960). To a small extent, respondents indicated that entry of new companies to the
industry is hardly expected with a mean 2.4604 and standard deviation 0.5111. To a
very large extent, competition in telecommunication will intensify with a mean of 4.5298
and standard deviation of 0.4559. The industry is expected to be more regulated with a
mean of 3.8961 and standard deviation of 0.4357.

In the future to a very large extent, innovations and adoption of superior operational
strategies was indicated to dictate performance of telecommunication firms (mean of
4.7179) and the industry will continue to play immense role in delivery of diversified
services through mobile services to a large extent (mean of 3.8515). The industry will
remain attractive to foreign and local investors to a small extent (mean of 1.6535). The
possibility of future merge of the different mobile companies remains low (mean of
1.7475), the data services provided by the mobile companies is likely to intensify even
more to a large extent (mean of 4.1485). To a very extent, mobile companies are expected
to improve the efficiency of the services they provide (mean of 4.7575).

40
 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction
This chapter provides a summary of the findings of the research, the conclusion,
recommendations and suggestion for further studies of the subject matter. This study
sought to compare the operation management strategies adopted by Safaricom and Airtel
Kenya.

5.2 Summary of the Findings

The general objective of this study was to compare the operation management strategies
adopted by Safaricom and Airtel Kenya. The study found that the key strategies adopted
by the firms related to product differentiation, supply network, risk management, capacity
utilization and to a less extent cost leadership strategy. While the firms were found to
have related strategies, the firms differed in the level of adoption of specific strategies.
Airtel was found to have adopted product differentiation strategies to a moderate extent
while Safaricom had adopted product differentiation strategies to a large extent. Airtel
had adopted cost leadership strategy to large extent while Safaricom was found to have
adopted cost leadership strategies to a small extent. To a very large extent, Safaricom had
adopted supply chain network strategy (mean of 4.6065) and Airtel had adopted supply
network strategy to a large extent (mean of 3.7786). On adoption of risk management
strategies, both Airtel and Safaricom had adopted risk management strategies to a large
extent.

Both Airtel and Safaricom were found to be applying capacity utilization strategies to
gain competitive advantage. For Airtel, the respondents indicated that the firm was
partnering with other service providers at a cost to utilize idle capacity at a fee, cheaper
pricing where there was idle capacity, running promotions to ensure full capacity
utilizations and decommissioning idle capacity to reduce operational costs. For
Safaricom, the respondents indicated that the company was utilizing capacity strategy by
pricing cheaply where the capacity was not put to optimum, running promotions and
development of products capable of ensuring optimum use of capacity.

41
Operation management strategies were found to affect performance of the firms.
Operations management had resulted in increased profits in the mobile company, had
elevated customer base, influenced the effectiveness of the firm’s practices and had
resulted to reduced operations costs of the mobile company to a moderate. Multiple
regression analysis obtained a coefficient of correlation of 0.7502. This indicated that
strategic management practices have positive and significant effect on performance of the
firms. The coefficient of determination of 0.5628 indicates that operation management
strategies account for 56.28% of performance. The analysis of the variance results
indicated that the relationship was significant at 95% confidence level.

The final objective was to evaluate the future of the telecommunication industry in
Kenya. The study found that telecommunication industry was expected to experience a
higher growth rate as compared to the previous years, entry of new companies to the
industry was hardly expected, competition in telecommunication was expected to
intensify, and the industry was expected to be more regulated. Innovations and adoption
of superior operational strategies was found to dictate performance of telecommunication
firms and the industry was expected to continue to play immense role in delivery of
diversified services through mobile services. The industry was expected to remain
attractive to foreign and local investors to a small extent. The possibility of future merge
of the different mobile companies was found to remain low and the data services
provided by the mobile companies was likely to intensify even more to a large. To a very
extent, mobile companies are expected to improve the efficiency of the services they
provide.

5.3 Conclusion
The study concludes that the key strategies adopted by the firms related to product
differentiation, supply network, risk management, capacity utilization and to a less extent
cost leadership strategy. While the firms were found to have related strategies, the firms
differed in the level of adoption of specific strategies. Airtel is the leading firm in cost
leadership strategy, risk management and capacity utilization strategies while Safaricom
is a leader in product differentiation and supply network strategies. However, the
strategies adopted by the firm are related closely with minimal differences.

42
The study concludes that operation management strategies affect performance of the
firms. Adoption of superior operations management result in increased profits in the
mobile company, elevated customer base, influence the effectiveness of the firm’s
practices and leads to reduced operations costs of the mobile company. Therefore,
operation management strategies adopted by the firms significantly explain the difference
in performance of mobile telecommunication firms.

The study also concludes that telecommunication industry was expected to experience a
higher growth rate as compared to the previous years, entry of new companies to the
industry was hardly expected, competition in telecommunication was expected to
intensify, and the industry was expected to be more regulated. Innovations and adoption
of superior operational strategies was found to dictate performance of telecommunication
firms and the industry was expected to continue to play immense role in delivery of
diversified services through mobile services. The industry was expected to remain
attractive to foreign and local investors to a small extent. The possibility of future merge
of the different mobile companies was found to remain low and the data services
provided by the mobile companies was likely to intensify even more to a large. To a very
extent, mobile companies are expected to improve the efficiency of the services they
provide.

5.4 Recommendations
Based on the findings of the study, the study recommends that mobile telecommunication
firms and other firms in other industries to adopt operations management strategies that
are superior in their respective industries. The management should ensure that their firms
are leaders in adoption of most efficient strategies. This will ensure that their firms are
profitable and have superior products.

43
The mobile telecommunication industry is expected to experience a higher growth rate as
compared to the previous years. This implies increased opportunity for mobile
telecommunication firms. The study therefore recommends that the management of the
mobile telecommunication firms to prepare their firms appropriately for the future
opportunities. The management needs to continuously monitor the industry dynamics and
adopt the appropriate operational strategies. This further supported by the fact that entry
of new companies to the industry is hardly expected.

The competition in telecommunication was expected to intensify, and the industry was
expected to be more regulated, and innovations and adoption of superior operational
strategies will dictate performance of telecommunication firms. Therefore, the study
recommends that the telecommunication firms to develop measures to drive innovations
in their firms as this ensure that the firms will not be perform better irrespective of the
competition and more regulation.

5.5 Limitations of the study

The study was limited to two firms in mobile telecommunication firms and did not
compare the operations strategies adopted by the all the companies in the
telecommunication industry. This therefore implies that the results cannot be generalized
or assumed to represent all firms in the telecommunication industry or other industries.

The study also adopted a cross-sectional research design where data was collected at one
point in time. The study relied heavily on primary data that was collected at one point on
time. This limited the study in that primary data on operational strategies could not
determined for the previous years.

44
5.5 Suggestions for Further Research
The study recommends for a similar study in the telecommunication industry where all
the firms in the industry will be studied. A further similar study should be done on other
industries. This will ensure that the findings can be generalized.

The study also adopted a cross-sectional research design where data was collected at one
point in time. The study relied heavily on primary data that was collected at one point on
time. This limited the study in that primary data on operational strategies could not
determined for the previous years. A further study is recommended where a longitudinal
design can be adopted where operational management strategies data will be collected
over a number of years on a monthly basis. This will ensure that the primary data
collected is more accurate and objective.

45
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 APPENDICES
Appendix I: Questionnaire

This study seeks to compare the operation management strategies adopted by Safaricom
and Airtel Kenya. The information provided will be used solely for academic purposes
and will be treated with maximum confidentiality. Please fill as accurately and honestly
as possible.

1. Please indicate your company Airtel Kenya [ ] Safaricom [ ]

2. Pleaseindicatebytickingagainstanumberappropriatewithregardtotheoperationsstrategy
employed by your company where 1 is to not at all, 2, small extent, 3 to moderate
extent, 4 to great extent and 5 to very great extent.
i. Differentiation Strategy

Statement 1 2 3 4 5
The company has innovative culture that encourages
continuous adoption of innovative market strategies
The company products are always designed to look completely
different in the market
The company has leadership product design aimed at ensuring
quality product
Product development is participatory with a department tasked
with sole role of product development.
Quality of product and services offered is key consideration by
the firm
Products offered by the firms are those specifically needed by
the market

ii. Cost Leadership Strategy

Statement 1 2 3 4 5
The company runs its operations in most efficient way to
reduce operational costs
Operational tasks are well structured within departments and
sections to ensure efficiency
The firm is continuously seeking innovative ways to reduce
operational costs
The company has adopted superior cost management
techniques

49
Statement 1 2 3 4 5
The firm is an operational cost leader in the industry

iii. Supply Network Strategy

Statement 1 2 3 4 5
The firm has adopted most modern supply chain techniques
The company supply chain network is well defined and
structured to ensure efficiency in operations management
There is a department solely tasked with supply chain network

iv. Risk Management Strategy

Statement 1 2 3 4 5
The company recognize and appreciate that its operational
strategies are faced by risks
Risks facing operations are analyzed before a strategy is
implemented and preventive measures taken
There is a risk department tasked with identification and
management of risks
The company has adopted satisfactory risk management
strategies

v. Capacity Utilization Strategy

Does your company use the capacity utilization strategy in gaining competitive
advantage?
Yes [ ] No [ ]
Please specify the capacity utilization strategies used
i. …………………………………………………………………………………
ii. …………………………………………………………………………………
iii. …………………………………………………………………………………
iv. …………………………………………………………………………………

50
3. i) Please rate the extent operation management strategies influence the performance
of the mobile phone companies using a scale of 1 to 5 where 1 is to not at all, 2, small
extent, 3 to moderate extent, 4 to great extent and 5 to very great extent.

Statement 1 2 3 4 5
The operation management strategies have resulted in
increased profits in the mobile company

The elevated customer base of the mobile company has been

contributed greatly by the operation management strategies

The operation management strategies influences the

effectiveness of the firm’s practices

The operation management strategies result in reduced

operations costs of the mobile company

ii) What other ways has operation management strategies influence the financial
performance other the ones stated above?
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
4. Please rate the expected future of the telecommunication in Kenya using a scale of 1
to 5 where 1 is to not at all, 2, small extent, 3 to moderate extent, 4 to great extent and
5 to very great extent.
Statement 1 2 3 4 5
The telecommunication industry will experience a higher
growth rate as compared to the previous years
Entry of new companies to the industry is hardly expected
Competition in telecommunication will intensify
The industry will become more regulated
Innovations and adoption of superior operational strategies
will dictate performance
The industry will continue to play immense role in delivery of
diversified services through mobile services
The industry will remain attractive to foreign and local
investors
There is possibility of future merge of the different mobile
companies

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Statement 1 2 3 4 5
The data services provided by the mobile companies is likely
to intensify even more
The mobile companies will improve the efficiency of the
services they provide
END
THANK YOU FOR YOUR TIME

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