PORTER'S FIVE FORCES INFLUENCE ON COMPETITIVE ADVANTAGE IN TELECOMMUNICATION INDUSTRY IN KENYA
DOI:
https://doi.org/10.47604/ejbsm.1140Keywords:
Porter's Five Forces, Competitive Advantage, Telecommunication IndustryAbstract
Purpose: Competition is at the core of existence of firms. This determines the appropriateness of a firm's activities that can contribute to its performance, such as innovations, a cohesive culture, or good implementation. Many firms have performed poorly in a competitive environemnt due to failure to analyse and strategise on the Porter's Five Forces, regardless of the industry sector. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition. The purpose of the study was to investigate the influence of Porter's Five Forces on competitive advantage in telecommunication industry in Kenya. The study aims at establishing the extent to which barriers to entry, rivalry among established firms, bargaining power of buyers, bargaining power of suppliers and substitute products influence competitive advantage of telecommunication industry in Kenya.
Methodology:The study adopted desktopresearch. Specifically, the paper identified documentary evidence in the form of already completed studies that focused on influence of porters five forces on competitive advantage both locally, regionally and globally.
Findings:The study findings indicated that there was threat of new entrants in the teleommunication industry in kenya due to presence of various competing firms. In addition, although the suppliers in the industry had formed associations to negotiate prices with the input providers, the buyers bargaining power was high. The firms had to strategize on how to attract and retain the customers to avoid shifting from one company to the other. Findings on bargaining power of buyers of mobile phone providers indicate that, firms have spent time and energy in ensuring their customers are well protected and incentivized so as to stick to their respective mobile networks. Similarly, findings on intensity of rivalry, indicate that to strategize and win in this highly competitive industry, product differentiation, process innovation, product innovation and technological innovation are some of the strategies the companies use to stay ahead. Findings on threat of substitute products indicate that, the industry has a number of substitutes that can highly influence the profitability of these companies. The study concludes that porters five forces framework indeed influenced performance of telecommunication firms in Kenya. The study also concludes that the threat of new entrants applies to the mobile phone providers in the Kenyan Telecommunication industry due to the presence of various competing organizations. These organizations are offering similar products and services such as mobile money transfer services, handheld devices, airtime and accessories.
Unique contribution to theory, practice and policy The study recommends that the telecommunication firms should keep monitoring their business environment so as to structure the appropriate strategies to keep up with competition and technological changes.
Downloads
References
Alam, M. R., Azim, T. A. & Islam, E. (2010). Attractiveness of Tea Industry in Bangladesh: A Projection Based on Porter's Five Forces Model, The Cost and Management Journal, pp. 16-37
Aosa, P. (2009). The Five Forces in the Kenyan Environment. Nairobi: Nairobi University.
Ariffin, A. S., & Sahid, M. L. I. (2018). Competitiveness analysis of ASEAN automotive industry: a comparison between Malaysia and Thailand. Journal of Science, Technology and Innovation Policy, 3(2).
Asimakopoulos, G., & Whalley, J. (2017). Market leadership, technological progress and relative performance in the mobile telecommunications industry. Technological forecasting and social change, 123, 57-67.
Ayub, S. E., Kwendo, E., & Liyayi, C. S. (2019). Effect of Differentiation Strategies on the Performance of Mobile Phone Service Providers in Kenya. Int. J. of Multidisciplinary and Current research, 7.
Barba-Sanchez, V., Calderón-Milán, M. J., & Atienza-Sahuquillo, C. (2018). A study of the value of ICT in improving corporate performance: a corporate competitiveness view. Technological and Economic Development of Economy, 24(4), 1388-1407.
Barney, J.B. (1991). Firm resources and sustained competitive advantage, Journal of Management, Vol. 17, pp. 99- 120
Bashir, M., & Verma, R. (2017). Why business model innovation is the new competitive advantage. IUP Journal of Business Strategy, 14(1), 7.
Baxter, G. (2019). A strategic analysis of Cargolux Airlines International position in the global air cargo supply chain using Porter's Five Forces Model. Infrastructures, 4(1), 6.
Belwal, R., & Amireh, M. (2018). Service quality and attitudinal loyalty: Consumers' perception of two major telecommunication companies in Oman. Arab Economic and Business Journal, 13(2), 197-208.
Benjamin, S. (2018). Exploration to Exploitation: An industry analysis of suborbital space tourism. New Space, 6(1), 87-98.
Boafo, N. D., Kokuma D. A., & Arthur G. (2015).Assessing the Nature of Competition in the Telecommunication Industry: A Case Study of Airtel Ghana Limited, Kumasi. European Journal of Business and Management, 7 (8), 11-25
Capineri, C., & Rietveld, P. (2018). Networks in Transport and communications: a policy approach. Routledge.
David, A. M. (2019). Porter's competitive strategies influence on performance of mobile telecommunication companies in Kenya. International Journal of Scientific Research and Management, 7(2), 1014-1022.
Fuchs, M. (2019). The Overlooked Agenda of Ethical Leadership in Tourism: A Disciplinary and Philosophical Critique. Critical Tourism Studies Proceedings, 2019(1), 65.
Garland, C. (2019). "˜Something for All, So That None May Escape': Reworking The Critique of Consumption. Fast Capitalism, 8(2).
Genoveva, G., & Siam, S. T. (2017). Analysis of marketing strategy and competitive advantage. Journal of Economic & Management Perspectives, 11(1), 1571-1579.
Gnjidić, V. (2018). Interdependence of company's industrial competitive position and its strategic orientation: A dynamic theoretical model. Management-Journal of Contemporary Management Issues, 23(2), 103-120.
Gomera, S., Chinyamurindi, W. T., & Mishi, S. (2018). Relationship between strategic planning and financial performance: The case of small, micro-and medium-scale businesses in the Buffalo City Metropolitan. South African Journal of Economic and Management Sciences, 21(1), 1-9.
Goparaju, H. (2017). Digital payment sector: The sunrise industry in India: A review. IUP Journal of Business Strategy, 14(2).
Hussein, S. S., & Muchemi, A. (2019). Michael Porters five forces on performance of savings and credit cooperative societies in Nairobi City County, Kenya. International Academic Journal of Human Resource and Business Administration, 3(7), 14-35.
Indiatsy C. M., Mwangi, M. S., Mandere, E. N., Bichanga, J. M., & George, G. E. (2014). The Application of Porter's Five Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd. European Journal of Business and Management. Vol.6, No.16, pg. 75-86.
IÅ¡oraitÄ—, M. (2018). The competitive advantages theoretical aspects. Ecoforum Journal, 7(1).
Kang, D., & Park, M. J. (2017). Competitive prospects of graduate program on the integration of ICT superiority, higher education, and international aid. Telematics and Informatics, 34(8), 1625-1637.
Kawira, B. (2017). Effect of porter's five forces on strategy formulation at Standard Chartered Bank Kenya. Unpublished Dissertation Report. United States International University - Africa
Kipruto, T. B., Ombui, K. & Iravo, M. A. (2016). Influence of the Porter's Five Forces Model Strategy on Performance of Selected Telecommunication Companies in Kenya. International Academic Journal of Human Resource and Business Administration, 2 (1), 1-16
Kulmia, A. M. (2014). A study competitiveness of the supermarket industry in Kenya using Porters Five Forces model. Unpublished Dissertation Report. United States International University - Africa
Mahadi, A., & Dhewanto, W. (2019). Innovations for Declining Product to Extend Product Life Cycle (Case of TelX International Call Service Vinci). European Journal of Business and Management Research, 4(3).
Malhotra, G., & Batra, S. K. (2019). Customer-Switching Behaviour for Telecom Service Provider. International Journal of Business and Economics, 4(2), 1-17.
Marshall, S. J. (2018). Strategic Planning as Sense-Making. In Shaping the University of the Future (pp. 413-436). Springer, Singapore.
Mathooko F. M. and Ogutu M., (2015). "Porter's five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya", International Journal of Educational Management, Vol. 29 Iss: 3, pp.334 - 354
Mburu E. N (2015). Porter's Five Forces Influence on Competitive Advantage in the Kenyan Beverage Industry: A Case of Large Multinationals. Unpublished Dissertation Report. United States International University - Africa
Nashiruddin, M. I. (2019). Creating Competitive Advantage in the Turbulent Business Environment: Lesson Learned from Indonesia Telecommunication. Buletin Pos dan Telekomunikasi, 17(1), 31-46.
Nekmahmud, M., & Rahman, S. (2018). Measuring the Competitiveness Factors in Telecommunication Markets. In Competitiveness in Emerging Markets (pp. 339-372). Springer, Cham.
Novikov, S. V. (2018). Strategic analysis of the development of high-technology manufacturing facilities. Russian Engineering Research, 38(3), 198-200.
Okolo, V. O. (2019). Impact of corporate social responsibility strategies on consumer patronage of telecommunication industry: an MTN experience in Enugu state. Problems and perspectives in management, (17, Iss. 1), 216-229.
Ole Kulet, J. L., Wanyoike, D. M., & Koima, J. K. (2019). Effects of best product strategic positioning on organizational performance in telecommunication industry. Kenya. The Strategic Journal of Business & Change Management, 6(1), 387-400.
Owusu, P. A., & Duah, H. K. (2018). Evaluating total quality management as a competitive advantage tool in mobile telecommunication services in Ghana. European Journal of Research and Reflection in Management Sciences Vol, 6(1).
Porter, M. E. (1980). Competitive Strategy: Techniques for analyzing industries and Competitors, New York. Free Press.
Porter, M.E. (1985). Competitive advantage. New York: Free press.
Porter, M.E. (2008). The five competitive forces that shape strategy. Harvard Business Review. 86-104.
Qosasi, A., Maulina, E., Purnomo, M., Muftiadi, A., Permana, E., & Febrian, F. (2019). The impact of information and communication technology capability on the competitive advantage of small businesses. International Journal of Technology, 10, 167-177.
Rahman, M. S. (2019). An Analysis of Smart-Phone Industry in Bangladesh Using Porter's Five Forces Model. Open Access Library Journal, 6(09), 1.
Rajasekar, J. and Raee, M. A. (2013). An analysis of the telecommunication industry in the Sultanate of Oman using Michael Porter's competitive strategy model", Competitiveness Review, Vol. 23 No. 3, pp. 234-259
Ryu, M. H. (2018). The Value Co-Creation Strategy for Telecommunication Carriers: Focusing on the Assessment of Potential Strategic Alliance Partners. Procedia Computer Science, 139, 338-346.
Riley, J. (2012).Porter's Five Forces Model: analysing industry structure. Retrieved Oct 18 2019 from http://www.tutor2u.net/business/strategy/porter_five_forces.htm.
Satyanarayana, D., Rao, K. S., & Naidu, S. K. (2017). The impact of Reliance Jio on Indian mobile industry-A case study on mergers and acquisitions of idea-Vodafone and Airtel-Telenor. IJAR, 3(3), 209-12.
Valinejad, F., & Rahmani, D. (2018). Sustainability risk management in the supply chain of telecommunication companies: A case study. Journal of Cleaner Production, 203, 53-67.
Visser, W. (2018). Creating Integrated Value Through Sustainable Innovation: A Conceptual Framework. In Sustainable Business Models (pp. 129-150). Springer, Cham.
Wati, L. A. (2018, April). Analyzing the development of Indonesia shrimp industry. In IOP Conference Series: Earth and Environmental Science (Vol. 137, No. 1, p. 012101). IOP Publishing.
Wee, C. H. (2017). Think tank"”beyond the five forces model and blue ocean strategy: an integrative perspective from Sun Zi Bingfa. Global Business and Organizational Excellence, 36(2), 34-45.
West, D. S. (2009). Evaluating a supermarket relocation strategy using spatial competition analysis. Annals of Regional Science,23(2), pp. 137
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
