Influence of Value-Added Service Strategies on Performance of Telecommunication Firms in Kenya: A Literature Based Review

  • Francis Mutuiri M’itonga Jomo Kenyatta University of Agriculture and Technology

Abstract

Some of the telecommunications firms in Kenya are experiencing a relative decline in Average Revenue per User resulting in overreliance on voice, short message serve and internet services as major source of revenue. This situation reveals that income from conventional voice services will not be enough for the mobile telecom service providers to survive. To overcome this, telecommunications firms are engaging in value added strategies as a source of new revenue and differentiation strategies. The study determines the influence of Value-Added Services Strategies on Performance of Telecommunication Firms in Kenya. The paper employs a desk study review methodology. A critical review of empirical literature is conducted to identify main thematic concepts of the paper. Telecom providers invest in value added strategies to be able to cross-sell additional mobile services and enlarge their share-of-wallet with the consumer. This way, the provider does not only get more revenue from its customers, but also creates value added to products and services offered. Some of the value added services impacting the telecommunication sector include e-commerce, social value added services, interactive voice response services, business process outsourcing, mobile money transfer and enterprise value added service. In Kenya, the mobile money services have been significant in enhancing performance of telecom companies. It is concluded that there are many benefits associated with adoption of value added service strategies in the telecommunication industry. By demonstrating the linkage to other core services, the benefits of value added strategies need to be enhanced through research and development. Research and development shall promote the innovation of products and services that are specifically tailored to meet customer needs. Service and product improvement must emanate from customers’ views and preferences. Considering the sum of resources invested into value added services systems, it is essential to ensure that the services meet customers’ needs and quality standards. In order to achieve this goal, and based on the findings, this study recommends that a proactive awareness programme should be developed and implemented to educate customers on the available value added services and how this will benefit them, as well as business partners on the potential of value added services in enriching their revenue growth, over and above cost reduction, operational efficiency and customer base growth and retention.

Key words: Communication based value-added strategies, Application based value added strategies, Performance of Telecommunication Firms, Kenya.

Author Biography

Francis Mutuiri M’itonga, Jomo Kenyatta University of Agriculture and Technology

PhD Candidate, Jomo Kenyatta University of Agriculture and Technology

References

Bhadani, A. K., Shankar, R., & Rao, D. V. (2016). Modeling the barriers of service adoption in rural Indian telecom using integrated ISM-ANP. Journal of Modelling in Management, 11(1), 2-25.

Bhatti, H. S., Abareshi, A., & Pittayachawan, S. (2016). An Empirical Examination of Customer Retention in Mobile Telecommunication Services in Australia. In ICE-B (pp. 72-77).

Dekker, H. C. (2003). Value chain analysis in interfirm relationships: a field study. Management accounting research, 14(1), 1-23.

Drejer, I. (2004). Identifying innovation in surveys of services: a Schumpeterian perspective. Research policy, 33(3), 551-562.

Hagedoorn, J. (1996). Innovation and entrepreneurship: Schumpeter revisited. Industrial and Corporate Change, 5(3), 883-896.

Hajar, M. A., Ibrahim, D. N., & Al-Sharafi, M. A. (2018). Value Innovation in the Malaysian Telecommunications Service Industry: Case Study. In International Conference of Reliable Information and Communication Technology (pp. 892-901). Springer, Cham.

Ikonyareg, J., M &Ogollah, K. (2015). Influence of business strategies on the performance of telecommunication companies in Kenya, Master of Project University of Nairobi

Kaplinsky, R., & Morris, M. (2000). A handbook for value chain research (Vol. 113). University of Sussex, Institute of Development Studies.

Kar, A. K., & Singh, P. (2011). A conceptual model to cross sell value added services in telecom industry. In Proceedings of the International Conference on Technology and Management, Hyderabad, India.

Kimani, J., K. (2012). Mobile Value Added Services Adoption And Customer Stickiness In Kenya, Master Project, University of Nairobi

KNBS, (2016). https://www.knbs.or.ke/download/economic-survey-2016/

KNBS, (2019). https://www.knbs.or.ke/download/gross-county-product-2019/

Letangule, S. L., &Letting, D., (2012). Effect of innovation strategies on performance of firms in the telecommunication sector in Kenya. International Journal of Management & Business Studies, 2(3), 75-78.

Mathenge, P. M. (2017). Effect of online marketing strategies on performance of telecommunication companies: A case of Safaricom Limited. International Academic Journal of Information Systems and Technology, 2(1), 49-60

Možný, L. (2017). Key elements of strategy in the telecommunication industry: overview of discussion. Business Trends, 7(3), 60-71

Narang, U. (2015). Mobile Value Added Services in India, PG Deptt of Commerce, P G Government College, Chandigarh

Njeri, A. (2017). Effects of Innovation Strategy on Firm Performance in Telecommunications Industry: A Case of Safaricom Kenya Limited (Doctoral dissertation, United States International University-Africa).

Oktavianto, L. K., &Hudrasyah, H. (2013). Strategic Review of Mobile Value-Added Services (M-VAS) Opportunity Based on Customer Satisfaction and Loyalty Criteria in Indonesia. Indonesian Journal of Business Administration, 2(10), 1121-1130

Oteri, O. M., Kibet, L. P., &Ndung’u, E. N. (2015). Mobile subscription, penetration and coverage trends in Kenya’s Telecommunication Sector. International Journal of Advanced Research in Artificial Intelligence, 4(1), 1-7.

Peppard, J., &Rylander, A. (2006). From value chain to value network:: Insights for mobile operators. European management journal, 24(2-3), 128-141.

Porter, M. E., & Millar, V. E. (1985). How information gives you competitive advantage.

Rafiq, A., &Gao, P. (2008). The transformation of mobile telecommunications industry in Pakistan. PACIS 2008 Proceedings, 95.

Rahman, S., Haque, A., & Ahmad, M. I. S. (2010). Exploring influencing factors for the selection of mobile phone service providers: A structural equational modeling (SEM) approach on Malaysian consumers. African Journal of Business Management, 4(13), 2885-2898.

Roberts, P. W. (2001). Innovation and firm‐level persistent profitability: a Schumpeterian framework. Managerial and Decision Economics, 22(4‐5), 239-250.

Rodiati, Y., (2010). Strategic Review of Mobile Value Added Services (M‐VAS) in Indonesia [thesis], London, UK: School of Engineering and Design Brunel University.

Shafei, I., &Tabaa, H. (2016). Factors affecting customer loyalty for mobile telecommunication industry. EuroMed Journal of Business, 11(3), 347-361.

Siddiqui, K., Ali, M., Sarki, I., & Khuhro, R. (2015). Telecom Branding in Pakistan: Network Coverage or Value Added Services. Academic Journal of Research in Economics and Management, 3(3), 61-66

Soi, C., C (2016). Effect of innovation strategies on the performance of firms in the telecommunication industry in Kenya. Masters Project, United States International University

Srikanjanarak, S., Omar, A., & Ramayah, T. (2013). Value Added Service and Service Quality from the Customer’s Perspective: An Empirical Investigation in Thai Telecommunication Industry. ASEAN Marketing Journal, 5(5), 34-342

Stadnicka, D., &Ratnayake, R. C. (2016). Minimization of service disturbance: VSM based case study in telecommunication industry. IFAC-Papers OnLine, 49(12), 255-260.

Taylor, D. H. (2005). Value chain analysis: an approach to supply chain improvement in agri-food chains. International Journal of Physical Distribution & Logistics Management, 35(10), 744-761.

Tharamba, T. M., Rotich, G., &Anyango, W. (2016). Effect Of Strategic Positioning On The Firms Performance In The Telecommunications Firms In Kenya: A Case Of Safaricom Limited, The strategic Journal of Business and Change Management, 5 (2), 83– 105

Venkatram, R., & Zhu, X. (2012). An analysis of factors influencing the telecommunication industry growth: A case study of China and India.

Wong, K. K. K. (2010). Fighting churn with rate plan right-sizing: A customer retention strategy for the wireless telecommunications industry. The Service Industries Journal, 30(13), 2261-2271.

World Bank, (2010). https://www.itu.int/ITU-D/ict/publications/wtdr 10/material/WTDR2010 e v1.pdf
Published
2019-04-26
How to Cite
M’itonga, F. (2019). Influence of Value-Added Service Strategies on Performance of Telecommunication Firms in Kenya: A Literature Based Review. Journal of Strategic Management, 3(1), 69 - 81. Retrieved from https://stratfordjournals.org/journals/index.php/journal-of-strategic-management/article/view/278
Section
Articles