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Effectiveness of Competitive Strategies Adopted by Major Radio Stations in Kenya

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Effectiveness of Competitive Strategies Adopted by Major Radio Stations in Kenya EFFECTIVENESS OF COMPETITIVE STRATEGIES ADOPTED BY MAJOR RADIO STATIONS IN KENYA HELLEN GAICUGI MBURUGU A RESEARCH PROJECT SUBMITTED IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI NOVEMBER 2015 i DECLARATION I declare that this project is my original work and has not been submitted for the award of degree in any other university. Signature___ _____________ Date:____ _______________ HELLEN GAICUGI MBURUGU D61/70957/2014 This project has been submitted to the University of Nairobi for examination with our approval as the student‟s supervisors. Signature_________________________ Date: ______________________ DR. JOHN YABS Lecturer Department of Business Administration University of Nairobi ii ACKNOWLEDGEMENTS I wish to thank the Almighty God for his favors, mercy, provision and protection throughout this journey. Indeed, you appoint time for each and every success. Thank you for seeing me through I wish to profoundly thank my Supervisor, Dr. John Yabs for his steadfast support, guidance and encouragement during the entire period. My gratitude goes to all my lecturers who successfully took me through the course units and in the same breadth provided advice that proved invaluable in achieving my goals iii DEDICATION I dedicate this study to my family and friends for their unending love, support and prayers. iv TABLE CONTENTS DECLARATION............................................................................................................... ii ACKNOWLEDGEMENTS ............................................................................................ iii DEDICATION.................................................................................................................. iv LIST OF TABLES ......................................................................................................... viii LIST OF FIGURES ......................................................................................................... ix LIST OF ABBREVIATIONS AND ACRONYMS .........................................................x ABSTRACT ...................................................................................................................... xi CHAPTER ONE: INTRODUCTION ..............................................................................1 1.1 Background of the Study ...............................................................................................1 1.1.1 Concept of Strategy...............................................................................................2 1.1.2 Competitive Strategies ..........................................................................................4 1.1.3 The Concept of Effectiveness ...............................................................................5 1.1.4 Media Industry in Kenya ......................................................................................6 1.1.5 Major Radio Stations in Kenya .............................................................................7 1.2 Research Problem ..........................................................................................................9 1.3 Research Objective ......................................................................................................11 1.4 Value of the Study .......................................................................................................11 CHAPTER TWO: LITERATURE REVIEW ...............................................................13 2.1 Introduction ..................................................................................................................13 2.2.1 Porter‟s Generic Strategies .................................................................................15 2.2.2 The Resource-Based View (RBV) ......................................................................17 v 2.3 Competitive Strategies .................................................................................................19 2.4 The Effectiveness of Competitive Strategies ...............................................................21 CHAPTER THREE: RESEARCH METHODOLOGY ..............................................23 3.1 Introduction ..................................................................................................................23 3.2 Research Design...........................................................................................................23 3.3 Target Population .........................................................................................................23 3.4 Data Collection ............................................................................................................24 3.5 Data Analysis ...............................................................................................................24 CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION .................25 4.1 Introduction ..................................................................................................................25 4.2 Response Rate ..............................................................................................................25 4.3 General Information .....................................................................................................26 4.4 Information on Basis of competition ...........................................................................27 4.5 Information on Competitive Strategies adopted by Radio Stations .............................31 4.6 Effectiveness of Strategies ...........................................................................................38 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS ...40 5.1 Introduction ..................................................................................................................40 5.2 Summary ......................................................................................................................40 5.3 Conclusion ...................................................................................................................42 5.4 Recommendations ........................................................................................................43 5.5 Suggestions for future research ....................................................................................43 REFERENCES .................................................................................................................45 vi APPENDICES ..................................................................................................................47 Appendix I: Letter of Introduction .....................................................................................47 Appendix II : Questionnaire ...............................................................................................48 Appendix III: A List of Major Radio Stations in Kenya ...................................................53 vii LIST OF TABLES Table 4.1: The Extent of New Entrants Influenced Competitive Strategies. ......................... 27 Table 4.2: Threat of Substitute............................................................................................... 28 Table 4.3: Power of Suppliers ................................................................................................ 29 Table 4.4: Bargaining Power of Buyers ................................................................................. 30 Table 4.5: Intensity of Rivalry ............................................................................................... 31 Table 4.6: The Extent of Using Competitive Strategies to Deal with Competition .............. 34 Table 4.7: Cost Leadership .................................................................................................... 36 Table 4.8: Focus ..................................................................................................................... 37 Table 4.9: Rating the Overall Effectiveness of each of the Strategies to the Radio Station. 38 viii LIST OF FIGURES Figure 4.1: Radio Station ...................................................................................................26 Figure 4.2: Number of years the Radio Station ................................................................27 Figure 4.3: Developing Radio Strategies ...........................................................................32 Figure 4.4: Company‟s market segment(s) in the radio sector ..........................................33 ix LIST OF ABBREVIATIONS AND ACRONYMS CAK : Communications Authority of Kenya FM : Frequency Modulation KBC : Kenya Broadcasting Corporation MCK : Media Council of Kenya NMG : Nation Media Group RBV : Resource-Based View RMS : Royal Media services x ABSTRACT One of the challenges presented by a dynamic environment is increased competition. Competition is indeed a very complex phenomenon that is manifested not only in other industry players but also in form of customers, suppliers, potential entrants and substitute products. It is therefore necessary for a firm to understand the underlying sources of competitive pressure in its industry in order to formulate appropriate strategies to respond to competitive forces. Competitive strategy specifies the distinctive approach which the firm intends to use in order to succeed in each of the strategic business area. Competitive strategy gives a company an advantage over its rival in attracting
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