COMPETITIVE STRATEGIES ADOPTED BY THE NATION MEDIA GROUP KENYA IN RESPONSE TO CHANGES IN THE EXTERNAL ENVIRONMENT A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI JULY 2013 DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than The University of Nairobi for academic credit. Signed ……………………………….. Date ………………………... Linda Karimi D61/8281/2006 This research has been presented for examination with my approval as appointed supervisor. Signed ………………………………… Date ………………………... Supervisor Mr. Jeremiah Kagwe Lecturer School of Business University of Nairobi ii ACKNOWLEDGEMENTS Firstly, I want to thank the almighty God who has seen me through this program and who constantly assures me that with him, all things are possible. I would like to express my profound gratitude to my supervisor Mr. Jeremiah Kagwe, for his invaluable support, supervision, encouragement, unlimited patience in reading through my drafts and giving useful suggestions in a timely manner. Thank you for your guidance that made the completion of this research possible. I am highly thankful to the staff of The School of Business, University of Nairobi for their valuable support throughout this study. At home, I want to thank my dear husband Duncan Wanjohi for his unqualified support and my lovely daughter Wangui Wanjohi for her patience. I also express my special gratitude to my mother Ellah Mutea for her wise counsel and financial support which enabled me to complete this project and my house manager Faith Kendi for the overwhelming support in running my home affairs while I was busy working on the research. My appreciation also goes to my friends Beatrice Awiti and Ann Arithi for their continued support and encouragement during the research period. Lastly, I give appreciation to the Nation Media Group management for making time out of their busy schedules to be interviewed and availing information that went a long way to inform this study. iii DEDICATION I dedicate this project to my ever supportive family. My mother, Ellah Gacheri Mutea for her enormous emotional and financial support throughout my education, my loving husband and best friend Duncan Wanjohi Njogu for encouraging me and believing in my abilities and my lovely daughter Arella Wangui Wanjohi for her patience and understanding. iv TABLE OF CONTENTS Declaration .................................................................................................................... ii Acknowledgements ...................................................................................................... iii Dedication .................................................................................................................... iv Abstract ........................................................................................................................ vii CHAPTER ONE: INTRODUCTION ......................................................................... 1 1.1 Background of the study ............................................................................. 1 1.1.1 Competitive Strategies ................................................................... 2 1.1.2 The External Environment ............................................................ 5 1.1.3 Competitive Strategies and the Environmental Challenge .............. 8 1.1.4 Overview of the Kenyan Media Industry ........................................ 9 1.1.5 The Nation Media Group .............................................................. 10 1.2 Research Problem ...................................................................................... 11 1.3 Research Objectives ................................................................................... 14 1.4 Value of the Study ..................................................................................... 15 CHAPTER TWO: LITERATURE REVIEW ........................................................... 16 2.1 Introduction .............................................................................................. 16 2.2 The Concept of Strategy ........................................................................... 16 2.3 Competitive Strategies .............................................................................. 17 2.4 The External Environment ........................................................................ 22 2.5 Competitive Strategies and Environmental Changes ................................. 26 CHAPTER THREE: RESEARCH METHODOLOGY ........................................... 28 3.1 Introduction .............................................................................................. 28 3.2 Research Design ....................................................................................... 28 3.3 Data Collection ........................................................................................ 28 3.4 Data Analysis ........................................................................................... 29 CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSIONS ............. 30 4.1 Introduction .............................................................................................. 30 4.2 Response Rate and Respondent’s Profiles ................................................. 30 4.3 Changes Occurring in NMG’s External Environment ............................... 31 4.4 Competitive Strategies Adopted by NMG ................................................. 36 4.5 Sustainability of the Competitive Strategies Adopted by NMG ................. 41 v 4.6 Discussion ................................................................................................ 42 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS .. 45 5.1 Introductions ............................................................................................ 45 5.2 Summary of the Findings ......................................................................... 45 5.3 Conclusion ............................................................................................... 47 5.4 Recommendations for Policy and Practice ................................................ 48 5.5 Limitations of the Study ........................................................................... 50 5.6 Suggestions for Further Study .................................................................. 51 REFERENCES ........................................................................................................... 52 APPENDICES ............................................................................................................ 56 Appendix 1: Interview Guide ......................................................................... 56 Appendix 2: Introduction Letter ..................................................................... 58 vi ABSTRACT Competitive strategy deals with management’s game plan to compete successfully, its responses to a dynamic external environment, its ability to shift with the demands of its customers and its initiatives to strengthen its market position. The media industry in Kenya is highly fragmented and competition amongst existing players is stiff. The media choices available to Kenyan consumers continue to expand at a rapid pace. The purpose of this research was to identify the changes occurring in Nation Media Group’s external environment and to establish the competitive strategies if adopted in response to the changes in its external environment. The research was conducted through a case study. Both primary and secondary data were used. Interview guides were administered among NMG’s senior managers to collect primary data. Being a case study, content analysis was used to analyze the data. The study findings showed that NMG is facing competitive pressures from other media houses, political and legislative changes, demographic changes, change in customer tastes and preferences, globalization, economic factors and the emergence of the digital space. In a bid to remain competitive NMG has embraced Porter’s generic strategies namely cost leadership, differentiating its products and focus. The study recommends that NMG should develop other brands which can compete successfully in the market, since its main publication The Daily Nation has reached maturity. The study further recommends that NMG needs to explore what other capabilities and opportunities are available on the internet since this has not been fully exploited. Lastly there is need for NMG to position itself to take advantage of opportunities that may be present with the new county government structure. vii CHAPTER ONE: INTRODUCTION 1.1 Background of the study A company’s competitive strategy deals exclusively with the specifics of management’s game plan for competing successfully, its specific efforts to please customers, its offensive and defensive moves to counter the maneuvers of rivals, its responses to shifting market conditions, its initiative to strengthen its market position and the specific kind of competitive advantage it is trying to achieve (Thompson et al., 2012). Porter (1998) demonstrates that the essence of formulating competitive strategy is relating a company to its environment. He further notes that although the relevant environment is very broad, encompassing social as well as economic forces, the key aspect of the firm’s environment in the industry