Africa: Safaricom Company Limited - Report Example

Safaricom Company Limited Name Subject Instructor Introduction The telecommunication industry in Africa has come a long way, with a wide range of development in a short period of time. However young it may seem, the age of technological development is taken seriously in the continent. Acquisition of cell phones has been on an increasing trend ever since the introduction of mobile handset services in the region. Many people would think that the region is less technologically advanced compared to other continents in the world. Well, that may be true but not entirely true. Recent technological advancements are extended to the continent, giving it an opportunity to join the world as a global village. One of the companies battling for telecommunication supremacy in the region is Safaricom Limited. Formed in 1997, the company is one of the leading telecommunication service providers in the region. However, on the global scale, it is still recognized as a medium sized company with an annual turnover of just over $250 million. It is largely owned by British telecommunication giant, Vodafone, having 40% of its shares, with the rest shared between the private investor’s and Kenya’s Telkom Company. Bob Colimore, a native of South Africa is the current chief executive officer, having taken the reins from Michel Joseph. The company receives stiff competition from other telecommunication companies in the region such as Airtel Africa, Essar’s Yu Limited and State owned Orange Kenya. Safaricom employs over 1500 people mainly stationed in Nairobi and other big cities like Mombasa, Kampala, Nakuru and Dar-es-Salam. These cities house the retail outlets and customer care services for the company for diversification and decentralization of services. Currently, it has regional nationwide dealerships to ensure customers across the country have access to its products and services. As of January 2010, Safaricom had 12 million subscribers. This is impressive factoring in that the nearest competitor in the East African region has almost half Safaricom’s market share. The company’s headquarters are situated in Westland, Nairobi, Kenya. Other offices are spread out in the East African region (Aker, Mbiti, 2010). Quality of Services and Improvement Much as the company enjoys a large market share compared to its nearest competitor in its region, it is far from meeting the preferences and quality of standard for the customers. Many subscribers in the region have been complaining on the quality and reliability of the services of the company, which includes internet service delivery, money transfer services, mobile phone calling and texting services. Of all the services, the money transfer service is the only one wholly appreciated by many in the region. It has even received global accolade from CNN and other business platforms. Therefore, there is still a lot to improve the company. Product Desirability in the Market Voice calling and texting services provided by Safaricom are far from satisfactory. Many subscribers have been complaining of network failure and regular hitches, especially during peak hours and holiday seasons. It seems as if the company is unable to handle a lot of subscribers using their services all at once. Many have pointed out that the services are not reliable; prompting them to seek services from other service providers. Of ken notice is the preferable switch to Airtel Africa, which many subscribers say that it has stronger and wider network coverage throughout the region. Since telecommunication industry is relatively young in the region, it is natural that there are bound to be network problems. A good part of the East African region does not have telecommunication boosters to ensure adequate network. There are other places where one cannot even make a call. For a company that boast of the lion’s share in the market, this is unfortunate, since it should erect boosters throughout the region to ensure better service delivery. However, Airtel Africa is not in a good position to compete with Safaricom, even though it might be having the stronger network coverage due to cost of operation. Reportedly, there are instances where SMS services fail completely. Delayed SMS delivery and total failure of the SMS service are some of the characteristics of the services. It is so unfortunate that in so instances, the subscriber gets SMS mix up, ending up receiving texts intended for other people. This cause a lot of fear in engaging in the service since it may infringe the confidentiality of information. The electronic money transfer is another service whose desirability is in question. The initial concept of this service was creating service that allowed microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers. This would enable microfinance institutions (MFIs) to offer even more competitive loan services as the cost of processing the credit extensions are low. The users of the service gain through their ability to track their finances more easily. This service now enables subscribers to perform banking services without necessarily visiting a bank. The service is very popular in the region, with markets across East, Central and Southern Africa, extending into parts of North Africa, Afghanistan and India. Deposit and withdraw money, transfer money to other users and non-users, pay bill, purchase airtime, transfer money between the service and a bank account (in some markets) (Karugu, Mwendwa 2007). The company regularly report of system failure in the service delivery, leaving subscriber to wait for long periods before the system is restored. For a company that considers itself as a leader, it should ensure that multiple operating systems are in place to avoid inconveniences. At such times, when systems fail, it is difficult to rely on the service. Still unfortunate, many subscribers in the region rely on the money transfer service, making it one of the most utilized services in the region. The service, popularly known as M-PESA in the region, is used across the economic divide from small businessmen to large companies, from paying domestic bills by households to transferring money meant for commercial use. It is one of the most relied on service in the region and, therefore, it is up to the company to ensure that its reliability is improved. Market Opportunities Safaricom Limited, although a telecommunications giant in its region, does not cover the whole region of Africa. There are other telecommunication service providers in the region offering even better services, giving Safaricom a big challenge in the exploitation. Some of the companies include MTN and Zamtel. These two service providers have been in the market longer than Safaricom, meaning that they have the required experience. However, if the company diversifies its services, with improved quality, it has the capability to capture the whole of Central and North Africa. The island countries are other potential market for the company. Places such as Madagascar, Seychelles, Mauritius and Zanzibar are up for grabs. Although they are small island nations (except for Madagascar), they offer a rich market, factoring in that they are some of the favorite tourist destinations in the region, and globally. Nigeria, one of the most populated countries in the region has the highest level of international telephone traffic per subscriber. This is estimated at over 200 minutes per year. However, the existing telecommunication service providers cannot meet this demand. With a huge population of 140 million people, it is a market haven. Its locally manufactured electronic products and huge labor force makes it possible for companies to cut on production cost, thus maximizing on profits. If Safaricom steps up its game and improves its product quality, it is likely that reception in this market will be good. Supporting New Product Technologies Phone markers are increasingly improving the user friendliness of phones. The introduction of the android operating system and the improvement of the windows operating system are among the efforts among phone makers to improve phones. More subscribers are acquiring smart phones, allowing them to have good reception of the network. This is a huge boost to the telecommunication service providers since it will enable their wide network coverage. The older phones used to have a weak network reception, as opposed to the always improving Smartphones. The smatphones also allow for multitasking on phones. They have improved utilization of services such as texting and money transfer services. With their big screens of up to five inches and their Querty display, it is easier for subscribers to send messages. They also enable users to know if the message sending is successful by giving a short notice of successful delivery. This is a technological advancement adopted by almost all handset makers. Internet service reception on Smartphones is another aspect advantageous to telecommunication service providers in the region, as most people rely on the companies for internet services. The adaptation of 3G+ and 4G by Smartphone makers makes internet services very fast and easier to access, as compared to the earlier phones which used EDGE. This has increased the number of internet access through Smartphones as they are more flexible and portable as compared to computers and tablets. Huge screens, good screen display quality and resolution are among the elements that allow customers to enjoy excellent internet services from the service providers. Product Objective for 2020 and Improvement By the year 2020, the telecommunication industry will have improved a lot. For good service delivery, the company should put in place many improvements on the quality and reliability of the products. First, reliability of the money transfer services should be checked. The company should put many systems in place to serve as alternatives for the main system. This will ensure that service delivery is continuous throughout. In cases of emergencies, such a system can be trusted. The company should also increase the maximum amount of money to be sent or received per transaction. Currently, the amount stands at about $1200. However, with the ever increasing use of the service, the company should consider revising this decision and maybe double the rooftop amount per transaction. For the company to attract a larger market from its rivals, it should also consider reducing the transaction fees for transactions between a subscriber and a non-subscriber. Currently, the charges are around $1.5 as compared to the charges between two subscribers, which is $0.38. Other competitors charge less than Safaricom for transactions across different telecommunication service providers (Morawczynski, Pickens 2009). There have been cases whereby senders confuse the phone numbers for their money recipients, ending up sending money to the wrong recipients. This is a major problem that the company should focus and exploit on ways to reduce this. Till date, there is little done by the company to reduce this, but since it oversees any telecommunication service, it should find ways of paralyzing this problem. Currently, correction of this problem wholly relies on the honesty and decency of the wrong recipient, who might choose to return the money back to the sender. However, if they decline, they run away with the money. Since the company registers its subscribers using their identification number, it should make it impossible for the wrong sender to receive any services with the company without returning the money. The company should erect many boosters to ensure that network coverage is adequate. By the year 2020, it is possible that Safaricom’s phone subscribers will be more than 30 million. This kind of market needs reliability and high quality of services, which cannot happen without adequate network coverage. More boosters mean reaching out to a larger market. Calling and internet services will be possible in all locations equally. The company should also improve their SMS a handling system. SMSs are a way of relaying confidential information without necessarily calling, since eavesdropping is possible. Confidential messages do not necessarily mean that the information is meant for illegal use. The regular hitches in SMS service is a setback for confidentiality. Employee Support Safaricom has a huge number of its staff serving in their various outlets across the region as customer care service providers. The company also enables customer care services on phones by dialing the number 100. It is a free call. However, many subscribers have complained about the unreliability of this service, especially the one where calling is involved. There should be more customer care service providers so that when a subscriber calls, the call is not put on hold for long, to the dissatisfaction of the customer, This is a step taken by the company’s competitors. Since not all people can access the customer care centers physically, the on-phone customer care service should be made the major focus in terms of customer care service delivery. The employees should also improve on their courtesy and speed when serving the customers. Though the virtue of courtesy is well embraced in the company, speed is still an issue. Queuing, being a tiresome exercise requires speed for customer satisfaction. The employees also need to train on various technological applications in the market for them to help the customers. Customers rely on the employees for directions on operation of different gadgets in the market. The employees should serve as a link between the management and the customers to improve service delivery. Since they are the people whom have regular contact with the customers, it is possible for them to collect views and contributions which would lead to development of market specific products. Relevant Management For the company to realize the above objectives in terms of improving their product, they should look for a human resource manager to spearhead the changes. The manager should be a middle aged person since the younger generation has a better taste appreciation for technological advancements as compared to the older folks. Fifteen years of experience in human resource management, at least four of which they should have served in a managerial position is vital. He/she should be a well trained human resource expert, with a bachelor’s degree a post-graduate specialization in both human and strategic management and at least a diploma qualification from a professional body. He/she should have worked with at least two telecommunication companies, one of which should be operating internationally. Language diversity is an added advantage. He/she should be an honest, hardworking and smart-working individual with the ability to relate professionally across different social classes and ethnical affiliations. He/she should be able to accommodate views, accept correction and communicate in an open and effective manner. Reference List Aker, J., & Mbiti, I. (2010). Mobile phones and economic development in Africa. Center for Global Development Working Paper, (211). Cargo, W. N., & Mwendwa, T. (2007). Vodafone and Safaricom Kenya: Extending the Range and Reliability of Financial Services to the Poor in Rural Kenya. Growing Inclusive Markets Case Study. Morawczynski, O., & Pickens, M. (2009). Poor people using mobile financial services: observations on customer usage and impact from M-PESA. Read More