Sales and Advertising

In 2010 Safaricom sacrificed a few operating income with the aid of increasing income and advertising prices by using 16.3% from monetary year 2009 stages. This become a conscious decision made with the aid of the senior control group as they sought to reach and teach their diverse market. In 2011, to amplify their advertising efforts, Safaricom centered on expertise the voice of the purchaser, improving the manner the business enterprise communicates its messages, and aiming to come to be more in detail involved within the community. The "Niko na Safaricom" marketing campaign became released in November 2010 and gained traction in 2011. The campaign's purpose is to stimulate customer

5

loyalty and to lessen client turnover. This campaign fortified the Safaricom brand via speaking a commitment to Kenya and its people, reminding the general public they're a successful Kenyan employer constructed and made up of the human beings of Kenya. Motivation segmentation took middle degree as Safaricom strived to recognize differing segments in their target market in hopes to align product development, communication, resources, and distribution strategies to fulfill various wishes. In 2012, Safaricom become voted the most treasured logo in Kenya. As marketing activities endured to make bigger, 2013 noticed the consolidation of all advertising and marketing capabilities across Safaricom, centralized right into a single division led with the aid of Rita Okuthe, who become appointed Marketing Director in May 2013. Under her leadership the "Naweza" campaign become released. This marketing campaign became to further weave the Safaricom emblem into the Kenyan lifestyle. Safaricom now sponsors the largest sporting occasion in Kenya (seven-a-side rugby) known as Safaricom Sevens, and launched Niko Na Safaricom Live to offer local tune skills the chance to carry out on a world elegance platform.34

STRATEGIC PRIORITIES

Safaricom has diagnosed its motive to transform the lives of its clients, shareholders, enterprise partners, workforce, and the communities Safaricom serves. The employer has defined the following strategic priorities:

1. 2. 3. Four. Five.

Deliver the 'Best Network in Kenya' Grow cellular and stuck information Deepen economic inclusion Retain and reward the loyal consumer base Encourage in addition innovation.35

Under its insurance, growth speeds, supply cost-based pricing, decrease the pricing of 3G smartphones, and improve purchaser offerings. Other movements encompass: upgrading old cell websites, lowering the number of dropped calls, reducing network downtime, and broadening the attain in their telecom offerings. Although upgrades in community satisfactory are a incredible opportunity, there may be a few risk, such as the danger of vandalism leading to carrier disruption, fashionable safety, specially in northeastern Kenya, energy availability and reliability, and M-PESA provider delays. The instability of the Kenyan country wide power grid and lack of power grid availability in some rural or remoted parts of the usa limits growth.36

THE SAFARICOM FOUNDATION

The Safaricom Foundation turned into based in 2003 and disbursed 416.Eight Ksh million to 119 projects in 2012. The basis is divided into ten areas, such as Education, Health Education, Disaster Relief, Water, Economic Empowerment, Sport, Environment, World of Difference, M- PESA Foundation, and Other.37 Safaricom recognizes "the continued want to spend money on maternal and toddler health; in addition to the essential function that cellular communications generation plays in reworking lives in regions consisting of health, education, and financial empowerment."38 The Safaricom Foundation's "World of Difference" software is a multi-phase initiative that

"Best Network in Kenya" initiative, Safaricom has worked to growth 2G and 3G modernize the network in six key cities, roll-out fiber in forty% of web sites in Nairobi,

6

empowers the residents of Kenya to make a distinction within the areas of health, schooling, economics, get right of entry to to clean water, disaster relief, environmental conservation, arts, lifestyle, and sports.39

VODAFONE GROUP PLC

Vodafone Kenya Ltd., whose figure company is Vodafone Group Plc, is the largest shareholder in Safaricom Limited.Forty Vodafone has over 404 million customers, with sixty eight% of those clients located in rising markets.41 The business enterprise has operations in each continent except Antarctica. In Africa and the Middle East, Vodafone operates in 9 international locations along with: Qatar, Egypt, Kenya, Democratic Republic of the Congo, Ghana, Tanzania, Mozambique, Lesotho, and South Africa.Forty two According a study by using the World Bank, a ten% increase in cell penetration can upload 1.2% to the once a year financial boom in a growing kingdom. The business enterprise's vision is for Vodafone cell offerings to in addition enhance humans's livelihoods and the best of lifestyles.

Vodafone licenses (even though Safaricom operates) the M-PESA service in Kenya.Forty three M-PESA is currently also in vicinity in Tanzania, South Africa, Afghanistan, Qatar, and Fiji. Moreover, Vodafone launched M-PESA on a small scale in Rajasthan, India, in coaching for release throughout Indias in 2013.44 Safaricom has roaming agreements in region with numerous Vodafone subsidiaries in different countries, which advantages Safaricom clients once they journey. There is a further agreement in location that gives Safaricom get admission to to Vodafone's global price e-book and supply chain resources for the purposes of procurement, terminals management, technical understanding, high-quality practices, enterprise understanding, enterprise warranty, patron products, and advertising assist. This settlement also stipulates a participation price, constant at six million Euros yearly.Forty five

INDUSTRY COMPETITION

Safaricom presently has three direct competition in Kenya - Bharti airtel, Telkom Kenya, and YuMobile.46 There also are several different potential competition, defined as firms that operate in Africa however not in Kenya, which include Millicom, Etisalat Emirate Telecommunications Company, and MTN Group.

Bharti airtel

Bharti Airtel Limited is a leading global telecommunications firm with operations in Africa and Asia. The business enterprise is centered in New Delhi, India and has a hundred ninety million mobile subscribers in India alone, with a further 72 million cellular clients across the world.47 The firm describes itself as a multi-platform carrier firm working in telecom, company, and digital television, unified underneath the "airtel" brand.48 In phrases of subscribers, it ranks in the top 4 for international cellular carrier vendors. Under IFRS requirements, the company's revenue become Rs. 202,995 million and EBITDA changed into Rs. 65,449 million.Forty nine This amounts to revenue of $14.7 billion USD and EBITDA of $four.Three billion USD. Of this sales, 49% may be attributed to Indian and South Asian wireless offerings and 27% comes from African wi-fi offerings. Bharti airtel has the best market proportion in India, retaining 22% of the wi-fi subscriber marketplace. Vodafone is in

7

2d region with a 17% marketplace proportion. In 2011, Bharti airtel obtained Zain Africa B.V., gaining entry to the continent. The firm now operates in 20 countries with the targets of growing the logo, diversifying to lessen its India hazard, and replicating its powerful operations version. Bharti believes it has done a worldwide stature with a focus on emerging markets, huge synergies and a strong platform for destiny expansion.50

Bharti airtel operates below its specific enterprise model called the "Minutes Factory", which makes a speciality of producing the lowest price minutes while preserving/developing margins. This method makes a speciality of driving affordability to gain greater customers and therefore extra utilization, which results in advanced economies of scale and an boom in profitability, thereby additionally allowing the company to make the product greater inexpensive.51

2. Does Safaricom possess any specific and difficult-to-imitate sources that give the organization a sustainable competitive gain over other African cell smartphone agencies?

Three. What are the maximum important elements within the external surroundings which can be vital to Safaricom's enterprise? How does the organisation deal with every of these factors at gift?

4. Why has Safaricom been a hit in selling a luxurious product in a low- earnings marketplace?

Five. What instructions from Safaricom's achievement may additionally be relevant in extra advanced economies inclusive of the U.S. Or Europe? That is, what are the takeaways from this case for the managers of businesses in these markets?

6. Are the advantages Safaricom has within the Kenyan marketplace transferable to other nations in Africa? Should Safaricom amplify to different countries? If so, how ought to they do it?

7. With over a quarter of a million shops already selling Safaricom's products in Kenya, in which are the avenues for destiny growth?

Eight. How can Safaricom take most gain of its courting with Vodafone?

1) Assume that interest rate parity holds so that future or forward exchange rates adjust to eliminate investor arbitrage profits. If interest rates in Britain are higher than corresponding interest rates in Japan, would you expect an appreciating pound or a depreciating pound in the futures (forward) market relative to the current spot market rate? In terms of the supply and demand for pounds in the spot and forward currency markets, what is implicitly occurring in each as a result of interest rate parity? Is the pound selling forward at a premium or at a discount relative to the yen? 2) The spot market rate for the euro is 1.4059 Canadian dollars per euro. The 3-month futures (forward) rate on the euro is 1.4147 Canadian dollars per euro. The yield on a 3-month Canadian government security is 1.16 percent (0.0116 decimal), annual percentage rate (APR). The yield on a 3-month euro area security is 0.24 percent (0.0024 decimal), annual percentage rate (APR). Show that interest rate parity (IRP) does not hold by solving for the forward rate that ensures IRP. How would you take advantage of the arbitrage opportunity arising from the actual data (i.e., borrow 1,000,000 euros, convert to Canadian dollars, invest in Canada, sell the proceeds forward and then repay your loan or borrow 1,000,000 Canadian dollars, convert to euros, invest in europe, sell the proceeds forward and then repay your loan)?