Abstract

This study assessed “The effect of Competitive Strategies on Organisational Performance in MTN Buea. The specific objectives were; to determine influence of cost leadership strategies on organisational performance in MTN Buea, to establish the effect of differentiation strategies on organisational performance in MTN Buea and to assess extent of focus strategy on organisational performance in MTN Buea. To achieve the study’s objectives, a survey research design was adopted. Data used for the study were collected through questionnaires from fifty employees (50) of MTN. The study has used both descriptive and inferential statistics using simple regression analysis.

Findings show that cost leadership strategies, have a negative but significant impact on organisational performance of MTN Buea. Findings further show that differentiation strategies have a positive and significant effect on organisational performance of MTN Buea; Also, focus strategy has a positive and significant effect on organisational performance of MTN Buea.

The study concluded that competitive strategies have a significant positive effect on organisational performance in MTN Buea. The study therefore recommends that the management of MTN Buea should implement the different types of competitive strategies but should focus more on differentiation strategies and focus strategy because they have a high positive and significant effect on organisational performance while though cost leadership strategies is negative its effect on their effect on organisational performance still remind significant so, they need to be reviewed.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Organisational performance refers to how well an organisation achieves its objectives and fulfils its mission. It is a multidimensional concept that encompasses various financial and non-financial measures, reflecting the organisation’s overall effectiveness and efficiency (Richard et al., 2009). It encompasses various dimensions, including financial performance, operational efficiency, market share, customer satisfaction, and employee engagement (Neely, 2005). Financial performance can be measured through indicators such as revenue growth, profit margins, and return on investment (ROI).

Operational efficiency is often assessed using metrics like productivity ratios, cost per unit, and cycle time. Market share reflects an organisation’s competitiveness within its industry, while customer satisfaction can be gauged through surveys, Net Promoter Scores (NPS), and retention rates. Employee engagement is increasingly recognised as a crucial indicator of organisational performance, measured through employee satisfaction surveys and turnover rates (Harter et al., 2002). Organisational performance is particularly vital due to intense competition and rapid technological advancements. Companies must continuously innovate and adapt their strategies to maintain a competitive edge. The performance of MTN Buea, a subsidiary of MTN Group, can be influenced by various competitive strategies that the company adopts to differentiate itself in the market.

Competitive strategies are the approaches that organisations use to gain an advantage over their rivals in the marketplace. Michael Porter (1985) identified three primary types of competitive strategies: cost leadership, differentiation, and focus strategies. Cost leadership involves becoming the lowest-cost producer in an industry, allowing a company to offer lower prices to attract customers. Differentiation focuses on providing unique products or services that stand out from competitors, often justifying higher prices due to perceived value. Focus strategies target a specific market segment or niche, allowing organisations to tailor their offerings to meet the unique needs of that segment. Each of these strategies has distinct indicators or dimensions for measurement. For cost leadership, key indicators include cost per acquisition, pricing strategies, and economies of scale achieved. Differentiation can be assessed through brand loyalty metrics, product innovation rates, and customer feedback on unique offerings. Focus strategies may be evaluated based on market share within the targeted segment, customer satisfaction scores specific to that niche, and sales growth in that area.

The relationship between competitive strategies and organisational performance has been extensively studied across different contexts. research indicates that companies employing effective competitive strategies tend to outperform their rivals significantly. For instance, a study by Dess et al. (1997) found that firms utilising differentiation strategies saw improved financial performance compared to those relying solely on cost leadership. According to Dess and Lumpkin (2005), a successful cost leadership strategy can lead to higher profitability by allowing companies to offer lower prices to customers, while maintaining acceptable margins. The relationship between competitive strategies and organisational performance has been a focal point in strategic management literature since the early work of Michael Porter in the 1980s. Porter (1985) introduced three generic competitive strategies, cost leadership, differentiation, and focus that organizations could adopt to achieve superior performance in their respective industries. These strategies have been widely studied and implemented across various sectors, demonstrating that organizations that effectively align their competitive strategies with their operational capabilities tend to outperform their rivals (Hoskisson et al., 1999).

Globally, competitive strategies have been studied by many scholars. According to Lestor (2012), who has done her study in America expressed those strategies allow a firm to compete effectively. Companies that adopt competitive strategies and plan adequately have improved performance compared to their competitors. (Barney, 2012). According to Thompson and Strickland (2010), having an advantage over competitors enables a company to have competitive advantage and Core competencies yielding long term benefits gives a company competitive advantage. Kvint (2013) states that future of companies is determined by response to competition change in business environment and strategic capability. The business environment, competence, resources and political will within which a firm exists determines the strategies adopted.

In developed countries, research indicates that companies employing effective competitive strategies tend to outperform their rivals significantly. For instance, a study by Dess et al. (1997) found that firms utilising differentiation strategies saw improved financial performance compared to those relying solely on cost leadership. Walmart exemplifies a cost leadership strategy through its efficient supply chain and low operating costs. Companies like Apple demonstrate successful differentiation through innovative products and strong brand recognition. Smaller companies like Warby Parker, through targeted social media marketing and brand awareness activities, use a focus strategy to capture niche markets. In Europe, Ryanair is an example of a company that has adopted a cost leadership strategy by cutting unnecessary costs and focusing on price sensitive customers. (Dess et al., 1997)

In developing countries, the dynamics can be more complex due to varying market conditions and consumer behaviors. A study by Agyapong (2010) in Ghana revealed that telecommunications companies adopting a combination of cost leadership and differentiation strategies were more successful in enhancing their organisational performance. Similarly, research conducted in Nigeria highlighted the importance of strategic alignment between competitive strategies and local market demands (Bruning, 2016). Dirisu, Oluwole, and Ibidunni (2013) state that while there are numerous ways to differentiate brands, identifying meaningful product-driven differentiators can be especially fruitful in gaining and sustaining a competitive advantage. Firms in the same industry, for example, MTN, Airtel, GLO, and 9 Mobile, and other smaller firms operating within specific niches, have all rolled out their networks. MTN Nigeria employs a mix of strategies, including cost leadership through offering lower prices, and differentiation by providing a wider range of digital products and services. Similarly, Globacom, has implemented a differentiation strategy by offering unique data plans and mobile banking services.

In Cameroon, the telecommunications sector has witnessed significant growth, with MTN being a leading player. A study by Ndjengue (2018) emphasized that MTN’s competitive strategies directly influence its market position and overall performance in the Cameroonian market. In Buea specifically, where the demand for mobile services is rising among a youthful population, the effectiveness of MTN’s competitive strategies becomes even more critical. In the context of Cameroon, particularly in Buea, the telecommunications sector has witnessed significant growth and competition, especially with the presence of major players like MTN. The evolution of competitive strategies in this sector can be traced back to the liberalization of telecommunications in Cameroon during the late 1990s, which opened the market to private operators. As a result, companies like MTN have had to continuously adapt their strategies to maintain market leadership amidst increasing competition from local and international firms (Zainab, 2018). A study by Njeuma (2020) highlighted that MTN’s strategic focus on customer-centric services and technological innovation has significantly contributed to its market share in Buea, underscoring the importance of effective competitive strategies in enhancing organisational performance.

Despite the wealth of studies conducted globally and within Africa, there remains a gap in understanding how specific competitive strategies impact organisational performance in the context of MTN Buea. Despite these advancements, challenges remain in aligning competitive strategies with organisational performance. According to the International Telecommunication Union (ITU, 2021), while MTN has made strides in expanding its service offerings in Cameroon, issues such as network reliability, customer service quality, and pricing remain critical areas that need attention. These challenges highlight the necessity for continuous evaluation and adaptation of competitive strategies to ensure sustained organisational performance. This research aims to fill this gap by analysing the effects of cost leadership, differentiation, and focus strategies on MTN’s performance metrics in Buea.

1.2 Statement of the Problem

Organisational performance challenges faced telecommunications industry as a result competitive strategy impact MTN Buea. MTN Buea, as a leading service provider, must navigate a highly competitive landscape characterised by price wars, technological advancements, and changing consumer preferences. Despite its strong market presence, MTN has encountered difficulties in maintaining its competitive edge and achieving optimal organisational performance.

In Cameroon, controversies surrounding service quality and customer dissatisfaction have emerged as critical factors affecting MTN’s reputation and performance (Ndjengue, 2018). Again, there has been a rapid increase in competition among communications sector in Cameroon. Several companies have entered the market, resulting in a need for existing operators to implement strategies to maintain their competitive advantage. The regulatory environment in Cameroon has also presented challenges for providers. The telecommunications sector is also being disrupted by internet and other technologies. Many telecommunications companies in Cameroon struggle to adapt their strategies quickly enough to changing market conditions, and technological disruptions, thus leading to missed opportunities and poor performance. (GSMA, 2022).

With the Case of MTN Buea, like many other telecommunications firms, may struggle to create sustainable differentiation. There is also a need to be constantly aware of shifts in consumer trends, and develop products that are appropriate for the local market While a focus strategy can be effective in targeting specific niche markets, it also requires in-depth understanding of consumer demands and preferences. It is a challenge to clearly define your target audience, and then tailor services to meet the specific needs of that market. There is also the challenge of scaling up from a niche market to achieve greater market share. Some telecommunications providers attempt to combine two or more strategies (e.g., pursuing both differentiation and cost leadership), which can lead to inconsistent messaging and diluted efforts, which in turn negatively impacts organisational performance. (ART, 2023). Specifically, where competition from other telecom providers is intensifying, MTN must reassess its competitive strategies to enhance organisational performance.

Previous studies have indicated that while MTN has adopted various competitive strategies, there is still a gap in fully integrating these strategies with organisational processes to optimize performance outcomes (Zainab, 2018). For instance, while cost leadership may allow MTN to offer lower prices, it must not compromise service quality a critical factor for customer retention. Similarly, differentiation strategies should focus on innovation and unique service offerings that resonate with local customer preferences.

Competitive strategy components, cost leadership, differentiation, and focus have the potential to address these performance challenges by fostering a more agile and responsive organisational structure. The existing literature highlights a gap in understanding how these strategies specifically influence MTN Buea’s operational outcomes. This study seeks to address this gap by investigating the effects of cost leadership, differentiation, and focus strategies on MTN’s organisational performance metrics.

1.3 Research Questions

1.3.1 Main Research Question

What is the effect of competitive strategies on organisational performance in MTN Buea?

1.3.2 Specific Questions

The specific questions are;

1. What is the influence of cost leadership strategies on organisational performance in MTN Buea?
2. What is the effect of differentiation strategy on organisational performance in MTN Buea?
3. To what extent does focus strategy influence on organisational performance in MTN Buea?

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