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IMPACT OF COMPETITION ON FINANCIAL PERFORMANCE OF TELECOMMUNICATION COMPANIES

 A CASE STUDY OF MTN UGANDA

BY

ABRAHAM EDONU

17/U/17640/BSD/GV

A RESEARCH REPORT SUBMITTED TO THE SCHOOL OF MANAGEMENT AND ENTREPRENEURSHIP IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF BUSINESS STUDIES

WITH EDUCATION OF KYAMBOGO UNIVERSITY.

MARCH, 2021

DECLARATION

I, ABRAHAM EDONU, do here declare that this research proposal entitled “impact of competition on financial performance of telecommunication companies” is my original work as a result of my personal effort and has never been submitted to any university or any other institution for any kind of award. Due acknowledgement has been done for other people’s work that has been referred to.

Signed……………………………………

Date…………………………………….

APPROVAL

This research report has been approved for submission as partial fulfilment for the award of degree in bachelor of business studies.

I certify that Abrham Edonu has done this work under our guidance and supervision.

Name Mr.  Mulajje Muhammad

Signed ………………………………..

Date   …………………………………

DEDICATION

This book is dedicated to my parents and my brothers for their tireless support and encouragement throughout my study.

God bless them all.

ACKNOWLEDGEMENT

I would like to express my sincere heartfelt gratitude to all those who contributed in one way or the other to have this piece of work completed. I particularly recognize and thank the scholars and practitioners whose work provided important literature that enriched my study.

I, on a special note, pay special tribute to my supervisor and my parents for their immeasurable contribution, parental, academic advice and encouragement without whose support and guidance, completing this work on time would have been difficult. May God richly bless them!

TABLE OF CONTENTS

Table of Contents

DECLARATION.. i

APPROVAL. ii

DEDICATION.. iii

ACKNOWLEDGEMENT.. iv

LIST OF TABLES. viii

LIST OF FIGURES. ix

ABSTRACT.. x

CHAPTER ONE.. 1

INTRODUCTION.. 1

1.0 Introduction. 1

1.1 Background to the Study. 1

1.2 Statement of the Problem.. 3

1.3 General Objective. 4

1.4 specific objectives. 4

1.5 Research Questions. 4

1.6 Scope of the Research. 4

CHAPTER TWO.. 6

LITERATURE REVIEW… 6

2.0 Introduction. 6

2.2 Market share affects the company’s profitability in the competitive environment 8

2.4 Relationship between competition and financial performance of an organization. 10

2.6 Gaps in the literature. 14

CHAPTER THREE.. 15

METHODOLOGY.. 15

3.0 Introduction. 15

3.1 Research Design. 15

3.2 Study population and Area. 15

3.3 Sampling techniques. 15

3.4 Determination of the sample size. 16

3.5.0 Data sources and collection instrument 16

3.5.1 Data sources, Collection Procedure and Instruments. 16

3.5.2 Secondary data sources. 17

3.6 Data Collection Methods and Instruments. 17

3.7.1 Questionnaire. 17

3.8 Data collection procedure. 18

3.9 Data Quality Control of the Instrument 18

3.9.1 Reliability of the questionnaire. 18

3.9.2 Validity of the questionnaire. 18

3.10 Data Collection Procedures. 19

3.12 Ethical consideration. 20

CHAPTER FOUR.. 22

PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS. 22

4.0 Introduction. 22

4.1 Overview of the Study. 22

4.1.1 Response Rate. 22

4.2 Demographic Characteristics of the Respondents. 22

4.2 To market share affects the company’s financial performance. 24

4.3 Relationship between competition and financial performance. 26

The findings on objective two, regarding the relationship between competition and financial performance. 26

4.4 Best practices in dealing with competition. 27

CHAPTER FIVE.. 29

DISCUSSION, RECOMMANDATIONS AND CONCLUSIONS OF THE STUDY.. 29

5.1 DISCUSSION.. 29

5.1.1 To assess how market share affects the company’s profitability in the competitive environment 29

5.1.2 To establish the relationship between competition and financial performance. 29

5.2 Conclusion. 32

5.3 Recommendations. 32

REFERENCES. 33

QUESTIONNAIRE.. 35

LIST OF TABLES

Table 1: Population, Sample size and Sampling technique. 16

Table 4.2: Age of Respondents. 23

Table 4.3: Market share affects the company’s financial performance. 24

Table 4.4: Relationship between competition and financial performance. 26

Table 4.5: Best practices in dealing with competition. 27

LIST OF FIGURES

Figure 1: Showing gender of the respondents. 22

ABSTRACT

The purpose of this study was to examine the impact of competition on financial performance of telecommunication companies a case study of MTN Uganda. The study was guided by the following objectives; to assess how market share affects the company’s financial performance, to establish the relationship between competition and financial performance and to establish the best practices in dealing with competition.

Using Krejcie and Morgan’s (1970) table for sample size determination approach, a sample size of 40 employees were selected from the total population of 49 employees. In the collection of data from the field the study used both questionnaires and the interview guides

The study results therefore indicated that the best practices of competition include; Adoption of improved software systems for an organization to be able to deal with competition is imperative for an organization to deal with competition. The use of most update technical skills among the organizational employees , After sales service is the way an organization can use to enable the customers understand that they are being cared for by the organization, extrinsic motivation of employees and involvement into Philanthropic activities.

The study made the following recommendations; the study recommends that MTN Uganda should improve on the quality of its products, MTN Uganda should also charge fair prices and lastly MTN Uganda should also advertise aggressively so as it can overcome the challenges of competition.

CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter presents background of the study, the problem statement, Purpose, objectives of the study, research questions, study scope, and significance of the study.

1.1 Background to the Study

The history of competition in Business can be traced from the earliest business dates between 2400 and 2800 B.C for 50 jars of fragrant smooth oil for 600 small weights in grain written on a red clay tablet found in Syria (Coe, 1989, p. 87). Also another evidence of historical competition in Business includes the development of the silk trade between China and a Greek colony in 800 B.C. Furthermore, in the United States, according to Page (1980), competition in Business is a common issue and intense competition in Business started in the industrial revolution between mainly railroad companies at the time (Koske, Wanner, Bitetti, & Barbiero, 2015).

The complexity and volume of competition in Business drastically increased globally in the recent years. Some of the causes that can be attributed to this include globalization, out sourcing, intense competition for existing markets as well as complicated and numerous partnership. Over the last fifty years many, of the world’s largest firms have advanced from being simple manufactures of hard goods, or providers of basic services, to being sophisticated vendors using advanced business models. This means that commitment of customers and suppliers to contractual obligations has increased, thus, the need for sustainable competition polices (Cusumano, Gawer, & Yoffie, (2019).

In most African countries like Nigeria, the competition in Telecommunication Industry is now increasing in importance as customers demand quality and low prices. Organizations are increasingly relying on critical services and production contracts as their key to maintaining competitive advantage, the organization’s competence and process capability in offering affordable products in timely manner is often viewed as a key strength in enhancing the capability of the organization to win over customers (Rendon, & Rendon, 2016).

Since the telecommunication companies have been coming to Uganda there has been an increasing demand for quality at low cost by Ugandans this has thus ignited the need to adopt better and sustainable competition practices to enhance their survival even though the telecommunication companies view competition in business as something that has been in existence since trade was started by humans, this has been mainly because of the need to win over competitors and widen their market base.

The study used transaction cost theory. The transaction cost approach to the theory of the firm was created by Ronald Coase. Transaction cost refers to the cost of providing for some good or service through the market rather than having it provided from within the firm. Coase describes in his article “The Problem of Social Cost” the transaction costs he is concerned with:

In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on. More succinctly transaction costs are: search and information costs, bargaining and decision costs, policing and enforcement costs. Coase contends that without taking into account transaction costs it is impossible to understand properly the working of the economic system and have a sound basis for establishing economic policy. Coase observes that market prices govern the relationships between firms but within a firm decisions are made on a basis different from maximizing profit subject market prices. Within the firm decisions are made on through entrepreneurial coordination. Coase quotes D.H. Robertson on there being,

There are a great variety of arrangements in producing goods. In agriculture often most of the labor force works on a day-to-day basis. In other industries the labor force may be permanent, tied to the firm with long-term contracts. Repair services in some firms may be supplied by an internal organization; in others it is provided by specialized firms from outside. A firm is a system of long-term contracts that emerge when short-term contracts are unsatisfactory.

MTN Uganda has reported a 9.1% increase in net profit to Shs442.6billion for the first six months of 2020. According to company’s latest interim results, the performance was driven by a strong performance of mobile money, data and digital income. Overall, the company’s revenues grew by 7.6% to Shs900billion in the period while data incomes jumped from Sh128billion to Shs167billion representing a 30% growth.

Voice revenues grew from Shs458billion to Shs471billion as the company reported a 10% growth in subscriber base to 13.2 million, up from 13 million last year. Meanwhile, mobile money revenue, which has been another cash cow for the firm grew by 6.5% to Shs214billion as its active mobile money subscribers hit 7.4 million. Prior to this reporting period, the company’s active mobile money clients were 7.3 million. In terms of data, the number of active users went up to 3.2 million from 3.1 million in the period under review as more individuals gained access to internet enabled devices to browse the internet for different reasons.

Financial performance measures are outlined in the financial statements of companies. The income statement, balance sheet and cash flow statements can be used in a variety of ways through horizontal, vertical and ratio analysis to determine the best ways for companies to grow, set goals and become more profitable (Kourtis, Kourtis, & Curtis, 2019).

Telecommunications are the means of electronic transmission of information over distances. The information may be in the form of voice telephone calls, data, text, images, or video. Today, telecommunications are used to organize more or less remote computer systems into telecommunications networks. These networks themselves are run by computers. A telecommunications network is an arrangement of computing and telecommunications resources for communication of information between distant locations (Willner, 2019).

1.2 Statement of the Problem

The financial performance of MTN Uganda overall has been on a down ward trend since 2012. This is observed by the fact that in 2012 MTN reported a profit of 400.4 billion dollars with a large market share of more than 60% and this reduced to UGX 302 billion in 2013, though in 2014 MTN sales performance yielded a profitability higher than 2013 of 331.6 billion it was still much lower than 2012 and more to that poor financial performance has led to a profit reduction by 46.7% to UGX 176.8 in 2015 and in 2016 the profitability which is as a result of poor sales performance reduced further to 96.3 billion shillings until 2017 the financial performance of MTN Uganda overall has failed to pick up and this has led to the narrowing of the MTN financial performance this has also led to the narrowing of its market share to its main Rival (Airtell) to about 54% by 2017 (MTN Uganda, 2019).

The MTN, Records, (2017) further indicates that the percentage growth of sales of the company has been declining ever since Airtell and Warid merged this has thus made the company face stiff competition from its close competitors and this has puzzled experts of what could be the cause.

It’s against this background that this study intended to investigate into impact of competition on financial performance of telecommunication companies, with specific reference to MTN Uganda, Head office.

1.3 General Objective

The purpose of this study was to examine the impact of competition on financial performance of telecommunication companies a case study of MTN Uganda.

1.4 specific objectives

1. To assess how market share affects the company’s financial performance.
2. To establish the relationship between competition and financial performance.

• To establish the best practices in dealing with competition.

1.5 Research Questions

1. How does market share affects the company’s financial performance?
2. What is the relationship between competition and financial performance?

• What are the best practices in dealing with competition?

1.6 Scope of the Research

Geographical scope 

The research was conducted at the MTN Head offices in Kampala District..

Time scope

The study investigated a period of five years from 2015 to 2020

Content scope

The scope of the study included; How market share affects the company’s financial performance, the relationship between competition and financial performance and the best practices in dealing with competition.

1.7 Conceptual frame work

   COMPETITION                                                FINANCIAL PERFORMANCE    

Source : Mathenge, J. (2013).

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter presents an overview of the existing literature based on other writers’ opinions, findings, and viewpoints on the impact of competition on financial performance of telecommunication companies a case study of MTN Uganda.

2.1 Theoretical Background

The study used transaction cost theory. The transaction cost approach to the theory of the firm was created by Ronald Coase. Transaction cost refers to the cost of providing for some good or service through the market rather than having it provided from within the firm. Coase describes in his article “The Problem of Social Cost” the transaction costs he is concerned with:

In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on. More succinctly transaction costs are: search and information costs, bargaining and decision costs, policing and enforcement costs. Coase contends that without taking into account transaction costs it is impossible to understand properly the working of the economic system and have a sound basis for establishing economic policy. Coase observes that market prices govern the relationships between firms but within a firm decisions are made on a basis different from maximizing profit subject market prices. Within the firm decisions are made on through entrepreneurial coordination. Coase quotes D.H. Robertson on there being,

There are a great variety of arrangements in producing goods. In agriculture often most of the labor force works on a day-to-day basis. In other industries the labor force may be permanent, tied to the firm with long-term contracts. Repair services in some firms may be supplied by an internal organization; in others it is provided by specialized firms from outside. A firm is a system of long-term contracts that emerge when short-term contracts are unsatisfactory.

The unsuitability of short term contracts arise from the costs collecting information and the costs of negotiating contracts. This leads to long term contracts in which the remuneration is specified for the contractee in return for obeying, within limits, the direction of the entrepreneur.

Coase notes that the economic theory of the production level of a plant in the short run and long run are well worked out, but the theory of the size of the firm is not well developed. This is clear in the matter of acquisition of companies by other companies.

Ronald Coase gives the origin of The Nature of the Firm as a course in the organization of the business unit which he taught in 1932. He noted that there are inconveniences of market transactions, but if transactions are not governed by the price system there has to be an organization. The object of a business organization is to reproduce the conditions of a competitive market for the factors of production within the firm at a lower cost than the actual market. But if an organization exists to reduce costs then why is there any market transactions at all? Coase gave two reasons:  the costs of organizing additional transactions rise with scale and are equated with the costs of additional market transactions, the organization of bigger firms may not reproduce the effects of market conditions and Coase’s career in economics came as a result of some odd circumstances. Here is what Coase himself says:

In economics Coase single handedly pioneered a nonmathematical but deeply penetrating economic analysis. He examined questions that never occured to most economists. In the rare cases where others considered those questions they did not come to meaningful conclusions as did Coase. The uniqueness of his contribution was recognized with his being awarded the Nobel Prize in economics.

His contribution which is most widely known in economics is what George Stigler named the Coase Theorem. Coase never referred to this proposition as a theorem and its role in his article, “A Problem of Social Cost” is subsidiary to transaction cost approach. In presenting the “Coase Theorem” Coase was arguing that in the absence of transaction costs many surprising results hold. The Coase Theorem says that even in the presence of externalities (although he doesn’t use that term) if there are no transactions costs to creating private agreements the levels of productions of goods will be the same no matter which party to an externality has legal right to compensation. This means that the intervention of the government in the case of externality doesn’t affect production if there are no transaction costs. Intervention of the government in such cases does affect the distribution of income. The economics profession has focused upon the content of the proposition rather than the fact that significance of the presence or absence of transaction costs.

2.2 Market share affects the company’s profitability in the competitive environment

Consumers not only want good and safe products, but would also like to know that what they buy was produced in a socially and environmentally friendly way, and are sometimes willing to pay more for products that are produced in a socially and environmentally friendly manner. Loyalty is a combination of product or service quality, price and intellectual or emotional bonding. More and more customers are considering the environmental and social impacts of companies’ activities when they are making purchasing decisions. Customer loyalty can be created through cause promotions, cause related marketing. The companies need to identify and implement the initiative. Brand visibility, recognition and awareness among the stakeholders can be achieved by putting a good CSR plan in place. Cause branding is intended to reinforce or improve a company’s image by demonstrating the company’s support for a particular cause (Davcik, & Grigoriou, 2019).

In 2013, 62.6 million volunteers participated in community service around the nation Palmer, Tate, Wadud, & Nellthorp, 2018). Volunteers participated in many different types of service including tutoring, office servicing, fundraising, and many more (Corporation for National & Community Service, 20 1 5). In recent years, participation in community service has taken on an integral role in the development of a well-rounded college student (Case, Henck, Schreiner, & Herrmann, 2011). Trends show that male companies are less likely to participate in club and organizations on campus, including community service (Al-Jawarneh, 2016). The trends also show that males are missing out on cognitive development because of these missing pieces, while females continue to get involved in campus activities.

Participating in community service activities has allowed companies to integrate the community development agenda into their companies policy this has thus made it possible for these organizations to make themselves popular (Hoffmann, Lavie, Reuer, & Shipilov, 2018). It is not only important to the companies but it is also beneficial to the community surrounding Franks, & Spalding, 2013).

Companies take up voluntary activity for a range of reasons (Francis, 2011; Gage & Thapa, 2012). Passion for a cause and feelings of obligation have been found to underpin volunteering across all types of volunteers. Companies may also undertake volunteering to enhance their resume, to seek out employment opportunities, or to find out if their chosen profession or pathway will suit those (Lee & Won, 2011). For the university, it is important not only to attract companies to volunteering, but also to keep them for future events. Proper human resources policy, the use of existing experience in attracting and retaining volunteers will allow universities to work more effectively with young volunteers. Motivational policy.

According to Callan and Thomas (2009), there is therefore need for more research concerning the relationship between sustainability performance and financial performance. This, to be able to determine the level of generalization that is possible between various empirical studies. There is also, to a certain degree, need for updated research, since several previous studies could be considered as dated, due to the fast development of sustainability practices and the surrounding context in recent years (Callan & Thomas, 2009). Furthermore, previous research has focused almost exclusively on U.S. firms (Surroca, Tribó, & Waddock, 2010). Thus, more research should be conducted on non-U.S. companies to be able to establish whether there are any differences between nations; where societal or cultural traditions may differ in regards to how corporations should respond to environmental and social concerns (Callan & Thomas, 2009).

Friedman (2018) argues that corporations engaging in sustainability activities incur more costs, thus reducing their net financial performance (Friedman, 2018). Since these additional costs and administrative burdens may affect the corporation’s bottom line negatively it may potentially lead to competitive disadvantages for the firm (Friedman, 1970; McWilliams & Siegel, 1997; Jensen, 2001; Barnett & Salomon, 2006). Therefore, a focus on corporate sustainability challenges the traditional main objective of corporations, which is to maximize shareholder value. More specifically, according to this view, it is believed that any manager who makes investments that is not beneficial for employees, shareholders or its customers, is believed to abuse the firm’s resources (Friedman, 1970). Instead, the cost of social issues and inequality are perceived as problems that may best be solved by others, for instance the government (Waddock & Graves, 1997) and that corporations, thus, should do no more than to abide the law (Friedman, 1970). Jensen (2001), however, has suggested a more nuanced view on value maximization, in which companies should satisfy the needs of their stakeholders as long as the cost of doing so does not distort shareholder value.

2.4 Relationship between competition and financial performance of an organization.

Standardized transportation process, including improved quality control, shorter delivery time, and greater efficiency through the use of various ERP systems like the internet enabled tracking and tracing of the goods in transit, during shipment as well as giving up to date information to the buyers about the goods. This according to (Kotler 2000) enables the trading parties to minimize inefficiencies such as pilferage, theft among others during the logistics of the goods hence improving logistics efficiency and effectiveness.

Simplified logistics and supply chain process. The introduction of ERP systems has not only simplified the logistics process but has also improved on the whole supply chain process including control over suppliers, improved process cycle time, close cooperation relationships, improved supply chain efficiency, raw materials on time for suppliers. According to (Kenneth Lysons 2000), simplified logistics and supply chain process has brought about shorter lead times and has enabled the materials to be available as and when they are required by the buyers for production purposes.

Process Automation With the use of ERP components such as bar coding, Satellite, internets and Image processing among others in the process of managing logistics efficiency, there has been reduction on paper work thereby leading to a substantial reduction of errors, as well as increased capability to obtaining and exchanging real time information. This is possible through the use of information technology systems such as Bar code and scanners which represents a series of alphanumerical characters, bar code readers to interpret bar code symbology, and bar code printers to reliably and accurately print bar codes on labels, cartons, and/or picking /shipping documents. This review is included here because bar code systems are the foundation for many paperless warehousing systems, but the review is meant only as a brief introduction to bar code system. In logistics, bar coding is useful in receiving inbound materials. This helps in quick and accurate data entry, faster checking and clearing of shipments, automatic tracking of the shipments throughout the logistics. (Trent and Monczka 2000)

Improved Logistics process. Logistics management is the process of managing the efficient, costs effective way of transporting goods, supplies and related information from the point of origin to the point of consumption Kenneth Lysons (2000). The introduction of ERP has brought in tremendous improvements in the flow of materials from the point of origin to the point of consumption including reduced arrangement costs and handling times, shortened response time for purchasing, improved order process speed and reduced labor costs.

Improved warehousing facilities. Warehousing is the primary link between the producers and the consumers; it is used for storing products (raw materials, in process inventory and finished goods) before they are finally worked upon or delivered to the ultimate consumers. Through the implementation of internet, ware house efficiency and effectiveness has improved greatly through using opportunities such as e- warehousing, e- receipts and e- issuing. These have brought about accurate operations in the warehouse hence complementing logistics management efficiency (R.J Carter, 1990)

Reduce product delivery time. Through the implementation of ERP in organizations Company the organizations’ processes of making payments to their suppliers have improved greatly including faster payment systems like using ATMS, credit cards among others. This reduces among others interest rate, credit risk among others (Aberdeen group 2005).

Improved distribution process. According to Donald W Dobler and David Burt (2001)With improved tracking and tracing as a result of using ERP systems like the internet, satellites among others, the company that is to say the distributing company is assured of efficiency and effectiveness in the distribution process as their trucks are properly tracked and traced so that in case the deliveries are made to a different location, the mistake can easily be rectified.

Proper monitoring. The introduction of ERP in international trade has brought about efficient and effective monitoring of the materials during transit to their various destinations. This is done through use of technologies that allows communication across a very wide geographical area.

Faster information transfer. ERP enables a speedy transfer of information between the supplier and the buyer. Therefore, all the necessary information that the supplier needs to give to the buyer regarding how the goods in transit should be handled, stored and packed are given to the buyer prior to delivery so that special attention is taken by the buyer where necessary( Van Horne 1994)

Reduce inventory levels. According to ( (ThomsonSingh2001; thompson, 2014)) ERP helps the buying organisation to order the needed items at the right time and once the need arises then an order will be placed. This helps the organisation to do away with bulk stock levels hence solving the problem of inventory costs like obsolescence and dampness leading to losses this leads to efficiency and effectiveness in the logistics operations.

Globalization, According to (oketcho, 2010), ERP has not only brought the world closer together, but it will allow the world’s economy to become a single interdependent system. This means that we will not only share information quickly and efficiently, but we will also bring down barriers of linguistic and geographic boundaries. The world will developed into a global village due to the help of information and communication technology, allowing countries like Chile and Japan who are not only separated by distance but also by language to share ideas and information with each other.

Communication, Chaffey (2007) asserts that with the help of ERP, communication becomes cheaper, quicker, and more efficient. We can now communicate with anyone around the globe by simply text messaging them, or sending them an email, for an almost instantaneous response. The internet has also opened up face-to-face direct communication from different parts of the world, thanks to the help of video-conferencing.

2.4 Best practices in dealing with competition

According to Ajuwon, (2015) companies across the globe have to identify in order to stand out of the crowded market place they have to engage in more knowledge development of the employees. Knowledge has become one of the most highly valued commodities in the modern economy. Further, knowledge is considered the principal tool of competitiveness and innovation in the composition of commodity chain to the broader processes of regional and national economic development. In line with Tarhini et al., (2015) the new paradigm is that, within the organization, knowledge must be shared in order for it to grow thus sharing knowledge among its management and staff grows stronger and becomes more competitive.

Some of the most significant changes are the growing importance of knowledge as a catalyst of economic growth within the global economy, the revolution of information and communication technology (ICT), the integration of the global labour market and worldwide socio-political transformations (Lwoga et al., 2016). Access to and production of knowledge are essential prerequisite for participation in the global economy as noted by (Lwoga et al., 2016).

Telecommunication companies have significantly increased the speed of production, use and distribution of knowledge, thus making a country’s economic and social wellbeing dependant on how quickly it can adjust its capacity to share and generate knowledge.

Transformations brought to different firms as a result of information systems offer many potential opportunities for both developed and developing nations (Komba et al., 2016). However, on the negative side, they also pose serious threats, and especially for developing nations. There is ample evidence that processes of globalization and the ascent of Manuel Castell’s ‘Information Society’ have given rise to new problems, such as the growing knowledge gap and digital divide between the information rich and the information poor among and within nations.

Knowledge Management (KM) has attracted the attention of researchers over the last decade since it is considered an important tool to achieve innovation and sustainable competitive advantage (Meeker, 2015). Takieddine & Sun (2015) noted that in highly unstable economies the only sure source of lasting competitive advantage is knowledge.  Firms that adopt knowledge management practices perform better than competing firms that do not (Bayero, 2015), on the same line of thought, Ukachi, (2015) further asserts that knowledge management practices have been implemented in different industries both service and manufacturing to enhance better performance and increased output.

The adoption of more efficient computers in telecommunication companies. The adoption of computers in telecommunications is not a new phenomenon, Ahmadi (2013) asserts that in the 1970’s, its promoters claimed that it would transform and enhance the competitive strength of organizations.  Ludeman & Erlanson, (2013) the late 1980’s saw a growing shift towards computer integration which emphasized the use of computers in most of the government’s daily work like the preparation of reports, accountability and monitoring of government projects which changed from manual to automated.

According to Busagala, & Kawono, (2013) 1990’s saw a heightened focus on increasing the use of computer technology in Health, defence and Education departments of most governments across the globe., the author further notes that there is growing attention and pressure to implement technology in education, one of the most significant features of the technological or digital era of much relevance to education is the Internet.

Nishimura, Kawamura, & Sakurai, (2011) notes that Intrinsic motivation enables the teachers to be devoted to their profession because they view it as important specifically to themselves and therefore without being told what to do and they are able to concentrate on their work and teach leaners well. It is therefore imperative to note because of the intrinsic motivation teachers teach are able to teach the children even in harsh conditions so that to enable the leaners pass their examinations.

2.5 Gaps in the literature

In analysis of the literature on the study of impact of competition on financial performance of telecommunication companies a case study of MTN Uganda. It was evident a number of studies have been carried regarding the topic under investigation however there has not been a concrete study specifically in MTN Uganda and it is against this study intends to fill this gap by specifically concentrating on MTN Uganda.

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter included the research design, study population area, sample size, sampling techniques and procedure, data collection methods, data collection instruments, validity and reliability, data quality control, data analysis, data measurements, ethical considerations and limitations of the study and it provided justifications of the methodology that was used for the study. The research design and analytical path of any research project should have a specific methodological direction based on its research objectives and framework.

3.1 Research Design

According to Johnson & Christensen (2019) research design is the conceptual blueprint within which research is conducted, while Fisher (2007) states that a research design is defined as a detailed outline of how an investigation takes place. The study will adopt a descriptive survey design which provided descriptions of the variables to answer the research questions. This study used two approaches; the qualitative and quantitative research design. Quantitative design also allows comparisons between respondents, giving the right perspective on the variables under study (Riffe, et al., 2019). Quantitative design is based on measurement of quantity hence this was used in calculating simple percentages and the number of respondents (Gray, 2019).  The choice of this technique is also guided by the fact that the study aims at generating findings, which would facilitate a general understanding and interpretation of the problem. The quantitative data was triangulated with Key Informant Interviews to provide explanatory information to the statistical data.

3.2 Study population and Area

Martin, (2019) defines a study population as the group in which a researcher wants to pick a sample from in order to make generalizations. The study specifically focused on the employees of MTN since they are the people who have clear information regarding the subject under study.

3.3 Sampling techniques

This study employed both probability and non-probability sampling techniques. Probability sampling techniques included simple and stratified random sampling which was used to select key respondents of the study. This ensured that there is representativeness. Besides, it provided an equal chance to all of being selected. Non-probability sampling techniques included purposive; namely key informants to ensure people with particular information about the subject under study are selected. Snow ball sampling was used to reach respondents through referrals and enable the researcher interview respondents who can provide data on the topic under study.

3.4 Determination of the sample size

Mugenda and Mugenda (2003), argue that it is impossible to study the whole targeted population and therefore the researcher took a sample of the population. A sample is a subset of the population that comprises members selected from the population. Using Krejcie and Morgan’s (1970) table for sample size determination approach, a sample size of 40 employees were selected from the total population of 49 employees.

Table 1: Population, Sample size and Sampling technique

Source: MTN head office Employee List, (2016)

3.5.0 Data sources and collection instrument

Majorly, two types of data sources – primary and secondary will be used for this study

3.5.1 Data sources, Collection Procedure and Instruments

Two types of data namely primary and secondary data was used to collect data using different methods. Primary data was collected using questionnaires and direct interviews. The study adopted a mixture of qualitative and quantitative methods to obtain data on the topic under study. Qualitative data was collected using interview guides and was used to collect data on feelings, beliefs and attitudes regarding the subject under study.  Quantitative methods were used to generate quantifiable data, using a questionnaire, which was the main instrument used because of its convenience and efficiency in data collection. The different tools and data sources was used to make triangulation feasible (Amin 2005).

3.5.2 Secondary data sources

Secondary sources of data that was reviewed include scholarly books, magazines, dissertations journals and articles. This source is useful in collecting data from already written literature for example e-books, journals, published articles and periodicals as part of literature review. Documentary resources was classified in order to facilitate the data collection and textual analysis (Mubazi, 2008).

3.6 Data Collection Methods and Instruments

The study adopted a mixture of qualitative and quantitative methods. Qualitative data was collected using interview guides. The use of interview guides to enable data collection on feelings, beliefs and attitudes regarding the subject under study. While quantitative data was collected using a questionnaire.

3.7.1 Questionnaire

Ahuja (2009) defines a questionnaire as a structured set of questions that are given to people in order to collect facts or opinions about something. The researcher used closed-ended questions because they are easy and quick to answer, and they are helpful in improving consistence of the responses.

3.7.2 Interviews

According to Ahuja (2009), an interview is a two-person conversation initiated by the interviewer for the specific purpose of obtaining research-related information. It focused on the content specified by the research objectives, description and explanation. An interview guide, which is referred to as a set of questions for which answers, will be used by a researcher to interview respondents. The use of this tool gives the researcher control over the line of questioning hence time saving.   Interviews were conducted in a quiet place without noise with the key informants

Like parents.

3.8 Data collection procedure

The researcher obtained a recommendation and an introductory letter from Kyambogo University, after which he sought permission from the university.

3.9 Data Quality Control of the Instrument

3.9.1 Reliability of the questionnaire

According to Mugenda and Mugenda, (2003) reliability is the measure of the extent to which research instruments are able to provide the same results upon being tested repeatedly. Crobach’s coefficient alpha (a) as recommended by Amin, (2005, P.302) was used to test the reliability of the research instrument. The instrument is deemed reliable if reliable of 0.7 and above is obtained and therefore, it was adopted for use in the data collection.

Formula for reliability is

=       ( )

Where  = alpha reliability co efficiency.

K=Number of items included in the questionnaire

= sum of variance of individual items

= variance of all items in the instrument.

To ensure credibility and trust worthiness of qualitative data the researcher will ensure that only the officials who are employees of MTN were interviewed.

The coefficient ranges between a=0.00 for no reliability, a =1.00 for perfect reliability. The closer alpha gets to 1.0 the better. If the study findings result to Cronbanch’s Alpha of 0.7 and above, this signified that research instrument is good enough for the study. According to Amin (2005), all the measurements in the instrument that show adequate levels of internal consistency of cronbach’s alpha of 0.77 and above are accepted as reliable.

3.9.2 Validity of the questionnaire

Validity is defined as the extent to which results can be accurately interpreted and generalized to other populations (Oso & Onen, 2008). While Borg & Gall, 1989 as cited in Onyinkwa, (2013) validity is defined as the degree to which results obtained by the research instrument correctly represented to the phenomenon understudy and Mugenda & Mugenda, (2019) as the accuracy and meaningfulness of inferences which are based on the research results.

Amin, (2005) recommended minimum CVI of 0.7 to be used. Validity was tested using content validity index which involves judges scoring the relevancy of the questions in the instruments in relation to the study variables.

The formula for Content Validity Index is;

CVI =

Where CVI = content validity

n= number of items indicated relevant.

N = total no. of items in the instrument

In this study, validity was achieved by establishing content validity. The researcher achieved content validity by using the experts to assess the validity of the research instrument. The experts especially research supervisors and consultants from Kyambogo University will be given data collection tools to assess whether the items in the instruments are valid in relation to research topic, objectives, and questions. From the instruments they will declare some items valid and others invalid. Those declared invalid was dropped, others adjusted, while the valid ones were maintained.  Then content validity index (CVI) was computed by dividing the number of items declared valid by total number of items/questions in the data collection instrument.

3.10 Data Collection Procedures

The researcher obtained an introductory letter from Kyambogo University to seek permission and enable easy access of information by the researcher from MTN Head offcie branch, after the permission is granted from, the researcher went ahead and administer questionnaires and interviews will be done for the selected respondents however the researcher sought the consent of the respondents before being given questionnaire and the respondents was informed that the study was strictly for academic purposes.

3.11 Data Processing and Analysis

This section covered methods of data processing and analysis.

3.11.1 Data Processing 

In order to ascertain the accuracy, consistency, uniformity, proper arrangement and completion of the data, the researcher used the computer for data entry, editing and data coding. The computer was used because it increases the speed of computation and data processing and handles huge volumes of data, which is not possible manually. It facilitated copying, editing, saving and retrieving the data easier and validation, checking and correction of data.

3.11.2 Data analysis

Data collected was checked, coded and edited for completeness and accuracy. Data was analyzed using the statistical package for social scientists (SPSS) version 21.0 for Windows. It was analyzed using frequency distribution tables, excel spread sheets and Spearman correlation to determine the degree of relationship between variables. Qualitative data was also used to analyze descriptive statistics using opinions and attitudes of respondents and developing themes.

3.12 Ethical consideration

Ethical considerations was taken care of by, first seeking authorization from the Kyambogo University administration and other relevant authorities. Questionnaires was structured in such a way that there is no mention of the interviewee’s name which ensures strict confidentiality in data.

Further, responses were optional and respondents were not being given any inducements to participate in the study. Ethical considerations were taken care of by the researcher by briefing the respondents on the purpose of the research, their relevance in the research process, and expectations from them as explained by Lloyd Bevan (2009).

Informed consent was ascertained from informants/respondents. They were promised confidentiality about the information they provide. The researcher explained to the respondents the purpose of the study as purely academic and that the information obtained were treated with utmost confidentiality. If anybody other than the University authority is to have access the information, the researcher first sought the consent of the respondents.

Limitations of the Study

• The respondents feared to answer the questions asked as they feel that their security may be at stake.
• Respondents did not have enough time to answer the questions
• The respondent expected to be given some money during the research process

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

This chapter consists of the presentation, discussion and analysis of the findings from the study. It provides results which were analyzed from raw data collected in the field. It is in two categories; the first one represents the demographic characteristics of the respondents while the other category represents the responses of the questions that were asked concerning research objectives. The analysis was done and data is represented in form of tables, graphs and pie-charts.

4.1 Overview of the Study

The study was carried out at Mtn Uganda. Questionnaires and interview guides were designed to obtain data from a sample size of 40 was selected, and these were top management, operational staff and customers. The findings of the study were presented in accordance to the study objectives.

4.1.1 Response Rate

A sample of 20 respondents was selected using purposive sampling methods. Questionnaires, and interview guides were administered to them for data collection. Among the 40 respondents, all of them returned the questionnaires, giving a response rate of 100%.

4.2 Demographic Characteristics of the Respondents

The background characteristics compiled show the gender, age, the education level and period of work. This data was analyzed and is presented below;

Figure 1: Showing gender of the respondents

Source: Primary Data

From figure 4.1 above, it’s indicated, majority of respondents (53%) were males and the females were only 47% of the total respondents. This implies that men were found to be active in the study under investigation. However, both ideas were relevant for the study. This indicates that the institution employees more males than females in procurement and stores department.

Table 4.2: Age of Respondents

Source: Primary Data

Table 4.1 shows that, the majority (40%) of the respondents were predominantly between the ages of 31 and 40 years. A significant percentage (25%) of the respondents was in the age bracket of 41 and 50years. The remaining 20% of the respondents were in the age bracket of 18 and 30years and another 15% of them were in the age group of 50 and above. 31-40years had the highest number because these are the most active age group hence they are actively involved in management in the organizations, therefore they had rich experiences and could also appreciate the importance of the study.

The table above shows that most of the interviewed respondents (55%) were of degree holders, 30% were of Certificate/Diploma and only 15% of the study respondents were of A’ level while none of the respondents had a postgraduate nor of O’ level therefore, provided information based on the academic knowledge, skills and experience they have gain in management. This shows that company employees are qualified and competent to execute their duties and also appreciated the study under investigation.

Findings in table above, it was revealed that majority (45%) of respondents have worked at organization between 4years and above, followed by 1-3 years  with 30% and less than 1year with (25%). This implies that the majority of the employees are experienced in the activities of the firm and they act as the role models for the newly recruited staff members with regard to study.

4.2 To market share affects the company’s financial performance.

The findings on the influence of market share on the company’s financial performance. This was presented in the table below;  The results were obtained and are presented below;

Table 4.3: Market share affects the company’s financial performance.

Source: Primary Data

According to the table above, most of the respondents (62.5%) of the respondents agreed with the fact that Increase in income activities is one of the ways how market share affects profitability, 22.5% of them disagreed and only 15% of them were not sure. This implies that the increase in income activities is achievable when the company has a large market share.

Table above also indicate that 65% of the respondents agreed with the fact that Popularity of the company’s products is one of the ways of achieving profitability in a competitive environment, , 15% of the respondents disagreed, 20% of the respondents were not sure.

The table indicates that, most of the respondents (75%) of them agreed with the fact that Customer awareness of the product, 15% of them disagree, 10% of the study respondents were not sure. This implies that majority of the respondents agreed that customer awareness of the product affects profitability of the company’s products.

In line to the study findings the respondents indicated that Increased sales is one of the benefits achieved when the company has a big market share this view was only disagreed by 7.5% of the members during the study.

4.3 Relationship between competition and financial performance

The findings on objective two, regarding the relationship between competition and financial performance.

Table 4.4: Relationship between competition and financial performance

Source: Primary Data

According to the findings in the study majority of the respondents disagreed with the findings that when there is competition companies make more profits, this was indicated by the fact that 87.5% disagreed and only 7.5% agreed.

The study results also further showed that Competition enhances performance this view was supported by the fact that 90% of the respondents agreed and only 5% disagreed.

On regarding the question of Companies make more money when there is competition majority of the respondents disagreed and only 25% disagreed.

The study results also further shows that majority of the respondents agreed with the fact that competition enhances financial management of the company this view was also further supported by 12.5% of the respondents.

Majority of the respondents also indicated that 55% of the respondents hold the view that Competition increases better performance

4.4 Best practices in dealing with competition.

The results were obtained and are presented below;

Table 4.5: Best practices in dealing with competition

Source: Primary Data

According to the study findings majority of the respondents (100%) strongly agreed that there is need for Adoption of improved software systems for an organization to be able to deal with competition is imperative for an organization to deal with competition. When the organization has an improved software system especially in the telecommunication sector, this tends to improve the quality of services that the organization is serving, from the above analysis it is also evident that software systems are imperative in enhancing the quality of the services that the organization is offering there by eliminating challenges.

According to the findings in the study majority 65% of the respondents held the view that Use of most update technical skills among the organizational employees is critical in enabling an organization over challenges of competition in the study only 10% disagreed. This findings also indicates that it is essential for an organization to overcome competitors through ensuring that employees use the most updated technical skills among the employees.

The study results also further indicates that after sales service is essential in enabling the organization to in position to overcome competition. After sales service is the way an organization can use to enable the customers understand that they are being cared for by the organization, the results further showed that 70% of the respondents assert that After sales service is one of the better ways of fighting against competition from other competitors, during the study only 10% disagreed and 5% strongly disagreed with the statement.

The study findings also further indicated that 70% of the respondents indicated that extrinsic motivation of employees was one of the better ways of eliminating competition and enabling an organization stand strong against its peers this view was only disagreed by 20% of the respondents.

The study results also indicates that 80% of the respondents stated that Philanthropic activities is one of the ways of eliminating competition by one organization this view was only refuted by 10% of the respondents.

The table results indicates that 85% of the respondents indicated that Advertisement strategies is one of the better ways of eliminating competition, while only 5% disagreed with the findings.

CHAPTER FIVE

DISCUSSION, RECOMMANDATIONS AND CONCLUSIONS OF THE STUDY

5.1 DISCUSSION

This section presents the discussion of the study in line to the study objectives; which specifically included; to assess how market share affects the company’s financial performance, to establish the relationship between competition and financial performance and to establish the best practices in dealing with competition.

5.1.1 To assess how market share affects the company’s profitability in the competitive environment

The study results indicates that Increase in income activities is one of the ways how market share affects profitability, This implies that the increase in income activities is achievable when the company has a large market share and therefore leading to profitability.

The study findings also further indicated that Popularity of the company’s products is one of the ways of achieving profitability in a competitive environment, this view was also further supplemented by the fact when the company has a big market share it becomes popular.

The study results further indicates that Customer awareness of the product, this implies that majority of the respondents agreed that customer awareness of the product affects profitability of the company’s products, this is because when the customers are aware the organization is able to sell more products.

The results in the study also further indicates that when there is  Increased sales is one of the benefits achieved when the company has a big market share this view was only disagreed by 7.5% of the members during the study.

5.1.2 To establish the relationship between competition and financial performance

The study results indicates that majority of the respondents indicated that when there is competition companies makes little profits. This view therefore indicated that when there is competition the company faces several challenges and it is not able to make enough profits due to several challenges that it will be facing.

On regarding the question of Competition the response indicated that competition enhances performance this view was also further indicated by the fact that the results also indicates that

On regarding the question of Companies make more money when there is competition , it was evident that majority of the respondents indicated that companies donor make more money when there is competition this is  because of the challenges companies face in competition are enormous.

It was also revealed that competition enhances financial management of the company this view also indicated when there is competition companies are able to design appropriate ways of managing their finance.

It has also been noted that Competition increases better performance, this has also been revealed that when there is competition companies become vigilant and spend money on only essential activities to enable them gain competitive advantage.

5.1.3 Best practices in dealing with competition

The study results indicates that majority of the respondents strongly agreed that there is need for Adoption of improved software systems for an organization is imperative for an organization to deal with competition, from the above finding it was also further indicated that when the organization has an improved software system especially in the telecommunication sector, this tends to improve the quality of services that the organization is serving, from the above analysis it is also evident that software systems are imperative in enhancing the quality of the services that the organization is offering there by eliminating challenges, this view was also further stated by   Ajuwon, (2015) who indicates that companies across the globe have to identify in order to stand out of the crowded market place they have to engage in more knowledge development of the employees. Knowledge has become one of the most highly valued commodities in the modern economy. Further, knowledge is considered the principal tool of competitiveness and innovation in the composition of commodity chain to the broader processes of regional and national economic development.

The findings in the study further indicates that majority of the respondents held the view that Use of most update technical skills among the organizational employees is critical in enabling an organization overcome challenges of competition this view was also shared by Lwoga et al., (2016) who indicates that some of the most significant changes are the growing importance of knowledge as a catalyst of economic growth within the global economy, the revolution of information and communication technology (ICT), the integration of the global labour market and worldwide socio-political transformations .

According to the findings in the study the respondents indicated that after sales service is one of the better ways of fighting against competition from other competitors. This also indicates that when the company offers after sales service to its clients it’s able to retain them and therefore fight against competition.

On regarding the question of extrinsic motivation of employees. The results revealed that one of the better ways of eliminating competition and enabling an organization stand strong against its peers, it is through extrinsic motivation of its employees this view was also shared by Nishimura, Kawamura, & Sakurai, (2011) who notes that extrinsic  motivation enables the employees to be devoted to their profession because they view it as important specifically to themselves and therefore without being told what to do and they are able to concentrate on their work and teach leaners well. It is therefore imperative to note because of the intrinsic motivation teachers teach are able to teach the children even in harsh conditions so that to enable the leaners pass their examinations.

The study results of the study indicates that after sales service is essential in enabling the organization to be in position to overcome competition. After sales service is the way an organization can use to enable the customers understand that they are being cared for by the organization. This therefore indicates that after sales service is essential in enabling an organization to be in position to overcome the challenges of competition.

The study findings further shows that Philanthropic activities is one of the ways of eliminating competition by one organization, this findings therefore indicates that when an organization is engaged into phillathropic activities it has the ability to eliminate competition from other organizations., this view was also in line with UNCTAD, 2014) who indicates that philanthropic activities are essential in enabling the company eliminate competition by appearing stronger than competitors.

The study findings in the study also further indicates that organizations like telecommunication companies can use Advertisement strategies as one of the best practices in overcoming the challenges of competition in the organization.

5.2 Conclusion

The study made the following recommendations;

The study results therefore indicated that the best practices of competition include; Adoption of improved software systems for an organization to be able to deal with competition is imperative for an organization to deal with competition. The use of most update technical skills among the organizational employees , After sales service is the way an organization can use to enable the customers understand that they are being cared for by the organization, extrinsic motivation of employees and involvement into Philanthropic activities

5.3 Recommendations

The study made the following recommendations;

• The study recommends that MTN Uganda should improve on the quality of its products.
• MTN Uganda should also charge fair prices.
• MTN Uganda should also advertise aggressively so as it can overcome the challenges of competition.

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QUESTIONNAIRE

Dear Respondent,

I am a Abraham Edonu a student of Kyambogo university in public administration and management.

This questionnaire has been designed purposely for data collection on information systems and performance of government agencies. You have been carefully identified as a potential person who can provide useful and reliable data that will help policy makers and implementers to improve on impact of competition on financial performance of telecommunication companies a case study of MTN Uganda

Dear Respondent,

Section A: Background information about the respondent

1. Gender of the respondent

Male                            Female

2. Age bracket of respondent in years

18 –30                         31-40                           41-50                           Over 50

3. Highest level of education attained by respondent

“O” Level                    “A” Level                    Certificate/Diploma                         Degree Postgraduate

5. For how long have you been working in this organization?

Less than 1 Year                     1-3 Years                                4 Years and above

Section B: To assess how market share affects the company’s profitability in the competitive environment.

 Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree,   A-Agree,       NS- Not Sure,   D- Disagree,     SD-Strongly Disagree

Section C: To establish the relationship between competition and financial performance.  Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree

Thank you for responding

Section D:  Best practices in dealing with competition

.  Here you are requested to indicate the level at which you agree with the statement.   The keys have been displayed below where:

SA- Strongly Agree, A-Agree, NS- Not Sure, D- Disagree, SD-Strongly Disagree