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Friday 27th October:: Safaricom profits: Good but?

Profits are good and sure indicators of success of a company.  Supernormal profits (as they are termed by accountants) are even better signs, though unlikely to be sustainable. I do share the joy of the current huge profits declared by Safaricom.  The profits however are an indicator that the mobile call pricing may not be based on business reasoning. It will be noted that there has been public outcry on mobile call charges when compared to rates in other countries.  I fear that this may be the case given the Supernormal profits. Besides, there are only two Competitors in the sector, the third one still struggling with start up process.  The Government urgently needs to free the telecommunication sector more so the mobile telephone.
This will encourage competition in the sector. The ensuing competition will not only ensure reduced prices but further creation of employment opportunities spread through many players in the market. But, my sentiments notwithstanding, Safaricom’s approach to business has been admirable.  It has been a leader in adopting new strategies on a continuing basis. It is particularly highly innovative.
It has been on the run even when the competition appears to be not too much of a threat. But recent indicators are that Safaricom can also be outdone. Indeed, it is yet to have a regional presence.  But, I wonder whether the small business sector has learnt some lessons from this. The maneuvers by the two main competitors are applicable to both big and small business. You must keep strategizing and strategizing on a continuing basis. The business must keep growing even when it seems not to be threatened. Even when competition sets in, you must keep up with it. It is the only way to remain profitable. It is the only way to remain in business. I do know however, that most small businesses or SMEs are unable to overcome competition and are probably just there unaware of how to deal with it.  Competition drives business to success or failure. For Safaricom it has been success. For most SMEs, could I be wrong in saying that it is a wait and see affair? For those that are profitable, is the profitability  sustainable?

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