MONDAY: 4 April 2022. Morning paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.
QUESTION ONE
KAY SKY-LINER LIMITED (KSL)
Kay Sky-Liner Limited (KSL) was registered twenty years ago as a limited company in the aviation industry to. offer cargo transport services and passengers transport services in East Africa with a view of expanding its operations to other countries in Africa. The company is listed on the Nairobi Securities Exchange and its main office is situated at Nairobi city in Kenya with terminal offices in other major cities of East Africa.
The company’s management comprises of seven directors. One of the directors is a non-executive director who does not participate in the day to day management of the company but attends the Minuet General Meetings (AGM) of the company held once in a year. The last AGM was held three years ago during a period when the executive directors were charged with governance issues of the company.
The company has seven airplanes in use currently that were purchased ten years ago; three of the airplanes are used in the business of cargo transport while four of the airplanes are used in the business of passenger transport. The captain of each plane is responsible for the plane and reports directly to any of the executive directors in terms of all activities of the plane, strategies employed and management of human resources assigned to the plane. The executive directors discuss the reports of each captain between themselves in monthly meetings of the company’s executive directors.
For many years the company enjoyed high growth of business in terms of market share and growth rate for both lines of business as compared to its competitors. This scenario prompted the expansion of market into other countries in Africa few years after the formation of the company. The upward trend of the company’s growth persisted for a period of eight years after which it started declining gradually. The market share as well as the market .price of shares of the company reduced significantly as compared to those of its competitors in the region. For the last three years, declared dividend remained unpaid and interest due on loans borrowed were unpaid. The shareholders of the company and other stakeholders became increasingly concerned about their stake in the company.
In the year 2020, the company’s passengers line of business unit curtailed its business growth due to Covid 19 pandemic and other strategic issues. The company’s cargo transportation line of business continued operating at a lower seek.
In March 2022, The Board of Directors (BOD) held a meeting to deliberate on the best strategies to craft in order to salvage the company from winding up. The Chairman tabled an audit report for the previous period of operation to the meeting of the BOD, emphasising on matters highlighted in the audit report and the recommendations made by the auditor for the attention of the Board.
The audit report recommended that proper system of governance be put in place to address issues raised in the report such as formation of Board committees with proper mandate, development of a proper vision and mission of the company, preparation of strategic plans and objectives of the company, establishing an organisation chart and other management systems that reflects the nature of business of the company. The report highlighted expenditure approval for corporate social responsibility (CSR) amounting to twenty percent of total revenue. Three months salary arrears are reflected in the audit report and the management has received a letter from the union of employees of the company on human resource practices in the company. The union has threatened to call a strike within one month if workers issues are not addressed.
The Board made a resolution to outsource for a consultant to help in crafting the best strategies to counteract the challenges facing the company.
Required:
1. Assess any four important types of Committees that KSL should establish, giving examples of important tasks to be assigned to these committees. (8 marks)
Suggest a reason in each case why KSL shoiild develop both a vision statement and Mission statement. (4 marks)
2. Suggest four defensive strategies that KSL might use. (8 marks).
3. Evaluate any four threats that KSL could be facing. (8 marks)
4. Propose three types of diversification strategies suitable to KSL (6 marks)
5. Discuss three stakeholders whose interest is violated by KSL. (6 marks)
(Total: 40 marks)
QUESTION TWO
1. Discuss how strategic management could be made more effective. (5 marks)
2. Examine the role of corporate history in shaping the strategy of an organisation. (5 marks)
3. Evaluate the importance of corporate values in strategic management. (5 marks)
(Total: 15 marks)
QUESTION THREE
1. Discuss four limitations of a focus strategy. (4 marks)
2. Multi-business organisations might create a “parent” to which strategic business units (SBU) have reporting and accountability relationship. Assess three positions an SBU could occupy in the Parenting Fit Matrix. (3 marks)
3. Describe four broad barriers that might impact international business strategy. (4 marks)
4. Distinguish between “deliberate” and “emergent strategy”. (4 marks)
(Total: 15 marks)
QUESTION FOUR
1. Barriers to entry and exit make it difficult for new firms to enter the industry and existing ones to quit.
Examine five factors that cause entry barriers. (5 marks)
2. Discuss the importance of environmental scanning to an organisation. (5 marks)
3. Analyse five conditions that must be fulfilled to make value chain more effective. (5 marks)
(Total: 15 marks)
QUESTION FIVE
1. Examine five reasons why your organisation might choose to use Boston Consulting Group (BCG) Model in strategic Management. (5 marks)
2. Justify the need for change in organisations. (5 marks)
3. Assess five challenges that might hinder successful strategy implementation. (5 marks)
(Total: 15 marks)
