MONDAY: 24 April 2023. 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
MAGHARIBI LIMITED (ML)
In December 2018, Magharibi Limited, a software developing company founded in the year 1990, spent Sh.1.9 billion in acquisition of Quick Data Services (QDS), a data handling company. Though the takeover was a hostile one, it made ML become a formidable technology services provider. The takeover also enabled the company to better compete with Mashariki Limited, a technology services provider which controlled more than 10% market share of the multi-billion technology market. At the time of the acquisition, Mashariki Limited was the market leader in the technology industry, with Magharibi Limited in second place while QDS was a distance sixth. Founded by Mark Mensa in the year 1995 as a
start-up, QDS was the pioneer of outsourced business data management and was making profits until technology downturn happened in the year 2000. The situation was made worse by the threat of investors from Asia who were offering similar services at sharply reduced prices.
The company has had a relatively low growth until January 2018 when Dan Ford was hired as the new Chief Executive officer (CEO). With his recruitment, the company started exhibiting exponential growth. The CEO attributed this growth to the company`s strong commitment to its vision of creating cutting-edge technology. According to him, this made life better for everyone, everywhere.
The mission of ML is to provide innovative products and services that make a difference in the lives of its customers, and to continuously improve its offerings to meet their changing needs. The company’s values include; customer obsession, innovativeness, team spirit, integrity and responsibility.
Magharibi Limited had been primarily known for its software development prowess, but the marketing department had not been vibrant until its hostile takeover of QDS. Before the acquisition of QDS, the company seemed not to have a clear focus on the strategy to pursue: whether low cost, high cost, penetrative or otherwise. The CEO lamented that many competitors offered information technology services that were “low-tech, low cost”. Their major rival Mashariki Limited offered “high-tech, high cost,” while ML did not have a clear marketing strategy. In the year 2021, Magharibi Limited embarked on a mission to offer customers “high-tech, low cost” services by improving the marketing of its outstanding services. To achieve this mission, the CEO split the centralised sales team and assigned them to each strategic business unit (SBU); he also hired executives from outside the company and cut costs by laying off some staff, among other changes. After the decentralisation, the SBUs controlled over 80% of their own budget expenses, up from 20% previously.
Ford’s strategic and tactical interventions have borne fruits and the company is on an upward trajectory. The company’s profitability for the year 2022 was double the one for the previous year and the board is optimistic that the CEO will help the company scale even greater heights in the foreseeable future.
Required:
1. Magharibi Limited (ML) spent Sh1.9 billion in acquisition of Quick Data Services (QDS), a data handling company.
Evaluate FIVE benefits that could accrue to ML from this move. (10 marks)
2. Examine FIVE components of Strategic Business Units (SBUs) as deployed at Magharibi Limited. (10 marks)
3. The CEO, Dan Ford, made critical strategic decisions to ensure growth of the company.
Examine FIVE steps the CEO and his team could have followed while making the decision to takeover Quick Data Services (QDS). (10 marks)
4. Explain FIVE considerations that could have made ML develop a good vision statement. (10 marks)
(Total: 40 marks)
QUESTION TWO
1. Describe FIVE organisational structures in strategic management. (5 marks)
2. Identify FIVE benefits of using strategic management information system in an organisation. (5 marks)
3. Examine FIVE benefits of formulating clear strategic objectives. (5 marks)
(Total: 15 marks)
QUESTION THREE
1. Explain FIVE factors that affect workplace culture as espoused by Geert Hofstede. (5 marks)
2. Examine FIVE symptoms of resistance to change in an organisation. (5 marks)
3. Analyse FIVE challenges faced while developing business strategy for foreign markets. (5 marks)
(Total: 15 marks)
QUESTION FOUR
1. Identify FIVE tools that companies can use to conduct an external business environment analysis. (5 marks)
2. The scope of a project needs to be defined first when entering a new market. Using the “deep dive” analogy, explain FIVE steps involved in the strategy development process. (5 marks)
3. Strategic drift refers to the phenomenon where a company deviates from its original strategy over time.
Analyse FIVE factors that may cause this drift. (5 marks)
(Total: 15 marks)
QUESTION FIVE
1. The VRIO framework is a tool that companies can use to analyse their internal resources and capabilities to determine whether they have a sustained competitive advantage.
Describe the FOUR elements of this framework. (4 marks)
2. Assess 5Ps of strategy according to Henri Mintzberg. (5 marks)
3. Explain SIX types of Business strategy. (6 marks)
(Total: 15 marks)
