STRATEGIC MANAGEMENT DECEMBER 2021 PAST PAPER

WEDNESDAY: 15 December 2021.                                                                  Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question.

QUESTION ONE

MWANANCHI BANK LIMITED (MBL)

It is December 2021, and the momentum is high at Mwananchi Bank Limited (MBL). The bank recently won several awards in a high profile award ceremony held in Durban, South Africa. The company was named as the fastest growing enterprise in the financial sector.

In the early 90’s, the financial sector was dominated by few commercial banks most of them being large multinationals. They were historically oriented to meeting the financial needs of large-scale commerce and external trade. They had no track record of lending to house-holds and start-up small enterprises. The low income market segment was therefore largely ignored.

Kwani Kwema (KK) a successful entrepreneur together with a group of investors, aware of the gap in banking services among low income earners, formed a bank that would bridge the financing gap. MBL was first registered as a building society and was later converted into a privately owned bank.

The bank focused fully on its target market and kept new products rolling for each category of its clients. This strategy led to overwhelming support from households, small businesses, individual entrepreneurs and professionals.

Apart from the market focus strategy, the overwhelming reception from clients might also be associated with the company’s positive corporate culture. The unique corporate culture provided an opportunity for the bank to develop competitive advantage centred on good customer service.

MBL was the first locrl bank to adopt and develop benchmarking strategy. Comparative companies were identified and data on them was collected. This enabled the discovery of gaps in competitive performance between MBL and those other banks hence the establishment of action plans.

The management was well aware of the intense competition in the industry and was keen to establish a wide customer base. This was expressed in the firm’s long term plan which recognised the need to broaden the operation base and in particular to enter foreign markets and acquire subsidiaries.

After several years of stable growth, MBL established operations in a neighbouring country. The senior managers in the foreign unit were non locals while the first line managers and a large number of operatives were locals. An inverted pyramid organisation structure was adopted at the foreign unit. Senior management adopted a facilitating “behind the scenes” role leaving operational decisions to those who were closest to the customers in particular matters.

Though the structure was meant to improve human relations, rivalry and emerged between the various employees based on their nationalities. With time, motivation and productivity decreased and there was a deep mistrust of senior management among the lower cadre employees. Three years down the line, foreign market share was half the target figure, financial performance was poor and corporate image was at an all time low. Drastic measures needed to be taken to resolve these issues before they could water down the successes achieved in the past.

In the last five years, MBL has emerged as a star performer in the financial sector. Despite all the challenges the company faced in the past, the leadership of the company was able to turnaround the company and return it to profitability.

Required:

1.          Mwananchi Bank Limited (MBL) successfully implemented the market focus strategy in its home country.

Explain seven situations that must exist for market focus strategy to be effective.                                  (7 marks)

2.          Examine the criteria which could have been used by MBL while selecting a foreign market entry method. (7 marks)

3.          The expansion of MBL to the neighbouring country performed below expectations.

With reference to the above statement, discuss how MBL could overcome cultural barriers while setting up operations in the neighbouring country.                                                                                                                            (10 marks)

4.           To deal with human resource issues in the foreign unit, it was imperative for MBL to develop and implement a human relations strategy.

Required:

Evaluate the criteria that an effective strategy should meet.                                                                                               (10 marks)

5.           Instead of establishing a completely new unit from scratch in a foreign country, MBL would have scouted for an existing company in the neighbouring country with an aim of takeover.

With reference to the above statement, highlight six factors that MBL should have taken into consideration when appraising a target company.                                                                                                                                               (6 marks)

(Total: 40 marks)

 

QUESTION TWO

1.          Evaluate five roles of organisational culture in relation to strategy execution.                                                                     (5 marks)

2.         Discuss five challenges likely to be faced by an organisation while venturing in an international market.

(10 marks)

(Total: 15 marks)

 

QUESTION THREE

1.           The bargaining power of suppliers is an important factor in driving industry competition.

With reference to the above statement, describe six determinants of supplier power in the industry.                                   (6 marks)

2.           With the use of a well labelled diagram, discuss four Michael Porter’s generic strategies.                                                  (9 marks)

(Total: 15 marks)

 

QUESTION FOUR

1.           Enumerate seven challenges likely to be faced by an organisation while implementing a strategic plan.               (7 marks)

2.           Wabora County government has hired you as the lead consultant during the development of their strategic plan.

With reference to the above statement:

Distinguish between “vision statement” and “mission statement”.                                                                      (2 marks)

Advise them on activities usually carried out during strategy formulation, strategy implementation and strategy evaluation.  (6 marks)

(Total: 15 marks)

 

QUESTION FIVE

1.           A functional organisational structure is a structure where an organisation is divided based on functional areas.

With reference to the above statement, outline four strategic advantages and four strategic disadvantages of functional organisational structure.                                                                                                                                      (8 marks)

2.           Explain several limitations of the use of Boston Consulting Group (BCG) matrix in an organisation.                               (7 marks)

(Total: 15 marks)

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