Corporate Strategy Development at Nakumatt Holdings
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CORPORATE STRATEGY DEVELOPMENT AT NAKUMATT HOLDINGS LTD BY: KIILU PETER MUNYAO A Management Research Project Submitted In Partial Fulfillment of The Requirements For The Award of The Degree of Master of Business Administration (MBA), School of Business, University of Nairobi. October, 2008 This management research project is my original work and has not been presented for a degree in any other university. Signed Date... ...... I . i Peter Kiilu (D61/P/8349/04) This management project has been submitted for examination with my approval as the University supervisor. Date Lecturer. Department of Business Administration To my wife, Lillian: and sons. Brian and Raphael for their love, patience and care. I am forever grateful to God Almighty without w hom none of this would have been possible. My special appreciation and heartfelt gratitude to my university supervisor, Mr. Jackson Maalu for his sacrifice, patience and guidance that made this study a success. God bless you abundantly. The senior management team at Nakumatt Holdings Ltd. led by their CEO. Mr. Atul Shah went out of their way to assist me in this project. Messrs. Thiagarajan Ramamurthy. Sailesh Savani. Justus Nyaga and all the Branch Managers gave me all the support I needed. I am indebted to them for their assistance in this project. I acknow ledge my dear wife Lillian and sons: Brian and Raphael for their unwavering support that made a whole lot of a difference. Finally, I would like to thank the University of Nairobi, school of business library staff and many other people, w ho in one way or the other made it much easier for me to complete this project. IV TABLE OF CONTENTS DECLARATION............................................................................................................... ii DEDICATION............................................................................................................ iii ACKNOWLEDGEMENTS........................................................................................... iv LIST OF TABLES...........................................................................................................vii LIST OF FIGURES....................................................................................................... viii LIST OF ABBREVIATIONS........................................................................................ ix ABSTRACT.........................................................................................................................x CHAPTER ONE: INTRODUCTION........................................................................... 1 1.1 Background................................................................................................................ 1 1.1.1 Concept Of Corporate Strategy........................................................................ 2 1.1.2 Retail Sector Overview..................................................................................... 6 1.1.3 Nakumatt Holdings Ltd..................................................................................... 7 1.2 Statement O f Research Problem............................................................................. 9 1.3 Research Objectives...............................................................................................1 1 1.4 Significance Of The Study....................................................................................1 1 CHAPTER TWO: LITERATURE REVIEW.............................................................12 2.1 The Concept of Corporate Strategy......................................................................12 2.2 Corporate Strategy Development Processes.......................................................... 17 2.2.1 Strategic Planning Process in Organizations.................................................17 2.2.2 Strategy Development as a Managerial Intent............................................. 22 2.2.3 Organizational Processes.................................................................................24 2.2.4 Imposed Corporate Strategy Development....................................................25 2.2.5 Alternative Models to Corporate Strategy Development............................ 26 2.3 Challenges of Corporate Strategy Development................................................ 27 v CHAPTER THREE: RESEARCH METHODOLOGY.......................................... 31 3.1 Research Design......................................................................................................31 3.2 Data Collection...................................................................................................... 31 3.3 Data Analysis........................................................................................................... 32 CHAPTER FOUR: FINDINGS AND DISCUSSION...............................................33 4.1 Introduction..............................................................................................................33 4.2 Nakumatt Holdings Limited Profile.........................................................................34 4.3 Process Of Corporate Strategy Formulation At Nakumatt Holdings Ltd..........37 4.3.1 Vision And Mission..........................................................................................37 4.3.2 Corporate Strategy Formulation......................................................................39 4.3.3 Business Level Competitive Strategies Adopted By NHL...........................43 4.4 Challenges O f Corporate Strategy Development Processes At Nakumatt Holdings Ltd...................................................................................................................45 CHAPTER FIVE: SUMMARY,CONCLUSIONS AND RECOMMENDATIONS ..............................................................................................................................................47 5.1 Introduction............................................................................................................. 47 5.2 Summary .................................................................................................................47 5.3 Conclusion................................................................................................................48 5.4 Suggestions For Further Research......................................................................... 49 REFERENCES.................................................................................................................50 APPENDIX 1: INTERVIEW GUIDE FOR NAKUMATT DIRECTORS........... 56 APPENDIX 2: INTERVIEW GUIDE FOR NAKUMATT HEADS OF DEPARTMENTS AND BUSINESS UNITS............................................................... 60 APPENDIX 3: LETTER OF INTRODUCTION TO INTERV IEWEES............ 62 VI LIST OF TABLES Table 1 - Nakumatt Current Branch Networks.........................................................35 Table 2 - Nakumatt proposed regional branch networks by 2010..........................36 Table 3 - Nakumatt grow th in terms of employees...................................................37 Table 4 - Nakumatt Benchmarks attributes............................................................... 42 vii LIST OF FIGURES Figure 1- Hierarchy of strategy................................................................................. 3 Figure 2: Strategic Planning Model........................................................................ 18 Figure 3 - Nakumatts' growth patterns in turnover (US$ millions)......................34 Figure 4 - Nakumatt logos before and after changes........................................39 viii LIST OF ABBREVIATIONS CEO - Chief Executive Officer IPO - Initial Public Offer ISO - International Standards Organization IT - Information Technology JKUAT - Jomo Kcnyatta University of Agriculture and Technology NHL - Nakumatt Holdings Limited PEST - Political, Economical, Social and Technological UK - United Kingdom USA - United States of America SWOT _ Strength, Weakness, Opportunities, and Threat IX ABSTRACT Corporate strategy is primarily about the choice o f direction for an organization as a whole and the management of businesses or product portfolio for maximum value (Wheelen and Hunger. 2008). Corporate executives are therefore concerned with the orientation towards growth, coordination of cash flow among business units and building of corporate synergies through resource sharing and development. Thus, the study sought to understand the process of corporate strategy development and its challenges at NHL. The rationale of the study arose out of the realization of the Nakumatfs tremendous growth and diversification over the last five years. The challenge of managing a diversified company with arrays of businesses lies in the development and management of well crafted corporate strategies. The objective of this research project was to establish the corporate strategy development processes and challenges faced by Nakumatt Holdings Ltd. An interview guide was used to facilitate personal and in-depth interviews of the Managing Director. Operations Director, IT director and all the departmental heads as well as Branch Managers at NHL. This was a case study of Nakumatt Holdings Ltd. An in-depth and comprehensive inquiry was conducted on the corporate strategy development processes and its challenges at NHL. Primary' data was collected using an interview guide and posing of mostly open-ended questions. The questions were administered through personal interviews of the respondents.