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Strategic Alternatives for the Continued Operation of Kenya Airways

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Strategic Alternatives for the Continued Operation of Kenya Airways STRATEGIC ALTERNATIVES FOR THE CONTINUED OPERATION OF KENYA AIRWAYS BY RAHAB NYAWIRA MUCHEMI UNITED STATES INTERNATIONAL UNIVERSITY SPRING 2016 STRATEGIC ALTERNATIVES FOR THE CONTINUED OPERATION OF KENYA AIRWAYS BY RAHAB NYAWIRA MUCHEMI A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) UNITED STATES INTERNATIONAL UNIVERSITY SPRING 2016 ii STUDENT’S DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than the United States International University in Nairobi for academic credit. Signed: ________________________ Date: _____________________ Rahab Nyawira Muchemi (ID 629094) This project has been presented for examination with my approval as the appointed supervisor. Signed: ________________________ Date: _____________________ Dr. Michael Kirubi, PhD. Signed: _______________________ Date: ____________________ Dean, Chandaria School of Business Signed: _______________________ Date: _________________ Deputy Vice Chancellor, Academic Affairs iii COPYRIGHT © 2016 Rahab Nyawira Muchemi. All rights reserved iv ABSTRACT The concept of strategic alternatives has received a lot of attention from scholars for a very long time now. Despite numerous studies in this area, interest has not faded away. To this end, the objectives of this study were to identify the determinants of strategic alternatives to better understand what drives airlines into such alliances and to identify factors that affect the performance of the alliances. The research was done through descriptive survey design, which involved all airlines with scheduled flights in and out of Kenya totaling thirty six (42). The target population was CEOs or senior managers within the airlines, which had response rate of 92.7%. Key findings of the study showed all the variables under study affected the strategic alternating in KQ. The study found that the all the variables have a positive Pearson correlation which shows that the effect is direct proportion to the strategic alternatives for continued operation of Kenya Airways. Organization competitiveness have a strong relationship with organization leadership with r = 0.661 which is significant at 0.01 level. In addition, organization competitiveness had a very strong correlation with industry challenges which had a Peasrson correlation of r = 0.836 where are it was significant at 0.01 level. Further, the correlation between organization competitiveness and organization resources had a Pearson correlation of 0.053 where by it was not significant for strategic alternatives for continued operation of Kenya Airways. The study recommends that competitive in the airline industry can be eliminated by the industries forming alliances that will allow the airline industries to rip the benefit of operating in different destination. In addition, when the airline adopts the right technology and invest on the state of the art air plane that can be able operate in the harsh climatically conditions and different routes. Also recommends that the board of directors should always put in place the best leaders they can get because best leaders are known to foster growth of the organizations by maximizing the shareholder’s wealth. Leaders should be in front line to identify the best strategic alternatives that the organization can adapt to ensures growth. Further, the study also recommends that the airline industries should diversify their operation in order to curb the rising global oil crisis and also the economic instability of the different countries that they are operating. This will help the organization to rip the benefits even when some of the economy in which the firm is operating is economically unstable. v Finally, the study recommends that the airline industry should withhold the dividends pay out first so that the amount to be issued can be ploughed back to help boost the airline in making profit. In addition, the airline industry can think of mergers in order to eliminate competition vi ACKNOWLEDGEMENT I would like to acknowledge Kenya Airways for continued support they have given me in my quest to acquire knowledge and skills and by availing necessary data and resources required to complete my research. Secondly I would like to acknowledge Dr. Michael Kirubi, PhD. for his firm but insightful support during the research period. I wish to thank all my lecturers during this past year for their dedication in transferring their knowledge; Fred Newa, Dr. Peter Kiriri and Dr. Paul Katuse. Finally, I would like to extend my gratitude to my colleagues at work and the University for providing an excellent and stimulating learning and sharing atmosphere. vii DEDICATION To my parents Dr. Muchemi and Catherine Waturi, may this Master’s project be a symbol of the ripe fruits of your labour to provide me with an excellent foundation through education. My brothers Eliud and JohnPaul thank you for allowing the last to be the first. To my best friend George Ng’ang’a and his lovely parents James Wairire and Jane Wambui and family, thank you for welcoming me with open arms. viii TABLE OF CONTENTS STUDENT’S DECLARATION ........................................................................................................................... iii COPYRIGHT ........................................................................................................................................................ iv ABSTRACT .............................................................................................................................................................v ACKNOWLEDGEMENT ................................................................................................................................... vii DEDICATION .................................................................................................................................................... viii CHAPTER 1 ............................................................................................................................................................1 1.0 INTRODUCTION ..........................................................................................................................................1 1.1 Background of the Problem ............................................................................................................................1 1.2 Statement of the Problem ................................................................................................................................5 1.3 Purpose of the Study .......................................................................................................................................6 1.4 Research Questions .........................................................................................................................................6 1.5 Significance of the Study ................................................................................................................................6 1.6 Scope of the Study ..........................................................................................................................................7 1.7 Definition of Terms ........................................................................................................................................8 1.8 Chapter Summary ...........................................................................................................................................8 CHAPTER 2 ............................................................................................................................................................9 2.0 LITERATURE REVIEW ............................................................................................................................9 2.1 Introduction .....................................................................................................................................................9 2.2 Strategic alternatives .......................................................................................................................................9 2.3 Organization Competitive of Strategic Alternatives .....................................................................................12 2.4 Organization Leadership of Strategic Alternatives .......................................................................................18 2.5 Organization Resources on Strategic Alternatives........................................................................................26 2.6 Chapter Summary .........................................................................................................................................28 CHAPTER 3 ..........................................................................................................................................................29 3.0 RESEARCH METHODOLOGY ..............................................................................................................29 3.1 Introduction ...................................................................................................................................................29 3.2 Research Design ...........................................................................................................................................29 3.3 Population and Sampling Design ..................................................................................................................30
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