STRATEGIES ADOPTED BY KENYA PORTS AUTHORITY IN ITS QUEST TO BE A WORLD CLASS SEA PORT OF CHOICE By ALI I. MWIN’JAKA A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION (MBA) DEGREE OF THE SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI OCTOBER, 2013 DECLARATION This research project is my original work and to the best of my knowledge has not been presented to any other institution. Signed: ……………………………… Date………………………… ALI I. MWIN’JAKA D61/61992/2010 SUPERVISOR’S DECLARATION This research project has been submitted for examination with my approval as the University Supervisor. Signature…………………………………….….Date………………………………….. Prof. Martin Ogutu Department of Business Administration, University of Nairobi ii DEDICATION I dedicate this work to my beloved family and all those who supported me in the completion of this project. iii ACKNOWLEDGEMENT I take this opportunity to give thanks to the Almighty God for seeing me through the completion of this project. I acknowledge all who supported me through my studies and research. Special thanks to my supervisor Prof. Martin ogutu for his professional guidance, advice and unlimited patience in reading through my drafts and suggesting workable alternatives, my profound appreciation to you. iv ABSTRACT The survival and success of an organization occurs when the organization creates and maintains a match between its strategy and the environment and also between its internal capability and its strategy. KPA envisions itself to be World class seaports of choice with a mission of facilitating and promoting global maritime trade through provision of competitive port services. Strategies are the various game plans developed by organizations in respond to the challenges posted by the operating environment. Organizations have to adequately and promptly respond to these challenges in the environment for them to be successful. The objectives of this study included: determining the strategies adopted by Kenya Ports Authority in its quest to be a world class sea port of choice and determining the effectiveness of these strategies developed in transforming the Port into a world – class sea port. This study adopted a case study design. The study used primary data collected using interview guides on the CEO and general managers at KPA. The data obtained from the interview guide was analyzed using content analysis. The data was then presented in prose format. The study concludes that KPA had plans of improving quality of services offered which were achieved through customer service charter, Performance standards, ISO Certification, baseline surveys to establish as is position, annual customer satisfaction survey, internal work standards measurements, annual financial performance measures (accounts) and bulletin of statistics. The study also concludes that KPA uses employee training and development as a strategy to improve its operations. Further the study concludes that KPA engages in collaborations with other sea ports like Port of Singapore, Shanghai, Egypt, Durban, the collaboration has influenced world-class status attainment at KPA by bench marking with world-class service providers worldwide. The study recommends that further training and study tours be used to allow the exchange of ideas among KPA employees and those in world-class service ports. The study also recommends that there is need to understand competitor strengths in the market and then position one’s own offerings to take advantage of weaknesses and avoid head on clashes against strengths. v TABLE OF CONTENTS ABSTRACT .......................................................................................................................v CHAPTER ONE................................................................................................................1 INTRODUCTION..............................................................................................................1 CHAPTER TWO: LITERATURE REVIEW.................................................................8 2.1 Introduction................................................................................................................8 2.2 Theoretical Perspective..............................................................................................8 2.3Organizational Strategies............................................................................................9 2.3.1 Corporate Strategies....................................................................................................10 2.3.2 Business Strategies.......................................................................................................14 2.3.3 Operational Strategies.................................................................................................16 2.4 World Class Sea Port...............................................................................................18 CHAPTER THREE: RESEARCH METHODOLOGY..............................................19 4.2 General Information.................................................................................................22 4.3 Strategies Adopted To Improve Service Delivery at KPA......................................23 4.4 Effectiveness of the Strategies Developed ..............................................................26 4.5 Discussion of Findings.............................................................................................26 APPENDICES..................................................................................................................37 Appendix I: Interview Guide.........................................................................................37 Appendix II: Data Collection Form...............................................................................39 vi CHAPTER ONE INTRODUCTION 1.1 Background of the Study A strategy is defined as a complete plan which specifies what choices an organization will make in every possible situation in order to reach a preset objective. As a plan, strategies may be general of specific but in general, it is a set of beliefs on how a firm can achieve success in a highly dynamic and competitive environment (Woods and Joyce, 2003). A strategy is the main route to attain corporate goals and an objective, leading to enhanced long-term performance meaning that strategy is much more than beliefs and encompasses a deliberate search for a plan of action that will develop a business's competitive advantage and compound it (Pearce and Robinson, 2005). The survival and success of an organization occurs when the organization creates and maintains a match between its strategy and the environment and also between its internal capability and its strategy (Grant, 2002). Ports are critical enablers of a country’s competitiveness on the international market hence they need to be oriented towards supply chain to meet the changing needs of their customers. Kenya Ports Authority’s mandate is to maintain, operate, improve and regulate all scheduled sea ports situated along the coastline (KPA, 2012). To be more responsive to customers’ demands and keep abreast with global shipping trends, the Kenya Ports Authority has resorted to various strategies to uplift its services to the world-class level. 1 1.1.1 Concept of Strategy Woods and Joyce (2003) define strategy as a set of beliefs on how a firm can achieve success. They affirm that strategy is the main route to attain corporate goals and an objective, leading to enhanced long-term performance meaning that strategy is much more than beliefs and encompasses a deliberate search for a plan of action that will develop a business's competitive advantage and compound it. A strategy is important because it aligns corporates to their changing immediate environment. The core concept of strategic management is strategy because it breaks down the long term goals of an organization into multiple short term goals. The iterative process of strategic management includes predictions and forecasts on challenges and opportunities that an organization is likely to encounter as a result of changes in the external environment. However, it assumes a rational process and approaching strategy in the right way (Sauer and Willcocks, 2003). Even if there were strong pointers to a possible right way, it is arguably difficult for strategists to make decisions without reference to their own views on how strategy should be determined (Frishammer, 2003). Strategic management involves strategy formulation, implementation evaluation and control. 1.1.2 Kenya Ports Authority The Kenya Ports Authority (KPA) is a state corporation charged with the responsibility of managing the Port of Mombasa, and all other ports along the Kenyan coastline. KPA is one of the leading parastatals in the Country and a major facilitator of sea-borne trade within the East and Central African region. Its strategic direction is guided by her vision 2 “world class seaports of choice”. The mission is to “facilitate and promote global maritime trade through provision of competitive port services”. The port is equipped to handle a wide range of cargoes including dry bulks such as grain, fertilizers, cement and soda ash and liquid bulks such as crude oil and oil products as well as bagged products like coffee, tea, sugar, among others, break-bulk including iron and steel, timber, motor vehicles, machinery and containerized cargo. The Authority’s mandate is to maintain, operate, improve and regulate all scheduled