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CHALLENGES FACING STRATEGY IMPLEMENTATION IN NATION

MEDIA GROUPS REGIONAL EXPANSION STRATEGY

By

Bwika Mbwana Salim

Registration No.: D61/P/8010/04

A Management Research Project Proposal Submitted In Partial

Fulfillment Of The Requirements Of The Master Of Business

Administration (MBA) Degree,

School Of Business, University Of Nairobi.

August 2009

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CHAPTER ONE

INTRODUCTION

1.1 Background

Strategy is the direction and scope of an organisation over the long term which achieves

advantage in a changing environment through its configuration of resources and

competences with the aim of fulfilling stakeholder expectations. (Johnson G. et al. 2006)

Strategic planning process; strategy implementation (brief explanation).

Organisations do not operate in a vacuum. They exist in a given environment which is

turbulent and not static. The environment consists of the political, economic, social,

technological and legal aspects of the world. The turbulence is in the form of increased

competition and rivalry among existing firms, possible new entrants, and change in

consumer tastes among other factors. The survival and competitiveness of an organisation

is therefore determined by the strategies the firm will adopt in order to remain relevant in

the market. One of the strategies a firm may adopt to become competitive and relevant is

through expansion into new (foreign) markets.

Expansion to new (foreign) markets poses its own set of challenges to the firm. For

instance, Global corporations headquartered in one country with subsidiaries in other

countries experience difficulties that are understandably associated with operating in

several distinctly different arenas (Pearce and Robinson 2005). Strategic managers are

therefore required to continually scan the environment that their organisations operate in

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with a view to continually formulate strategies that will make them compete effectively

and expand and maintain their market share.

1.1.1 Expansion Strategies

When a firm wishes to expand into other regions, it has three strategy level options; viz

import export activity which has minimal effect on the existing management orientation

or an existing product line; foreign licensing and technology transfer which again

requires little change in management or operation and thirdly, direct investment in

overseas operations, including manufacturing plants which requires large capital outlays

and the development of global management skills (Pearce and Robinson 2005).

Expansion strategies are game plans to grow and position a firm in a competitive manner.

Firms usually apply expansion strategies to grow bigger in size in order to gain from

economies of scale for instance in risk reduction through diversification, increase their

market share and profitability, improve their financial strength and improve technological

capacity. As a crucial driver of success and sustainability, growth allows firms to expand

their portfolio by providing their products and services to a larger number of clients while

at the same time fulfilling other missions. Organizations can use a variety of

organizational structures to facilitate expansion, including: Growing existing operations,

legal restructuring, franchising, strategic alliances, mergers and Acquisitions (Robert,

2000)

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There are two models that help answer this question. These are: Customer-centric

approach and firm-centric approach. In the customer-centric approach, the organizations

first seek to understand customer needs and demands. This includes current and future

trends in the marketplace. Once the organization determines the types of products and

services customers are demanding it must then consider whether it can meet these needs

given its internal capabilities and resources. The organization must also consider how

offering these products and services fits into its overall strategy. If it determines that its

internal capabilities cannot meet these customer needs, yet offering these particular

products and services fits into its overall strategy, it should begin considering various

expansion strategies. Furthermore, the organization should consider which other

organizations offer the products and services the customer is demanding then it can

consider opportunities to partner or potentially acquire. (Markusen et al 1995)

In the firm-centric approach, an organization evaluates its internal capabilities (core

competencies, current product offering, legal structure, and available resources). If these

internal capabilities cannot meet external market factors (such as increased competition,

increased commoditization, increased customer demand, etc.), the organization should

consider various expansion strategies. (Doyle, Gillian, 2002)

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1.1.2 Nation Media Group

The Nation Media Group Company is one such organisation that is undoubtedly the

leading media house in East and central Africa. It was founded in 1959 by the H.H Aga

Khan. It is well established in Print Media and Electronic media and is now in the Digital

media. It has fulfilled its initial vision of becoming the leading media house in East and

Central Africa and has now changed its vision to becoming The Media of Africa for

Africa. The initial mission statement was fulfilled by expanding into the East African

Market namely Uganda and Tanzania where it owns subsidiary Companies dealing in

Media matters namely Mwananchi Communications Limited and The Monitor

Publications Limited in both Tanzania and Uganda respectively. Both subsidiaries

command respect by publishing authoritative, independent titles in the countries that they

operate in that have come to be associated with the boldness that the Kenyan Nation

media front is associated with. The Tanzanian Subsidiary publishes one English Daily

title (The Citizen) and The Sunday Citizen; a bi weekly sports and entertainment

newspaper called Mwanaspoti and a Daily Kiswahili newspaper (Mwananchi) and

Mwananchi Jumapili. The company recently invested in a 4,000 US dollars printing

press that will give it a competitive advantage over the other media houses in Tanzania as

it has a faster printing and more colour pages capacity. The Kiswahili titles command the

highest market share in the market while the English daily comes a distant third. The

number one and two positioned newspapers; The Daily News and The Guardian are

spread sheets and have been there much longer. The Ugandan subsidiary on the other

hand has One English Daily (The Monitor) and The Sunday Monitor and acquire licenses

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to own and broadcast on electronic media, NTV Uganda and also has radio broadcasting

frequencies. NTV Uganda has the largest audience within the two years that it has been

in existence. It goes without saying therefore that Nation Media Group has a strong

presence in the East African Market and is now looking at further expansion into other

regions in West Africa.

1.2 Problem Statement

Organisations are guided by their vision and mission in order to attain both their short

term and long term objectives. Senior managers have the sole responsibility of

formulating and supervising the implementation of strategies for their organizations

through their subordinates. The vision of a given organisation underlines the strategic

direction that the company wants to take or put in another way, where it wants to be in a

given period of time. A mission statement is a statement of the overriding direction and

purpose of an organisation while objectives are statements of specific outcomes that are

to be achieved. (Johnson G. et al, 2006).

When an organisation adopts a strategy to expand its operations beyond its existing

boundaries, it is prudent for managers in charge of corporate strategy to scan the

environment with a view to identifying the expected or potential changes in the

environment as the changing variables will give rise to opportunities and threats for the

organisation. Since these variables are likely to pause great challenges to the strategic

capability of the organisation i.e. resources and competences must be analysed with the

sole purpose of the internal influences and constraints on strategic choices for the future.

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All the studies that have been done on the subject of Nation Media Group Limited

(NMG), no study has addressed the challenges the Media house is facing in implementing

its core strategy of becoming the media of Africa for Africa or the challenges it faced in

its vision of becoming the leading Media house in East and Central Africa. In fact in his

suggestions for further research, Robert Muganda Ekirapa (2008) he has cited the need

for research to be done on the challenges the organisation is facing in its bid to maintain a

market leadership. The studies have largely looked at its Diversification Strategy, Thuo

(2002); Mungai (2006) has studied the Competitive Strategies employed by the group in

order to become competitive, while Kaburu (2008) looked at the effect of market

strategies on the financial performance of media houses in Kenya. The study by Kieti

John (2006) addressed the determinants of foreign entry strategies a case of Kenyan firms

venturing into Southern Sudan. Vincent (2005) has looked at challenges to strategy

implementation at CMC Motors group limited and has successfully enumerated the

challenges experienced across all levels within the organisation. It is highly likely that

the authors of these studies have assumed a similar success story in its subsidiaries

(Uganda and Tanzania). The Organisation faces a lot of challenges in the respective

markets that blurs the vision of NMG that need to be addressed if it has to accomplish its

ambitious vision of being Media of Africa for Africa. The Kenyan environment has

changed largely and the organisation is forced to consolidate itself as the market leader is

largely liberalised and the competition is intense in both print and electronic Media.

Currently, one of the mobile telephone companies in Kenya, Safaricom provides content

through its mobile phone services and this poses a great challenge to NMG. For example

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in under five years, the organisation has been forced to close down some of its

publication such as the Nation Business Directory; The Coast Express which was a

weekly publication for the Coast Region, The Weekly advertiser which was a free sheet

that targeted the small advertisers and lately The Daily Metro which was closed down

early this year. This is because the business environment has changed and it called for a

shift in strategic thinking. The Tanzanian Market has had its share of problems where a

radio station was closed down (Radio Uhuru) and had left the company to survive

without any electronic platform and some of senior Kenyan Managers became prohibited

immigrants during the run up to the countries elections in 2005.The Ugandan publication

has had its press raided by the government and for several days the paper was not

available in the streets of Uganda and the NTV Uganda station has severally been put off

air by the government as the government perceives it to be driving foreign agenda that is

seen as a threat to the government of the day. All these are changes that hamper strategy

implementation of the organisation.

1.3 Objectives of the study

1. To identify the challenges NMG faces in implementing its regional expansion strategy

2. To recommend strategies to overcome the challenges

1.4 Importance of the study

The study will be useful to the Senior managers in charge with strategy formulation in the

at NMG as they will understand the challenges that threaten to blur the organisations

vision and therefore enable them to do adequate environmental scan before investing in

foreign markets and also come up with practicable solutions to counter the challenges.

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The study will also be useful to other companies that have presence in the East African

Market or have plans to pursue regional expansion especially with the first tracking of the

East African community common market. Other Media houses that would want to

venture into the East African Market will learn the pitfalls and the successes of NMG and

ensure that they have a successful take off and maintain a steady cruise level.

It is also expected that the study will provide policy makers in the East African Countries

with an insight into the problems faced by investors in their respective countries that are

likely to discourage foreign investment. For instance Kenya is the second largest investor

in Tanzania after Britain and it is only logical that investment policies in such an

environment should be more conducive than repulsive.

For the researchers and scholars this project will be useful as a reference material

especially in researching other industries and expansion strategies in other regions.

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