strategic responses to challenges of globalization @ nbk
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A CASE STUDY OF STRATEGIC RESPONSE EFFECTIVENESS BY THE
NATIONAL BANK OF KENYA TO CHALLENGES OF GLOBALIZATION
PRESENTED
BY
INGWE JOHN KENNEDY
REG. No. E6
SUPERVISOR: DR. JOHN YABS
A MANAGEMENT RESEARCH PROPOSAL SUBMITED IN PARTIAL
FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF A
DEGREE IN MASTER OF BUSINESS ADMINISTRATION (MBA),
SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI
FEBRUARY, 2012
DECLARATION
This research project is my original work and has not been submitted for any award in any other
university.
Signed: ……………………………… Date: ………………………………..
John Kennedy Ingwe
Reg. No.
Declaration by Supervisor
This project has been submitted with my approval as University Supervisor.
Signed: ……………………………… Date: ……………………………….
Dr. Jon Yabs
School of Business
University of Nairobi
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TABLE OF CONTENTS
DECLARATION.............................................................................................................................iiLIST OF ABBREVIATIONS.........................................................................................................ivCHAPTER ONE..............................................................................................................................1INTRODUCTION...........................................................................................................................1
1.1 Background of the Study.......................................................................................................11.1.1 Commercial Banks in Kenya..........................................................................................2
1.1.2 The National Bank of Kenya Limited.............................................................................3
1.1.3 The National Bank of Kenya..........................................................................................4
1.2 Statement of the Problem.......................................................................................................41.3 Objectives of the Study..........................................................................................................6
1.3.1 Main Objective...............................................................................................................6
1.3.2 Specific Objectives.........................................................................................................6
1.3.3 Research Questions.........................................................................................................6
1.4 Scope of the Study.................................................................................................................61.5 Significance of the Study.......................................................................................................7
CHAPTER TWO.............................................................................................................................8LITERATURE REVIEW.................................................................................................................8
2.1 Introduction............................................................................................................................82.2 The Concept of Globalization................................................................................................8
2.2.1 Globalization and Strategic Alliances.............................................................................9
2.2.2 Globalization and New Product Creation.....................................................................11
2.2.3 Globalization and New Market Creation......................................................................13
2.2.4 Globalization and Technology......................................................................................14
2.3 Factors Driving Globalization and its Challenges...............................................................162.4 Strategy and Strategic Response..........................................................................................182.5 Effects of Globalization.......................................................................................................202.5 Empirical Review................................................................................................................21
CHAPTER THREE.......................................................................................................................24RESEARCH METHODOLOGY..................................................................................................24
3.1 Introduction..........................................................................................................................243.2 Research Design..................................................................................................................243.3 Data Collection....................................................................................................................243.4 Data Analysis.......................................................................................................................25
REFERENCES..............................................................................................................................26APPENDICES...............................................................................................................................35APPENDIX I: LETTER OF INTRODUCTION...........................................................................35APPENDIX II: INTERVIEW GUIDE...........................................................................................36
iii
LIST OF ABBREVIATIONS
HRM Human Resources Management
SHRM Strategic Human Resources Management
CIPD Chartered Institute of Personnel and Development
NSSF National Social Security Fund
SME Small and Medium Enterprises
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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Globalization is the integration of economies throughout the world by means of trade, financial and
technological flows, the exchange of technology and information and the movement of people, goods
and services (Abdel-Bar, 2006). It is multi-faceted phenomenon comprising of economic, political-legal,
social-cultural and environmental dimensions. Globalization is not a purely contemporary phenomenon.
According to Chanda (2007), globalization has worked silently for millennia without being given a
name. Indeed, globalization processes are continuously evolving, driven by the economic aspirations of
millions around the globe— the more people involved, the faster the globalization is. The notion that the
world has become a global village is shared by almost every person on earth. Events, discoveries,
technologies, and crises that make headlines in one part of the world are swiftly brought to the notice of
many people all over the world. Globalization also refers to the strategy of approaching worldwide
markets with standardized products (Thompson and Strickland, 1993) and as such, has made it easy for
the task of pursuing international business strategies as trade among nations has been liberalized with a
tremendous reduction in trade barriers. Consequently, fewer trade barriers have also led to the spread of
improved technologies, communication systems, transportation systems and logistics, which all facilitate
the exchange relationships between an organization and its buyers, suppliers and other actors across the
globe. However, the impact of globalization remains very controversial (Abdel-Bar, 2006).
With the opening of borders to trade and foreign investment, globalization brings opportunities and
pressures for domestic firms in emerging market economies to innovate and improve their competitive
position. Many of these pressures and opportunities operate through increased competition from and
linkages with foreign firms. Globalization has made our world smaller. As the markets for products,
services, labor, and capital increasingly integrate worldwide, it is witnessed in the increasing economic,
cultural, demographic, political, and environmental interdependence of different locations around the
world. Thompson and Strickland, (1993) suggested that this period covered the first two eras of
globalization. The second era focuses on companies competing globally while the third will empower
individuals to collaborate freely and compete globally.
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To enjoy the benefits of the globalization of markets, an organization must be able to integrate and
control international operations by centralizing and co-coordinating activities in marketing,
manufacturing, and distribution. This global business perspective enables the organization to be
competitive in world markets by achieving major economies of scale in their operations. The banking
sector is one of the most important economic sectors and the most influential and responsive to changes,
whether international or domestic (Thompson and Strickland, 1993). The most important of those
changes include technological developments, the internationality of money markets, and freedom from
the constraints that hinder all banking activities, the removal of barriers that prevent some financial
institutions from working in certain sectors, and the trend to develop and manage the risks of lending in
light of the increase in international competition in this sector while seeking to attract foreign capital
with the emergence of giant banking entities.
The Kenyan banking system is one of the most important channels for mobilizing savings in the form of
credit or investment and working to direct them to more effective and more profitable productive sectors
and activities. Added to this is the role which the banking system plays in activating and enhancing
privatization and attracting investments to get the financial resources required for developmental needs.
Hence the concept of globalization has been associated with the concept of abundance and availability
of the services provided by banks. The accurate view to provide banking services, whether related to
deposits, loans, or bonds (as traditional services), or to the contracts of complex derivatives or other
innovative advanced services, leads banks to exist effectively in all fields of economic activity (El-
Dabie, 1999).
1.1.1 Commercial Banks in Kenya
Commercial banks are profit making financial institutions that play a significant role in the financial
system. They provide a wide range of corporate financial services that address the specific needs of
private enterprise including deposit, loan, and trading facilities but will not service investment activities
in financial markets (Magutu et al., 2009). The term commercial bank is used to differentiate these banks
from investment banks which are primarily engaged in the financial markets. In Kenya, commercial
banks play a number of roles in the financial stability and cash flow of the country’s private sector
including: processing payments; issuing bank cheques and drafts; accepting money on term deposits;
and acting as moneylenders, by way of installment loans and overdrafts.
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The commercial banks in Kenya provide a number of import financial and trading documents. These
include letters of credit (LCs), performance bonds, standby letters of credit, security underwriting
commitments and various other types of balance sheet guarantees. They also take responsibility for
safeguarding such documents and other valuables by providing safe deposit boxes. Currency exchange
functions and the provision of unit trusts and commercial insurance are typically provided by the
relevant departments in larger commercial banks (Omondi et al., 2010). In today’s competitive banking
environment, they are ceaselessly restructuring their operations in order to develop more cost effective
and efficient operations (Magutu et al., 2009).
The Companies Act, the Banking Act, the Central Bank of Kenya Act and the various prudential
guidelines issued by the Central Bank of Kenya (CBK), governs the Banking industry in Kenya. The
banking sector was liberalised in 1995 and exchange controls lifted. The CBK, which falls under the
Minister for Finance’s docket, is responsible for formulating and implementing monetary policy and
fostering the liquidity, solvency and proper functioning of the financial system. The CBK publishes
information on Kenya’s commercial banks and non-banking financial institutions, interest rates and
other publications and guidelines. The banks have come together under the Kenya Bankers Association
(KBA), which serves as a lobby for the banks’ interests and addresses issues affecting its members
(Kenya Bankers Association annual Report, 2010).
There are forty-six banks in Kenya and the industry is dominated by a few large banks most of which are
foreign-owned, though some are partially locally owned. Six of the major banks are listed on the Nairobi
Stock Exchange. These banks are Equity, KCB, Barclays, National, NIC and Standard Chartered bank.
The commercial banks offer corporate and retail banking services but a small number; mainly
comprising the larger banks, offer other services including investment banking (Okutoyi, 2003). All of
the policies and regulations that administer the entire banking industry centers in lifting the controls
towards the management and equitable services. Banking industry is expected to remain strong even in
the midst of adversities and challenges. In every nation, the banking institutions are different and unique
among the other type of business.
1.1.2 The National Bank of Kenya Limited
Commercial banks are profit making financial institutions that play a significant role in the financial system. They provide a wide range of corporate financial services that address the specific needs of
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private enterprise including deposit, loan, and trading facilities but will not service investment activities in financial markets (Magutu et al., 2009).
1.2 Statement of the Problem
Globalization is much more than the worldwide production and consumption of products. It is not just
an economic or cultural trend but a movement of ideas, lifestyles, and developments that could affect
our families, our employment, and the future of the world. It is the process of increasing social and
cultural inter-connectedness, political interdependence, and economic, financial and market integrations
(Eden and Lenway, 2001; Giddens, 1990; Molle, 2002; Orozco, 2002). Dramatic changes in the business
environment that cause shifts in business conduct and marketing activities of firms around the world
include, for example, the emergence of global markets for goods and services, labor, and financial
capital, advances in technologies, and a reduction in traditional barriers to trade and investment
(Deardorff and Stern, 2002). Recent years have seen a drastic reduction in global barriers to competition
in the financial services industry. Deregulation around the world has permitted consolidation across
more distant and different types of financial institutions. Improvements in information processing,
telecommunications, and financial technologies have facilitated greater geographic reach by allowing
institutions to manage larger information flows from more locations and to evaluate and manage risks at
lower cost without being geographically close to the customer. Moreover, growth in cross-border
activities of nonfinancial companies has spurred greater demands for institutions that can provide
financial services across borders.
Operating in a global industry context is an important element in determining the organizational
environmental. Pearce and Robinson (2005) observed that for firms to be effective and successful, they
should respond appropriately to changes that occur in their respective environments. Commercial banks
worldwide as a result of globalization are becoming increasingly interrelated. Globalization is creating
numerous opportunities for sharing knowledge, technology, social values, and behavioural norms and
promoting development at different levels including individuals, organizations, communities, and
societies across different countries and cultures (Brown and Lauder, 1996; Waters, 1995). Despite all
these, the financial services industry in general, and the commercial banking industry in particular,
currently faces numerous challenges as a result of the process of globalization. While there has been
considerable bank consolidation within individual industrialized nations in recent years, cross-border
bank mergers and acquisitions among these nations have generally been much less frequent.
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Consequently, the banking industry may never become fully globalized, even after adjusting to the full
effects of deregulation, technological progress, and increased cross-border nonfinancial activity.
The concept of globalization has been associated with abundance and availability of the services
provided by banks. The accurate view to provide banking services, whether related to deposits, loans, or
bonds (as traditional services), or to the contracts of complex derivatives or other innovative advanced
services, leads banks to exist effectively in all fields of economic activity. In addition to this banking is
central to a healthy economy and it is one of the sector that is highly affected by globalization.
Globalization comes with enormous challenges such as liberalization of markets, intense competition,
decline of domestic job opportunities and revenues, economic volatility of the integrated markets,
cyclical crises, and non-tariff barriers to trade, spread of pandemics, and new security issues. Many
actors not have the capabilities to handle challenges (Spiegel, 2007; Human Development Report, 2002)
which globalization brings with it. In Kenya, globalization has brought with it challenges that have made
the local firms to adopt various strategic responses with the aim of staying competitive not only in the
global market but also in the local market. Local firms have been forced to diversify their product
portfolio to cope with competition, maintain market share, enter into new markets and seal off any
unexplored market segments that foreign competitors may come to exploit.
The banking sector is one of the most important economic sectors and the most influential and
responsive to changes, whether international or domestic. The most important of those changes include
technological developments, the internationality of money markets, and freedom from the constraints
that hinder all banking activities, the removal of barriers that prevent some financial institutions from
working in certain sectors, and the trend to develop and manage the risks of lending in light of the
increase in international competition in this sector while seeking to attract foreign capital with the
emergence of giant banking entities. Locally, various studies (Gichira, 2007; Hannah, 2007) on
globalization have not addressed the strategic response adopted to handle the challenges of globalization
by the commercial banks in Kenya, in particular, by the National Bank of Kenya Limited. Furthermore
the business environment in Kenya has changed drastically since the 1990s and these changes have
raised serious issues about the way business processes are run, which have made the world a single unit
(Sheikh, 2000). The foregoing makes it imperative to conduct a study on the strategic responses by the
National Bank of Kenya to challenges of globalization. This study therefore seeks to fill the existing gap
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in knowledge by establishing the various strategic responses by the National Bank of Kenya Limited as
well as their effectiveness to challenges of globalization.
1.3 Objectives of the Study
1.3.1 Main Objective
The broad objective for this study is to establish the strategic responses by commercial banks in Kenya
to challenges of globalization.
1.3.2 Specific Objectives
The study will be guide by the following specific objectives;
i) To establish challenges of globalization at the National Bank of Kenya Limited.
ii) To establish strategic responses by the National Bank of Kenya to challenges of globalization.
iii) To evaluate the effectiveness of the strategic responses by National Bank of Kenya to challenges
of globalization.
1.3.3 Research Questions
i) What are the challenges of globalization at the National Bank of Kenya Limited?
ii) What strategic responses has National Bank of Kenya Limited adopted against the challenges of
globalization?
iii) How effective have the strategic challenges in (ii) been against the challenges of globalization at
the National Bank of Kenya Limited?
1.4 Scope of the Study
The study will be investigating the strategic responses by the National Bank of Kenya Limited to
challenges of globalization. Therefore, this study is limited to commercial banks in Kenya with respect
to only one bank- the National Bank of Kenya Limited. The respondents will comprise of top and senior
staff employed at the National Bank of Kenya. The researcher believes that this will provide an adequate
and reliable information required by the study and therefore give reliable results and findings.
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1.5 Significance of the Study
This study is important in informing stakeholders in the commercial banks as well as other institutions
on the strategic response by commercial banks to challenges of globalization. The study will offer
valuable contributions from both a theoretical and practical standpoint. From a theoretical standpoint, it
contributes to the general understanding of how banks respond to challenges of globalization through
their ability to create new markets, new products, affect the technology employed as well as strategic
alliance. This study will help to sensitize the Central Bank as a regulator, and the Government of Kenya
on the strategic responses to the challenges that come about as a result globalization by commercial
banks. The government may find this study useful in identifying the various challenges.
Policy makers may benefit from the issues and insights raised in the study that are important in
developing the frameworks where formation of such organizations might be enhanced to keep them in
sustainable competition. The study will add to the existing body of knowledge on the concepts of
strategic responses to challenges of globalization by firms to benefit academicians and aid further
research on the concept. It will form a fundamental base upon which further researches into the field will
be based as it will act as both reading and secondary source material in such cases.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter provides theoretical and empirical information from publications on topics related to the
research problem. It examines what various scholars and authors have written about strategic response
and globalization.
2.2 The Concept of Globalization
Globalization has made it easy for the task of pursuing international business strategies; trade among
nations has been liberalized with a tremendous reduction in trade barriers. Consequently, fewer trade
barriers have also led to the spread of improved technologies, communication systems, transportation
systems and logistics, which all facilitate the exchange relationships between a firm and its buyers,
suppliers and other actors across the globe (Carasco and Singh, 2009; Harford, 2007; Andersson and
Wictor, 2003). The phenomenon of globalization has become one of phenomena that are most associated
with economic activity. Globalization is also linked to banking activity as part of economic
globalization. Globalization has taken banking dimensions and contents of a new, made the banks tend
to the fields and activities unprecedented, and led to the transition from the attitudes and perceptions of
activities and extended range, in order to maximize the opportunities and increased gains, and look to
the future (Abdel-Bar,S.,2006).
Globalization is an interesting phenomenon since it is obvious that the world has been going through this
process of change towards increasing economic, financial, social, cultural, political, market, and
environmental interdependence among nations. Virtually, everyone is affected by this process. Given
these changes, globalization brings about a borderless world (Eden and Lenway, 2001; Ohmae, 1989a).
Globalization drives people to change their ways of living, prompts firms to change their ways of
conducting business, and, spurs nations to establish new national policies. Events transpiring in different
parts of the world now have dramatic consequences to other parts of the world at a faster pace than
anyone could imagine in the past.
On the positive side, globalization enables firms to outsource and find customers around the world, e.g.,
the auto and electronics industries. The globalization of production and operations benefits firms
through the realization of economies of scales and scope (Corswant, 2002; Reyes, Raisinghani, and
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Singh, 2002). Hence, no one can deny that globalization has changed the way we conduct business. As
the banks and banks manufactured identity and personality through orientation, which charted
throughout its history, since its inception, the bank has made globalization futuristic vision of a new
dimension to enter the new world of cosmic, a world of enormous economic opportunity. In light of
globalization and the restructuring of the banking services industry trend banks and commercial banks in
particular, the shift towards universal banks. Are those banking entities that seek always behind the
diversification of sources of funding and employment, and mobilization of the greatest possible savings
from all sectors, and employ their resources in more than one activity in several diverse areas. It opens
and gives credit to all sectors. As well as working to provide all the miscellaneous services and
renewable which may not based on the balance of knowledge.
In light of globalization become banks innovate and create distinct clients, and provide them with future
richer and richer more at the level of banking service (El-Dabie, 1999). And the future of this innovative
technology is owned and used by banks, which are only common denominator in all the work of trying
to progress and to the growth and prosperity. Hence the concept of globalization has been associated
with the concept of abundance and availability of the services provided by banks. The accurate view to
provide banking services, whether related to deposits, loans, or bonds (as traditional services), or to the
contracts of complex derivatives or other innovative advanced services, leads banks to exist effectively
in all fields of economic activity.
2.2.1 Globalization and Strategic Alliances
A strategic alliance is a contractual agreement among firms to cooperate in reaching an objective
without regard to the legal or organizational form the alliance takes. Strategic alliances cover all
relationships within the marketplace. Alliances are constructed as effective means to acquire access to
new markets and special expertise or compete with others on the market. There might be a problem with
finding resources to pursue a certain strategic direction and, therefore, a partner would be called in to
help. Typically, such alliances may occur when a particular company has an interesting technological
opportunity but lacks the funds to take it further or the needs to penetrate other countries (Johnson and
Scholes, 2002).
Today, enterprises of all sizes will have to depend more heavily on worldwide networks of
communications and transportation and establish virtual organizations to remain responsive and flexible.
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To adopt agile manufacturing practices, they have to organize them into new teams as new opportunities
arise. Speed-to-market practices require companies to adopt concurrent engineering in which all aspects
of a product's development are planned simultaneously rather than waiting for research and development
phases to end before testing them with customers and developing marketing and service strategies.
Cross-functional teams representing engineering and design, marketing, purchasing, distribution and
service departments and customer representatives - some of whom are scattered widely in different cities
or countries - is becoming part of the product development process (Deutsch, 2005).
Globally competitive firms will have to enter into international strategic alliances more aggressively in
the future and in this light the Airtel Kenya has adopted various types of strategic alliances to cope with
the challenges of globalization. Marketing can furnish a deep understanding of customer needs and
demands. An operation has the knowledge and experience to cost effectively produce and deliver the
product to the market (Smith, 2003). Just as the customer provides revenue to the firm, suppliers may
represent the bulk of the costs. Because the company's product and processes depend on healthy
suppliers, management must look backward when planning production and research strategies.
Establishing suppliers as partners is generally a win-win situation. Alliances geared towards reducing
supplier costs or improving the quality supplied can greatly affect the productivity and attractiveness of
the firm's own products and services to its customers (Mahmood and Mitchell, 2004).
Complementary alliances exist when two firms possess similar technology but different product lines. In
this case a single technology may be implemented differently by firms with different products on various
markets (Kotler, 2001). A coalition of their energies and resources may yield much greater advancement
of the overall technology than the sum of their individual efforts. This kind of technology coalition may
be classified as a vertical alliance. Complementary alliances also exist between Airtel Kenya and small
entrepreneurial firms. It brings to market new innovations that neither firm alone could accomplish. This
synergy results from the small, entrepreneurial firm offering innovative technology while the larger firm
supplies the necessary production and marketing resources. In either case, combining complementary
strengths enhances each firm's competitive position: productivity and financial performance above what
individual paths could have provided (Afuah, 1998).
Globally competitive enterprises will not only have to manage their own internal operations effectively,
but coordinate the entire value chain of suppliers and distributors on which they depend. Virtual
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organizations are not constrained by requirements of geographic space or locations in cities in the same
way as those that are engaged in mass production, they have to be able to have a global presence in
order to attain economies of scope, connect components of a production distribution system in many
locations that have the physical and geographical characteristics most appropriate for the component's
efficient operation (Alderfer, 2003).
2.2.2 Globalization and New Product Creation
It is not enough to avidly engage in new product creation for its own sake - what some managers refer to
as innoflation (Brown, 1997). It is important to delineate just what product features are to be improved
or radically changed. For this purpose, analysts have differentiated between “core” product features and
help provided in evaluating, buying and using the core product. The amount of help or support provided
will depend on the needs of particular customers. An appropriate premium price can normally be
charged for support. Support provides a potentially profitable lever for gaining competitive advantage. It
enables a supplier to sell the same core product to different customer groups as different offerings
(Brown, 1997).
New product creation provides the most obvious means for generating revenues. Process innovation, on
the other hand, provides the means for safeguarding and improving quality and also for saving costs.
Improved and radically changed products are regarded as particularly important for long-term business
growth (Burnes, 2000). The power of product innovation in helping companies retain and grow
competitive position is indisputable. Products have to be updated and completely renewed for retaining
strong market presence. Different terminologies have been used to categorize and describe product
development. Cooper et al (2002), for example, embraces two distinct activities: old product
development, which involves updating and improving existing products, and new product development,
which involves a greater degree of innovational challenge. Canals (1993) similarly categorized product
development into primary and secondary innovations. Primary innovations were broadly concerned with
the development of new markets and relate to instances where there is a high degree of technical
originality and a commensurate change in consumer behavior. Secondary innovations, on the other hand,
are basically business or company focused and typically involve improvements to an existing market.
Product portfolio decisions are the manifestation of a firm’s innovation and marketing strategies. The
common approach to managing new product development is to develop and manage a portfolio of
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specific projects (Choueke and Armstrong, 1998). Practically speaking, choosing the product portfolio
determines the firm’s strategy for the medium term future and is senior management responsibility
Christensen and Bower (1996). Operationally, portfolio decisions involve two strategic components: a
development strategy regarding the number and rate of new product introductions (introduction
intensity), and a market entry strategy regarding the relative speed to market (pioneering intensity). Past
research suggests that better-managed firms structure their portfolios by striking a balance in the product
innovation portfolio across these strategic components (Wheelwright and Clark, 1992). However, past
research has not systematically decomposed the components of portfolio strategy to examine how the
components work together in relation to financial performance (Matsuno et al, 2002).
A product can be differentiated in various ways. Unusual features, responsive customer service, rapid
product innovations and technological leadership, perceived prestige and status, different tastes, and
engineering design and performance are examples of approaches to differentiation (Porter, 1980). Rather
than cost reduction, a firm using the differentiation needs to concentrate on investing in and developing
such things that are distinguishable and customers will perceive. Overall, the essential success factor of
differentiation in terms of strategy implementation is to develop and maintain innovativeness,
creativeness, and organizational learning within a firm (Clerk et al, 2000).
Successful differentiation is based on a study of buyers’ needs and behavior in order to learn what they
consider important and valuable. The desired features are then incorporated into the product to
encourage buyer preference for the product. The basis for competitive advantage is a product whose
attributes differ significantly from rivals’ products. Competitive advantage results when buyers become
strongly attached to these incorporated attributes and this allows the firm to: charge a premium price for
its product, benefit from more sales as more buyers choosing the product and more buyers become
attached to the differentiating features resulting in greater loyalty to its brand. Efforts to differentiate
often result in higher costs. Profitable differentiation is achieved by either keeping the cost of
differentiation below the price premium that the differentiating features command, or by offsetting the
lower profit margins through more sales volumes (Cooper et al, 2002). Kotler (2001) insists that
anything that a firm can do to create buyer value represents a potential basis for differentiation. Once it
finds a good source of buyer value, it must build the value, creating attributes into its products at an
acceptable cost. These attributes may raise the product’s performance or make it more economical to
use. Differentiation possibilities can grow out of possibilities performed anywhere in the activity cost
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chain.
2.2.3 Globalization and New Market Creation
Market creation is concerned with improving the mix of target markets and how chosen markets are best
served (Cumming, 1998). Its purpose is to identify better (new) potential markets; and better (new) ways
to serve target markets. Market segmentation, which involves dividing a total potential market into
smaller more manageable parts, is critically important if the aim is to develop the profitability of a busi-
ness to the full. Incomplete market segmentation will result in a less than optimal mix of target markets,
meaning that revenues, which might have been earned, are misread (Cumming, 1998).
Market orientation as a business culture leads to business performance improvement, as proved by
numerous studies (Davila et al 2006). It is precisely product innovation that is considered as a moderator
of the link between market orientation and successful business operation (Dodgson, 2001). New market
creation has a positive impact on business performance by leading to a market share increase and/or cost
reduction and, in turn, a profit rise. Market oriented enterprises deliver superior quality products to their
customers while complying with ecological, health and safety standards as well as with legal norms.
Accordingly, market orientation is expected to produce a significant positive impact on all analyzed
effects of innovative activities. Sales has been proposed as the most important measure of business
performance on which managers should focus and is a measure of firm performance that is often closely
associated with the marketing function. Similarly, gross profit (sales revenue minus cost of selling) is an
indicator of the firm’s value chain, specifically measuring a firm’s ability to convert inputs into valuable
outputs (Doyle, 2004).
The market in which an enterprise offers its products can be a predictor of the effects of innovative
activities. Strengths and weaknesses of competitors, demands raised by consumers, legal regulations, as
well as ecological, health and other standards, motivate enterprises to develop products taking into
account the situation in a particular market. Enterprises often find themselves having to modify their
products sold on the international market, not only to achieve outstanding business performance and
competitive advantage, but also to enter the market in the first place and to remain in it. Accordingly, the
market range can have an impact on the effects of innovative activities. It is to be expected that the more
present an enterprise is in the international market, the more oriented its innovation activities are
towards improving product quality, ecological and health aspects, as well as towards complying with
13
legal standards and various regulations (Everitt, 2002).
2.2.4 Globalization and Technology
For many banking firms in Kenya, information and communication technology is viewed as potentially
capable of helping achieve innovative strategy. The high rate at which organizations are buying mobile
phones, computer hardware and software as well as using the Internet for information and
communication is evidence of the increasing awareness of information and communication technology
in the Kenyan market. The business benefits of using information and communication technology
include efficiency and attainment of increased returns. The vast opportunities brought by the Internet to
the banking industry have therefore attracted much attention from researchers whose efforts apparently
group on certain areas of interest (Fitzgerald et al, 2000).
Porter (1980) emphasized the use of technology to empower the firm’s capabilities. He argued that
technology would enable the firm to excel in the competition. Banks are regarded as a vanguard in the
use of information and communication technology (ICT) (Im and Workman 2004). In the context of
banks, the advancement in technology presents a new opportunity to improve service quality in response
to volatile economic environment and changing competitive conditions. Rosenberg (1996)At the firm
level, apart from adopting technology to integrate delivery channels to develop a close relationship with
customers, Banks also adopt technology to enable the analysis of information about customer
segmentation, demographics, product usage, transaction behavior that thereby help them to improve the
profitability and increase market share (Margerison, 1991). With the use of information technology (IT),
the banks can use the cross-selling strategies to sell new banking innovations to their existing customer
base. It can be seen that bank’s adoption of technology changes from improving efficiency of back office
banking functions towards improving the service quality in servicing the customers. Such changing
strategy demonstrates the situation where banks compete to own the potential customers (Fulmer, 1992).
The strengths of the integrated systems approaches relate to their taking learning, relations, dynamic and
systemic aspects of innovation into account. Griffin (1997) argued that innovation requires a process of
co-evolution between technology and cultural perspectives. Technology exerts a significant influence on
the ability to innovate and is viewed both as a major source of competitive advantage and of new
product innovation. Often, organizations experience problems in this area, which are caused by lack of
capital expenditure on technology and insufficient expertise to use the technology to its maximum
14
effectiveness (Alstrup, 2000).
Hamel (2000) stresses that organizations should obliterate rather than automate believing that
technology is often introduced for technology's sake without contributing to the overall effectiveness of
the operation. However, organizations traditional lack of resources usually results in a compromise
situation. It is important to link technology to innovation in sustaining competitiveness (Schon, 1998).
Organizations that can combine customer value innovation Hammer, (1990) with technology innovation
have an increased chance of enjoying sustainable growth and profit. If management skills and activities
are conceptualized to be situation specific and embedded in the organizations in which they are practiced
then the question arises about what is the best way to prepare managers for the “complexity, uncertainty,
uniqueness and value conflicts” which postulates characterize organizational environments (Manogran,
2001).
While the area of information technology is very wide, the most applicable and highly used is the mobile
phone, which is used by majority of Kenyans, both individuals and corporations. A large number of
people now use mobile phones for communication purposes this implies that banks can reach a large
number of persons through their mobile phones, which are always with them. The adoption of short
messages services banking both from clients will, if effectively implemented, lead to substantial cost
savings by insurers in the areas of telephone calls and personnel time (Lewis and Lytton, 1997).
Technological developments particularly in the area of Telecommunications and Information
Technology are revolutionizing the way business is done. Electronic commerce (e-commerce) is the
activity in which consumers get information and purchase products using Internet technology (Hart,
(1996). This revolution in the market place has set in motion a revolution in the insurance sector for the
provision of a payment system that is compatible with the demands of the electronic marketplace.
Consequently, the potential benefits of e-commerce have been widely touted (Leonard, 1995). While
technology is often a key ingredient in cost-reduction efforts, insurers also are looking to ensure they
restrain unnecessary IT expenses. One driver is the cost of maintaining interfaces among multiple legacy
systems, which are often the result of a series of acquisitions that have not been fully integrated (Carrie,
2008).
One promising strategy is virtualization or grid computing, where software and data are centralized,
moving from PCs to central servers. Zurich North America Commercial for example initially went
15
through a phase of virtualization to consolidate servers and boost utilization. Zurich used virtualization
to homogenize hardware and software environment (Carrie, 2008). The Schaumburg, Ill.-based
Company then used virtualization in non-production and, subsequently, production environments. It
currently uses virtualized and non-virtualized environments for production; in addition, the company
used virtualization to improve application efficiencies by running an application family within a virtual
environment (Higgins, 1995).
New analytics tools such as synthetic data and unstructured text applications add to the already powerful
analytics repertoire and create opportunities for both profitability and efficiencies in claims
administration, marketing and distribution (Carrie, 2008). Banks have to capture and analyze multiple
sources of data internally from diverse product databases and claims systems and externally from a
range of public domain data sources to develop insights that enable better and more informed decisions
(Carrie, 2008).
2.3 Factors Driving Globalization and its Challenges
The various factors that drive the rising globalization can be grouped under four broad categories:
macro-economic factors; political factors; technological factors; and organizational factors (Harvey and
Novicevic, 2002). Macro-economic factors include, for example, an acceleration of technology transfer
among countries and a rapid increase in populations in emerging economies (Harvey et al., 2002).
Political factors refer to privatization, deregulation and trade liberalization of many nations in favor of
free flows of trade and investments (Eden et al., 2001; Hafsi, 2002). Organizations such as multinational
enterprises are another major agent of this process (Eden et al., 2001; Harvey et al., 2002). Shifting
organizational strategic attention towards a more global mindset is an example of organizational forces
of globalization. Consequently, these forces have inevitably caused changes in the global marketplace.
Such changes can be viewed as effects of globalization, which ultimately have an effect on the
performance of firms.
Technological forces such as advance development in communication and transportation technologies,
which promote growth in international business transactions, are also key drivers of rapid globalization
(Graham, 1996; Knight, 2000). Thus, globalization is made possible by the development of cost
effective, yet very powerful technologies, including the Intra- and Internet, enterprise resource planning
system, data warehouse, data mart, and data analytics. Friedman (2005) defined globalization a whole
set of technologies and political events converging—including the fall of the Berlin Wall, the rise of the
16
Internet, the diffusion of the Windows operating system, the creation of a global fiber-optic network, and
the creation of interoperable software applications, which made it very easy for people all over the world
to work together—that leveled the playing field. It created a global platform that allowed more people to
plug and play, collaborate and compete, share knowledge and share work, on a scale never seen before.
Cloud computing and new advances in remote access and support technologies also seem to fuel
globalization. Many service jobs, such as call centers, animation, transcription, and software
development can be carried out remotely. It is estimated that 160 million jobs, or about 11 per cent of the
projected 1.46 billion service jobs worldwide in 2008, could be carried out remotely, barring any
constraints on supply (McKinley Global Institute, 2005).
Globalization is a force that has brought about increased interdependencies among many actors the
world over, which has never been witnessed before. (Czinkota and Ronkainen, 2007; Peters and Pierre,
2006). Therefore, the world is both becoming more homogenous and that the distinctions between
national markets, for some products/services, are fading away. Essentially, there abound numerous
opportunities such as large markets, access to modern technology, access to modern and superior
goods/services, fewer barriers to trade and capital flows for interdependent actors in our globalized
world. Consequently, integrated and/or interdependent markets should be virtually free from all forms of
trade barriers. Trade liberalization, therefore, assumes importance (Peng et al., 2008; Czinkota and
Ronkainen, 2007; Human Development Report, 2004; World Development Report, 1994).
As markets are liberalized, with almost all trade barriers like physical, fiscal, monetary, and technical
removed, many firms can enter and operate in almost any market of their choice. However, some nations
may not have the ability to deal with the challenges which globalization and its concomitant result of
trade liberalization bring with them.
Removal or even decreasing of tariff and non-tariff barriers in the globalized world is becoming impera-
tive for all markets. Firms and even private individuals have over the years been agitating for trade liber-
alization because of the benefits that come with that venture (Czinkota and Ronkanen, 2007; Human De-
velopment Report, 2004). An important premise for trade liberalization is that all markets will benefit
from deregulation or removal of all forms of trade barriers, which summarily limit, for example, firms’
and private individuals’ exchange relationships in an economy (Human Development Report, 2004;
World Development Report, 1994; Todaro, 1994). However, the forces of globalization and trade liber-
alization have also led to intense competition among firms in all countries (Peng et al., 2008; Czinkota
and Ronkainen, 2007; Beamish and Lu, 2004). Trade liberalization comes with challenges and firms are
17
compelled to develop ways to have the ability to deal with intense competition. Since many firms in may
not be well equipped to face the emerged competition from trade liberalization, their competitiveness
vis-à-vis other competitors that can enter their markets from anywhere in the globalized world becomes
eroded (Spiegel, 2007; Human Development Report, 2004, pp. 85-6). But, the presence of trade liberal-
ization will call for the role of institutional arrangements in any economy to help various actors exploit
opportunities or manage challenges emanating from trade liberalization (Peng et al., 2008; Beamishand
Lu, 2004; Human Development Report, 2004).
2.4 Strategy and Strategic Response
Strategy is a set of decision-making for guidance of organization behaviors. Strategy and objectives are
used to filter projects hence they appear similar but they are distinct. Objectives represent the ends
which the firm is seeking to attain while strategy is the means to these ends, (Ansoff & McDonnell,
1990). According to Hax & Majiluf, (1996) there are various dimensions in the concept of strategy.
Strategy can be seen as a multidimensional concept that embraces all of the critical activities of the firm,
providing it with a source of unity, direction, and purpose as well as facilitating the necessary changes
induced by its environment.
The role of strategy is not viewed as just passively responding to the opportunities and threats presented
by the external environment but as continuously and actively adapting the organization to meet the
demands of a changing environment including globalization. Johnson and Scholes (2002) note that
strategy is the long term direction and scope of an organization that facilitates the achievement of an
advantage, for the organization, through the mode of arrangement of resources within a changing
environment. This would enable the organization to meet the needs of markets and to fulfill stakeholder
expectations. Thus strategy is viewed as the matching of the activities of an organization to the ever-
changing environment in which it operates. According to Ohmae, (1993), the only purpose of strategic
planning is to empower an organization to efficiently gain a sustainable competitive edge over its
competitors. Hill and Jones (2004) conclude that the strategies an organization pursues have a major
impact on its performance relative to its peers and hence it’s sustainable competitive advantage.
Johnson and Scholes (2002), identify political, economic, social, technological and ecological factors as
comprising the external environment that presents the organization with opportunities, threats and
constraints. Leaders in organizations have to constantly monitor developments in the environment and
take action to maintain an appropriate relationship between their organization and external environment.
Burnes (2000) notes that due to political, economic, social and technological changes, history of
18
organizations has been that of change and upheaval since the industrial age. Because of the pace of
change and uncertainty, such change vary from organization to organization however, no matter what
level of turbulence is, what matters is the ability of the organization to cope with the environmental
constraints, challenges and threats.
According to Tregoe (2001), effective strategic response can be achieved in five phases: phase I entails
strategic intelligence gathering and analysis and it ensures that the depth and breadth of information on
which strategic decisions are based is up-to-date, accurate, and relevant; phase II consist of strategy
formulation which gives results in the creation of a strategic vision or profile; phase III is referred to as
strategic master project planning during which the plan for strategy implementation is developed in
order to align the organization structure with the strategy; phase IV involves strategy implementation
whereby the planned actions are taken, implementation is monitored, and the Strategic Master Project
Plan is modified as and when required; and phase V, strategy monitoring, review, and updating helps to
determine whether there’s success in the overall strategic response.
Strategic surveillance is designed to monitor a broad range of events that are likely to affect the strategy
of the company. Strategic surveillance can be done through a broad-based, general monitoring, on the
basis of selected information sources to uncover events that are likely to affect the course of the strategy
of an organization (Hill & Jones, 2004). According to Schreyogg and Steinmann (1987) strategic
surveillance task involves scanning the firm's internal and external environments to identify emerging
issues and trends which could eventually disrupt the effectiveness of existing strategies. Strategic
surveillance processes try to anticipate the need to change strategy, so that action can be taken before the
window of opportunity for effective response closes. From these definitions, strategic surveillance can
be considered as a generalized and overarching control designed to monitor a broad range of events
inside and outside the company that are likely to threaten the course of a firm’s strategy.
External monitoring does not only allow assessment of strategic progress relative to pre-established
goals or competitors but also allows organizations to determine whether environmental circumstances
has changed enough to make current strategic plans and control strategies obsolete (Preble, 1992).
Methods available for monitoring external performance include competitive benchmarking of products
and process relative to competitors or other industry players, strategic audits of company position in
respect to key competitive threats, and measurement of customer satisfaction with and competitor
responses to strategic moves. Potential actions during the feedback process include revising
organizational strategies, reassessing planning premises and action plans, or recasting managerial
19
objectives.
In the present day competitive business environment, evaluation and control process is crucial to ensure
sustainable competitive advantage by the firm. The environment is dynamic, changing and
unpredictable. The rate and intensity of change facing every organization is increasing daily. These
changes are driven by new technologies, regulatory changes, globalization, increasing customer
expectations and so on. Moreover, there is increasing cost of doing business owing to a number of
factors such as expensive power, expensive fuel and labour unrest due to rising cost of goods and poor
remuneration (Charles and Gareth, 1998).
2.5 Effects of Globalization
Since the 1980s, the world has witnessed dramatic changes in the international and global marketplace.
Liberalization of world trade and capital markets led by globalization has created a new and challenging
competitive arena for all firms (Nolan & Zhang, 2003). With the trend towards more interdependence
among nations, several changes in the business environment have emerged. There has been an
emergence of global markets for goods, services, labor and financial capital (Deardorff & Stern, 2002;
Hansen, 2002). Consumers’ demands around the world have converged (Fram & Ajami, 1994; Levitt,
1983). Increasing trade and investment liberalization evoked by advances in transportation and
communication technologies has resulted in larger volumes of international business transactions
(Deardorff et al., 2002). These aforementioned trends have brought about two key effects of
globalization, global market opportunities and global market threats (Hitt et al., 1998; Molle, 2002;
Sanchez, 1997). It is obvious that globalization not only presents more opportunities to firms, but also
higher levels of threats (Jones, 2002).
The environment in which firms operate provides resources that influence their survival and growth and
the ability of new entrants to join the environment (Randolph & Dess, 1984). This refers to one of many
environmental dimensions, the environmental munificence. Three sub-dimensions of environmental
munificence include: growth/decline, capacity, and opportunities/threats. Amid globalization, firms are
affected by the changes in both market opportunities and threats (Frenkel & Peetz, 1998; Hitt et al.,
1998; Kulmala et al., 2002). They can also be regarded as forces, which affect organizational outputs, or
firm performance.
20
2.5 Empirical Review
According to a study on commercial banks in Egypt, Ezzat (2009) found that with increasing
globalization, banking work became exposed to risks whether external or internal factors and banks had
to be causation about risks using several means, the most significant of which is strengthening capital.
Merging leads to the achievement of economies of scale and increases the volume of activity and
savings and reduce the costs of the activity and mergers and acquisition leads to a change in bank
management and the selection of leaders to pursue more efficient and modern management methods
which leads to lower costs and increase profits. The study recommended: development of skills of the
personnel in charge of credit and selection of the best of them from among those who are efficient, well-
reputed and highly experienced in the banking field; taking into consideration on-going training of bank
staff to get acquainted with the latest development in the banking sector; and also knowing the nature of
competition facing banks.
Thoumrungroje and Tansuhaj (2009) carried out a study on the effects of globalization on firm
performance. The results of their study show that as uncertainty increases, firms engage more in
networking activities, which finally enhances firm performance. This implies that uncertainty alone can
be harmful for firm performance unless certain strategies, such as networking activities and alliance
participation, are implemented to mitigate its negative impact. Further, globalization not only benefits
firms in terms of increasing opportunities, but also hurts business performance due to higher competitive
threats (Contractor and Lorange, 1999, D’Aveni, 1994, Jones, 2002). The study also found that
globalization has several implications for managers in the global marketplace. This study elaborated on
the different effects that globalization has on business. The results indicated that such effects are not
significantly different across cultures. This study also confirmed that globalization is a universal
phenomenon and that firms are inevitably affected. Globalization can affect firm performance positively
and negatively. While global market opportunities are likely to enhance firm performance, global
competitive threats tend to worsen it. Therefore, managers must be aware of such double-edged effects,
and try to capitalize on opportunities while converting threats into opportunities.
In their study on the globalization of commercial banking, Bexley et al. (2007) concluded that,
to accomplish total globalization, a common currency must be established which will ease the entry of
foreign banks into domestic markets that can contribute to more efficiency through increased competi-
tion. On the other hand, a currency crisis in an emerging market would exaggerate this situation. Domes-
21
tic borrowers, including banks, that obtain funds from abroad, usually borrow in a foreign currency such
as the dollar to give foreign currency such as the dollar to give foreign investors some reassurance about
the value of their investments. The effect of financial globalization, therefore, on domestic financial
fragility is not simple. Foreign direct investment both lowers the incidence of banking crises and short-
ens its duration. To face international competition, commercial banks must work to know all details
about the market needs, but ensure that they do not conflict with the goals of their bank. They must also
know the nature of their competition. Banks need to reinforce their financial resources through increas-
ing capital and merging with small and weak banks to form more effective units in order to achieve the
required reduction in costs. Banks need to develop human resources through rehabilitation and training
in such a way as to fit with the developmental process and the requirements of modern banking technol-
ogy. They need to implement the modern banking technology and introduce modern services and prod-
ucts to the customers in the local market.
Gachunga (2009) concluded that globalization has its positive side as well as its negative side. It affects
the economic dimensions; that is trade, finance, aid, migration and ideas. Increases in these dimensions
of globalization, if managed in a way that supports development in all countries, can help alleviate
global poverty under certain conditions. Further, globalization has led to a situation where the business
processes that are outsourced are at the lowest level in the hierarchy in terms of skills requirement. The
other effect of globalization on human resources in Kenya has to do with the migration patterns. Ratha
and Xhu (2008) indicate that the remittances provided by the people who have migrated provide a life-
line to the poor and to their dependants and are an essential source of foreign exchange and a stabilizing
force for the economy in turbulent times. However for many sub-Saharan African countries, the remit-
tance figures are also an indicator of the high levels of brain drain that have deprived these countries of
some of the finest brains (Ratha and Xhu, 2008). This level of brain drain hampers Africa’s and specifi -
cally Kenya’s growth. The fact that the jobs created require low skills and the skilled people are going
away is a bad mix for Kenya’s growth.
Gachunga (2009) further concluded that globalization has led to cut throat competition which means that
organizations have had to manage their performance very strictly in order to survive. It is from this
backdrop that organizations in Kenya including the civil service have embarked on measures of improv-
ing performance. From the human resource management perspective, the performance targets should be
clearly measurable so that individuals can gauge their performance. The targets come from the organiza-
22
tional targets. This form of management thinking has led to improvement in organizational performance
and especially service delivery has improved extensively especially in the public service. Most of these
organizations are competing with global organizations so they have had to put in extra effort to survive.
So with globalization organizations can no longer remain complacent.
23
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter sets out various stages and phases that will be followed in completing the study. It involves
a blueprint for the collection, measurement and analysis of data. This section is an overall scheme, plan
or structure conceived to aid the study in answering the raised research question. Therefore in this
section the research identifies the procedures and techniques that will be used in the collection,
processing and analysis of data. It is comprises of the following; research design, data collection, and
data analysis.
3.2 Research Design
Research design refers to the arrangement of conditions for collection and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in the procedure (Kothari, 2006).
Research design constitutes the blue print for the collection, measurement and analysis of data (Kothari,
2006). The function of research design is to provide for the collection of relevant evidence with minimal
expenditure of effort, time and money.
The research design for this study will be a case study and will focus on the National Bank of Kenya
Limited. This study aims at collecting information from respondents on the strategic responses by
National Bank of Kenya Limited on the challenges of globalization. The design is deemed appropriate in
this study because it’s focusing on only one of the commercial banks in Kenya- the National Bank of
Kenya Limited. Kiptoo (2008) asserted that a case study research design is appropriate where a detailed
analysis of a single unit is desired as they provide a focused and variable insight into a phenomenon.
3.3 Data Collection
The source of data will be both primary and secondary. The instruments to be used in primary data
collection will be in-depth personal interviews guided by open ended questions in an interview guide
(appendix II). The questions will be geared to acquire the opinion of the respondent on the strategic
responses by the National Bank of Kenya Limited on the challenges of globalization. The study will
consider twelve (12) respondents for an interview: one chief manager, one regional manager; one deputy
regional manager; two functional heads; one branch business head; one sectional head; and two field
24
staff. The respondents are expected to give an insight into the strategic responses by the National Bank
of Kenya Limited on the challenges of globalization in their respective positions. Secondary data will be
obtained from existing bank records.
Open-ended questions will be applied to avoid subjectivity that could result from limiting the
respondents’ answer to the questions. Cooper and Schindler (2008) points out that open ended questions
help measure sensitivity or disapproval of behavior and encourage natural modes of expression. Open-
ended questions also allow the respondents to include more information, including feeling, attitudes, and
understanding of the issues (Bryman & Bell, 2007).
3.4 Data Analysis
Data will be analyzed and evaluated using content analysis. The data collected will be summarized ac-
cording to the study objectives being: to establish challenges of globalization at the National Bank of
Kenya Limited; to establish strategic responses by the National Bank of Kenya to challenges of globaliz-
ation; and to evaluate the effectiveness of the strategic responses by National Bank of Kenya to chal -
lenges of globalization. Cooper and Schindler (2008) point out that content analysis measures the se-
mantic content or the ‘what’ aspect of the message. Its breadth makes it a flexible and wide ranging tool
that may be used as a methodology or as a problem specific technique. He further points out that content
analysis guides against selective perception of content and provides for rigorous application of reliability
and validity criteria. Content analysis is a technique for making inferences by systematically and objec-
tively identifying specific characteristics of messages and the relating themes (Ichangi, 2006). This is an
appropriate tool for quantifying and analyzing presence, meaning, and relationships of words and con-
cepts within texts.
25
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APPENDICES
APPENDIX I: LETTER OF INTRODUCTION
The Respondent,
Dear Sir/Madam,
Re: Request for Research Data
I am a Postgraduate student at the University of Nairobi pursuing a Master of Business Administration
(MBA) program. My research project topic is “A Case Study of Strategic Response Effectiveness by the
National Bank of Kenya to Challenges of Globalization”.
In order to carry out the research, you have been selected to form part of those to provide the necessary
data. The data will be gathered through personal interview with the undersigned. You are therefore
kindly requested to assist by granting an opportunity for the interview at your convenient when
contacted for an appointment.
The information you provide will be treated in strict confidence and is purely for academic purpose. In
no way will your name appear in the final research report.
A copy of sample question to assist in preparation is attached. Your assistance and cooperation will be
highly appreciated.
Yours sincerely,
Student Supervisor
35
APPENDIX II: INTERVIEW GUIDE
Section I: Demographic Information
1. Name of your bank
i) Equity bank Ltd ( )
ii) Kenya Commercial Bank ( )
iii) Barclays Bank of Kenya ( )
2. What level are you in management?
i) Lower level management ( )
ii) Middle level management ( )
iii) Top level management ( )
3. How long have you worked in this position?
i) Less than 5 years ( )
ii) More than 5 years ( )
Section II: Profit
4. How has your bank been performing in the last 5 years?
i) Increase in profits ( )
ii) Decrease in profits ( )
iii) Neither increase nor decrease in profits ( )
5. What was your bank’s annual profit before tax for the last 5 years?
Year 2007 2008 2009 2010 2011
Annual pre-tax profit in billions (Kshs.)
6. Kindly indicate the extent to which the following elements have affected on the performance of your
bank in the last five years.
Element Not all Least extent
Moderate extent
Great extent
Very great extent
Technology
Competition
Politics
36
Cultural values and institutions
New marketsNew products creationEcological constraintsDefined rules, duties and regulationsStrategic Alliance
Section III: Loans and Advances
7. What was your bank’s loan portfolio for the last 5 years?
Year 2007 2008 2009 2010 2011
Loan Portfolio
8. To what extent has globalization affected the levels of loan portfolio in you bank for the last 5 years?
i) Not at all ( )
ii) Little extent ( )
iii) Moderate extent ( )
iv) Great extent ( )
v) Very great extent ( )
9.
10.
Year 2007 2008 2009 2010 2011
Annual pre-tax profit in billions (Kshs.)
37
APPENDIX III: INTERVIEW GUIDE
38