Responses to changes in the external environment-A case study of Postbank

Abstract

Over the last 10 years, several changes have taken place in Kenya's business environment prompting each organization to develop appropriate response mechanisms. Postbank has not been spared these changes. This research was a case study of Postbank. Its objective was to establish Postbank's responses to challenges emanating from the external environment. In order to achieve this objective, primary data and secondary data were collected. Primary data was obtained from personal interviews with respondents who were (are) the heads of departments at Postbank. These are the same people charged with developing and implementing the strategic responses at Postbank. Secondary data was obtained from published accounts and corporate development plans (COPs). These were analyzed by way of graphs, charts and line graphs. The study established that changes emanating from the environment have and continue to pose challenges to Postbank. The changes that have taken place as enumerated by the managers include governance and regulation, culture, organizational structures, service delivery systems, investment, -. technological development, product diversification, and strategic management. The study found out that the Board of director's membership has been restructured to include well-known industry practitioners, researchers and academicians. These have not only injected professionalism, but also turned around the bank from a loss-making outfit to a profitable organisation. For instance, in 1999, the Bank made a loss of Kshs 204.6 Millions, and by 2004, it posted a profit of Kshs 209.5 Millions. The Bank is also re-branding to shake off its image as a tired institution. Moreover, it has reduced its bureaucratic structure from 15 to 11 staffing levels thereby reducing the chain of command. The bank has also restructured its investments from a one-man show to a committee decision, which has improved its investment as the government no longer guarantees, its losses. The study also found out that Postbank is emphasizing on product development and modification to respond to the ever-changing needs of customers and improve its revenue base and profitability. For instance it now offers, Western Union, Visa card and a host of commission based services, which are more lucrative than investment income. Moreover the bank has embraced strategic management and is continuously reviewing its COP including its vision, mission and objectives to conform to the challenges emanating from the environment. During the study, the research found out that Postbank has had 4 CEOs over the last five years. It will be interesting to carry out a study to show the different management styles of the CEOs and their impact on the bank's strategic direction. This would give an indication on how personal traits influence the running of organisations especially state owned ones.