The Influence of Corporate Governance and Turnaround Strategies on the Performance of Uchumi Supermarkets Limited

Abstract

The objective of the study was to examine the influence of corporate governance and turnaround strategies on the performance of Uchumi supermarkets limited. The study was conducted as a case study of Uchumi Supermarkets Limited in Kenya. Primary data was collected using an interview guide and analyzed based on the content matter. The study established that corporate governance practices influences the success of turnaround strategies in a distressed firm in a number of ways. The top management teams must be able to formulate and implement requisite strategies needed to turnaround a declining organizational performance. The length of managers and directors tenure influences their ability to scan environment and tendencies to process information during recovery. Higher levels educational among managers and directors relate to greater cognitive ability and information processing capacity. Individuals with high level of education are tolerant of ambiguous situations and more likely to engage in successful strategic recovery of an organization. Functionally diverse boards are more likely to generate multiple perspectives in the strategic decision-making process, maximize the extent of information needed for strategic decision making and increase the likelihood of task conflicts which are important in improving the quality of strategic decisions. A focus on product lines for which the firm is best known, customer segments that are particularly loyal or less price sensitive, and areas where the firm has distinct competitive strength. Last but not least the replacement of the firm's top management team is undertaken signal change and creates a positive perception of management team that oversees turnaround. The study recommends companies implementing turnaround strategies should emphasize transformation in leadership style to enable successful achievement of recovery. A comprehensive understanding of customers, markets and the business environment, as well as having customer-oriented management practices for are necessary for successful achievement of turnaround strategies. Customer relationships, prompt delivery and after sales service are thus important factors that should be addressed during turnaround in order to establish a market niche and fulfill customer needs. Companies should focus on corporate social responsibility practices in their turn around strategies and effective communication channels should be put in place to ensure that turn around strategies are effectively and efficiently communicated to all stakeholders