Restructuring strategy and the performance of Kenya commercial bank Ltd

Abstract

In today’s globalised economy, competitiveness and competitive advantage have become the buzzwords for corporate around the world. Corporates worldwide have been aggressively trying to build new competencies and capabilities, to remain competitive and grow profits. As organizations seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can cut costs, maintain quality and improve their performance by undertaking organizational restructuring strategy. Organizational restructuring has attracted much attention from academics not only because it concerns a wide range of aspects but also due to its implications for firms to adjust strategies regarding to the dynamic business environment, and eventually enable firms to create and retain the competitive advantages. Firms may obtain a core competence of continually acquiring other firms, restructuring, and retaining certain firm assets, while divesting others. The study sought to establish the influence of organizational restructuring as a strategy on the performance of the Kenya Commercial Bank. The study used case study research design. The study used primary data which was collected using an interview guide. The data obtained was analyzed using content analysis. The study found out that the Kenya Commercial Bank undertook restructuring which involved disposal of non-core assets, outsourcing of key services, closed of non-profitable operations; staff rationalization; change in executive management, defining, a set of core values, a mission statement and vision as well as by re-branding and restructuring of non-performing loans portfolio. Restructuring was found to have resulted in improved performance of the bank in terms of reduction of operating costs, nonperforming loans, increased market share and growth in shareholder value (Profit & Return on Capital). The study found out that the bank encountered resistance from employees for fear of losing their jobs. At the same time employees and pensioners resisted management attempts to sale the bank headquarters. To counter the challenges the bank ensured that there was effective communication and also they trained employees in order to change their culture. Organizational restructuring should be informed from situational based analysis of the firms operating environment and aimed at adapting the business to changing business environment with top management support being a key ingredient to successful process