Turnaround strategies adopted by the National Bank of Kenya

Abstract

The management of company turnaround is a daunting task when it is considered that the majority of turnaround attempts fail to produce a viable business. There has been little research conducted in the last decade that gives managers some insight into the management of the company turnaround process. The study sought to answer to the following research questions: what turnaround strategies were used by the National Bank of Kenya? What influenced the choice of tum around strategies? The study used a descriptive design.

The target population was the 42 tactical and corporate managers. Only 34 finally took part in the study. Primary data was collected using structured questionnaires. The analysis was done using pearson correlation and descriptive analysis. The findings revealed that the turnaround strategies used were efficiency oriented Strategies which included reduction/omission of dividends, layoffs, replacement of top management, integration of surplus fixed assets, closure of branchlbusiness units, diversification in some areas, and sale of some business units.

The findings revealed that the most significant factors were cost cutbacks, technology, retrenchment, profitability, bank size, senior management turnover, free assets, severity of financial distress, capital structure, bank relationship, block shareholding, managerial shareholding, and leverage. The study concludes that the turnaround strategies are managerial restructuring, operational restructuring, asset restructuring and financial restructuring.

The study also concludes that the factors significantly affected turnaround strategies adopted by the bank. The study recommends that companies wishing to turnaround should focus more on operational restructuring, asset and financial restructuring as strategies than focus on managerial restructuring.

There is also need for companies to pursue turnaround strategies to do so in cognizance of the factors that influence such strategies especially cutbacks, technology, retrenchment, profitability, bank size, senior management turnover, free assets, severity of financial distress, capital structure, bank relationship, block shareholding, managerial shareholding, and leverage.