| dc.description.abstract | This is a management research project which was carried out with
three (3) key objectives, namely,
• To identify the extent of diversification within East Africa
Building Society,
• The factors that influence the pursuit of the related
diversification strategy
• Why the EABS wants to move to the main stream of banking.
It is a case study whose respondents comprised the Chief
Executive of the EABS,the Chief Executives of its sister companies
within the EABS holdings and the marketing managers. Primary
data was collected using personal interview guide whereas
secondary data was collected from the company's periodicals.
Content analysis method was applied for the data analysis.
The research findings were that-:
It has diversified into both financial and real estate sectors.
Reasons for these were due to support the parent firm's core
objectives of mortgage financing and housing development.
The key factors which have influenced their pursuit of related
diversification move were that they wanted to remain competitive
and turn into ''one stop shop" where they could satisfy all their
customers' needs as well as maintain their relative market share.
Also they wanted to share and transfer key resources within their
SBUs, others cited included the synergy effects, firm's strategic
intent, and to try to spread its risks as well as putting their excess
financial resources into viable ventures.
Their move into the banking sector from their main stream
mortgage sector is due to the competitive environment into which
they are operating in. It was found out that EABS is registered
under the Society's Act which has hindered it in terms of the
clearing procedures at the central bank, a factor they now think
they can overcome by entering into the banking sector and also
due to the fact that their capital base has over grown and
surpassed the central bank requirement. Also change of their
target market, a fact they think can well be met by shifting to a
commercial bank. Finally, insiders pointed out that they are
actually divesturing one of its SBUs which has failed to perform to
their expectation.
With these strategic moves, EABS is seen to have taken the
necessary proactive strategy of related diversification which has in
deed placed it in the upper hand in the entire mortgage industry in
the country. Further, it was revealed that the EABS supports its
sister companies especially in both finance and resources of which
this has boosted their operations within their respective industries.
Recommendations for the policy and practice are that the
centralised decision making process and the management style
within the EABS Group were cited to have hindered the
effectiveness of the single SBUs which need to be set free to
compete effectively. It is also the high time the management of the
EABS realised the importance of recruiting and maintaining high
qualified staffs from all the races. Finally each of the SBUs should
be allowed to set up a research and development departments to
enable them read the market signals early in advance and set the
necessary proactive strategies. | en |
