Challenges of Implementing Turnaround Strategies at Kenya Railways Corporation

Abstract

The business environment globally and locally is increasingly becoming competitive. Gaining and sustaining a competitive advantage is harder than ever. In order to cope with these changes, strategic management has taken the centre stage in organizations that intend to succeed in the turbulent business environment. Many public corporations experiencing decline in performance have opted to implement turnaround strategies to improve their performance. KRC is one of these institutions that are yet to effectively manage challenges facing the implementation of its turnaround strategies. This study therefore sought to determine the challenges faced in implementation of turnaround strategies at Kenya Railway Corporation. The study adopted a case study research design. Both primary and secondary data was used to gather information on the topical issue. The respondents were the General Manager-Finance, General Manager-Business Development, Project Manager –SGR, Human Resource and Administration Manager and Procurement and Logistics Manager since they were critical in the formulation of the corporate strategies at the corporation. The data collected was analyzed using content analysis technique because it was qualitative in nature. Data was summarized and presented under KRCs strategic themes in response to the strategic objectives. The study found out that KRC Management adopted a number of strategies to turnaround the Corporation. These strategies included: privatization through concession management, diversifying of its funding sources by harnessing the potential of its vast real estate portfolio, modernizing the rail infrastructure through the construction of the new Standard gauge railway (SGR), expanding urban passenger transport services, reopening of all viable closed branch rail lines, restructuring its organization structure and strengthening corporate governance. The study concluded that the challenges faced in the implementation of the turnaround strategies were a weak financial base, stiff competition from road and pipeline transport, dilapidated and obsolete rail infrastructure and assets, lack of documents of title for a large portion of the real estate portfolio, insecurity including vandalism and encroachment on the railway corridor, dismal performance by the concessionaire Rift Valley Railways(RVR) and the weak legal regulatory framework governing State Corporations in Kenya. The study recommends that continued Government support especially on infrastructure development and on regulatory reforms is critical in harnessing the potential of KRC. The study further recommends that to fully realize the vast potential of KRCs diversification strategy into the real estate sector, the recruitment of a professional property management firm that would independently run it‟s the real estate portfolio is critical.