Strategic Planning And Profitability At Equity Bank Kenya Limited
Githagui, Morgan K
MetadataShow full item record
Strategic planning has its roots in Greek mythology and refers to the process of setting longterm organizational objectives, developing and executing plans to achieve these objectives, and providing financial and non-financial resources, necessary for realizing these objectives. Strategic planning is a process that involves three stages. The first stage involves identifying an organization’s vision and mission, and conducting an analysis of the organization’s strengths and weaknesses as well as potential opportunities and threats. The second stage involves implementation of the action plan, and the third stage involves monitoring to identify successes or failures. Organizations that undertake strategic planning build teams with a common vision and are able to keep in motion a dynamic process that allows them to continually reassess, confront change, and grow within an agreed-upon framework. They are able to make more informed decisions that anticipate both short-term and long-term consequences, and also demonstrate significant improvement in sales, profitability and productivity. Reasons given by organizations that do not undertake strategic planning include: costs related to staffing, facilitation, venue, transportation or materials, the complexity associated with the language, terminology, conceptual requirements of strategic planning, and the need to acquire resources needed for short-term operations before embarking on long-term goals. Equity Bank Kenya Limited is a publicly listed commercial bank in Kenya and is the largest bank in the East African region in terms of customer base. The bank operates in Uganda, Tanzania, South Sudan and Rwanda. The study’s objective was to establish the relationship between the bank’s profitability and the use of strategic planning. Profitability is the state or condition of yielding a gain and is the primary goal of all business ventures. It is measured by comparing income with expenses. The research question was: Is there any relationship between the bank’s profitability and its use of strategic planning? The study made use of an interview guide to collect primary data from five respondents. The bank’s Company Secretary and Director of Corporate Strategy, Chief Officer - Finance, Innovation and Technology, Director Customer Experience, Research and Development, Director of Operations, and Director of Treasury and Trade Finance were interviewed. Secondary data was also obtained by reviewing the bank’s publications and annual reports. Data was analyzed through content analysis, a technique that makes use of codes to draw out connections between words and tries to explain the possible meanings of the words in context. Two main findings emerged. First, there was evidence to suggest that the bank made use of strategic planning. The fact that there was a director in charge of strategy formulation and execution in the bank, and that there existed several teams that were tasked with implementation of various strategic initiatives corroborated this suggestion. Various strategic initiatives were in place. These included: global partnerships, regional expansion, staff development, brand visibility, and rollout of mobile banking and agency banking services. Secondly, as a result of execution of these strategic initiatives, the bank had maintained an upward trend in terms of profitability. The average rate of growth per year in profitability between the year 2008 and 2013 had been 32.2%. In the first half of the year 2014, Profit before Tax increased to Kshs. 10.8 billion up from Kshs. 8.9 billion recorded for the same period in year 2013. The study therefore concluded that a relationship indeed existed between the bank’s profitability and its use of strategic planning.