Challenges of the implementation of turnaround strategy of the large micro finance institutions in Nairobi county
Organizations all over the world have realized the need to embrace strategic management to attain a competitive advantage in pursuit of set objectives. Since change has become a constant, successful organizations need to implement change continuously and this requires development of organizational change competencies. Successful organizations are those that implement turnaround strategies. On this note, the MFI industry has had to evolve over time; the desire to grow, expand outreach and improve quality of financial services to its target client is a legitimate and fundamental goal for any financial institution. Thus a clear corporate strategy is critical. The study focused on the challenges of the implementation of turnaround strategies in the large MFIs in Nairobi County. However, the study narrowed down to 2 MFIs who have implemented the turnaround strategy and transformed into Deposit Taking MFIs. Thus the research design adopted was a case study of the two institutions. Both primary and secondary data was used to gather information on the topical issue. The respondents were senior managers of the institutions since they were critical in the formulation of the corporate strategies within an institution. The respondents highlighted the strategies they adopted and the challenges they faced while implementing those strategies. They proposed measures that could be adopted by their institutions for effective implementation of the strategy to attain competitive advantage. The study findings indicate that transformation process take longer than expected and the cost far more than the initial estimates. They are also long and complicated processes which call for ownership from all stakeholders, thus effective communication is a crucial component of any change process since it is associated with risks and for this reason, it is important that a good communication strategy is in place, to ensure that the interests of all parties are aligned to the main corporate strategy. By transforming from a credit only microfinance institution into a DTM, extensive capacity building is required to develop skills of existing and new employees. Therefore, those smaller MFIs contemplating implementation of the turnaround strategy have a great advantage as they already have a working document to refer to. The study recommends that management should provide full financial support and also carry out extensive capacity building on the subject of turnaround strategy to have a buy in of all stakeholders owing to the various challenges highlighted. Lastly, a good governance culture is necessary prior to beginning the process since it helps to ensure transparency. Some of the implications of the study highlighted include adoption of a multi sectoral approach and wide consultations in order to develop realistic guidelines that will ascertain effective implementation of turnaround strategies. This is because turnaround strategy is more challenging to realize considering that it takes a longer period and require more resources to stabilize the organizations before profitability can be achieved. Also, the empirical results will aid theory building testing new and established theories and frameworks and will either validate or refute the current theories and paradigms. This will advance strategic management, which is still in the pre-paradigmatic stages. Thus, organizational competencies and capabilities will always play a key role for successful turnaround strategies; ideal structures/systems, effective leadership, positive culture, teamwork, efficient mobilization and utilization of resources and adoption of the rapid changing technology. Therefore, appropriate combination of these factors will enable companies operate viably while gaining a competitive edge over their rivals.