Turnaround strategy and performance of Kenya Commercial Bank
A successful turnaround is a complex procedure that requires a strong management team and sound business core. The stage of decline of a business will determine the type of action that must be taken to accomplish the turnaround. Turnaround is a sustained positive change in the performance of a business to obtain a desired result, it is the process by which a business with inadequate performance is analyzed and changed to achieve a desired result. In a turnaround, analysis and action is simultaneous. The contemporary business environment is increasingly becoming competitive due to changes in the external environment characterized by risks and uncertainties. Turnaround strategies are seen as essential components of managing, stabilizing, funding and fixing an underperforming or distressed organization. These strategies provide the basic direction for actions and forms a basis for coordinated efforts directed towards achieving long-term business objectives. The study reviewed Turnaround Strategy and Performance of Kenya Commercial Bank. The study employed a case study research design. Data was collected using an interview gui65de which was administered to bank managers of Kenya Commercial Bank. Qualitative data collected was analyzed using content analysis technique. This enabled the researcher to make general statements in terms of the several attributes and conceptualization of the study. The study established that turnaround situation is one where a company suffers declining economic performance for an extended period of time, such that the performance level is so low that the survival of the company is threatened unless serious efforts are made to improve its performance. Turnaround strategy emphasizes the improvement of operational efficiency and is probably most appropriate when a corporation‟s problems are pervasive but not yet critical. They stand on the belief that the market cycle doesn‟t describe an inevitable course of growth followed by decline. The bank effectively manages its operating costs and has more room to maneuver during the current credit crisis. This is particularly important especially when it is struggling to rebuild capital positions damaged by the crisis. The study concludes that turnaround strategy has a positive effect on the performance of the Kenya Commercial Bank. The bank manages to halt the decline, return to profitability and growth. The bank has continually grown and has a successful listing in the recent years which has enabled it to increase its capital base. The study recommends that for turnaround to be successful there is need to pursue a strategy at any given time. Whenever a firm is faced by a decline and it desires to attempt turnaround it should consider replacing the current management and hire an experienced team to steer the turnaround process. The study implies that policy makers should obtain knowledge of banking sector dynamics and the appropriate turnaround strategies to enhance economic performance and therefore obtain guidance.