CHALLENGES FACING STRATEGY IMPLEMENTATION IN NATION MEDIA GROUPS REGIONAL EXPANSION STRATEGY

By Bwika Mbwana Salim Registration No.: D61/P/8010/04

A Management Research Project Proposal Submitted In Partial Fulfillment Of The Requirements Of The Master Of Business Administration (MBA) Degree, School Of Business, University Of Nairobi. August 2009
1

CHAPTER ONE INTRODUCTION

1.1 Background Strategy is the direction and scope of an organisation over the long term which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. (Johnson G. et al. 2006) Strategic planning process; strategy implementation (brief explanation).

Organisations do not operate in a vacuum. They exist in a given environment which is turbulent and not static. The environment consists of the political, economic, social, technological and legal aspects of the world. The turbulence is in the form of increased competition and rivalry among existing firms, possible new entrants, and change in consumer tastes among other factors. The survival and competitiveness of an organisation is therefore determined by the strategies the firm will adopt in order to remain relevant in the market. One of the strategies a firm may adopt to become competitive and relevant is through expansion into new (foreign) markets.

Expansion to new (foreign) markets poses its own set of challenges to the firm. For instance, Global corporations headquartered in one country with subsidiaries in other countries experience difficulties that are understandably associated with operating in several distinctly different arenas (Pearce and Robinson 2005). Strategic managers are therefore required to continually scan the environment that their organisations operate in
2

with a view to continually formulate strategies that will make them compete effectively and expand and maintain their market share.

1.1.1

Expansion Strategies

When a firm wishes to expand into other regions, it has three strategy level options; viz import export activity which has minimal effect on the existing management orientation or an existing product line; foreign licensing and technology transfer which again requires little change in management or operation and thirdly, direct investment in overseas operations, including manufacturing plants which requires large capital outlays and the development of global management skills (Pearce and Robinson 2005).

Expansion strategies are game plans to grow and position a firm in a competitive manner. Firms usually apply expansion strategies to grow bigger in size in order to gain from economies of scale for instance in risk reduction through diversification, increase their market share and profitability, improve their financial strength and improve technological capacity. As a crucial driver of success and sustainability, growth allows firms to expand their portfolio by providing their products and services to a larger number of clients while at the same time fulfilling other missions. Organizations can use a variety of organizational structures to facilitate expansion, including: Growing existing operations, legal restructuring, franchising, strategic alliances, mergers and Acquisitions (Robert, 2000)

There are two models that help answer this question. These are: Customer-centric approach and firm-centric approach. In the customer-centric approach, the organizations first seek to understand customer needs and demands. This includes current and future trends in the marketplace. Once the organization determines the types of products and services customers are demanding it must then consider whether it can meet these needs given its internal capabilities and resources. The organization must also consider how offering these products and services fits into its overall strategy. If it determines that its internal capabilities cannot meet these customer needs, yet offering these particular products and services fits into its overall strategy, it should begin considering various expansion strategies. Furthermore, the organization should consider which other organizations offer the products and services the customer is demanding then it can consider opportunities to partner or potentially acquire. (Markusen et al 1995)

In the firm-centric approach, an organization evaluates its internal capabilities (core competencies, current product offering, legal structure, and available resources). If these internal capabilities cannot meet external market factors (such as increased competition, increased commoditization, increased customer demand, etc.), the organization should consider various expansion strategies. (Doyle, Gillian, 2002)

1.1.2

Nation Media Group

The Nation Media Group Company is one such organisation that is undoubtedly the leading media house in East and central Africa. It was founded in 1959 by the H.H Aga Khan. It is well established in Print Media and Electronic media and is now in the Digital media. It has fulfilled its initial vision of becoming the leading media house in East and Central Africa and has now changed its vision to becoming The Media of Africa for Africa. The initial mission statement was fulfilled by expanding into the East African Market namely Uganda and Tanzania where it owns subsidiary Companies dealing in Media matters namely Mwananchi Communications Limited and The Monitor Publications Limited in both Tanzania and Uganda respectively. Both subsidiaries command respect by publishing authoritative, independent titles in the countries that they operate in that have come to be associated with the boldness that the Kenyan Nation media front is associated with. The Tanzanian Subsidiary publishes one English Daily title (The Citizen) and The Sunday Citizen; a bi weekly sports and entertainment newspaper called Mwanaspoti and a Daily Kiswahili newspaper (Mwananchi) and Mwananchi Jumapili. The company recently invested in a 4,000 US dollars printing press that will give it a competitive advantage over the other media houses in Tanzania as it has a faster printing and more colour pages capacity. The Kiswahili titles command the highest market share in the market while the English daily comes a distant third. The number one and two positioned newspapers; The Daily News and The Guardian are spread sheets and have been there much longer. The Ugandan subsidiary on the other hand has One English Daily (The Monitor) and The Sunday Monitor and acquire licenses

to own and broadcast on electronic media, NTV Uganda and also has radio broadcasting frequencies. NTV Uganda has the largest audience within the two years that it has been in existence. It goes without saying therefore that Nation Media Group has a strong presence in the East African Market and is now looking at further expansion into other regions in West Africa.

1.2 Problem Statement Organisations are guided by their vision and mission in order to attain both their short term and long term objectives. Senior managers have the sole responsibility of formulating and supervising the implementation of strategies for their organizations through their subordinates. The vision of a given organisation underlines the strategic direction that the company wants to take or put in another way, where it wants to be in a given period of time. A mission statement is a statement of the overriding direction and purpose of an organisation while objectives are statements of specific outcomes that are to be achieved. (Johnson G. et al, 2006).

When an organisation adopts a strategy to expand its operations beyond its existing boundaries, it is prudent for managers in charge of corporate strategy to scan the environment with a view to identifying the expected or potential changes in the environment as the changing variables will give rise to opportunities and threats for the organisation. Since these variables are likely to pause great challenges to the strategic capability of the organisation i.e. resources and competences must be analysed with the sole purpose of the internal influences and constraints on strategic choices for the future.
6

All the studies that have been done on the subject of Nation Media Group Limited (NMG), no study has addressed the challenges the Media house is facing in implementing its core strategy of becoming the media of Africa for Africa or the challenges it faced in its vision of becoming the leading Media house in East and Central Africa. In fact in his suggestions for further research, Robert Muganda Ekirapa (2008) he has cited the need for research to be done on the challenges the organisation is facing in its bid to maintain a market leadership. The studies have largely looked at its Diversification Strategy, Thuo (2002); Mungai (2006) has studied the Competitive Strategies employed by the group in order to become competitive, while Kaburu (2008) looked at the effect of market strategies on the financial performance of media houses in Kenya. The study by Kieti John (2006) addressed the determinants of foreign entry strategies a case of Kenyan firms venturing into Southern Sudan. Vincent (2005) has looked at challenges to strategy implementation at CMC Motors group limited and has successfully enumerated the challenges experienced across all levels within the organisation. It is highly likely that the authors of these studies have assumed a similar success story in its subsidiaries (Uganda and Tanzania). The Organisation faces a lot of challenges in the respective markets that blurs the vision of NMG that need to be addressed if it has to accomplish its ambitious vision of being Media of Africa for Africa. The Kenyan environment has changed largely and the organisation is forced to consolidate itself as the market leader is largely liberalised and the competition is intense in both print and electronic Media. Currently, one of the mobile telephone companies in Kenya, Safaricom provides content through its mobile phone services and this poses a great challenge to NMG. For example

in under five years, the organisation has been forced to close down some of its publication such as the Nation Business Directory; The Coast Express which was a weekly publication for the Coast Region, The Weekly advertiser which was a free sheet that targeted the small advertisers and lately The Daily Metro which was closed down early this year. This is because the business environment has changed and it called for a shift in strategic thinking. The Tanzanian Market has had its share of problems where a radio station was closed down (Radio Uhuru) and had left the company to survive without any electronic platform and some of senior Kenyan Managers became prohibited immigrants during the run up to the countries elections in 2005.The Ugandan publication has had its press raided by the government and for several days the paper was not available in the streets of Uganda and the NTV Uganda station has severally been put off air by the government as the government perceives it to be driving foreign agenda that is seen as a threat to the government of the day. All these are changes that hamper strategy implementation of the organisation. 1.3 Objectives of the study 1. To identify the challenges NMG faces in implementing its regional expansion strategy 2. To recommend strategies to overcome the challenges 1.4 Importance of the study

The study will be useful to the Senior managers in charge with strategy formulation in the at NMG as they will understand the challenges that threaten to blur the organisations vision and therefore enable them to do adequate environmental scan before investing in foreign markets and also come up with practicable solutions to counter the challenges.
8

The study will also be useful to other companies that have presence in the East African Market or have plans to pursue regional expansion especially with the first tracking of the East African community common market. Other Media houses that would want to venture into the East African Market will learn the pitfalls and the successes of NMG and ensure that they have a successful take off and maintain a steady cruise level.

It is also expected that the study will provide policy makers in the East African Countries with an insight into the problems faced by investors in their respective countries that are likely to discourage foreign investment. For instance Kenya is the second largest investor in Tanzania after Britain and it is only logical that investment policies in such an environment should be more conducive than repulsive.

For the researchers and scholars this project will be useful as a reference material especially in researching other industries and expansion strategies in other regions.