A CASE STUDY OF STRATEGIC RESPONSES EFFECTIVENESS BY THE NATIONAL BANK OF KENYA LIMITED TO CHALLENGES OF GLOBALIZATION

PRESENTED BY INGWE JOHN KENNEDY REG. No. E6

SUPERVISOR: DR. JOHN YABS

A MANAGEMENT RESEARCH PROPOSAL SUBMITED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF A DEGREE IN MASTER OF BUSINESS ADMINISTRATION (MBA), SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI

FEBRUARY, 2012

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DECLARATION This research project is my original work and has not been submitted for any award in any other university.

Signed: Date: .. John Kennedy Ingwe Reg. No. Declaration by Supervisor This project has been submitted with my approval as University Supervisor.

Signed: Date: . Dr. Jon Yabs School of Business University of Nairobi

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TABLEOFCONTENTS
DECLARATION............................................................................................................. iii LIST OF ABBREVIATIONS.............................................................................................vi CHAPTER ONE............................................................................................................. 1 INTRODUCTION........................................................................................................... 1 1.1 Background of the Study....................................................................................1 Strategic Responses..............................................................................................2 Globalization......................................................................................................... 4 The Baking Industry in Kenya................................................................................4 1.1.4 The National Bank of Kenya Limited.............................................................6 1.2 Statement of the Problem..................................................................................6 1.3 Objectives of the Study......................................................................................8 1.4 Significance of the Study....................................................................................8 REFERENCES............................................................................................................. 10 CHAPTER TWO...........................................................................................................12 LITERATURE REVIEW..................................................................................................12 2.1 Introduction......................................................................................................12 2.2 The Concept of Globalization............................................................................12 2.2.1 Globalization and Strategic Alliances..........................................................13 2.2.2 Globalization and New Product Creation.....................................................15 2.2.3 Globalization and New Market Creation .....................................................16 2.2.4 Globalization and Technology.....................................................................17 2.3 Factors Driving Globalization and its Challenges...............................................20 2.4 Strategy and Strategic Response......................................................................21

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2.5 Empirical Review..............................................................................................21 CHAPTER THREE........................................................................................................24 RESEARCH METHODOLOGY.......................................................................................24 3.1 Introduction......................................................................................................24 3.2 Research Design...............................................................................................24 3.3 Data Collection.................................................................................................24 3.4 Data Analysis................................................................................................... 25 REFERENCES............................................................................................................. 26 APPENDICES.............................................................................................................. 35 APPENDIX I: LETTER OF INTRODUCTION....................................................................35 APPENDIX II: INTERVIEW GUIDE.................................................................................36

LIST OF ABBREVIATIONS
HRM SHRM CIPD NSSF SME Human Resources Management Strategic Human Resources Management Chartered Institute of Personnel and Development National Social Security Fund Small and Medium Enterprises

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CHAPTER ONE INTRODUCTION 1.1 Background of the Study Globalization is the growing interdependence of national economies involving consumers, producers, suppliers, and governments in different countries (Dunning, 1993). Globalization allows companies and firms to sell their products and services to consumers beyond the borders of their country of origin. Globalization is literally removing the boundaries to potential customers in a worldwide market. Knight (2000) states globalization reflects the trend of firms selling and distributing products and brands in many countries around the world. In the past two decades, the world has gone through the process of globalization, one that causes increasing economic, financial, social, cultural, political, market, and environmental interdependence among nations. According to Chanda (2007), globalization has worked silently for millennia without being given a name. Indeed, globalization processes are continuously evolving, driven by the economic aspirations of millions around the globe the more people involved, the faster the globalization is. The notion that the world has become a global village is shared by almost every person on earth. Events, discoveries, technologies, and crises that make headlines in one part of the world are swiftly brought to the notice of many people all over the world. Globalization also refers to the strategy of approaching worldwide markets with standardized products (Thompson and Strickland, 1993) and as such, has made it easy for the task of pursuing international business strategies as trade among nations has been liberalized with a tremendous reduction in trade barriers. Consequently, fewer trade barriers have also led to the spread of improved technologies, communication systems, transportation systems and logistics, which all facilitate the exchange relationships between an organization and its buyers, suppliers and other actors across the globe. However, the impact of globalization remains very controversial (Abdel-Bar, 2006). The banking sector is one of the most important economic sectors and the most influential and responsive to changes due to globalization, whether international or domestic (Thompson and Strickland, 1993). The most important of those changes include technological developments, the internationality of money
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markets, and freedom from the constraints that hinder all banking activities, the removal of barriers that prevent some financial institutions from working in certain sectors, and the trend to develop and manage the risks of lending in light of the increase in international competition in this sector while seeking to attract foreign capital with the emergence of giant banking entities. The Kenyan banking system is one of the most important channels for mobilizing savings in the form of credit or investment and working to direct them to more effective and more profitable productive sectors and activities. Added to this is the role which the banking system plays in activating and enhancing privatization and attracting investments to get the financial resources required for developmental needs. Hence the concept of globalization has been associated with the concept of abundance and availability of the services provided by banks. The accurate view to provide banking services, whether related to deposits, loans, or bonds (as traditional services), or to the contracts of complex derivatives or other innovative advanced services, leads banks to exist effectively in all fields of economic activity (El-Dabie, 1999). Strategic Responses A strategy is a set of decision-making for guidance of organization or firm behaviors. Strategy and objectives are used to filter projects hence they appear similar but they are distinct. Objectives represent the ends which the firm is seeking to attain while strategy is the means to these ends (Ansoff & McDonnell, 1990). According to Hax & Majiluf, (1996) there are various dimensions in the concept of strategy. Strategy can be seen as a multidimensional concept that embraces all of the critical activities of the firm, providing it with a source of unity, direction, and purpose as well as facilitating the necessary changes induced by its environment. The role of strategy is not viewed as just passively responding to the opportunities and threats presented by the external environment but as continuously and actively adapting the organization to meet the demands of a changing environment including globalization. Johnson and Scholes (2002) note that strategy is the long term direction and scope of an organization that facilitates the achievement of an advantage, for the organization, through the mode of arrangement of resources within a changing environment. This would enable the organization to meet the needs of markets and to fulfill stakeholder expectations. Thus strategy is viewed as the matching of the activities of an organization to the ever-changing environment in which it operates. According to Ohmae, (1993), the purpose of strategic response is to empower an organization to efficiently gain a sustainable competitive edge over its competitors. Hill and Jones (2004) conclude that the strategies an organization pursues have a major impact on its performance relative to its peers and
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hence its sustainable competitive advantage. Johnson and Scholes (2002) identify political, economic, social, technological and ecological factors as comprising the external environment that presents the organization with opportunities, threats and constraints. Leaders in organizations have to constantly monitor developments in the environment and take action to maintain an appropriate relationship between their organization and external environment. Burnes (2000) notes that, due to political, economic, social and technological changes, history of organizations has been that of change and upheaval since the industrial age. Because of the pace of change and uncertainty, such change vary from organization to organization however, no matter what level of turbulence is, what matters is the ability of the organization to cope with the environmental constraints, challenges and threats. According to Tregoe (2001), effective strategic response can be achieved in five phases. Phase one entails strategic intelligence gathering and analysis. It ensures that the depth and breadth of information on which strategic decisions are based is up-to-date, accurate, and relevant. Phase two consist of strategy formulation which gives results in the creation of a strategic vision or profile. Phase three is referred to as strategic master project planning. During this stage, the plan for strategy implementation is developed in order to align the organization structure with the strategy. Phase four involves strategy implementation whereby the planned actions are taken, implementation is monitored, and the Strategic Master Project Plan is modified as and when required; and phase five - strategy monitoring, review, and updating - helps to determine whether theres success in the overall strategic response. Strategic surveillance is designed to monitor a broad range of events that are likely to affect the strategy of the company. Strategic surveillance can be done through a broad-based, general monitoring, on the basis of selected information sources to uncover events that are likely to affect the course of the strategy of an organization (Hill & Jones, 2004). External monitoring does not only allow assessment of strategic progress relative to pre-established goals or competitors but also allows organizations to determine whether environmental circumstances has changed enough to make current strategic plans and control strategies obsolete (Preble, 1992). Methods available for monitoring external performance include competitive benchmarking of products and process relative to competitors or other industry players, strategic audits of company position in respect to key competitive threats, and measurement of customer satisfaction with and competitor responses to strategic moves. Potential actions during the feedback process include revising organizational strategies, reassessing planning premises and action plans, or recasting managerial objectives.
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In the present day competitive business environment, evaluation and control process is crucial to ensure sustainable competitive advantage by the firm. The environment is dynamic, changing and unpredictable. The rate and intensity of change facing every organization is increasing daily. These changes are driven by new technologies, regulatory changes, globalization, increasing customer expectations and so on. Moreover, there is increasing cost of doing business owing to a number of factors such as expensive power, expensive fuel and labour unrest due to rising cost of goods and poor remuneration (Charles and Gareth, 1998). Globalization Globalization is the integration of economies throughout the world by means of trade, financial and technological flows, the exchange of technology and information and the movement of people, goods and services (Abdel-Bar, 2006). It is multi-faceted phenomenon comprising of economic, political-legal, socialcultural and environmental dimensions. Globalization is not a purely contemporary phenomenon. The various factors that drive the rising globalization can be grouped under four broad categories: macro-economic factors; political factors; technological factors; and organizational factors (Harvey and Novicevic, 2002). Macro-economic factors include, for example, an acceleration of technology transfer among countries and a rapid increase in populations in emerging economies (Harvey et al., 2002). Political factors refer to privatization, deregulation and trade liberalization of many nations in favor of free flows of trade and investments (Eden et al., 2001; Hafsi, 2002). Organizations such as multinational enterprises are another major agent of this process (Eden et al., 2001; Harvey et al., 2002). Shifting organizational strategic attention towards a more global mindset is an example of organizational forces of globalization. Consequently, these forces have inevitably caused changes in the global marketplace. Such changes can be viewed as effects of globalization, which ultimately have an effect on the performance of firms. The Baking Industry in Kenya Commercial banks are defined as profit making financial institutions which play an important role in the financial system. Commercial banks provide a broad array of corporate financial services that address the specific needs of private enterprise including deposit, loan, and trading facilities but will not service investment activities in financial markets (Magutu et al., 2009). The term commercial bank is used to differentiate these banks from investment banks which are primarily engaged in the financial markets. In
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Kenya, commercial banks play a number of roles in the financial stability and cash flow of the countrys private sector including: processing payments; issuing bank cheques and drafts; accepting money on term deposits; and acting as moneylenders, by way of installment loans and overdrafts. The commercial banks in Kenya provide a number of import financial and trading documents. These include; letters of credit (LCs), performance bonds, standby letters of credit, security underwriting commitments and various other types of balance sheet guarantees. Moreover, commercial banks in Kenya take responsibility for safeguarding important documents and other valuables by providing safe custody and deposit boxes. The relevant departments in larger commercial banks do provide currency exchange functions and the provision of unit trusts and commercial insurance (Omondi et al., 2010). In todays competitive banking environment, they are ceaselessly restructuring their operations in order to develop more cost effective and efficient operations (Magutu et al., 2009). The Companies Act, the Banking Act, the Central Bank of Kenya Act and the various prudential guidelines issued by the Central Bank of Kenya (CBK), governs the Banking industry in Kenya. The banking sector was liberalised in 1995 and exchange controls lifted. The CBK, which falls under the Minister for Finances docket, is responsible for formulating and implementing monetary policy and fostering the liquidity, solvency and proper functioning of the financial system. The CBK publishes information on Kenyas commercial banks and non-banking financial institutions, interest rates and other publications and guidelines. The banks have come together under the Kenya Bankers Association (KBA), which serves as a lobby for the banks interests and addresses issues affecting its members (Kenya Bankers Association Annual Report, 2010). There are forty-six banks in Kenya and the industry is dominated by a few large banks most of which are foreign-owned, though some are partially locally owned. Six of the major banks are listed on the Nairobi Stock Exchange. These banks are Equity, KCB, Barclays, National, NIC and Standard Chartered bank. The commercial banks offer corporate and retail banking services but a small number; mainly comprising the larger banks, offer other services including investment banking (Okutoyi, 2003). All of the policies and regulations that administer the entire banking industry centers in lifting the controls towards the management and equitable services. Banking industry is expected to remain strong even in the midst of adversities and challenges. In every nation, the banking institutions are different and unique among the other type of business.

1.1.4 The National Bank of Kenya Limited National Bank of Kenya Limited (NBK) was incorporated on 19th June 1968 as a 100% governmentowned financial institution and officially opened on Thursday November 14th 1968.The objective for which it was formed was to help Kenyans to get access to credit and control their economy after independence. In 1994, the Government reduced its shareholding by 32% (40 Million Shares) to members of the public. Again in May 1996, it further reduced its Shareholding by 40 million Shares to the public. The current shareholding now stands at: National Social Security Fund (NSSF) 48.06%, General Public 29.44%, Kenya Government 22.5%.During the 34th AGM held on 25th April 2003 the bank increased its Share Capital by Kshs. 6 Billion i.e. from Kshs. 3 Billion to Kshs. 9 billion through the creation of 1,200,000,000 non-cumulative preference Shares of Kshs. 5 each. NBK is a large financial services provider in Kenya, serving individuals, small-to-medium companies and businesses (SMEs) and large corporations. Headquartered in Nairobi, the bank owns one subsidiary company: NatBank Trustee and Investment Services Limited. As of December 2010, National Bank of Kenya's asset base was valued at over US$750 million (KES: 60 billion), with shareholder's equity in excess of US$110 million. The stock of National Bank of Kenya is listed on the Nairobi Stock Exchange, where it trades under the symbol: NABK. The current branch network of National Bank of Kenya is made up of 44 branches and agencies. 1.2 Statement of the Problem The challenges of globalization are felt by virtually all the industries and sectors and the banking industry is no exception. Economists believe that the onset of the global integrationism means the globalization of financial services. Banks, according to Berger et al (2002), have inherent nationality and reach. Other elements that could contribute to the globalization of the banking industry are the emergence of new business models, the emergence of global challenges to banking, the changing attitude and perspectives of the workforce, the emergence of new competitors and the emergence of strategic off-shoring. Further, globalization is much more than the worldwide production and consumption of products. It is not just an economic or cultural trend but a movement of ideas, lifestyles, and developments that could affect our families, our employment, and the future of the world. It is the process of increasing social and cultural inter-connectedness, political interdependence, and economic, financial and market integrations (Eden and Lenway, 2001; Giddens, 1990; Molle, 2002; Orozco, 2002). Dramatic changes in the business environment that cause shifts in business conduct and marketing activities of firms around the world
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include, for example, the emergence of global markets for goods and services, labor, and financial capital, advances in technologies, and a reduction in traditional barriers to trade and investment (Deardorff and Stern, 2002). Recent years have seen a drastic reduction in global barriers to competition in the financial services industry. Deregulation around the world has permitted consolidation across more distant and different types of financial institutions. Improvements in information processing, telecommunications, and financial technologies have facilitated greater geographic reach by allowing institutions to manage larger information flows from more locations and to evaluate and manage risks at lower cost without being geographically close to the customer. Moreover, growth in cross-border activities of nonfinancial companies has spurred greater demands for institutions that can provide financial services across borders. Pearce and Robinson (1997) observed that for firms to be effective and successful, they should respond appropriately to changes that occur in their respective environments. Commercial banks worldwide as a result of globalization are becoming increasingly interrelated. Globalization is creating numerous opportunities for sharing knowledge, technology, social values, and behavioural norms and promoting development at different levels including individuals, organizations, communities, and societies across different countries and cultures (Brown and Lauder, 1996; Waters, 1995). Globalization comes with enormous challenges such as liberalization of markets, intense competition, decline of domestic job opportunities and revenues, economic volatility of the integrated markets, cyclical crises, and non-tariff barriers to trade, spread of pandemics, and new security issues. Many actors not have the capabilities to handle challenges (Spiegel, 2007; Human Development Report, 2002) which globalization brings with it. In Kenya, globalization has brought with it challenges that have commercial banks to adopt various strategic responses with the aim of staying competitive not only in the global market but also in the local market. Local firms have been forced to diversify their product portfolio to cope with competition, maintain market share, enter into new markets and seal off any unexplored market segments that foreign competitors may come to exploit. The banking sector is one of the most important economic sectors and the most influential and responsive to changes, whether international or domestic. The most important of those changes include technological developments, the internationality of money markets, and freedom from the constraints that hinder all banking activities, the removal of barriers that prevent some financial institutions from working in certain sectors, and the trend to develop and manage the risks of lending in light of the increase in international competition in this sector while seeking to attract foreign capital with the emergence of giant banking
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entities. Locally, various studies (Gichira, 2007; Hannah, 2007) on globalization have not addressed the strategic response adopted to handle the challenges of globalization by the commercial banks in Kenya, in particular, by the National Bank of Kenya Limited. The foregoing makes it imperative to conduct a case study on strategic response effectiveness by the National Bank of Kenya to challenges of globalization. This study therefore seeks to fill the existing gap in knowledge by establishing various strategic responses by the National Bank of Kenya Limited as well as their effectiveness to challenges of globalization. 1.3 Objectives of the Study The broad objective for this study is to establish the strategic responses effectiveness by commercial banks in Kenya to challenges of globalization. The study will be guide by the following specific objectives; i) To establish challenges of globalization at the National Bank of Kenya Limited. ii) To establish strategic responses by the National Bank of Kenya to challenges of globalization. iii) To evaluate the effectiveness of the strategic responses by National Bank of Kenya to challenges of globalization. 1.4 Significance of the Study This study is important in informing stakeholders in the commercial banks as well as other institutions on the strategic response by commercial banks to challenges of globalization. The study will offer valuable contributions from both a theoretical and practical standpoint. From a theoretical standpoint, it contributes to the general understanding of how banks respond to challenges of globalization through their ability to create new markets, new products, affect the technology employed as well as strategic alliance. This study will help to sensitize the Central Bank as a regulator, and the Government of Kenya on the strategic responses to the challenges that come about as a result globalization by commercial banks. The government may find this study useful in identifying the various challenges. Policy makers may benefit from the issues and insights raised in the study that are important in developing the frameworks where formation of such organizations might be enhanced to keep them in sustainable competition. The study will add to the existing body of knowledge on the concepts of strategic responses to challenges of globalization by firms to benefit academicians and aid further research on the concept. It will form a fundamental base upon which further researches into the field will be based as it will act as

both reading and secondary source material in such cases.

REFERENCES Pearce, J. and Robinson, R. (1997) Strategic Management: Formulation, Implementation, and Control. Boston: Irwin/McGraw-Hill. Human Development Report (2002) Deepening Democracy in a Fragmented World, Oxford University Press, New York, NY. Spiegel (2007), Geschichte Afrika, das umkampfte Paradies, Nr. 2/22-05-2007, Spiegel Special. Brown, J.S. (1997) Seeing Differently, Insights on Innovation, Harvard Business School Press, Boston, MA. Deardorff, A. V. and Stern, R. M. (2002) What You Should Know about Globalization and the World Trade Organization, Review of International Economics, 10 (3): 404-23. Orozco, M. (2002) Globalization and Migration: The Impact of family Remittances in Latin America, Latin American Politics and Society, 44 (2): 41-66. Molle, W. (2002) Globalization, Regionalism, and Labor Markets: Should We Recast the Foundations of the EU Regime in Matters of Regional (Rural and Urban) Development? Regional studies, 3(2), 161-172. Giddens, A. (1990) The Consequences of Modernity. Stanford, CA: Stanford University Press. Eden, L. and Lenway, S. (2001) Introduction to the Symposium Multinational: The Face of Globaliza tion, Journal of International Business Studies, 32 (3): 383-400. Okutoyi, P. (2003) The Relationship between the Use of Strategic Marketing and Bank Performance in Kenya. Unpublished MBA product. University of Nairobi, Nairobi, Kenya. Kenya Bankers Association Annual Report, (2010). Hafsi, T. (2002) Global Competition and the Peripheral Player: A Promising Future. Washington DC: The International Bank of Reconstruction and De velopment. Eden, L., and Lenway, S. (2001) Introduction to the Symposium Multinational: The Face of Globaliza tion, Journal of International Business Studies, 32 (3): 383-400. Harvey, M. & Novicevic, M. M. (2002) The Hypercompetitive Global Marketplace: The Importance of Intuition and Creativity in Expatriate Managers. Journal of World Business, 37, 127-138. El-Dabie, A. (1999) Privatization of Banks and Development in Egypt. El-Ahram Economic, Egypt.
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Thompson, A. and A. Strickland (1993) Strategic Management: Concepts and Cases, 7th Ed, Boston: Irwin. Abdel-Bar, S. (2006) Restructuring the Banking System and How to Increase its Competitiveness: A Study Based on International Experiences. Contemporary Egypt Magazine, Egyptian Associa tion of Political Economics, Statistics and Legislation, No. 483, Cairo. Magutu O. P., Richard O. N, and Haron, M (2009) Modeling the Effects of E-Commerce the IBIMA, Vol 8, 2009 ISSN: 1943-7765 pg 175. Omondi, G. O., Magutu, P. O., Onsongo, C. O., and Abongo, L. A. (2010) The Adoption of Strategic Human Resource Management Practices in Commercial Banks: The Process and Challenges in Kenya. Journal of Human Resources Management Research, Vol. 2011 (2011), Article ID 598896. Dunning, J. (1993) The Globalization of Business. London: Routledge. Knight, G. (2000) Entrepreneurship and Marketing Strategy: The SME under Globalization. Journal of International Marketing. Chicago: 2000.Vol.8, Issue. 2; pg. 12-21. Adoption on Business Process Management: Case Study of Commercial Banks in Kenya. Communications of

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CHAPTER TWO LITERATURE REVIEW

2.1 Introduction This chapter provides theoretical and empirical information from publications on topics related to the research problem. It examines what various scholars and authors have written about strategic response and globalization. 2.2 The Concept of Globalization Globalization has made it easy for the task of pursuing international business strategies; trade among nations has been liberalized with a tremendous reduction in trade barriers. Consequently, fewer trade barriers have also led to the spread of improved technologies, communication systems, transportation systems and logistics, which all facilitate the exchange relationships between a firm and its buyers, suppliers and other actors across the globe (Carasco and Singh, 2009; Harford, 2007; Andersson and Wictor, 2003). The phenomenon of globalization has become one of phenomena that are most associated with economic activity. Globalization is also linked to banking activity as part of economic globalization. Globalization has taken banking dimensions and contents of a new, made the banks tend to the fields and activities unprecedented, and led to the transition from the attitudes and perceptions of activities and extended range, in order to maximize the opportunities and increased gains, and look to the future (AbdelBar,S.,2006). Globalization is an interesting phenomenon since it is obvious that the world has been going through this process of change towards increasing economic, financial, social, cultural, political, market, and environmental interdependence among nations. Virtually, everyone is affected by this process. Given these changes, globalization brings about a borderless world (Eden and Lenway, 2001; Ohmae, 1989a). Globalization drives people to change their ways of living, prompts firms to change their ways of conducting business, and, spurs nations to establish new national policies. Events transpiring in different parts of the world now have dramatic consequences to other parts of the world at a faster pace than anyone could imagine in the past. On the positive side, globalization enables firms to outsource and find customers around the world, e.g., the auto and electronics industries. The globalization of production and operations benefits firms through the realization of economies of scales and scope (Corswant, 2002; Reyes, Raisinghani, and Singh, 2002).
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Hence, no one can deny that globalization has changed the way we conduct business. As the banks and banks manufactured identity and personality through orientation, which charted throughout its history, since its inception, the bank has made globalization futuristic vision of a new dimension to enter the new world of cosmic, a world of enormous economic opportunity. In light of globalization and the restructuring of the banking services industry trend banks and commercial banks in particular, the shift towards universal banks. Are those banking entities that seek always behind the diversification of sources of funding and employment, and mobilization of the greatest possible savings from all sectors, and employ their resources in more than one activity in several diverse areas. It opens and gives credit to all sectors. As well as working to provide all the miscellaneous services and renewable which may not based on the balance of knowledge. In light of globalization banks innovate and create distinct clients, and provide them with future richer and richer more at the level of banking service (El-Dabie, 1999). The future of this innovative technology is owned and used by banks, which are only common denominator in all the work of trying to progress and to the growth and prosperity. Hence the concept of globalization has been associated with the concept of abundance and availability of the services provided by banks. The accurate view to provide banking services, whether related to deposits, loans, or bonds (as traditional services), or to the contracts of complex derivatives or other innovative advanced services, leads banks to exist effectively in all fields of economic activity. 2.2.1 Globalization and Strategic Alliances A strategic alliance is a contractual agreement among firms to cooperate in reaching an objective without regard to the legal or organizational form the alliance takes. Strategic alliances cover all relationships within the marketplace. Alliances are constructed as effective means to acquire access to new markets and special expertise or compete with others on the market. There might be a problem with finding resources to pursue a certain strategic direction and, therefore, a partner would be called in to help. Typically, such alliances may occur when a particular company has an interesting technological opportunity but lacks the funds to take it further or the needs to penetrate other countries (Johnson and Scholes, 2002). Today, enterprises of all sizes will have to depend more heavily on worldwide networks of communications and transportation and establish virtual organizations to remain responsive and flexible. To adopt agile manufacturing practices, they have to organize them into new teams as new opportunities
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arise. Speed-to-market practices require companies to adopt concurrent engineering in which all aspects of a product's development are planned simultaneously rather than waiting for research and development phases to end before testing them with customers and developing marketing and service strategies. Crossfunctional teams representing engineering and design, marketing, purchasing, distribution and service departments and customer representatives - some of whom are scattered widely in different cities or countries - is becoming part of the product development process (Deutsch, 2005). Globally competitive firms will have to enter into international strategic alliances more aggressively in the future and in this light the Airtel Kenya has adopted various types of strategic alliances to cope with the challenges of globalization. Marketing can furnish a deep understanding of customer needs and demands. An operation has the knowledge and experience to cost effectively produce and deliver the product to the market (Smith, 2003). Just as the customer provides revenue to the firm, suppliers may represent the bulk of the costs. Because the company's product and processes depend on healthy suppliers, management must look backward when planning production and research strategies. Establishing suppliers as partners is generally a win-win situation. Alliances geared towards reducing supplier costs or improving the quality supplied can greatly affect the productivity and attractiveness of the firm's own products and services to its customers (Mahmood and Mitchell, 2004). Complementary alliances exist when two firms possess similar technology but different product lines. In this case a single technology may be implemented differently by firms with different products on various markets (Kotler, 2001). A coalition of their energies and resources may yield much greater advancement of the overall technology than the sum of their individual efforts. This kind of technology coalition may be classified as a vertical alliance. In either case, combining complementary strengths enhances each firm's competitive position: productivity and financial performance above what individual paths could have provided (Afuah, 1998). Globally, competitive enterprises will not only have to manage their own internal operations effectively, but coordinate the entire value chain of suppliers and distributors on which they depend. Virtual organizations are not constrained by requirements of geographic space or locations in cities in the same way as those that are engaged in mass production, they have to be able to have a global presence in order to attain economies of scope, connect components of a production distribution system in many locations that have the physical and geographical characteristics most appropriate for the component's efficient operation (Alderfer, 2003).

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2.2.2 Globalization and New Product Creation It is not enough to avidly engage in new product creation for its own sake - what some managers refer to as innoflation (Brown, 1997). It is important to delineate just what product features are to be improved or radically changed. For this purpose, analysts have differentiated between core product features and help provided in evaluating, buying and using the core product. The amount of help or support provided will depend on the needs of particular customers. An appropriate premium price can normally be charged for support. Support provides a potentially profitable lever for gaining competitive advantage. It enables a supplier to sell the same core product to different customer groups as different offerings (Brown, 1997). New product creation provides the most obvious means for generating revenues. Process innovation, on the other hand, provides the means for safeguarding and improving quality and also for saving costs. Improved and radically changed products are regarded as particularly important for long-term business growth (Burnes, 2000). The power of product innovation in helping companies retain and grow competitive position is indisputable. Products have to be updated and completely renewed for retaining strong market presence. Different terminologies have been used to categorize and describe product development. Cooper et al (2002), for example, embraces two distinct activities: old product development, which involves updating and improving existing products, and new product development, which involves a greater degree of innovational challenge. Canals (1993) similarly categorized product development into primary and secondary innovations. Primary innovations were broadly concerned with the development of new markets and relate to instances where there is a high degree of technical originality and a commensurate change in consumer behavior. Secondary innovations, on the other hand, are basically business or company focused and typically involve improvements to an existing market. Product portfolio decisions are the manifestation of a firms innovation and marketing strategies. The common approach to managing new product development is to develop and manage a portfolio of specific projects (Choueke and Armstrong, 1998). Practically speaking, choosing the product portfolio determines the firms strategy for the medium term future and is senior management responsibility Christensen and Bower (1996). Operationally, portfolio decisions involve two strategic components: a development strategy regarding the number and rate of new product introductions (introduction intensity), and a market entry strategy regarding the relative speed to market (pioneering intensity). Past research suggests that better-managed firms structure their portfolios by striking a balance in the product innovation portfolio across these strategic components (Wheelwright and Clark, 1992). However, past research has not
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systematically decomposed the components of portfolio strategy to examine how the components work together in relation to financial performance (Matsuno et al, 2002). A product can be differentiated in various ways. Unusual features, responsive customer service, rapid product innovations and technological leadership, perceived prestige and status, different tastes, and engineering design and performance are examples of approaches to differentiation (Porter, 1980). Rather than cost reduction, a firm using the differentiation needs to concentrate on investing in and developing such things that are distinguishable and customers will perceive. Overall, the essential success factor of differentiation in terms of strategy implementation is to develop and maintain innovativeness, creativeness, and organizational learning within a firm (Clerk et al, 2000). Successful differentiation is based on a study of buyers needs and behavior in order to learn what they consider important and valuable. The desired features are then incorporated into the product to encourage buyer preference for the product. The basis for competitive advantage is a product whose attributes differ significantly from rivals products. Competitive advantage results when buyers become strongly attached to these incorporated attributes and this allows the firm to: charge a premium price for its product, benefit from more sales as more buyers choosing the product and more buyers become attached to the differentiating features resulting in greater loyalty to its brand. Efforts to differentiate often result in higher costs. Profitable differentiation is achieved by either keeping the cost of differentiation below the price premium that the differentiating features command, or by offsetting the lower profit margins through more sales volumes (Cooper et al, 2002). Kotler (2001) insists that anything that a firm can do to create buyer value represents a potential basis for differentiation. Once it finds a good source of buyer value, it must build the value, creating attributes into its products at an acceptable cost. These attributes may raise the products performance or make it more economical to use. Differentiation possibilities can grow out of possibilities performed anywhere in the activity cost chain. 2.2.3 Globalization and New Market Creation Market creation is concerned with improving the mix of target markets and how chosen markets are best served (Cumming, 1998). Its purpose is to identify better (new) potential markets; and better (new) ways to serve target markets. Market segmentation, which involves dividing a total potential market into smaller more manageable parts, is critically important if the aim is to develop the profitability of a business to the

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full. Incomplete market segmentation will result in a less than optimal mix of target markets, meaning that revenues, which might have been earned, are misread (Cumming, 1998). Market orientation as a business culture leads to business performance improvement, as proved by numerous studies (Davila et al 2006). It is precisely product innovation that is considered as a moderator of the link between market orientation and successful business operation (Dodgson, 2001). New market creation has a positive impact on business performance by leading to a market share increase and/or cost reduction and, in turn, a profit rise. Market oriented enterprises deliver superior quality products to their customers while complying with ecological, health and safety standards as well as with legal norms. Accordingly, market orientation is expected to produce a significant positive impact on all analyzed effects of innovative activities. Sales has been proposed as the most important measure of business performance on which managers should focus and is a measure of firm performance that is often closely associated with the marketing function. Similarly, gross profit (sales revenue minus cost of selling) is an indicator of the firms value chain, specifically measuring a firms ability to convert inputs into valuable outputs (Doyle, 2004). The market in which an enterprise offers its products can be a predictor of the effects of innovative activities. Strengths and weaknesses of competitors, demands raised by consumers, legal regulations, as well as ecological, health and other standards, motivate enterprises to develop products taking into account the situation in a particular market. Enterprises often find themselves having to modify their products sold on the international market, not only to achieve outstanding business performance and competitive advantage, but also to enter the market in the first place and to remain in it. Accordingly, the market range can have an impact on the effects of innovative activities. It is to be expected that the more present an enterprise is in the international market, the more oriented its innovation activities are towards improving product quality, ecological and health aspects, as well as towards complying with legal standards and various regulations (Everitt, 2002). 2.2.4 Globalization and Technology For many banking firms in Kenya, information and communication technology is viewed as potentially capable of helping achieve innovative strategy. The high rate at which organizations are buying mobile phones, computer hardware and software as well as using the Internet for information and communication is evidence of the increasing awareness of information and communication technology in the Kenyan
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market. The business benefits of using information and communication technology include efficiency and attainment of increased returns. The vast opportunities brought by the Internet to the banking industry have therefore attracted much attention from researchers whose efforts apparently group on certain areas of interest (Fitzgerald et al, 2000). Porter (1980) emphasized the use of technology to empower the firms capabilities. He argued that technology would enable the firm to excel in the competition. Banks are regarded as a vanguard in the use of information and communication technology (ICT) (Im and Workman 2004). In the context of banks, the advancement in technology presents a new opportunity to improve service quality in response to volatile economic environment and changing competitive conditions. Rosenberg (1996)At the firm level, apart from adopting technology to integrate delivery channels to develop a close relationship with customers, Banks also adopt technology to enable the analysis of information about customer segmentation, demographics, product usage, transaction behavior that thereby help them to improve the profitability and increase market share (Margerison, 1991). With the use of information technology (IT), the banks can use the cross-selling strategies to sell new banking innovations to their existing customer base. It can be seen that banks adoption of technology changes from improving efficiency of back office banking functions towards improving the service quality in servicing the customers. Such changing strategy demonstrates the situation where banks compete to own the potential customers (Fulmer, 1992). The strengths of the integrated systems approaches relate to their taking learning, relations, dynamic and systemic aspects of innovation into account. Griffin (1997) argued that innovation requires a process of coevolution between technology and cultural perspectives. Technology exerts a significant influence on the ability to innovate and is viewed both as a major source of competitive advantage and of new product innovation. Often, organizations experience problems in this area, which are caused by lack of capital expenditure on technology and insufficient expertise to use the technology to its maximum effectiveness (Alstrup, 2000). Hamel (2000) stresses that organizations should obliterate rather than automate believing that technology is often introduced for technology's sake without contributing to the overall effectiveness of the operation. However, organizations traditional lack of resources usually results in a compromise situation. It is important to link technology to innovation in sustaining competitiveness (Schon, 1998). Organizations that can combine customer value innovation Hammer, (1990) with technology innovation have an increased
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chance of enjoying sustainable growth and profit. If management skills and activities are conceptualized to be situation specific and embedded in the organizations in which they are practiced then the question arises about what is the best way to prepare managers for the complexity, uncertainty, uniqueness and value conflicts which postulates characterize organizational environments (Manogran, 2001). While the area of information technology is very wide, the most applicable and highly used is the mobile phone, which is used by majority of Kenyans, both individuals and corporations. A large number of people now use mobile phones for communication purposes this implies that banks can reach a large number of persons through their mobile phones, which are always with them. The adoption of short messages services banking both from clients will, if effectively implemented, lead to substantial cost savings by insurers in the areas of telephone calls and personnel time (Lewis and Lytton, 1997). Technological developments particularly in the area of Telecommunications and Information Technology are revolutionizing the way business is done. Electronic commerce (e-commerce) is the activity in which consumers get information and purchase products using Internet technology (Hart, (1996). This revolution in the market place has set in motion a revolution in the insurance sector for the provision of a payment system that is compatible with the demands of the electronic marketplace. Consequently, the potential benefits of e-commerce have been widely touted (Leonard, 1995). While technology is often a key ingredient in cost-reduction efforts, insurers also are looking to ensure they restrain unnecessary IT expenses. One driver is the cost of maintaining interfaces among multiple legacy systems, which are often the result of a series of acquisitions that have not been fully integrated (Carrie, 2008). One promising strategy is virtualization or grid computing, where software and data are centralized, moving from PCs to central servers. Zurich North America Commercial for example initially went through a phase of virtualization to consolidate servers and boost utilization. Zurich used virtualization to homogenize hardware and software environment (Carrie, 2008). The Schaumburg, Ill.-based Company then used virtualization in non-production and, subsequently, production environments. It currently uses virtualized and non-virtualized environments for production; in addition, the company used virtualization to improve application efficiencies by running an application family within a virtual environment (Higgins, 1995). New analytics tools such as synthetic data and unstructured text applications add to the already powerful analytics repertoire and create opportunities for both profitability and efficiencies in claims administration,
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marketing and distribution (Carrie, 2008). Banks have to capture and analyze multiple sources of data internally from diverse product databases and claims systems and externally from a range of public domain data sources to develop insights that enable better and more informed decisions (Carrie, 2008). 2.3 Factors Driving Globalization and its Challenges Technological forces such as advance development in communication and transportation technologies, which promote growth in international business transactions, are also key drivers of rapid globalization (Graham, 1996; Knight, 2000). Thus, globalization is made possible by the development of cost effective, yet very powerful technologies, including the Intra- and Internet, enterprise resource planning system, data warehouse, data mart, and data analytics. Friedman (2005) defined globalization a whole set of technologies and political events convergingincluding the fall of the Berlin Wall, the rise of the Internet, the diffusion of the Windows operating system, the creation of a global fiber-optic network, and the creation of interoperable software applications, which made it very easy for people all over the world to work togetherthat leveled the playing field. It created a global platform that allowed more people to plug and play, collaborate and compete, share knowledge and share work, on a scale never seen before. Cloud computing and new advances in remote access and support technologies also seem to fuel globalization. Many service jobs, such as call centers, animation, transcription, and software development can be carried out remotely. It is estimated that 160 million jobs, or about 11 per cent of the projected 1.46 billion service jobs worldwide in 2008, could be carried out remotely, barring any constraints on supply (McKinley Global Institute, 2005). Globalization is a force that has brought about increased interdependencies among many actors the world over, which has never been witnessed before. (Czinkota and Ronkainen, 2007; Peters and Pierre, 2006). Therefore, the world is both becoming more homogenous and that the distinctions between national markets, for some products/services, are fading away. Essentially, there abound numerous opportunities such as large markets, access to modern technology, access to modern and superior goods/services, fewer barriers to trade and capital flows for interdependent actors in our globalized world. Consequently, integrated and/or interdependent markets should be virtually free from all forms of trade barriers. Trade liberalization, therefore, assumes importance (Peng et al., 2008; Czinkota and Ronkainen, 2007; Human Development Report, 2004; World Development Report, 1994). As markets are liberalized, with almost all trade barriers like physical, fiscal, monetary, and technical removed, many firms can enter and operate in almost any market of their choice. However, some nations may not have the ability to deal with the challenges which globalization and its concomitant result of trade
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liberalization bring with them. Removal or even decreasing of tariff and non-tariff barriers in the globalized world is becoming imperative for all markets. Firms and even private individuals have over the years been agitating for trade liberalization because of the benefits that come with that venture (Czinkota and Ronkanen, 2007; Human Development Report, 2004). An important premise for trade liberalization is that all markets will benefit from deregulation or removal of all forms of trade barriers, which summarily limit, for example, firms and private individuals exchange relationships in an economy (Human Development Report, 2004; World Development Report, 1994; Todaro, 1994). However, the forces of globalization and trade liberalization have also led to intense competition among firms in all countries (Peng et al., 2008; Czinkota and Ronkainen, 2007; Beamish and Lu, 2004). Trade liberalization comes with challenges and firms are compelled to develop ways to have the ability to deal with intense competition. Since many firms in may not be well equipped to face the emerged competition from trade liberalization, their competitiveness vis--vis other competitors that can enter their markets from anywhere in the globalized world becomes eroded (Spiegel, 2007; Human Development Report, 2004, pp. 85-6). But, the presence of trade liberalization will call for the role of institutional arrangements in any economy to help various actors exploit opportunities or manage challenges emanating from trade liberalization (Peng et al., 2008; Beamishand Lu, 2004; Human Development Report, 2004). 2.4 Strategy and Strategic Response 2.5 Empirical Review According to a study on commercial banks in Egypt, Ezzat (2009) found that with increasing globalization, banking work became exposed to risks whether external or internal factors and banks had to be causation about risks using several means, the most significant of which is strengthening capital. Merging leads to the achievement of economies of scale and increases the volume of activity and savings and reduce the costs of the activity and mergers and acquisition leads to a change in bank management and the selection of leaders to pursue more efficient and modern management methods which leads to lower costs and increase profits. The study recommended: development of skills of the personnel in charge of credit and selection of the best of them from among those who are efficient, well-reputed and highly experienced in the banking field; taking into consideration on-going training of bank staff to get acquainted with the latest development in the banking sector; and also knowing the nature of competition facing banks.
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Thoumrungroje and Tansuhaj (2009) carried out a study on the effects of globalization on firm

performance. The results of their study show that as uncertainty increases, firms engage more in networking activities, which finally enhances firm performance. This implies that uncertainty alone can be harmful for firm performance unless certain strategies, such as networking activities and alliance participation, are implemented to mitigate its negative impact. Further, globalization not only benefits firms in terms of increasing opportunities, but also hurts business performance due to higher competitive threats (Contractor and Lorange, 1999, DAveni, 1994, Jones, 2002). The study also found that globalization has several implications for managers in the global marketplace. This study elaborated on the different effects that globalization has on business. The results indicated that such effects are not significantly different across cultures. This study also confirmed that globalization is a universal phenomenon and that firms are inevitably affected. Globalization can affect firm performance positively and negatively. While global market opportunities are likely to enhance firm performance, global competitive threats tend to worsen it. Therefore, managers must be aware of such double-edged effects, and try to capitalize on opportunities while converting threats into opportunities. In their study on the globalization of commercial banking, Bexley et al. (2007) concluded that, to accomplish total globalization, a common currency must be established which will ease the entry of foreign banks into domestic markets that can contribute to more efficiency through increased competition. On the other hand, a currency crisis in an emerging market would exaggerate this situation. Domestic borrowers, including banks, that obtain funds from abroad, usually borrow in a foreign currency such as the dollar to give foreign currency such as the dollar to give foreign investors some reassurance about the value of their investments. The effect of financial globalization, therefore, on domestic financial fragility is not simple. Foreign direct investment both lowers the incidence of banking crises and shortens its duration. To face international competition, commercial banks must work to know all details about the market needs, but ensure that they do not conflict with the goals of their bank. They must also know the nature of their competition. Banks need to reinforce their financial resources through increasing capital and merging with small and weak banks to form more effective units in order to achieve the required reduction in costs. Banks need to develop human resources through rehabilitation and training in such a way as to fit with the developmental process and the requirements of modern banking technology. They need to implement the modern banking technology and introduce modern services and products to the customers in the local market.

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Gachunga (2009) concluded that globalization has its positive side as well as its negative side. It affects the economic dimensions; that is trade, finance, aid, migration and ideas. Increases in these dimensions of globalization, if managed in a way that supports development in all countries, can help alleviate global poverty under certain conditions. Further, globalization has led to a situation where the business processes that are outsourced are at the lowest level in the hierarchy in terms of skills requirement. The other effect of globalization on human resources in Kenya has to do with the migration patterns. Ratha and Xhu (2008) indicate that the remittances provided by the people who have migrated provide a lifeline to the poor and to their dependants and are an essential source of foreign exchange and a stabilizing force for the economy in turbulent times. However for many sub-Saharan African countries, the remittance figures are also an indicator of the high levels of brain drain that have deprived these countries of some of the finest brains (Ratha and Xhu, 2008). This level of brain drain hampers Africas and specifically Kenyas growth. The fact that the jobs created require low skills and the skilled people are going away is a bad mix for Kenyas growth. Gachunga (2009) further concluded that globalization has led to cut throat competition which means that organizations have had to manage their performance very strictly in order to survive. It is from this backdrop that organizations in Kenya including the civil service have embarked on measures of improving performance. From the human resource management perspective, the performance targets should be clearly measurable so that individuals can gauge their performance. The targets come from the organizational targets. This form of management thinking has led to improvement in organizational performance and especially service delivery has improved extensively especially in the public service. Most of these organizations are competing with global organizations so they have had to put in extra effort to survive. So with globalization organizations can no longer remain complacent.

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CHAPTER THREE RESEARCH METHODOLOGY 3.1 Introduction This chapter sets out various stages and phases that will be followed in completing the study. It involves a blueprint for the collection, measurement and analysis of data. This section is an overall scheme, plan or structure conceived to aid the study in answering the raised research question. Therefore in this section the research identifies the procedures and techniques that will be used in the collection, processing and analysis of data. It is comprises of the following; research design, data collection, and data analysis. 3.2 Research Design Research design refers to the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in the procedure (Kothari, 2006). Research design constitutes the blue print for the collection, measurement and analysis of data (Kothari, 2006). The function of research design is to provide for the collection of relevant evidence with minimal expenditure of effort, time and money. The research design for this study will be a case study and will focus on the National Bank of Kenya Limited. This study aims at collecting information from respondents on the strategic responses by National Bank of Kenya Limited on the challenges of globalization. The design is deemed appropriate in this study because its focusing on only one of the commercial banks in Kenya- the National Bank of Kenya Limited. Kiptoo (2008) asserted that a case study research design is appropriate where a detailed analysis of a single unit is desired as they provide a focused and variable insight into a phenomenon. 3.3 Data Collection The source of data will be both primary and secondary. The instruments to be used in primary data collection will be in-depth personal interviews guided by open ended questions in an interview guide (appendix II). The questions will be geared to acquire the opinion of the respondent on the strategic responses by the National Bank of Kenya Limited on the challenges of globalization. The study will consider twelve (12) respondents for an interview: one chief manager, one regional manager; one deputy regional manager; two functional heads; one branch business head; one sectional head; and two field staff. The respondents are expected to give an insight into the strategic responses by the National Bank of Kenya
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Limited on the challenges of globalization in their respective positions. Secondary data will be obtained from existing bank records. Open-ended questions will be applied to avoid subjectivity that could result from limiting the respondents answer to the questions. Cooper and Schindler (2008) points out that open ended questions help measure sensitivity or disapproval of behavior and encourage natural modes of expression. Open-ended questions also allow the respondents to include more information, including feeling, attitudes, and understanding of the issues (Bryman & Bell, 2007). 3.4 Data Analysis Data will be analyzed and evaluated using content analysis. The data collected will be summarized according to the study objectives being: to establish challenges of globalization at the National Bank of Kenya Limited; to establish strategic responses by the National Bank of Kenya to challenges of globalization; and to evaluate the effectiveness of the strategic responses by National Bank of Kenya to challenges of globalization. Cooper and Schindler (2008) point out that content analysis measures the semantic content or the what aspect of the message. Its breadth makes it a flexible and wide ranging tool that may be used as a methodology or as a problem specific technique. He further points out that content analysis guides against selective perception of content and provides for rigorous application of reliability and validity criteria. Content analysis is a technique for making inferences by systematically and objectively identifying specific characteristics of messages and the relating themes (Ichangi, 2006). This is an appropriate tool for quantifying and analyzing presence, meaning, and relationships of words and concepts within texts.

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APPENDICES APPENDIX I: LETTER OF INTRODUCTION

The Respondent, Dear Sir/Madam,

Re: Request for Research Data I am a Postgraduate student at the University of Nairobi pursuing a Master of Business Administration (MBA) program. My research project topic is A Case Study of Strategic Response Effectiveness by the National Bank of Kenya to Challenges of Globalization. In order to carry out the research, you have been selected to form part of those to provide the necessary data. The data will be gathered through personal interview with the undersigned. You are therefore kindly requested to assist by granting an opportunity for the interview at your convenient when contacted for an appointment. The information you provide will be treated in strict confidence and is purely for academic purpose. In no way will your name appear in the final research report. A copy of sample question to assist in preparation is attached. Your assistance and cooperation will be highly appreciated.

Yours sincerely, Student Supervisor

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APPENDIX II: INTERVIEW GUIDE

Section I: Demographic Information 1. Name of your bank i) Equity bank Ltd ii) Kenya Commercial Bank iii) Barclays Bank of Kenya 2. What level are you in management? i) Lower level management ii) Middle level management iii) Top level management ( ) ( ) ( ) ( ) ( ) ( )

3. How long have you worked in this position? i) Less than 5 years ii) More than 5 years Section II: Profit 4. How has your bank been performing in the last 5 years?
i) Increase in profits ii) Decrease in profits iii) Neither increase nor decrease in profits

( ) ( )

( ) ( ) ( )

5. What was your banks annual profit before tax for the last 5 years? Year Annual pre-tax profit in billions (Kshs.) 2007 2008 2009 2010 2011

36

6. Kindly indicate the extent to which the following elements have affected on the performance of your bank in the last five years.

Element Technology Competition Politics Cultural values and institutions New markets New products creation Ecological constraints Defined rules, duties and regulations Strategic Alliance

Not all

Least extent

Moderate extent

Great extent

Very great extent

Section III: Loans and Advances 7. What was your banks loan portfolio for the last 5 years? Year Loan Portfolio 2007 2008 2009 2010 2011

8. To what extent has globalization affected the levels of loan portfolio in you bank for the last 5 years? i) Not at all ii) Little extent iii) Moderate extent iv) Great extent v) Very great extent 9. 10. ( ) ( ) ( ) ( ) ( )

37

Year Annual pre-tax profit in billions (Kshs.)

2007

2008

2009

2010

2011

38

APPENDIX III: INTERVIEW GUIDE

39