Kenya Commercial Bank Using 7-S Framwork

Abstract

This study aimed to provide an assessment of Kenya Commercial Bank (KCB) using the 7-S Framework, Balanced Scorecard, SWOT, and PESTLE analysis. KCB is the leading commercial bank in Kenya. The 7-S framework entails the evaluation of an organization’s necessary elements. Regarding the evaluation of KCB using the 7-S model, the study established that the bank has pursued an expansion strategy in the East Africa region as it adopts modern technological innovations like mobile phone banking, ICT convergence, and modern customer-driven banking experience in banking halls. Concerning the organizational structure, KCB has reworked its structures many times and the current structure is largely informed by the span of control and centralization with emphasis on growth strategies (customer base and geographical expansion), product diversification, and business functions and this has led to the adoption of divisional structure. Regarding skills, the bank organizes training for both the line managers and the clerical staff in its established leadership center. Regarding staff, the bank has several employee improvement programs like offering its staff education loans at no interest to further their education, investment in on and off-job training programs in addition to introduction of a reward system for employees based on individual balance scorecards. Regarding style, the style itself is a leader in all financial solutions including focusing on the increasing demand for home ownership by realigning its Mortgage Subsidiary S&L.

Regarding systems, the bank boasts of largest number of branded ATMs in Kenya, in addition to excellent information Technology (IT) platforms and digitized customer service and operations. Finally, regarding shared values, the bank puts a lot of emphasis on the bank's corporate culture with great attention to customer and service delivery. The bank’s shared values include; professionalism, working together as a team, putting the customer first, caring for the community, and readiness to change. The analysis of the Bank using the four perspectives of a Balanced Scorecard (BSC) revealed that KCB employs BSC to clarify and interpret vision and strategy into specific strategic objectives which link the overall organizational strategy to the departmental and individual objectives in the bank. The performance of individuals, departments, and the whole organization is then measured against the strategic objectives.

To maximize its use and attain the required results each employee in the bank has to have a scorecard that must be in line with the overall bank objectives. These perspectives are defined and confirmed every financial year and they are normally dependent on the overall bank strategy and they are normally in line with the overall mission and vision of the bank. The study also identified the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of Kenya Commercial Bank. The strengths include; an experienced workforce, accomplished business units along with reduction in labor costs to acquire effective distribution processes along with sales networks. Weaknesses include; Competition in the market, Size of the market in the future, and. Threats include Changes in price and tax, competitive environment. The study also analyzed the bank using the PESTLE analysis.

The Political factors affecting the bank include; Political uncertainty in the country due to the change of regime and the post-election violence, Terrorism for example threat from Al-Shabab, and regional political instability e.g. South Sudan, and Northern Uganda. The economic factors include; Volatile Kenyan currency, slow economic growth, Pressure from the regulator to control the interest rates through interest capping, and customers maintaining multiple accounts that are dormant. The social factors include; Rapid urbanization, Kenya’s middle class is rising very fast calling for diverse banking products that suit their lifestyle, and rising income levels, The Increase in the level of education among the citizenry has led to increased awareness of consumer rights and demand for better services, increasing saving culture among Kenyans.

The technological factors include; Modern solutions in areas like forex, Technological developments in Telecommunications and Information Technology which are revolutionizing the way business is done, New commercial revolution in e-commerce bringing inexpensive and direct ways to exchange information and to sell or buy products and services, Stiff competition from other banks now offering ATM and e-banking services and competition from mobile phone money transfer services such as Equitel and M-pesa. The legal factors include; regulations relating to employee training, strict regulatory environment, lack of proper anti-money laundering law in Kenya, and Central bank regulations relating to increase in capital requirements. Finally, the environmental factors affecting the bank include; Environmental screening of transactions and Pressures to invest in green energy.

The study offers the following recommendations to the bank; due to the changing business environment KCB needs constant strategic change; KCB needs to make incremental changes to its corporate strategies such as full acquisition of the T24 system, which will later help in rolling out new products, specifically in the areas of micro as well as small business-driven environment. In addition to this, the targeting of the low-income groups along with the attainment of protecting the rights and duties of value and investment needs to be attained. The initiation of risk management processes and procedures to retain the top level of employees helps in the further facilitation of the skills and competencies that are being perceived by the employees of the definite organization. Regarding staffing, the bank should do thorough training to ensure all employees understand its strategy, goals, and objectives including BSC as a management tool; the bank should also continue investing in the latest cutting-edge technology to ensure efficient service delivery.

At the same time, the bank should continue in its innovation path that it is currently pursuing as well as focus on aggressive marketing of its products and services to the wider market. The study also recommends that the bank should focus on partnering as opposed to competing with new products and services in the market for example, M-Pesa and other money transfer services. Finally, about organizational structure, the bank needs to create new positions in its organizational structure that will match the changing political, economic, social Technological, and legal factors and ensure modern organization structures.

Introduction

This study aims to provide an assessment of Kenya Commercial Bank (KCB) using the 7-S Framework, Balanced Scorecard, SWOT, and PESTLE analysis. KCB is the leading commercial bank in Kenya. The study will also suggest areas that need some change and the reasons for that change. Finally, the study will provide “Before and After” Organizational charts showing the current management structure a proposition to change it, and the reasons for change.

Analysis of KCB using 7-S Framework, Balanced Scorecard, SWOT, and PESTLE analysis

Analysis of Kenya Commercial Bank using the 7-S Framework

Estimation of the definite propositions and elements of the 7S framework tends to play an important role in carrying out significant methods and processes. Propagated by McKinsey, this definite framework helps in the attainment of the necessary business evaluation processes that need to be assessed. The sharing of values and strategic interventions tends to entail the inevitability of achieving the tenets and facets of dominating elements. These dominating elements create a systematic blending of the formal arrangement of organizational settings and guiding concepts. Furthermore, the complexity and critical aspects of the organization help in the facilitation of the analytical situations of the business processes and methods. The following factors contribute to the analytic categorization of the framework:

Strategy

The bank has pursued an expansion strategy in the East Africa region as it adopts modern technological innovations like mobile phone banking, ICT convergence, and modern customer-driven banking experience in banking halls. Kenya Commercial Bank has begun many modern strategic interventions with an orientation towards continued international expansion, capacity building in effective focus towards customers along with partnerships and products, human capital management, small and medium-sized enterprises (SMEs), and corporate social investment.

Organizational Structure

KCB has reworked its structures many times since 2000 and this was mainly due to changes in its business and marketing practices in response to momentous changes in the business environment such as technology and competition just to name a few. The existing structure is largely informed by the span of control and centralization. Most of the emphasis is on tasks and functions with little evidence of customer service and processes and these have led to the adoption of a divisional structure. The current structure is mainly focusing on growth strategies (customer base and geographical expansion), product diversification, and business functions and this has led to the adoption of a divisional structure. The approach to core function, core business, and excellent customer service has greatly influenced the current structure. The structure of the bank has changed immensely in the past decade due to the following: socio-political reforms, ICT, decentralization, and turnaround strategies.

A study by Mutungi (2016) observed that the restructuring of 2011 recognized the effects of structure restraining strategy and hence reduction of several key officers and reviewed the reporting lines. The current organizational structure results in the CEO having three deputies and directors directly reporting to him, all of whom form a large executive committee. This is due to the grouping of tasks into focused functions resulting in small divisions that reflect job holder responsibilities rather than corporate functions. The swollen executive committee has challenges which include communication, policy formulation, and implementation. The following therefore is the KCB’s current organizational structure. Find more at 'Assignment Help'.

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