Question
Question 1 Efex Bank Uganda Limited (EBUL) is a commercial bank that has operated in Uganda for the past twenty five years. The bank was
Question 1
Efex Bank Uganda Limited (EBUL) is a commercial bank that has operated in
Uganda for the past twenty five years. The bank was among the first financial
institutions to be licensed by the central bank under the Financial Institutions
Statute of 1993.
Given its foreign ownership and the related access to foreign funding, EBUL
quickly developed its niche around the corporate customers, largely comprised of
multinational companies and expatriates. These are clients who are willing to
pay whatever it requires to get a good and convenient service.
In line with the expectations of the chosen market segment, the bank's only two
branches were located in the upscale Kampala suburbs of Nakasero and Kololo.
banking executives, the facilities are the perfect
definition of luxurious banking. , the Uganda banking sector faced turbulence which led to the
closure of three large commercial banks. At the same time, a moratorium was
put in place limiting the licensing of new banks, pending regulatory reforms in
the sector. This moratorium was key in helping EBUL consolidate its position as
the corporate bank of choice. At the time, the entire banking sector comprised
of approximately 15 banks, three of which served the corporate clientele. In
2005, however, the moratorium was lifted leading to the entry of several other
banks in the sector. As of December 2017, the sector comprised of 24
commercial banks. These entrants came along with unconventional banking
approaches that significantly changed the banking landscape. For example,
banking hours were extended to 7.00 pm as opposed to the traditional 3.00 pm,
weekends became normal banking days for some new players, while new credit
and savings products were also introduced.
With customers spoiled for choice, banks started to engage in aggressive
competition that in some cases bordered on price wars. The matter is reported
to have been even discussed by the Bankers' Association, with a view of creating
cooperation under intense competition. It became common sight for banks to
open outlets next to one another in the busy shopping malls in the major towns
across the country, while promotion campaigns at social events and in schools
started attracting several banks at a time, with each promoting its serviceoffering. The central bank was not to be left out either, as it issued financial
consumer protection guidelines as a measure to protect the consumers of
financial services.
Employees were not left out either as their services were on high demand by the
increased number of players in the sector. It became common practice for staff
to move from one bank to another in a space of 2 - 3 years, which movements
came with massive increase in benefits. For the customers, the increased variety
meant better and cheaper service. In the process, some of the customers
realised that it was not worth to spend expensively on luxury banking services at
banks like EBUL, when other competitors were now offering relatively similar yet
less costly services. This was the beginning of the erosion of market share for
EBUL.
In the subsequent years, other developments came along in the form of
advanced use of technology, and the emergence of mobile banking platforms.
Noting the change in the operating landscape, and with a significant reduction in
corporate clientele, EBUL decided to acquire Ugabank Ltd, a smaller institution by
asset size and deposit base, but much larger by branch network. The plan was
that EBUL would leverage Ugabank Ltd's massive regional outreach across the
country to make entry into retail banking where the target bank had a big
footprint. With an increasingly financially literate population and with the
Ugandan government devoting funds to promotion of financial literacy, this was
considered perfect timing for EBUL to enter the retail banking market segment.
In a related development, government commenced the promotion of savings and
credit cooperative societies countrywide as a measure to improve the savings
culture and mobilise capital for eventual investment.
The above aside, Ugabank Ltd had also pioneered and successfully implemented
micro loans via a partnership with a leading telecommunications company.
Under the arrangement, telecommunication users would borrow money from the
bank even when they were not bank clients. This product was based on the
mobile money application and it turned out to be hugely successful. Whereas
the loans are micro in nature, the number of active borrowers was in excess of 5
million as at December 2017. In addition, these borrowers have a very low
default rate yet the interest rates charged are higher than those charged on the
conventional loan products. It is understood that this product and the related
loan portfolio were one of the key attractions for EBUL in making the acquisition
decision, which would make EBUL one of the largest banks by not only asset size
and deposit base, but also branch network.
Following the central bank's approval, the deal was finally sealed in May 2018.
The parties, however, agreed to keep the deal under wraps for one week, to allow EBUL finalise its post-acquisition plan before going public. Following an
internal debate within EBUL, management decided that it was prudent to first
finalise the transition plan before a public announcement can be made. This
notwithstanding, the announcement was to be made before the Bankers'
Exhibition, which was due in a fortnight.
Required:
(a) Using Porter's Five Forces Model, assess the level of competition in the
banking sector.
(16 marks)
(b) Write memo to EBUL management advising them on the following:
(i) Considerations for the successful integration of Ugabank Ltd into
EBUL.
(12 marks)
(ii) Use of promotion as an awareness tool following the acquisition.
(12 marks)
(c) Evaluate the possible organisation structures to be considered by EBUL
following the merger.
(10 marks)
(Total 50 marks)
SECTION B
Attempt any two of the four questions in this section
Question 2
Mac-Holdings Limited (MHL), has a range of apartments that it rents out on a
short-term basis with focus placed on tourists and Ugandans from the diaspora
who visit Uganda once in a while. Whereas the company has done well over the
years, management has ambitions of further growing the profits and client base.
Currently, the company's apartments are only located in Kampala city and Jinja
town. In addition to providing accommodation, MHL also provides meals to its
clients. Research has shown that there is a high correlation between the
occupancy rate of the apartments and the quantity of meals sold. In addition,
the bulk of the company's clients are tourists from European countries and the
Middle East. The clients from the Middle East are known for making bookings for
both accommodation and a whole range of meals that are consumed throughout
the day. This niche has helped MHL to make good annual profits for the past ten
years.
Over the past eight months, however, the overall scale of business in MHL has
dwindled. This is partly attributed to fierce competition that is continuing to
emanate from the increasing number of hotels in Kampala city and Jinja town In
a recent meeting with the managing director (MD), Patrick, the marketing
manager, is reported to have assured the MD that the appropriate use of the
marketing mix can enable them regain competitiveness. The MD has bought into
the idea but he has cautioned Patrick to uphold the company values so as to
discourage unethical practices. In order to reassure himself, the MD has sought
your expert advice.
Required:
(a) Advise the MD on how MHL can apply the marketing mix to achieve its
ambitions.
(18 marks)
(b) Examine the ethical matters that must be considered in the
implementation of the marketing mix.
(7 marks)
(Total 25 marks)
Question 3
Exquisite Designs Limited (EDL) deals in the sale of garments both locally and
internationally. Following a wave of declining employee performance in most of
its branches across the globe, it has decided to employ a specialised human
resource firm to review its human resource management function. The review is
expected to take a wide scope and will include examining the means by which
EDL sources, selects, develops and disengages with staff.
After a laborious scrutiny of available specialised firms that could offer human
resource services, Skilling Personnel International Limited (SPIL) has been
awarded the contract by EDL's managing director. The contract requires SPIL to
advise EDL on the impact of embracing various employee selection methods.
While the formal contract between SPIL and EDL has just been formally signed,
informally SPIL has already started work. Draft documents point to the fact that
there is need for some categories of employees at EDL to be trained as a means
for enhancing staff performance as most of them seem to be making technical
errors on the job. Some notable concerns include the inability to persuasively
talk to clients, inability to report on stipulated time, and the inaccurate recording
of sales made.
SPIL has offered you a lucrative consultancy on the challenges being faced by
the company.
Required:
(a) Discuss the stages that SPIL will have to undertake as part of its efforts to
train employees at EDL.
(12 marks)
(b) Examine the employee selection methods that SPIL may recommend for
consideration by EDL.
(13 marks)
(Total 25 marks)
Question 4
The Uganda Tax Agency (UTA) is the statutory body in charge of administering
taxes and other non-tax revenue on behalf of government. UTA collects
revenues at all its branches located in all major towns across the country.
Smaller tax offices are also located in other smaller towns across the country.
With the advent of technology, UTA is in the process of automating all its tax
administration processes, from the registration of taxpayers, to the payment of
taxes. This initiative will reduce physical interaction between the staff of the
agency and the taxpayers as all correspondences will be automated.
Management is optimistic that the limited physical interface will reduce the highly
prevalent tax fraud, improve staff efficiency and result into cost savings as UTA
will need less staff. It is also expected to address the increasingly loud public
complaints about bureaucracy in tax administration.
The automation will also involve formation of strategic partnerships with financial
institutions which will receive all taxes going forward. In this new approach, no
cash will be received at UTA's offices. Other system enhancements will allow
taxpayers to get instant tax assessments and instant notices after their taxes
have been paid.
Management is in advanced stages of commissioning the tax administration
automation project for kickoff (pilot phase), but they are concerned by the silent
yet highly prevalent staff resistance. Most of the staff are against this change in
processes, for fear of possible loss in benefits, uncertainty about the ease of
operation for the systems being introduced and possible loss of jobs. Arguing
against the proposals, one of the longest serving staff was overheard
commenting that ............"we should have been involved in the project right from
the start. That is what management by objectives dictates; otherwise how do
you expect us to support something that management is just imposing on us? I
would rather be paid my terminal benefits and quit than stay on to be humiliated
with new information technology systems and reporting to young people."
You work for Huda Consults, a firm that specialises in organisational
development consultancy. The firm's managing director has assigned you as the
lead consultant to advise UTA on the staff resistance to the impending project.
The firm's leadership has decided that the primary tools to guide the assignment
will be Kurt Lewin's freeze model and business process engineering.
Required:
Prepare memo to the managing director evaluating the following:
(a) Application of Kurt Lewin's Freeze model as a tool to manage change at
the UTA.
(12 marks)
(b) Application of business process re-engineering as an intervention at UTA.
(8 marks)
(c) Role of management by objectives as a contemporary approach to
management at UTA.
(5 marks)
(Total 25 marks)
Question 5
Within the manufacturing industry, operations management has the potential to
cause the corporate strategy to fail or to succeed. For this reason, strategic
managers must envision and incorporate the role that operations management
will play in creating competitive advantage for the particular manufacturing
organisation. One of the key operations management issues that the strategist
will be concerned with, is the nature of production processes to embrace. This is
because different organisational goals may call for the adoption of differing
production systems. While some production system may be appropriate for
standard products and could be aligned to cost leadership strategies, others may
be appropriate for customised products and synonymous with other types of
strategies.
Required:
(a) Analyse the role of operations management in supporting organisational
corporate strategy.
(10 marks)
(b) Critically appraise the various production systems that an organisation can
use to support the pursuance of its corporate strategy.
(15 marks)
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