UNIVERSITY OF ZIMBABWE

An analysis of the impact of corporate culture on t he

execution of strategy at Interfin Bank

(2010-2011)

By

Joshua Gocha

(R068340C)

Dissertation submitted in partial fulfilment of

the requirements for the degree of

Master of Business Administration

in the

Graduate School of Management

University of Zimbabwe

Supervisor: Mr M. Mutowo

Academic Year: 2011

i

DEDICATION

This dissertation is dedicated to my family and friends for all the support during a

challenging period.

ii

DECLARATION

Student Declaration – I Joshua Gocha do hereby declare that this dissertation is as

the result of my own investigation and research, except to the extent indicated in the

acknowledgements and references and acknowledged sources in the body of the

report, and it has not been submitted in part or in full for any other degree, to any other

University or College.

_________________________ __________________

Signature (Student) Date

Supervisor Declaration - I, ………………………….. do hereby confirm that the work

reported in this dissertation was carried out by the candidate under my supervision as

University supervisor. This dissertation has been submitted for review with my approval

as University supervisor.

_________________________ __________________

Signature (Supervisor) Date

iii

ACKNOWLEDGEMENTS

I take this opportunity to thank all the lecturers and tutors in the MBA programme at the

University of Zimbabwe. I also thank my supervisor, Mr. Mutowo for all his support and

patience.

iv

ABSTRACT

Corporate culture can either be an asset or a liability to an organization depending on

the nature of the internal and external environments within which a company finds itself.

In this study the researcher analysed Interfin Bank, a registered commercial bank which

is faced with the need to develop a sustainable high-performance culture which

supports strategy implementation. Interfin Bank is a new institution formed in the year

2010 after the merger of CFX Bank Limited and Interfin Merchant Bank of Zimbabwe

Limited. The study looked at the fit between corporate culture and strategy

implementation at Interfin Bank from year 2010 to year 2011.

The researcher analysed the background of Interfin Bank, that is, its formation and

current performance. The researcher also explored the current problems facing the

merged bank. The researcher looked at the various concepts on corporate culture and

strategy from authors such as Schein (1985), Thompson (2005) and Johnson (2004),

among others. The methodology used in this study is based on a research design that

combined quantitative research with a qualitative exploratory procedure. The research

instruments used were interviews on senior management at Interfin Bank as well as

questionnaires which were administered to the chosen sample. The response rate was

good at 80 percent which enabled a fair analysis of the data.

The main conclusion is that corporate culture at Interfin Bank is not yet supporting

strategy execution and the bank has not yet developed its own set of values or shared

culture. The respondents also view the new bank’s management as being radical since

the merger took place in year 2010.

The recommendation by the researcher is that Interfin Bank needs to develop its own

unique and shared culture that will support strategy implementation in view of

competition from the several financial institutions. This will enable Interfin Bank to

realize the benefits of acquiring another bank such as the enhancement of financial

performance.

v

TABLE OF CONTENTS

Dedications…………………………………………………………………………….(i)

Declaration…………………………………………………………………………….(ii)

Acknowledgement………………………………………………............................(iii)

Abstract…………………………………………………………………………..…...(iv)

Table of Contents………………………………………………………………….....(v)

List of figures…………………………………………………………………………..(x)

List of tables……………………………………………………………………….….(xi)

CHAPTER ONE

1.0 Introduction……………………………………………………………………..1

1.1 Background to the study……………………………………………………...2

1.2 Business Environmental Analysis…………………………………………..12

1.3 SWOT Analysis……………………………………………………………….18

1.4 Industry Analysis……………………………………………………………...19

1.5 Statement of the problem…………………………………………………….22

1.6 Research objectives………………………………………………………….22

1.7 Research Questions………………………………………………………….23

1.8 Research proposition…………………………………………………………23

1.9 Justification of research………………………………………………………23

1.10 Scope of research…………………………………………………………….24

vi

1.11 Limitations of research………………………………………………………..24

1.12 Structure of dissertation………………………………………………………24

CHAPTER TWO

2.0 Introduction………………………………………………………………….…25

2.1 Corporate Culture defined…………………………………………………...26

2.2 Nature of corporate culture ……………………………………………….…31

2.3 Dimensions of corporate culture……………………………………………33

2.4 Elements of corporate culture…………………………………………….…34

2.5 Characterizing culture…………………………………………………….….44

2.6 Subcultures and Countercultures…………………………………………...58

2.7 Role of Culture………………………………………………………………..59

2.8 Ten parameters of corporate culture……………………………………….61

2.9 Impact of culture on performance…………………………………………..62

2.10 Culture Change and Culture Management………………………………..63

2.11 Criticism of Corporate Culture………………………………………………64

2.12 Corporate culture and strategy……………………………………………..65

2.13 Strategy Implementation………………………………………… ………….67

2.14 Importance of Strategy…………………………………………... ………….71

2.15 Cultural Approach to Strategy………………………………………………72

2.16 Creating a fit…………………………………………………………………..72

vii

2.17 Business Strategies………………………………………………………..75

2.18 Conclusion………………………………………… ……………………….77

CHAPTER THREE

3.0 Introduction…………………………………………………………………78

3.1 Methodological Convictions………………………………………………78

3.2 Research Design and Approach…………………………………………79

3.3 Population and Sampling…………………………………………………84

3.4 Sources of Errors…………………………………………………………86

3.5 Types of Sampling………………………………………………………..87

3.6 Nature of Investigation……………………………………………………93

3.7 Surveys…………………………………………………………………….93

3.8 Case Study………………………………………………………………..94

3.9 The Interview Method…………………………………………………….95

3.10 The Questionnaire Instrument…………………………………………..97

3.11 Measurement Scale ……………………………………………………..99

3.12 Data Collection Report…………………………………………………..99

3.13 Data Analysis…………………………………………………………….100

3.14 Limitations………………………………………………………………..100

3.15 Conclusion………………………………………………………………..100

viii

CHAPTER FOUR

4.1 Introduction……………………………………………………………..101

4.2 Response Rate…………………………………………………………101

4.3 Corporate Culture………………………………………… ……………104

4.3.1 Key features of culture…………………………………………………105

4.3.2 Development of unique and shared culture…………………………106

4.3.3 Team Spirit……………………………………………………………..107

4.3.4 Resolving issues through teams…………………………………….109

4.4 Changing the culture………………………………………………….109

4.5 Subcultures…………………………………………………………….111

4.5.1 Subcultures supporting departmental strategies…………………..111

4.5.2 Subcultures bonding Departments………………………………….111

4.6 Importance of culture…………………………………………………113

4.6.1 Culture as an asset that eases communication……………………114

4.7 Management Approach………………………………………………114

4.8 Culture Supporting Strategy…………………………………………116

4.8.1 Staff Involvement in Strategy Formulation…………………………116

4.8.2 Culture enhancing Performance and Productivity………………..117

4.8.3 Culture Supporting Strategy Implementation……………………..118

4.9 Strategic Planning Workshops……………………………………..119

4.10 Competitive Advantage……………………………………………..120

ix

4.10.1 Low Cost Leadership………………………………………………120

4.10.2 Product Differentiation…………………………………….……….121

4.11 Conclusion………………………………………………………….…122

CHAPTER FIVE

5.1 Introduction…………………………………………………………123

5.2 Conclusion………………………………………………………….123

5.3 Research Proposition Testing……………………………………124

5.4 Recommendations…………………………………………………124

5.5 Further Area of Study……………………………………………..125

5.6 Conclusion…………………………………………………….……126

References…………………………………………………………………127

Appendices…………………………………………………………………137

x

LIST OF FIGURES Figure

1.1 Total Assets Market Share ……………………………………….8

1.2 Savings Deposits……………………………………………….…10

1.3 Time Deposits…………………………………………………..….11

1.4 Loans and Advances……………………………………………...12

1.5 Real GDP growth…………………………………………………..15

1.6 Industry Analysis…………………………………………………...20

2.1 The Cultural Web…………………………………………………..38

4.1 Response Rate per Division……………………………………..103

4.2 Former Employer………………………………………………….104

4.3 Key Cultural Features…………………………………………….105

4.4 Unique and Shared Culture………………………………………106

4.5 Team Spirit…………………………………………………………107

4.6 Conflict Resolution…………………………………………………109

4.7 Creativity Promotion……………………………………………….110

4.8 Subcultures…………………………………………………………111

4.9 Subcultures bonding departments……………………………….112

4.10 Culture being an Asset……………………………………………114

4.11 Management Approach……………………………………………115

4.12 Staff Involvement…………………………………………………..116

4.13 Culture supporting Performance………………………………….117

4.14 Culture supporting Strategy Implementation…………………….118

4.15 Strategy Workshops………………………………………………..119

4.16 Low cost leadership………………………………………………..120

4.17 Product Differentiation……………………………………………..121

xi

LIST OF TABLES Table

1.1 Retail Banking Performance………………………………..……..6

1.2 Employee Turnover………………………………………….…….16

1.3 Interfin versus NMB Bank…………………………………………21

2.1 Dimensions of Organizational Culture………………………..…34

2.2 Characterising Culture…………………………………………....48

3.1 Samples Chosen………………………………………………..…92

4.1 Summary of Responses…………………………………………102

1

CHAPTER 1 1.0 INTRODUCTION

Corporate culture has become an important topic in business worldwide. While

corporate culture is an intangible concept, it clearly plays a meaningful role in

corporations, affecting employees and organizational operations throughout a firm

(Northcraft 1990).

While corporate culture is not the only determinant of business success or failure, a

positive culture can be a significant competitive advantage over organizations with

which a firm competes. According to Thompson (2005) corporate culture is a

managerial task that shapes the outcome of efforts to execute a company’s strategy.

According to Robbins (1999) it is the corporate culture that sets values and standards

which shape up how employees behave in their work environment. Also, according to

Plunkett (2001) corporate culture has four functions, namely, it gives members an

organizational identity; it facilitates collective commitment; it promotes social system

stability and lastly it shapes behaviour by helping members make sense of their

surroundings. Put simply, corporate culture is the way things are done in a particular

organization.

In today’s dynamic business world, especially in Zimbabwe, strategies are dynamic.

Hence, it is but logical that your corporate culture has to be dynamic too. It needs to

adapt to the demands of business.

This study explores the issue of “fit” between strategy and corporate culture at Interfin

Banking Corporation Limited (Interfin Bank) by analyzing whether corporate culture

supports strategy execution.

2

1.1 BACKGROUND TO THE STUDY

Interfin Bank started operating as a commercial bank in March 2010. Interfin Bank is a

new institution that was born from the acquisition of CFX Bank Limited by Interfin

Merchant Bank of Zimbabwe Limited. Interfin Merchant Bank Limited had been

operating as a merchant bank in Zimbabwe since the year 2000. On the other hand

CFX Bank was a commercial bank operating since the year 2002. CFX Bank Limited

was formed out of CFX Merchant Bank and Century Bank Limited. The acquisition

enabled a practical transformation from a merchant bank to a commercial bank.

During the second quarter of 2009, Interfin Merchant Bank of Zimbabwe Limited applied

to the Reserve Bank of Zimbabwe (RBZ) for a commercial banking license so that it

could transform itself from a merchant bank to a fully-fledged commercial bank. The

license was granted by the RBZ in January 2010 and Interfin Merchant Bank decided to

acquire CFX Bank Limited so that it could ride on the branch network and robust core

banking system that CFX Bank Limited had. CFX Bank Limited had announced that it

could no longer continue operating due to viability problems. Therefore the two banks

merged to form Interfin Bank and in the process retained some staff members from both

CFX Bank Limited and Interfin Merchant Bank. However, other staff members were

recruited from outside the two organizations. Interfin Bank currently has two hundred

staff members and has twelve branches with the head office being in Harare.

Interfin Bank provides a full spectrum of financial solutions for Zimbabwe's unique

environment including retail banking, treasury services, corporate finance, trade finance

transactions, corporate banking and advisory services.

Interfin Merchant Bank’s Motives for Acquiring CFX Bank

The shareholders of Interfin Merchant Bank felt of the need to keep up with a changing

environment in Zimbabwe and decided to acquire CFX Bank Limited. The other reasons

were as follows,

3

i. To enter new product or market areas since the process of internal development

was slow.

ii. The lack of commercial banking resources by Interfin Merchant Bank to compete

successfully in the commercial banking sector was a major driver. The

necessary innovations could not be put in place quickly enough.

iii. Cost efficiency made the acquisition favourable. CFX Bank Limited had Equation

3, which is a robust core banking system. It must be noted that CFX Bank

Limited was a long way down the experience curve and had achieved some

efficiencies which were going to be difficult to match quickly by Interfin Merchant

Bank’s internal development.

1.1.1 WHAT INTERFIN BANK STANDS FOR

The vision of the bank is to become an innovative and dominant commercial bank in

Zimbabwe. The mission is to become a dynamic provider of customer focused financial

solutions that create value for all stakeholders.

Interfin Bank’s character and focus is to be a multiple commercial branch network bank

targeting medium to large corporates, high net worth individuals and segments of the

mass market, serviced by a customer centric culture, offering an expanded product

range, which leverages on technology and is driven by skilled and robustly trained

human resources.

A comprehensive set of values were crafted by Interfin Bank and the management

noted that the success of the bank depends on reviving and living the Interfin Bank’s

corporate values, which are as follows:-

• Commitment

• Professionalism

• Entrepreneurship

• Teamwork

• Integrity

4

These values are key to strategy implementation since Interfin Bank came out of two

banks that had their own values and beliefs.

1.1.2 INTERFIN BANK’S BALANCED SCORECARD

Interfin Bank’s management met and crafted new strategies for the bank in April 2010

so as to move the institution forward and these were the highlights:

Financial Perspective

• Profitability (Focused strategies in Treasury, Corporate Banking & International

Banking).

• Business growth (Real growth of balance sheet and market share).

• Review business model in line with the changing environment.

• Improved reporting.

Customer Perspective

• Strategic alliances (nurture existing and forge new ones).

• Regional expansion by establishing technical partners.

• Increase profitability and market share in current local products and offshore

products.

• Introduce technologically driven products that address specific customer needs.

• Client relationship management.

• Increase lending facilities, local and offshore.

• Extensive market research and product development.

• Resuscitate advisory services (Corporate Finance).

• Enhance brand visibility.

5

Internal Perspective

• IT upgrade to improve on core banking system and other systems.

• Improve on internal controls.

• Full compliance with exchange control regulations.

Learning and Growth Perspective

• Skills development.

• Strategic recruitment with emphasis on qualifications.

• Succession plans based on skills, experience and qualifications.

• Targeted training and development programmes.

• Performance management to include productivity indicators.

• Change management to handle the transition (culture change).

• Staff motivation.

• Retention schemes.

• Reward for performance.

• Staff discipline (zero tolerance for intransigence, poor attitudes, non-compliance

and incompetence).

1.1.3 RETAIL BANKING PERFORMANCE

The retail banking division is the face of the bank. The division’s main thrust is to

raise deposits through the opening of customer accounts. The activity that happens

in this division reflects the liquidity of the bank. The more the deposits that the bank

raises, the more the funds that are available for the bank to on-lend. The table below

shows the performance of Interfin Bank’s retail banking division.

6

Table 1.1: Interfin Bank’s Retail Banking Division Performance

31.01.11 28.02.11 22.03.11 Budget

31.03.11

LIABILITIES

Customer

Deposits

10,593,319

11,684,574 15,010,298 20,000,000

ASSETS

INCOME

322,879

568,079 740,990 1,250,000

No.

Accounts

(USD)

14,451

15,692 16,669 50,000

Source: Interfin Bank Retail Division (April 2011).

The statistics show that the bank was 33% below budget in terms of customer deposits

as at 31 March 2011. In respect of income contributed by retail division, this was 69%

below budget as well. This explains the cost to income ratio of 68% for Interfin Bank as

at 31 December 2010 and staff costs to total costs of 50% which are high in terms of the

industry accepted ratio of 25%. Looking at the number of customer accounts, as at 31

March 2011 the bank was 200% below the expected number showing that more work

needs to be done to open more customer accounts and be in line with competitors like

CBZ Bank.

1.1.4 STRUCTURE OF THE ZIMBABWE FINANCIAL SERVICES SECTOR

BANKING SECTOR REVIEW

Zimbabwe's banking sector is struggling due to under-capitalisation and macro-

economic pressures. The sector requires fresh foreign capital injection and deep-

7

pocketed shareholders to operate viably. Since the introduction of the multiple-currency

system in 2009, the sector has faced a crisis of depositor confidence, non-performing

loans and advances and capital inadequacies.

The market also continues to be characterized by liquidity constraints and narrowing

margin returns as investors are continuously demanding a reasonable return for their

invested funds. This highlights the need for more decisive steps to promote portfolio

restructuring in order to ensure there are sufficient margins to generate additional

capital buffers. Recently Renaissance Merchant Bank was placed under curatorship.

According to reports the bank had a negative capital of US$16, 7 million against the

prescribed minimum capital of US$10 million for merchant banks.

Zimbabwe's inflation remains low and stable, as evidenced by the deceleration to levels

below 3% by the first quarter of 2011. In April 2011, annual headline inflation remained

unchanged at 2.7%. Food and non-food inflation stood at 2.95% and 2.58%,

respectively. Food inflation was largely driven by fruits and vegetables, which

were in short supply. These were being complemented by imports from South

Africa, which are adversely affected by a strong Rand. The increase in non-food

inflation was mainly due to transport costs, which responded to increases in

domestic fuel prices

MARKET SHARE IN TERMS OF ASSET BASE

For the period under review total banking sector assets (excluding Genesis and ZABG)

amounted to $3.78 billion as at 31 May 2011. CBZ led the pack with total assets of

$810.1 million representing a market share of 22%. CBZ’s market share decreased from

a firm position of 28.07% and 27.09% in 2009 and 2010 respectively.

Standard Chartered Bank was ranked second with an asset base of $351.7 million

representing a market share of 9%. Again, Standard Chartered Bank’s market share

decreased from 12.95% and 14.44% in 2009 and 2010 respectively. Stanbic and Banc

Abc had market shares of 9% respectively. With an asset base of $202.8 million Interfin

8

Bank’s market share was 5% while NMB’s market share was 4%. Figure 1.1 below

illustrates the sector’s market share as at 30 May 2011.

Figure 1.1: Total Assets Market Share

9

Banks such as Standard Chartered Bank, Barclays Bank, CBZ Bank, MBCA Bank and

Metropolitan Bank, demand deposits constituted well above 70% of their deposits. The

$1.5 billion worth of demand deposits as at end of May was distributed as follows:

• CBZ led the pack with a balance of $421 million.

• Stanbic Bank, Standard Chartered Bank, Barclays Bank, FBC Bank, MBCA Bank,

Banc ABC and Interfin Bank followed with balances of ranging from $291.9 million to

$40 million respectively.

• Other institutions, whose balances were below the $40 million mark constituted 9%

and amounted to $135 million of total demand deposits. NMB Bank, CABS and

Agribank had nil balances on their demand deposits.

Savings Deposits

The top four market shakers for savings deposits are Metropolitan Bank, BancABC, ZB

Bank and Kingdom Bank within the range $68 to $46 million, with Metropolitan Bank

and BancABC constituting 26% of total saving deposits. ZB Bank and Kingdom Bank

had 23% and 18% of total savings deposits respectively. They were within the range of

$58 to $46 million. Standard Chartered Bank and Barclays Bank had 4% and 2% of total

savings deposits respectively. These were within the range of $9 and $5million. The

remaining 1% was apportioned among the remaining banks, including Interfin Bank as

shown in figure 1.2 below.

10

Figure 1.2: Savings Deposits

Time deposits

As shown in figure 1.3 below, 73% of total time deposits amounting to $630 million was

held by five banks. These were CBZ Bank with 24%, Stanbic Bank with 10%, BancABC

with 10%, Standard Chartered Bank with 8%, Barclays Bank (6%), CABS (6%), ZB

Bank(5%). Interfin Bank had just 5%.

11

Figure 1.3: Time deposits

MARKET SHARE IN TERMS LOANS AND ADVANCES

The sector’s total loans and advances stood at $2.4 billion. CBZ Bank loaned $556

million which constituted 23% of the total market loans. Stanbic Bank and BancABC

came second with $246 million and $230 million both with 10% of the total loan and

advances market share. Stanchart ranked third with total loans of 8% totaling to

$192million. Barclays Bank and Interfin Bank were on the fourth position with 6% and

their loans were $148 million and $143 million respectively.

The fifth position has four banks which are Kingdom, CABS, NMBZ and ZB which had

5% their total loans were within the rage of $133miilion to $110miilion. Agribank, Royal

Bank, Metropolitan Bank, TN Bank and Eco-bank had 2% of total loans market share.

On a relative basis, during the month of May 2011 the sector loaned $0.79 on average

for every dollar deposited. Interfin Bank loaned $0.88 to loans for every dollar deposited

Interfin. The distribution of total loans and advaces is illustrated in figure 1.4 below.

12

USD 0.00

USD 100,000,000.00

USD 200,000,000.00

USD 300,000,000.00

USD 400,000,000.00

USD 500,000,000.00

USD 600,000,000.00

CB

Z

ST

AN

BIC

Ba

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BC

ST

AN

CH

AR

T

BA

RC

LA

YS

IBC

BA

NK

KIN

GD

OM

CA

BS

NM

BZ

ZB

BA

NK

FB

C

AG

RIB

AN

K

RO

YA

L

ME

TR

O

TN

BA

NK

EC

OB

AN

K

TE

TR

AD

PO

SB

TR

US

T

MB

CA

23%

10% 10%8% 6% 6% 5% 5% 5% 5% 4% 2% 2% 2% 2% 2% 1% 1% 1% 0%

LOANS AND ADVANCES

Figure 1.4: Loans and Advances

1.2 BUSINESS ENVIRONMENTAL ANALYSIS

In order to fully understand the external and internal environment of Interfin Bank, PEST

and SWOT analysis will be conducted in the study. The implications of the environment,

impact on Interfin Bank’s strategies.

1.2.1 Political Environment

The negative political environment prevailing in Zimbabwe has affected Interfin Bank

since the international partners continue to shun the local market. Partners like

MoneyGram, the money transfer partner is not willing to enter into more viable strategic

partnerships with Interfin Bank because of the prevailing political situation. Banks like

JP Morgan Chase New York in the United States of America, do not allow United States

Dollar payments, originating from Zimbabwe, to go through their systems because of

the political environment in Zimbabwe. There continues to be that growing sense of

insecurity and investment levels are very low. After the signing of the Global Political

Agreement by the main political parties, the political situation has slightly improved. Any

differences that still exist among the political parties are being discussed by the parties

as an ongoing process. A stable political environment makes it conducive for the

country’s business entities to move forward.

13

1.2.2 Economic Environment

Zimbabwe's inflation remains low and stable, as evidenced by the deceleration to levels

below 3% by the first quarter of 2011. In April 2011, annual headline inflation remained

unchanged at 2.7%. Food and non-food inflation stood at 2.95% and 2.58%,

respectively. Food inflation was largely driven by fruits and vegetables, which were in

short supply. These were being complemented by imports from South Africa, which are

adversely affected by a strong Rand. The increase in non-food inflation was mainly due

to transport costs, which responded to increases in domestic fuel prices.

Zimbabwe's annual inflation rate for the month of May measured by the all items

Consumer Price Index declined 0.2 percentage points to 2.5% on the back of price

stability. Zimbabwe’s annual inflation was unchanged in the previous 2 months at 2.7%.

The world economy has been gradually recovering from the recent recession with

developed and emerging economies recording positive growth. The global economy is

forecast to grow by 4.3% in 2011, according to the International Monetary Fund report

of 2010. Emerging economies continued to be buoyant driven by the recovery in

commodity prices and the positive impact of monetary and fiscal interventions aimed at

preserving and stimulating economic growth rates in response to global recessionary

pressure. Emerging markets are expected to grow by 6.5% in 2011 (IMF 2010).

Regulatory authorities in financial markets across the world have continued to tighten

regulations and oversight on the activities of the financial services industry aimed at

preventing and reducing the impact of systematic risk.

The prevailing policy uncertainty has limited the availability of external investment

capital for Zimbabwe thus depriving liquidity not only to the banking sector but to the

entire economy. Confidence in the banking sector continues to improve but there is still

a high level disintermediation as a result of low income levels and the high levels of

informal trade and Interfin Bank is affected. The informal sector is not captured in

14

national economic analyses but its impact is evident in the demand for consumer goods

especially mobile services, food and beverages.

The tight liquidity conditions in the economy have been exacerbated by the low levels of

savings which together with the low disposable incomes and the informal sector, have

starved the formal economy of liquidity resulting in the banking industry only receiving

short term deposits and consequently not being able to lend for a long term (Financial

Gazette 2011). The tight market liquidity is evident in the cost of money which is above

15% per annum on United States of America credit.

The lack of efficiencies and long term investment capital are posing significant

challenges for the manufacturing sector as the economy shifts away from import

substitution to comparative advantage based production (The Herald 2011). Interfin

Bank’s manufacturing customers are operating at low capacity utilization levels of below

40% and exports coming through the bank have gone down from $10 million dollars per

month to $3 million dollars. Transport and communications sectors are also operating at

low capacities.

With an estimated real GDP growth of 4.8% and 8.1% according to the IMF Report of

2010 and Zimbabwe Treasury respectively, the economy is expected to complete its

second year of buoyant economic growth after a decade of economic decline. As shown

below and according to the IMF’s World Economic and Financial Surveys of November

2010, the world outlook points to a growth in real GDP as at end of 2010; Sub-Saharan

Africa 5.5%, EURO area 1.5%, United Kingdom 2%, USA 2.3%, and South Africa 3.5%.

Figure 1.5: Real GDP G rowth

Zimbabwe’s overall socio

dollarization was adopted almost two years ago.

An investment banker with a regional bank noted that most indigenous

fresh capital from shareholders and considering that institutions are struggling to meet

the Reserve Bank of Zimbabwe minimum capital requirements, it means there is urgent

need for foreign investment (Herald 2011).

Country risk will remain the

with the export sector struggling to recover, the gap between demand and supply of

loanable funds may persist for at least the next three years implying higher margins on

the lending rates. Whilst we do not expect any

after the placement under curatorship of Renaissance Merchant Bank by the Reserve

Bank of Zimbabwe in June 2011,

Real G

DP

Real GDP Growth (

EURO Area

USA

Zimbabwe

15

rowth

Zimbabwe’s overall socio-economic situation has been improving since official

dollarization was adopted almost two years ago.

An investment banker with a regional bank noted that most indigenous

fresh capital from shareholders and considering that institutions are struggling to meet

the Reserve Bank of Zimbabwe minimum capital requirements, it means there is urgent

foreign investment (Herald 2011).

Country risk will remain the greatest hindrance to accessing offshore lines of credit and

with the export sector struggling to recover, the gap between demand and supply of

loanable funds may persist for at least the next three years implying higher margins on

t we do not expect any other bank to wind up in the near term,

after the placement under curatorship of Renaissance Merchant Bank by the Reserve

Bank of Zimbabwe in June 2011, we do not discount the possibility

Real GDP Growth (2008, 2009 and Projections for 2010 & 2011.)

Sub-Saharan Africa United Kingdom

Bostwana South Africa

economic situation has been improving since official

An investment banker with a regional bank noted that most indigenous banks require

fresh capital from shareholders and considering that institutions are struggling to meet

the Reserve Bank of Zimbabwe minimum capital requirements, it means there is urgent

greatest hindrance to accessing offshore lines of credit and

with the export sector struggling to recover, the gap between demand and supply of

loanable funds may persist for at least the next three years implying higher margins on

bank to wind up in the near term,

after the placement under curatorship of Renaissance Merchant Bank by the Reserve

we do not discount the possibility as more are likely to

2008, 2009 and Projections for 2010 & 2011.)

United Kingdom

South Africa

16

restructure and mergers and acquisitions will occur, as in the case of Interfin Merchant

Bank and CFX Bank Limited to form Interfin Bank.

1.2.3 Social Environment

There is a high incidence of HIV/Aids infection affecting the working population and the

population in general. Interfin Bank’s staff members have not been spared as the right

skills succumb to the HIV/AIDS pandemic. One advantage which Zimbabwe has is that

the cultures in the nation are united and very tolerant of one another. There is diversity

and oneness prevails. This oneness was however affected by the harsh economic

climate in recent years with resulted in citizens not utilising the banking services.

The harsh economic climate has also led brain drain as Interfin Bank lost the following

key personnel from May 2010 to July 2011,

Table 1.2: EMPLOYEE TURNOVER

DIVISION

NUMBER OF

RESIGNATIONS

Retail 12

Corporate Banking 3

Treasury 2

Operations 4

Marketing 2

Asset Finance 1

Risk 2

Total 26

Source: H.R. Department 2011

17

1.2.4 Technological Environment

Due to the economic downturn that the country experienced, we are still very far in

terms of adopting the latest technology. The Finance Minister, Tendai Biti stated in his

last fiscal policy presentation for year 2010 that the country is still operating in the

1970’s (Zimbabwe Independent 2011). He was implying that since the 1970’s, there has

not been any meaningful advancement in terms of technology. The state infrastructure

is worn out and systems used are obsolete. This has affected Zimbabwe’s

competitiveness since the country cannot match other goods on the global market.

However the country has started to make great strides in improving technology in the

country. This has seen the laying out of fibre cables to connect the country to the more

efficient internet connectivity. Rapid changes in technology present Interfin Bank with

opportunities as well as challenges. For example, Interfin Bank’s core banking system

still needs to be upgraded further so that customer service is continuously enhanced

and to enable the bank to compete with banks like CBZ Bank and FBC Bank.

1.2.5 Legal Environment

The country’s constitution is yet to be amended and this has presented challenges to

the operating environment. The formation of companies still presents challenges to

prospective business people since there are so many hurdles one has to deal with when

forming a company. We also have the Indigenisation Bill introduced by the government.

We all agree that it is a good piece of legislation but the way it was introduced to the

local and international community may not have been proper and this has affected the

competitiveness of Zimbabwe as a country since investors are shying away. Interfin

Bank has not been spared by these issues. Exchange Control regulations by the central

bank remain very stringent affecting the normal running of banking business.

Interfin Bank as a new entrant needs to continuously craft new strategies so that the

bank meets its objectives.

18

1.3 SWOT ANALYSIS

The SWOT analysis (Strengths, weaknesses, opportunities and threats) bring out the

internal capabilities that Interfin Bank can use to deal with external threats and at the

same time taking advantage of opportunities that prevail in the environment.

1.3.1 Strengths

Interfin Bank has a positive credit rating given by the Global Credit Rating, an

internationally recognized rating company. The bank has relatively risk free assets.

Looking at the management, the management is adequately qualified with all managers

having a degree and years of experience. Interfin Bank has been a market leader in

satellite television subscriptions from the days of Interfin Merchant Bank and the market

has confidence in the bank.

1.3.2 Weaknesses

The bank has been experiencing weak strategy implementation. A number of

milestones were set in April 2010 but many of these remain outstanding with the

implementation plans not being followed. The bank needs to craft a customer service

charter so as to improve on customer service. The bank needs to fight the negative

market perception when it took over CFX Bank Limited. This is because the CFX brand

had been tarnished in the market after the bank had several brushes with the regulatory

authorities leading to curatorship at some point in year 2004 and customers lost their

hard earned money. Succession planning in the bank is not robust and not well

documented. Morale of staff remains low since the merger as staffs are still uncertain

about their future. This has resulted in negative employee perception of leadership

styles. The bank is also suffering from poor internal and external communication.

19

1.3.3 Opportunities

One major opportunity for Interfin Bank is growing the balance sheet and what is only

needed is twisting around the bank’s fortunes. The financial institution also has an

opportunity to enhance the new brand. A new logo was unveiled in April 2011 and the

bank has the potential to lift the brand to a higher level. Interfin Bank as a new institution

has the opportunity to bring on board international strategic partners such as Mauritius

Commercial Bank, PTA Bank, Afrexibank and Rand Merchant Bank- South Africa.

These international alliances used to do deals with the former Interfin Merchant Bank.

1.3.4 Threats

One of the major threats facing the bank includes the continuous improvement and

innovation of systems and products by other local financial institutions. Banks like FBC

Bank and Kingdom Bank are leading the way in terms of bringing out technologically

advanced products. The bank is also facing the threat of continuously losing competent

staff members to rival banks. International correspondent banks have been threating to

cut ties with local banks and Interfin Bank faces the same threat.

1.4 INDUSTRY ANALYSIS

Detailed below is the industry analysis as guided by Michael Porter’s Five Forces

Model. According to Thompson (2005) the five forces model holds that the state of

competition in an industry is a composite of competitive pressures operating in five

areas of the overall market. This assists Interfin Bank to isolate the power of suppliers

and communities, the degree of rivalry and ease of entry, as well as possible substitutes

for the bank’s products and services.

Together the five-forces model determines the profit potential for the banking industry in

Zimbabwe. It helps management decide whether the financial institution should remain

20

in or exit the financial services sector. It provides the rational for increasing or

decreasing resource commitments.

Figure 1.6: Interfin Bank’s Industry Analysis

POWER OF SUPPLIERS

o Suppliers of funds ask for a premium/unethical

deals due to market shortages & existence of

many players

o Key employees may withdraw their skills

BARRIERS TO ENTRY

• Prohibitive capital requirements & capital outlays required to establish infrastructure act as deterrent to new entrants

• Stringent licensing

requirements

DEGREE OF INDUSTRY RIVALRY

• Stiff competition around pricing & service delivery among commercial banks as well as other financial institutions offering similar services

THREAT OF SUBSTITUTES

• Substitutes may be in the form of property, stocks,

insurance

POWER OF CUSTOMERS/COMMUNITIES

• Customers may switch to competitors on the basis of perceived pricing & quality of service

• Customers may also multi-bank to spread their risk

21

1.4.1 INTERFIN BANK’S COMPARISON WITH A COMPETITOR

Interfin Bank’s research department carried out a benchmarking exercise in January

2011 and observed that the new bank was lagging behind in terms of meeting its set

objectives. The competitor used for this purpose was NMB Bank which operates along

the same lines as Interfin Bank.

Table 1.3: Interfin Bank versus NMB Bank as at 31 D ecember 2010

ARENA INTERFIN BANK NMB BANK

COST &

QUALITY

o Cost:income ratio 68%

o Cost of funds 68%

o Service delivery – fair

o Brand equity –famous

o Cost:income ratio 53%

o Cost of funds 43%

o Service delivery – better

o Brand equity – more

famous

TIMING &

KNOW-HOW

o Responsiveness – swift

o Skills base - good

o Product diversity – fair

o IT systems – 2005 version

o Responsiveness - swifter

o Skills base - better

o Product diversity - wide

o IT systems – 2010

version

STRONGHOLDS o Links with regulatory

authorities – fair

o Geographical

representation - better

o Group synergies - fair

o Links with regulatory

authorities – very good

o Geographical

representation – fair

o Group synergies - strong

Source: Interfin Bank’s Research Department

The commercial banking industry now more than at any other time in its history is

directly confronted with a fundamental issue, which is survival. Faced with further

deregulation, continued competition from other financial service organizations, and rapid

and unexpected change, Interfin Bank can no longer be just financially oriented; it must

22

be customer, sales and service oriented. The bank can no longer sit back and expect

customers, retail or commercial, to come to it. Interfin Bank must seek out quality

consumer and corporate business and establish meaningful multiproduct relationships.

1.5 STATEMENT OF THE PROBLEM

Interfin Bank is a new institution which was formed from two banks that were operating

in Zimbabwe, that is Interfin Merchant Bank of Zimbabwe Limited, a merchant bank and

CFX Bank Limited, a commercial bank. Since the merger the bank has been

experiencing loss of market share; targets set by executives are not being achieved;

some customers are closing their accounts and low staff morale prevails as evidenced

by the frequent workers’ meetings. The bank is experiencing lack of strategic alliances

with local and foreign partners; poor brand visibility; retarded balance sheet growth and

a high cost to income ratio. The merger meant bringing together two sets of different

corporate cultures, backgrounds, skills, norms and behaviours. It also meant crafting

new strategies and the implementation of those strategies.

It is therefore the intention of this study to analyse whether the prevailing corporate

culture supports strategy implementation at Interfin Bank.

1.6 RESEARCH OBJECTIVES

The following objectives were formulated in order to achieve the main purpose of this

research:

i. To establish the key features of Interfin Bank’s culture.

ii. To establish the nature of relationship between corporate culture and strategy

formulation and implementation at Interfin Bank.

iii. To find out whether corporate culture assists Interfin Bank in gaining competitive

advantage in the financial services sector.

23

iv. To investigate whether the new management team at Interfin Bank supports

strategy implementation.

1.7 RESEARCH QUESTIONS

The following research questions will guide the researcher thereby meeting the

objectives of the study,

i. What are the key features of Interfin Bank’s corporate culture?

ii. Does Interfin Bank’s corporate culture support strategy implementation?

iii. Is there a fit between corporate culture and strategy at Interfin Bank?

iv. Is corporate culture aiding competitive advantage at Interfin Bank?

v. Does the new management at Interfin Bank support strategy implementation?

1.8 RESEARCH PROPOSITION

The corporate culture at Interfin Bank supports strategy implementation.

1.9 JUSTIFICATION OF RESEARCH

The challenges prevailing in the Zimbabwean economy have seen many financial

institutions merging so as to counter the harsh economic environment. This merging of

banks results in the new institutions not meeting their intended targets and the benefits

of the merger are not realized.

This research seeks to examine whether corporate culture supports strategy formulation

and implementation in a merged bank like Interfin Bank. The researcher will examine

the culture integration at Interfin Bank and align it to strategy formulation and

implementation. The researcher will come up with recommendations that other

institutions that are going to merge or change ownership will adopt so that

implementation of strategy is done effectively and set targets are met.

24

1.10 SCOPE OF RESEARCH

The study covers the period 2010 to 2011. This is the time Interfin Merchant Bank

acquired CFX Bank Limited to form Interfin Bank. The study will look at the strategies

formulated by Interfin Bank in year 2010. The sample will be drawn from managerial

employees of Interfin Bank.

1.11 LIMITATIONS

The research will include a questionnaire whereby the interviewees will assess the

impact of corporate culture on strategy implementation at Interfin Bank. This presents

some probability of subjectivity whereby some respondents may be biased depending

on whether they came from Interfin Merchant Bank or CFX Bank Limited. The

respondents may feel that the subject under study is sensitive forcing them to withhold

valuable responses.

1.12 STRUCTURE OF THE DISSERTATION

The first chapter of this dissertation covered the background of the study, statement of

the problem, research justification, research objectives, research questions, proposition

and scope of the study. Chapter Two will focus on contributions made by other authors

on corporate culture and strategy. An analysis of the concepts will be made. In chapter

three the researcher will look at research methodology and data analysis techniques.

Chapter four will consist of the research findings. Finally chapter five will look at the

conclusion and recommendations.

25

CHAPTER 2

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter focuses on literature related to the study of corporate culture and business

strategy formulation and implementation. The chapter will define corporate culture and

also look at the various theories on corporate culture.

Schein (1985) contends that many of the problems confronting leaders can be traced to

their inability to analyze and evaluate organizational cultures. While there are many

common elements in the large organizations of any country, organizational culture is

unique for every organization and one of the hardest things to change (Ashkanasy

2000). According to Schroeder (2000) there has been an undisputed increase in both

managerial and theoretical interest in the field of corporate culture. This interest is not

attributable to one single factor, but a concern with new and improved ways of

managing for success has been a central theme. Culture is man made in the sense that

it is formed through events which take place in history in order to help individuals cope

with their environment (Plunkett 2001).

Mergers and acquisitions have flourished in the past decade. According to Beech

(2005) success in such activities is likely to depend upon not only the resulting

economic synergy but also on the cultural compatibility of the merging entities.

Corporate Culture is embedded deeply in the organization and in the behavior of the

people there (Brewis 2007). Every organization has a culture, its set of beliefs, values

and learned ways of managing and this is reflected in its structures, systems and

approach to the development of corporate strategy (Child 2003). Chan (2002) noted

that cultural dimension is central in all aspects of organizational life. An important task of

managers is to try to manage the ideas and understandings of their subordinates (Cray

1997).

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According to Denison (1990) most large organizations have a dominant culture and

numerous sets of sub-cultures. A dominant culture expresses the core values that are

shared by a majority of the organization’s members (David 2005). Sub-cultures tend to

develop in large organizations to reflect common problems, situations or experiences

that members face (Denison 1990). According to Pedersen (1989) the exponents of the

corporate culture paradigm are well known authors such as Deal and Kennedy (1982);

Peters and Waterman (1982); Athos and Pascale (1981) and Ouchi (1981).

According to Kotter (1992) strong cultures promote successful strategy implementation

while weak cultures do not. By strong culture, its means there is a shared belief in

practices, norms and other practices within the organization that helps energize

everyone to do their jobs to promote successful strategy implementation (Klein 2003).

2.1 CORPORATE CULTURE DEFINED

According to Hatch (2004) corporate culture refers to the shared philosophies,

ideologies, values, assumptions, beliefs, expectations, attitudes and norms that knit an

organization together. Hofstede (2002) defined it as the human invention that creates

solidarity and meaning and inspires commitment and productivity. Jacob (2005) defined

it as a system of shared values (what is important) and beliefs (how things work) that

interact with a company’s people, organizational structures, and control systems to

produce behavioral norms. While no strong consensus has been formed on a definition,

in the present study corporate culture is defined as the pattern of shared values and

beliefs that help individuals understand organizational functioning and thus provide

them with norms for behavior in the organization (Pullen 2005).

Organizational culture is based on shared attitudes, beliefs, customs, express or implied

contracts and written and unwritten rules that the organization develops over time and

that have worked well enough to be considered valid (Smith 2002). According to

Thompson (2005) corporate culture refers to the character of a company’s internal work

27

climate and personality as shaped by its core values, beliefs, business principles,

traditions, ingrained behaviours and style of operating.

Corporate culture manifests in the ways the organization conducts its business, treats

its employees, customers, and the wider community (Schwartz 2000). Another author

Magala (2005) noted that it is the extent to which autonomy and freedom is allowed in

decision making, developing new ideas and personal expression and how power and

information flow through its hierarchy. To add to this idea, Bauman (2004) stated that

corporate culture is the strength of employee commitment towards collective objectives.

Pacanowsky (1982) as cited by Linstead (2009) noted that corporate culture is not just

another piece of the puzzle, it is the puzzle. The same author also highlighted that

culture is not something an organization has; culture is something an organization is

(Linstead 2009).

Alvesson (2007) defines corporate culture as a system of common symbols and

meanings which provides the shared rules governing cognitive and effective aspects of

membership in an organization and the means whereby they are shaped and

expressed. On the other hand Finlay (2000) defined culture as being the shared norms

of behavior, values and assumptions that knit a community together. Corporate culture,

sometimes also called organizational culture, therefore refers to the shared values,

attitudes, standards, codes, and behaviors of a company's management and employees

(Louis 1999). According to Korth (2000) corporate culture is rooted in an organization's

goals, strategies, structure, and approaches to business activities. Another author Bloisi

(2003) defines culture as the configuration of learned behavior whose component

elements are shared and transmitted to the members of a particular society.

The taproot of corporate culture is the philosophy, the attitudes, the beliefs and the

shared values upon and around which the organization operates (Thompson 1989).

Blunt (1992) defines corporate culture as the collective programming of the mind which

distinguishes the members of one category of people from those of another. Shared

values, what people genuinely believe to be good or bad, desirable or undesirable,

acceptable or unacceptable, are the essence of organizational culture (Brown 2003).

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According to Robbins (2005) corporate culture refers to a system of shared meaning.

Cartwright (2001) also referred to organizational culture as being the positive elements,

where individuals or groups subscribe to organizational goals of product and service

quality and are committed and energetic in their pursuit. According to Macmillan (2000)

corporate culture refers to the style and learned ways that govern and shape the

organization’s people relationships.

According to Simmons (2001), it is the leader's job to provide the vision for the group. A

good executive must have a dream and the ability to get the company to support that

dream (Sadri 2001). The leader must also provide the framework by which the people in

that organization can help achieve the dream (Trist 1998). This is called corporate

culture. Generally, corporate culture refers to the prevailing implicit values, attitudes and

ways of doing things in a company (Liao 2005). According to Johnson (2007) it often

reflects the personality, philosophy and the ethnic-cultural background of the founder or

the leader. Corporate culture dictates how the company is run and how people are

promoted (Martin 2003).

Brown (2003) also defined organizational culture as the basic assumptions and beliefs

that are shared by members of an organization, that operate unconsciously and define

in a basic taken-for-granted fashion an organization’s view of itself and its environment.

However according to Garibaldi de Hilal (2006) culture is not merely a set of shared

values, but a set of basic assumptions and beliefs which operate in an often

unconscious ‘taken for granted’ fashion, as a powerful determinant of individual and

group behavior.

According to Hofstede (2001) organizational culture describes the fundamental

assumptions people share about an organization’s values, beliefs, norms, symbols,

language, rituals and myths that give meaning to organizational membership and are

collectively accepted by a group as guides to expected behaviours. Another author

Nguyen (2003) refers to corporate culture as a set of understandings or meanings

shared by a group of people that are largely tacit among members and are clearly

29

relevant and distinctive to the particular group which are also passed on to new

members .

According to Cooke (2000) culture is an integrating mechanism, the glue which holds

together a potentially diverse group of organizational members. Cartwright (2001)

further defines corporate culture as a pattern of basic assumptions, invented,

discovered or developed by a given group as it learns to cope with its problems of

external adaptation and internal integration, that has worked well enough to be

considered valid and therefore, to be taught to new members as the correct way to

perceive, think and feel in relation to those problems.

2.1.1 Definitions by other Authors

According to Kotter (1992) culture refers to:

(a) The values that lie beneath what the organization rewards, supports and expects;

(b) The norms that surround and/or underpin the policies, practices and procedures of

organizations;

(c) The meaning incumbents share about what the norms and values of the organization

are.

On the other hand Peters and Waterman (1982) as cited by Pugh (1998) noted

corporate culture to be a dominant and coherent set of shared values conveyed by such

symbolic means as stories, myths, legends, slogans, anecdotes and fairy tales.

Another definition came from Dodsworth (2007) who noted that culture is a set of

understandings or meanings shared by a group of people that are largely tacit among

members and are clearly relevant and distinctive to the particular group which are also

passed on to new members.

O’Donovan (2006) came up with three positions on corporate culture as follows:-

i. Culture as building block – corporate culture is assumed to be designed by

management and having a strong impact on results.

30

ii. Management as symbolic action – culture is seen as mediated in actions,

language use and arrangements primarily affecting beliefs and understandings,

thus having mainly consequences on attitudes and orientations, and less directly

so for ‘substantive outcomes’ such as profits.

iii. Culture as a terrain of possibilities and pitfalls – understanding culture is

important for managers’ possibilities in navigating in and with the organization.

2.1.2 Three Layers of Organizational Culture

According to Phegan (2000) the culture of an organization consists of three layers

namely, values, beliefs and taken-for-granted assumptions as detailed below:-

i. Values – Values may be easy to identify in an organization and are often written

down statements about the organization’s mission, objectives or strategies.

ii. Beliefs – Beliefs are more specific, but again they are issues which people in the

organization can surface and talk about. They might include a belief that the

company should not trade with particular countries, or that professional staff

should not have their professional actions appraised by managers.

iii. Taken-for-granted assumptions - They are the aspects of organizational life

which people find difficult to identify and explain. They are referred to as the

organizational paradigm, a paradigm being the set of assumptions held relatively

in common and taken for granted in an organization.

This sampling of definitions represents the two major camps that exist in the study of

organizational culture and its "application strategies." The first camp views culture as

implicit in social life Kaplan (2001). According to Brown (2003) culture is what naturally

emerges as individuals transform themselves into social groups as tribes, communities,

and ultimately, nations. The second camp represents the view that culture is an explicit

social product arising from social interaction either as an intentional or unintentional

consequence of behavior (Brown 2003). According to Woodward (2003) culture is

comprised of distinct observable forms that groups of people create through social

31

interaction and use to confront the broader social environment. This second view of

culture is most relevant to the analysis and evaluation of organizational culture and to

cultural change strategies that leaders can employ to improve organizational

performance (Brown 2003).

According to Denison (2000) culture is formed by screening and selecting new

employees who share the same values as your organization. However, culture evolves,

it is not static (Cole 1999). Both internal (hiring, staff turnover) and external (technology,

competition) factors shape your culture (Cummings 1999). Your beliefs, vision,

objectives and business practices may be compatible with culture (Finlay 2000).

Following Kotter (1992) seminal study of corporate culture and performance, adaptive

cultures are more appropriate not only for dealing with uncertain environments but, by

extension, also for implementing the prospector/differentiation strategies that tend to be

adopted in uncertain environments.

2.2 NATURE OF CORPORATE CULTURE

Morgan (2000) identified the following three major perspectives in corporate culture

research:

i. The integration perspective

According to Morgan (2000) this portrays a strong or desirable culture as one where

there is organization-wide consensus and consistency. Espoused values are consistent

with formal practices, which are consistent with informal beliefs, norms and attitudes

(Adler 2004). Cultural members share the same values, promoting a shared sense of

loyalty and commitment. According to Andrews (1998) where inconsistencies, conflict or

subcultural differentiation occur, this is portrayed as being a weak or negative culture.

The majority of the research highlighting relationships between culture and performance

have emerged from researchers who have adopted this perspective. According to

Robbins (1999) this perspective views organizational culture as a system of shared

meanings, unity and harmony.

32

ii. The differentiation perspective

This emphasizes that rather than consensus being organization-wide, it only occurs

within the boundaries of a subculture (Morgan 2000). At the organizational level,

differentiated subcultures may co-exist in harmony, conflict or indifference to each other

(Chatman 2003). Maanen (1991) in his study of Disneyland found groups of employees

who considered themselves as being distinct. These subcultures related to different

jobs, different levels of organizational status, gender and class. Claims of harmony from

management masked a range of inconsistencies and group antagonisms. According to

Pettigrew (1990), in his examination of an advertising agency, found that class, gender

and hierarchical status differentiated agency employees into a nested set of

subcultures, each with its own distinctive pattern of reaction. What is unique about a

given organization’s culture, then, is the particular mix of subcultural differences within

an organization’s boundaries (Ogbonna 1993). According to Pugh (1998) this

perspective views an organization’s culture as a compilation of diverse and inconsistent

beliefs that are shared at group level.

iii. The fragmentation perspective

According to Morgan (2000) this approach views ambiguity as the norm, with consensus

and dissension co-existing in a constantly fluctuating pattern influenced by events and

specific areas of decision making. As stated by Frost (1991) from the fragmentation

perspective, consensus fails to coalesce on an organization-wide or subcultural basis,

except in transient, issue-specific ways. Rather than the clear unity of the integration

perspective, or the clear conflicts of the differentiation viewpoint, fragmentation focuses

on that which is unclear (Hatch 2000). According to Phegan (2000) this perspective

views organizational culture as lacking any form of pattern as a result of differing

meanings between individuals and within individuals over time. This view rejects the

idea of ‘shared meanings’ in favour of the idea that people attribute meanings to

phenomena in organizations (Simmons 2001).

33

Many of the studies in corporate culture focus on only one of these perspectives. Peters

and Waterman (1982) rests on the mistaken assumption that organizational culture

consists of shared meanings and commonalities that are quite homogeneous,

monolithic and organization-wide. Little or no consideration is given to the potential

existence of subcultures or dissension unless as an indication of a weak culture.

However, Martin (1992) argued that any corporate culture contains elements congruent

with all three perspectives. Mohan (1993) also argued, using data from a variety of case

studies, that any culture contains elements that can be understood only when all three

perspectives are used. From a senior manager’s point of view, the integrationist

perspective may be congruent with a manager’s desire to see his or her values and

policies shared and followed (Mulling 1999). Middle management may want to distance

themselves from senior management and therefore subcultures and a differentiation

perspective may be more appropriate (Martin 1992).

Therefore within a company there may be organization-wide consensus on some

issues, consensus only within certain subcultures on other issues and an ambiguous

state on the remainder (McGuire 2003). Schein (1999) suggested that there may be a

core set of ideological guidelines within an organization, which requires a minimal

consensus and consistency; otherwise organizations would not function. Therefore

consistency, consensus, harmony and integration may occur but within the midst of

inconsistencies, ambiguities, conflicts, disruption and dissolution.

2.3 DIMENSIONS OF CORPORATE CULTURE

From the research done by Robbins (1999), there are seven dimensions that, in

aggregate, capture the essence of an organization’s culture as detailed below.

34

Table 2.1: Dimensions of Organizational Culture

Dimension Explanation

Innovation and Risk taking This is the degree to which employees are

encouraged to be innovative and take risks

Attention to Detail

This is the degree to which employees are

expected to exhibit precision, analysis and

attention to detail

Outcome orientation

This is the degree to which managers

focus on results or outcomes rather than

on the techniques and processes used to

achieve these outcomes.

Team orientation

This is the degree to which work activities

are organized around teams rather than

individuals

Aggressiveness The degree to which organizational

activities emphasize maintaining the status

quo in contrast to growth

Stability This is the degree to which organizational

activities emphasize maintaining the status

quo in contrast to growth

Source: Johnson (2004)

2.4 ELEMENTS OF CORPORATE CULTURE

According to Lynch (2001) there are four elements of corporate culture namely, the

environment; cultural factors specific to the organization; identification of the basis

cultural style of the organization and finally analysis of the strategic implications. Every

35

organization is unique since the combination of personalities and events –both past and

present – will have produced a unique balance of factors that is organizational culture.

Environment

i. People

ii. Corporate cultures

iii. Labour policies

iv. International issues and culture

Cultural factors specific to the organization

i. History and ownership

ii. Size

iii. Technology

iv. Leadership and mission

Identification of the basic cultural style of the o rganization

i. Power

ii. Role

iii. Task

iv. Personal

Analysis of the strategic implications

i. Prescriptive or emergent

ii. Competitive advantage

iii. Strategic change

36

A. ENVIRONMENTAL INFLUENCES ON CORPORATE CULTURE

According to Lynch (2001) outside the organization itself, there will be a whole series of

influences on the organizational culture of the organization. Finlay (2000) noted that the

more dynamic an organization’s environment, the more its culture needs to be one that

supports flexibility. The more complex an organization’s environment, the more

decentralized its structure is likely to be, with a consequent development of cultural

diversity.

1. People – Adler (2004) noted that the concern is with the impact on the

organization of people in the environment; such people will include customers

and suppliers, along with government and professional advisors. The main areas

are as follows:-

a) Age profile – as the population grows older, so tastes change,

recruitment changes and those in employment must pay more from their

remuneration for those already in retirement. The company burden will

also increase.

b) Socioeconomic group – As people become richer, their needs and

aspirations increase : Maslow’s hierarchy of needs is useful in suggesting

how these alter from basic survival to broader tastes. Strategy will need to

be sensitive to such variations and be devised accordingly.

c) Language and communication – Variations within and between

countries represent real differences that need to be accommodated in

strategy both to control strategy better and to motivate those involved in

the strategy process better.

d) Religion and Beliefs – Strongly held beliefs must be respected and

reflected in strategy development

37

e) Government policy – Policy on education, training, social welfare

provisions, health and pensions provisions will have a significant influence

on people development inside the organization.

2. Corporate Cultures – According to Frankema (2001) corporate cultural

environment covers the links that the organization has with other similar

organizations.

3. Labour Policies – According to Klein (2003) in some industrialized countries,

trade unionism forms part of the environment that needs to be considered.

4. International Issues – International cultures may have a significant impact on

corporate culture (Adler 2004).

B. CULTURAL FACTORS SPECIFIC TO THE ORGANIZATION

According to Lynch (2001) to understand the culture of an organization, it is useful

to consider the factors that have influenced its development.

1. History and ownership – A young company may have been founded by one

individual or a small group who will continue to influence its development for

some years (Holbeche 2005). Family firms and owner-dominated firms will have

clearly recognizable cultures.

2. Size – As firms expand, they may lose the tight ownership and control and

therefore allow others to influence their style and culture (Ansoff 1999).

According to Bauman (2004) even if ownership remains tight, larger companies

are more difficult to control from the centre. More typically, as organizations

grow, they need to introduce more control mechanisms and engage in more

formal control procedures (Stoner 1992). All this will lead to a new and more

formal culture with less flexibility and more rigid reporting structures.

3. Technology – This will influence the culture of the company but its effects are

not always predictable (Lynch 2001). According to Shachaf (2005) those

technologies that require economies of scale or involve high-cost and expensive

38

machinery usually require a formal and well-structured culture for success. In fast

changing technologies a more flexible culture may be required. According to

Finlay (2000) technology used in a firm can have a profound effect on work

patterns and thus on culture.

4. Leadership and mission – individuals and their values will reflect and change

the culture of the organization over time, especially the chief executive officer

and immediate colleagues (Shellenbarger 2000). According to Huse (1999)

leadership and power in an organization have a considerable impact on the

organizational culture, and a particularly powerful force is the make-up of the

senior management team. In Germany, engineers and lawyers are well

represented on the boards of companies; in the United Kingdom, while engineers

do make it to the top, economists and historians are well to the fore (Kanter

2002).

5. Cultural web – The cultural Web is a useful method of bringing together the

basic elements that are helpful in analyzing the culture of an organization.

Diagrammatically, the cultural web is shown below.

Figure 2.1: Cultural Web

Stories

Control

Systems Rituals &

Routines

Power

structures

Symbols

Organizational

Structures

Paradigm

39

Elements of the Cultural Web

The Cultural Web identifies six interrelated elements that help to make up what Johnson

(2004) call the "paradigm" – the pattern or model – of the work environment. By

analyzing the factors in each, you can begin to see the bigger picture of your culture:

what is working, what isn't working, and what needs to be changed. The six elements

are:

i. Stories – The past events people talked about, inside and outside the

company (Johnson 2004). Who and what the company chooses to

immortalize says a great deal about what it values, and perceives as great

behavior (Thompson (2005).

ii. Rituals and Routines – The daily behavior and actions of people that

signal acceptable behavior. This determines what is expected to happen

in given situations and what is valued by management (Huse 2001).

iii. Symbols – The visual representations of the company including logos,

how plush the offices are and the formal or informal dress codes (Hill

1997).

iv. Organizational Structure - This includes both the structure defined by

the organization chart, and the unwritten lines of power and influence that

indicate whose contributions are most valued (Johnson 2004).

v. Control Systems - The ways that the organization is controlled.

According to Andrews (1998) these include financial systems, quality

systems, and rewards (including the way they are measured and

distributed within the organization.)

vi. Power Structures - The pockets of real power in the company. This may

involve one or two key senior executives, a whole group of executives, or

even a department (Andrews 2000). The key is that these people have the

40

greatest amount of influence on decisions, operations, and strategic

direction.

These elements are represented graphically as six semi-overlapping circles which

together influence the cultural paradigm.

According to Stoykov (1995) the cultural web is a representation of the taken-for-

granted assumptions, or paradigm, of an organization and the physical manifestations

of organizational culture. Culture can be analyzed by observing the way in which the

organization actually behaves, the cultural artifacts (Smith 2002).

Thomason (2001) gave an outline of some of the questions that might help build up an

understanding of culture through the elements of the cultural web. According to Finlay

(2000) the web of behaviours is concerned with the manifestations of culture, the

behaviours in the organization.

Stories

i. What core beliefs do stories reflect?

ii. How pervasive are these beliefs?

iii. Do stories relate to : strengths or weaknesses; successes or failures;

conformity or mavericks?

iv. Who are the heroes and villains?

v. What norms do the mavericks deviate from?

According to Kotter (1992) the stories told by members of the organization to each

other, to outsiders, to new recruits and so on, embed the present in its organizational

history and also flag up important events and personalities. They typically have to do

with successes, disasters, heroes, villains and mavericks who deviate from the norm

(Thompson 2003). According to Wilson (2001) they distill the essence of an

organization’s past, legitimise types of behaviour and are devices for telling people what

is important in the organization. According to Cray (1997) the stories that members of

41

an organization tell about the past can provide a good view on what people feel is

important.

Routines and rituals

i. Which routines are emphasized?

ii. Which would look odd if changed?

iii. What behaviour do routines encourage?

iv. What are the key rituals?

v. What core beliefs do they reflect?

vi. What do training programmes emphasize?

vii. How easy are rituals/routines to change?

According to Moore (1997) the routine ways that members of the organization behave

towards each other, and towards those outside the organization, make up ‘the way we

do things around here’. At its best, this lubricates the working of the organization, and

may provide a distinctive and beneficial organizational competence (Woodward 2003).

However it can also represent a taken-for-grantedness about how things should happen

which is extremely difficult to change and protective of core assumptions in the

paradigm (Goffee 1998).

Examples of a ritual can include relatively formal organizational processes –training

programmes, interview panels, promotion and assessment procedures, sales

conferences, among others (Macmillan 2000). However rituals can also be thought of as

relatively informal processes such as drinks in the pub after work or gossiping around

photocopying machines (Woodcock 2003). According to Wood (2006) rituals are

systems of rites.

42

According to Wilson (2001) all organizations must have routine behaviours or working

together would be very difficult as you would never be sure of what anyone would do.

Organizational structures

i. How mechanistic/organistic are the structures?

ii. How flat/hierarchichal are the structures?

iii. How formal/informal are the structures?

iv. Do structures encourage collaboration or competition?

v. What types of power structure do they support?

According to Wheelen (2006) the organizational structure is likely to reflect power

structures and, again, delineate important relationships and emphasize what is

important in the organization. Formal hierarchical, mechanistic structures may

emphasize that strategy is the province of top managers and everyone else is ‘working

to orders’ (Wilkins 2001). Highly devolved structures may signify that collaboration is

less important than competition. According to Tripathi (2005) organizational structures

may not truly represent the way people work in an organization, but they can reflect

hierarchical thinking.

Control systems

i. What is most closely monitored/controlled?

ii. Is emphasis on reward or punishment?

iii. Are controls related to history or current strategies?

iv. Are there many/few controls?

According to Thompson (2003) the control systems, measurements and reward

systems emphasize what is important to monitor in the organization and to focus

attention and activity upon. Reward systems are important influences on behaviours ,

43

but can also prove to be a barrier to success of new strategies (Thompson (2002).

According to Sadri (2001) control systems are the sets of procedures to constrain

activities and to ensure conformance. On the other hand Robbins (2005) noted that

reward systems are the carrots and sticks so that those in power can foster their view of

how the organization should develop. A reward system geared very closely to results

and to individuals will produce a different out come from one that is more relaxed about

short – term objectives and that links reward to group success (Singh 2004).

Power structures

i. What are the core beliefs of the leadership?

ii. How strongly held are these beliefs (idealistic or pragmatists)?

iii. How is power distributed in the organization?

iv. Where are the main blockages to change?

According to Johnson (2007) power structures are also likely to be associated with the

key assumptions. The paradigm is, in some respects, the ‘formula for success’, which is

taken for granted and likely to have grown up over years (Huse 2001). According to Hill

(2001) the most powerful groupings within the organization are likely to be closely

associated with this set of core assumptions and beliefs. According to Liao (2005) the

dominant coalition is the obvious source of power in an organization and this is

generally, but not always, formed by the board or by a section of it.

Symbols

i. What language and jargon are used?

ii. How internal or accessible are they?

iii. What aspects of strategy are highlighted in publicity?

iv. What status symbols are there?

v. Are there particular symbols which denote the organization?

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According to Johnson (2004) symbols such as logos, offices, cars and titles or the

language and terminology used, become a shorthand representation of the nature of the

organization. For example, in long-established or conservative organizations it is likely

that there will be many symbols of hierarchy to do with formal office layout, differences

in privileges between levels of management or the way in which people address each

other (Greenberg 2000). According to George (2001) the form of language used in an

organization can also be particularly revealing, especially with regard to customers or

clients. A symbol is someone or something that represents a particular quality or idea

(Holbeche 2005). Another author Hatch (2000) defines a cultural symbol as any object,

act or event that serves to transmit cultural meaning.

The Paradigm

According to Johnson (2007) the paradigm of the organization encapsulates and

reinforces the behaviours observed in the other elements of the cultural web.

Overall

i. What is the dominant culture?

ii. How easy is this to change?

According to Hofstede (2000) the cultural web is a useful concept for understanding the

underlying assumptions linked to political, symbolic and structural aspects of an

organization.

2.5 CHARACTERISING AN ORGANIZATION’S CULTURE

According to Lynch (2001) as adapted from Handy (1993) although each organization

has its own unique culture, there are four main types. Handy (1993) characterized

culture in terms of the relationship between the organization and individuals and also

the importance of power and hierarchy. Different cultures will behave differently. Each of

45

the four cultures shown below would approach a strategy such as product development

in a different way.

i. The Power Culture – The organization revolves around and is dominated by one

individual or a small group (Lynch 2001). All decisions refer back to the centre

and so do beliefs and work styles (Singh 2004). Experts are either overvalued or

treated with suspicion and disdain. As the organization grows in size, it becomes

increasingly difficult for the centre to keep control. Either the organization

changes or it spawns a new subgroup with its own leader who, in turn, reports

back to the original centre (Hill 1997). The corporate plan, if it exists at all,

reflects the individual at the top, her or his whims, interest and passions.

Strategic change is fast or slow depending on the management style of the

leader (Holbeche 2005). According to Hill (2005) power culture would support the

strategy by the chief executive officer personally and actively issuing out

instructions indicating who does what and by when. According to Cummings

(2001) in this form of culture power is all that matters and instructions emanate

from the top of the organization. Power cultures are associated with inequitable

reward systems, in that salary and other benefits are often awarded on the basis

of personal preference in return for demonstrated loyalty, perceived favours or

long service as much as ability (Cartwright 2001).

ii. The Role Culture – This organization relies on committees, structures, logic and

analysis (Hofstede 2000). There is a small group of senior managers who make

the final decisions, but they rely on procedures, systems and clearly defined rules

of communication (Thompson 2005). According to Johnson (2004) it might even

be regarded as bureaucratic but has a thoroughness and solidity that make it a

reliable and fair employer. Expert opinions are treated with caution as they

represent outsiders to the organization. As long as the outside environment is

stable, the organization can handle difficult situations. However, senior managers

often do not see the changes that are coming and, even if they do, they do not

know how to manage them (Likert 2001). Change in such a culture comes

46

through a new set of managers being appointed. Strategic planning in a formal

way would characterize such a culture. Strategic change is likely to be slow and

methodical. According to Mann (2000) role culture would have well-sorted

arrangements for interdepartmental meetings and a schedule of tasks against

time-scales to ensure the development and launch goes smoothly.

iii. The task culture – According to Chatman (2003) the organization is geared to

tackle identified projects or tasks. Work is undertaken in teams that are flexible

and tackle identified issues (Black 2003). Power rests with the team, which may

contain some experts to facilitate group decisions (Kanter 2002). The culture is

flexible and sensitive to change, but it works best on small-team issues (Denison

(2001). Control relies largely on the efficiency of the team with top management

having to allow the group considerable day-to-day autonomy (Cummings 2005).

According to The Financial Times (2000) strategic planning is both flexible and

task-oriented but will focus largely on the task in hand. Strategic change will

depend on the circumstances but may be fast where this is needed. According to

David (2005) a task culture may prefer to create an ad hoc project team to see

the ‘project’ through. According to Cartwright (2001) the salient feature of a task

culture is the emphasis which it places on accomplishing the task, and the

energy which it directs toward securing the necessary task-related resources and

skills.

iv. The Personal Culture – According to Robbins (2001) the individual works and

exists purely for himself. The organization is tolerated as the way to structure and

order the environment for certain useful purposes, but the prime area of interest

is the individual (Hill 2005). According to Hawkins (2001) such organizations exist

infrequently in business, but may exist in non-profit institutions. Such individuals

are not easy to manage and feel little loyalty to the organization (Goffee 1996).

Changes are coped with easily or with difficulty depending on the inclination of

the individual. Strategic planning is largely meaningless except in a very personal

sense (Eden 1998). Strategic change can be instant, where the individual

47

decides that it is in his or her interests to make such a move. According to

Northcraft (1990) a personal culture would rely on the personal motivation and

inventiveness of individuals. According to Schroeder (2000) personal culture

revolves around individuals who come together in an organization only because it

furthers their own ambitions; the organization provides the medium in which they

can thrive. According to Robbins (1999) the main characteristic of the personal

culture is egalitarianism where the organization is subordinate to the individual

for its existence.

According to Schein (1992) in understanding the influence of culture on organizational

purposes, it is important to be able to characterize culture. It is in this way that

judgements can be made about the ease or difficulty the organization would experience

in pursuing different kinds of strategy. The same author came up with the following

ways of characterizing culture.

i. The graphic descriptor – The essence of an organization’s culture can be

captured in a simple graphic descriptor. At times this can be done to define the

dominant culture of different strategic groups within a sector (Hatch 2000). The

importance of this is in getting people to understand that culture drives strategies.

ii. Miles and Snow – Miles and Snow as cited by Johnson (2004) categorized

organizations into three basic types in terms of how they behave strategically.

According to Finlay (2000) Miles and Snow put forward organizational types,

categorized by their approach to innovation and risk.

A defender organization will behave quite differently from a prospector organization. It

can be noted that defender cultures find change threatening and have bureaucratic

approaches to management. A prospector culture thrives on change applying strategies

of product and market development. On the other hand an analyser culture entails

desirability to match new ventures to present shape of the business. An analyser culture

is complicated since it entails intensive planning. Scholes (2004) noted that the adoption

48

of strategies must be supported by efforts to shift culture. Miles and Snow’s cultural

framework is detailed below in table 2.2.

Table 2.2 Characterising Culture by Miles and Snow

Type or Culture Dominant

Objectives

Preferred Strategies Planning and

Control Systems

Defender Desire for a secure

and stable niche in

market

Specialization, cost-

efficient production;

marketing

emphasizes price

and service to

defend current

business; tendency

to vertical

integration

Centralized,

detailed control;

emphasis on cost

efficiency, extensive

use of formal

planning

Prospector Location and

exploitation of new

product and market

opportunities

Growth through

product and market

development;

constant monitoring

of environmental

change; multiple

technologies

Emphasis on

flexibility,

decentralized

control; use of ad

hoc measurements

Analyser Desire to match

new ventures to

present shape of

business

Steady growth

through market

penetration;

exploitation of

applied research,

followers in the

market

Very complicated;

coordinating roles

between functions

e.g. product

managers; intensive

planning

Source: Adapted from Johnson (2004)

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Therefore according to Johnson (2004) prospective organizations are innovative in

nature and they always look for new opportunities in the market. They tend to have a

developmental culture that values creativity, risk-taking and adaptability. Employees in

such organizations follow a less routine-based approach and are always encouraged to

come up with new ideas (Kotter 1999).

Companies that operate in relatively narrower and clearly defined market segments are

defenders (Pugh 1998). They achieve growth through development of unique

technology and market penetration. Such businesses tend to have hierarchical culture

in which routines and standardization are valued and technical knowledge is given more

preference (Schein 1999).

Analyzers are the companies that operate in two market environments; one is relatively

dynamic and the other stable (Schwartz 2000). They operate effectively in the stable

environment. In turbulent domains they critically scrutinize the competitors' ideas and

opt for the one that seems most promising. Rational culture is best suited for companies

with this strategy (Smith 2002). Decisions are taken based on facts and observed

evidences.

A reactor strategy is the dynamic one. They do not form a specific corporate strategy

and deal with the situations as they occur (Simmons 2001). This is why they do not

have a unique culture. Sometimes they are innovative, sometimes defender, and

sometimes both (Singh 2004).

2.5.1 DEAL AND KENNEDY’S CLASSIFICATION

According to Deal and Kennedy (1982) as cited by Rollinson (2002) organizational

cultures are characterized according to two factors, that is, the degree of risk associated

with the organization’s activities and the speed with which the organization and its

employees get feedback on whether their actions were successful or not. Deal and

Kennedy (1982) believe that employees in a strong company culture have a clearer idea

of what they should be doing and that this sense of mission results in huge productivity

increases. Furthermore, individuals within a strong company culture know what is

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expected of them, how to act and react when confronted with an unfamiliar situation.

They also have a frame of reference within which they can pattern their response (Sadri

2001). Conversely, those in a weak culture spend a great deal of time deciding what

they should do and how they should do it. From these two dimensions, the two authors

recognize four types of cultures:-

i. The tough-guy, macho culture – In this culture individuals regularly take high

risks and get quick feedback on whether their own actions are right or wrong

(Rollinson 2002). Fortunes can be made overnight. Venture capatalists, currency

dealers and many young internet entrepreneurs would seem to fit into this

category as well (Wheelen 2006). Inside the organization the pressures will be

intense, with every meeting becoming a trial of wills between the tough guys,

resulting in early ‘burn-out’ for the survivors and high staff turnover as the losers

leave (Johnson 2007).

ii. The work hard, play hard culture – Employees in this culture live in an

environment of small risks, quick feedback and a high level of activity (Wilkins

2001). Sales representatives and retailers would seem to live completely in this

world. Factory workers are often in this culture as they are making a series of

small decisions throughout the day; the risks are small since they work within

well-defined procedures and controls. According to Wood (2006) such

organizations are centered on customers and they will satisfy their needs through

team activities. Team working will be encouraged through team playing. This

culture is appropriate for action driven people who thrive on quick, tangible

feedback (Brown 2003).

iii. The Bet-your-company culture – Organizations with this culture experience

high risk but with slow feedback (Chan 2002). Examples will be those

organizations that invest large sums in research and development projects with a

long timescale, such as pharmaceutical companies and aero engine

manufacturers. With such long timescales and the inherent risks, the handling of

significant issues will be a very deliberate process by the most senior members

51

of the organization. This culture leads to high-quality inventions and major

scientific breakthroughs.

iv. The process culture – Organizations such as retail banks, insurance companies

and utilities and much of government are examples of the process culture,

characterized by low risk and slow feedback (Chatman 2003). Employees find it

difficult to measure their output and so they concentrate on how they do their

work-on the process. Procedures become an end in themselves and people tend

to develop a ‘cover your back’ mentality, where memos are sent about

everything. Process cultures are appropriate where there is a need for

consistency of treatment (Bloisi 2003).

2.5.2 TOXIC CORPORATE CULTURES

According to Hill (2005) the following corporate cultures are described as toxic because

they are dysfunctioning in terms of relationships and adjustment to changing times.

They undermine the social/spiritual capital, poison the work climate and contribute to

organizational decline (Cartwright 2001).

i. Authoritarian-hierarchical culture - The big boss alone makes all the major

decisions behind closed doors. Even when the decisions are harmful to the

company, no one dares to challenge the boss. The standard mode of operandum

is command and control, with no regard to the well-being of employees or the

future of the company (Denison 2000).

According to Goffee (1998) in this kind of culture, employees are to be controlled,

manipulated and occasionally pacified like little children. Workers are motivated by fear

rather than love for the company or passion for the work (Thompson 2005). They are

expected to do what they are told without questioning. The main criterion for promotion

is loyalty to the boss, rather than competence and commitment. As a result, star

performers who dare to question some of the administration's decisions are sidelined or

let go, while those who obey the boss blindly and who are willing be hatchet men get

the nod for promotion (Child 2003).

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According to Sathe (1985) hierarchies are not necessarily bad in and of themselves.

Some sort of hierarchy in terms of decision-making and responsibility is always

inevitable. However, when hierarchies are used to control and abuse workers, problems

inevitably occur (Cray 1997). Hierarchies without accountability tend to have a

corrupting influence on ambitious, autocratic leaders (David 2005). When the boss is

dysfunctional and has the power to impose his selfish, irrational decisions on others, the

entire company suffers.

ii. Competing-conflictive culture - There is always some sort of power struggle

going on. Leaders are plotting against each other and stabbing each other on the

back (Cummings 2001). Different units and even different individuals within a unit

are undercutting, backstabbing each other to gain some competitive advantage.

There is a lack of trust and cooperation. People often hide important information

from each other and even sabotage each other's efforts to ensure that only they

will come up on top (Donaldson 1998).

iii. Laissez faire culture - There is a vacuum at the top, either because the leader

is incompetent and ignorant, or because he is too preoccupied with his personal

affairs to pay much attention to the company (Greenberg 2000). Consequently,

there is an absence of directions, standards and expectations. When there is an

absence of effective leadership, each department, in fact, each individual does

whatever they want. The leadership void will also tempt ambitious individuals to

seize power to benefit themselves (Hofer 1997). Chaos and confusion are the

order of the day. No one has a clear sense where the company is going. Often,

employees receive conflicting directions and signals. Decisions are made in the

morning only to be nullified in the afternoon. Given the lack of direction, oversight

and accountability all across-the-board, productivity declines. According to

Linstead (1992) in this kind of culture, the company either disintegrates or

becomes an easy target for a hostile takeover.

iv. Dishonest-corrupt culture - In this culture, greed is good and money is God

(Louis 1999). There is little regard for ethics or the law. Such attitudes permeate

53

the whole company from the top down to individual workers. Bribery, cheating,

and fraudulent practices are widespread. According to Likert (2001) creative

accounting and misleading profit reports are a matter of routine. Denial,

rationalization and reputation management enable them carry on their unethical

and often illegal activities until they are caught red-handed or exposed by

correcting forces of the market (Korth 2000). When management is blinded by

greed and ambition, their judgment becomes distorted and their decisions

become seriously flawed; as a result, they often cross the line without being

aware of it (Lasley 1999).

v. Rigid-traditional culture - There is a strong resistance to any kind of change

(Magala (2005). The leadership clings to out-dated methods and traditions,

unwilling to adapt to the changes in the market place. They live in past glory and

any change poses a threat to their deeply entrenched values and their sense of

security. According to Nguyen (2003) workers are discouraged or even

reprimanded for suggesting innovative ideas. Their accounting, marketing and

delivery systems are no longer competitive with the fast-paced technology-driven

market place. Their products and services have not responded to changing

market demands.

The above five types of toxic cultures are not mutually exclusive (Hill 2005). For

example, a corporation may be both authoritarian and traditional. Similarly, a

corporation can be both authoritarian and corrupt. When a company suffers from a

multiple of diseases, drastic operations are needed to save it from demise.

2.5.3 HEALTHY CORPORATE CULTURES

i. Progressive-adaptive culture – According to Handy (1985) there is openness

to new ideas and a willingness to take risk and adopt innovations. It is a culture

that adjusts quickly to shifting market conditions. It does not value the certainty of

remaining the same; the only certainty it values is that the company is future-

54

oriented and innovative (Northcraft 1990). It is confident in catching and riding

the waves of change.

ii. Purpose-driven culture - The leadership articulates and crystallizes the purpose

of the company effectively, so that there is a common purpose, a shared vision

for all the workers (O’Donovan 2006). Everyone knows what the core values and

priorities are and everyone knows where the company is going. Workers are

highly motivated, because they are committed to the same set of core values.

iii. Community-oriented culture - There is a strong emphasis on collectivity and

cooperation. The leadership attempts to build a community, in which people

respect, support each other, and enjoy working together (McGuire 2003).

iv. People-centred culture - There is a genuine caring for each worker in the

organization. Everyone is valued and validated, regardless of their positions in

the company. The organization cares for the whole person, body, soul and mind

in terms of recognizing workers' basic needs for learning and growth, for

belonging and being connected, as well as the need for meaning and spirituality

(Morgan 2000). Each worker is encouraged to develop his or her full potentials,

personally and professionally. Such a culture will create a climate of mutual

respect and genuine civility.

The above four cultures are positive, because they create a positive work climate, which

is conducive to productivity and job satisfaction. They contribute to high-performance

without explicitly linking reward to performance. The ideal company should possess the

attributes of all four types of healthy corporate cultures (Hofstede 2000).

Hofstede (1991), a respected Dutch organizational studies professor, published with

three of his colleagues an important analysis of organizational practices. First published

in 1991, the work focused on what the authors called the six dimensions that separate

and define organizational cultures:

55

i. Process oriented versus results oriented . Process cultures emphasize low

risk and repeating known methods, whereas results orientations place a premium

on taking risks and finding new methods.

ii. Employee oriented versus job oriented . This is the personal/impersonal

workplace distinction. Employee cultures make members of the organization feel

personally valued, but job cultures are more concerned with simply having an

effective person to do the necessary work.

iii. Parochial versus professional . In parochial cultures, employees identify

strongly with their company as the basis for their employment and perhaps even

social status. Participants in professional cultures identify with their skill-set and

occupation more so than with the particular company they exercise those skills

at.

iv. Open system versus closed system . This dimension considers communication

and seniority-based favoritism. In an open system, new employees are

acclimated quickly into the communications and social fabric of the company.

However, in closed systems, there is greater secrecy and exclusion of certain

members of the organization, particularly newcomers.

v. Loose versus tight control . Loose control cultures are informal ones in which

employees and management tend to be laid back about the work, scheduling,

and even costs. Tightly controlled cultures emphasize formality, adherence to

standards, punctuality, and so on.

vi. Normative versus pragmatic . Finally, normative cultures are concerned with

doing things properly from an ethical or procedural perspective (similar to

process orientation above), while pragmatic cultures are more competitive,

market-driven, and results-oriented.

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2.5.4 STRONG VERSUS WEAK CULTURES

According to Thompson (2005) corporate cultures vary widely in the degree to which

they are embedded in company practices and behavioural norms. Strongly embedded

cultures go directly to a company’s heart and soul, while those with shallow roots

provide little in the way of a definable corporate character (Schein 1992).

Strong Culture Companies

According to Thompson (2005) a company’s culture can be strong and cohesive in the

sense that the company conducts its business according to a clear and explicit set of

principles and values, has managers who devote considerable time to communicating

these principles and values to the organization’s members and explaining how they

relate to its business environment and has values shared by senior executives and

rank-and-file employees alike. Strong cultures are intended to foster commitment,

dedication and devotion, enthusiasm, passion and even love in employees (Linstead

2009). Stoykov (1995) further notes that strong culture companies have a well-defined

corporate character, typically underpinned by a creed or values statement. Mis-matches

between strategy and culture in a strong culture company tend to occur when a

company’s business environment undergoes significant change, prompting a drastic

strategy revision that clashes with the entrenched culture (Cummings 2005).

Three factors contribute to the development of strong cultures (Thompson 2005).

i. A founder or other strong leader who establishes values, principles and practices

that are consistent and sensible in light of customer needs, competitive

conditions and strategic requirements.

ii. A sincere, long standing company commitment to operating the business

according to these established traditions, thereby creating an internal

environment that supports decision making and strategies based on cultural

norms.

57

iii. A genuine concern for the well-being of the organization’s three biggest

constituencies, that is, customers, employees and shareholders.

Weak Culture Companies

According to Donaldson (1998) weak-culture companies are fragmented in the sense

that no one set of values is consistently preached or widely shared, few behavioural

norms are evident in operating practices and few traditions are widely revered or

proudly nurtured by company personnel. Thompson (2005) further notes that because

top executives don’t repeatedly espouse any particular business philosophy or exhibit

long-standing commitment to particular values or extol particular operating practices

and behavioural norms, organization members at weak-culture companies typically lack

any deeply felt sense of corporate identity. As a consequence weak cultures provide

little or no strategy-implementing assistance because there are no traditions, beliefs,

values, common bonds, or behavioural norms that management can use as levers to

mobilize commitment to execute the chosen strategy (Thompson 2003).

2.5.5 Professional and Production Cultures

According to George (2001) there are professional and production cultures,

i. Professional cultures – organizations that invest in their employees develop a

professional culture, which reflect the desire to increase the value of human resources

to promote long term effectiveness.

ii. Production cultures – some organizations develop cultures with values that do

not include protecting and increasing the worth of their human resources as a major

goal. These organizations have a production culture and their employment practices are

based on short-term employment according to the needs of the organization and on

minimal investment in employees who perform simple, routine tasks.

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2.6 SUBCULTURES AND COUNTERCULTURES

2.6.1 Subcultures

According to Wood (2006) subcultures represent groups of individuals with a unique

pattern of values and philosophy that are not necessarily inconsistent with the

organization’s dominant values and philosophy. Bauman (2004) notes that strong

subcultures are often found in high performance task forces, teams and special project

groups in organizations. Another author Chan (2002) states that subculture formation

has also been linked to educational background, professional identity and distinctive

work paradigms.

The culture emerges to bind individuals working intensely together, organizational

values and assumptions are shared, but actions can be influenced differently by distinct

occupational tasks (Chatman 2003).

2.6.2 Countercultures

Brewis (2007) defines countercultures as the patterns of values and philosophies that

outwardly reject those of the larger organization or social system. According to Child

(2003) countercultures have a pattern of values and a philosophy that reject the

surrounding culture. Within an organization, mergers and acquisitions may produce

countercultures as employers and managers of an acquired organization may hold

values and assumptions that are quite inconsistent with those of the acquiring

organization (Wood 2006).

However, according to Cray (1997) not all mergers and acquisitions cause cultural

clashes. Cooke (2000) highlighted that understanding the importance of culture can

help a company to absorb or accommodate the cultures within the organizations that

are acquired or merged, or to manage the complex interplays in alliances, company

formations and employment relations. According to Hatch (2000) subculture formation

may be different according to where the organization is located, for example, in Japan,

subcultures may be formed on the basis of date of graduation from university. Hill

(2001) noted that in Europe, subcultures may exist on the basis of language and in

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North America on locational similarities. Hawkins (2001) states that other subculture

formation may be influenced by ethnicity, gender, generational differences,

socioeconomic status, place within the organization, political and religious beliefs,

among other issues.

2.7 ROLE OF CULTURE IN ORGANIZATIONS

According to Alvesson (2007) organizational culture is highly relevant for understanding

the things that characterize organizations, including financial and other forms of

performance. On the other hand, Blunt (1992) noted that there is a widespread

acceptance of the idea that national and organizational cultures have a major impact on

the structure and functioning of organizations, as well as on their performance and

problems.

According to Denison (1990) when considering corporate culture, it is helpful to consider

actual companies that have demonstrated the positive effects that a corporate culture

can have.

2.7.1 Wal-Mart

Wal-Mart’s founder, Sam Walton, showed concern and respect for his employees from

the company’s inception (Discount Store News, 1999). This created an environment of

trust that persists to this day. Walton also modeled the behavior that he desired from his

employees, especially customer service (both to internal and external customers), by

visiting his stores, meeting customers, and greeting employees by their first names.

Walton also embraced and encouraged change in order to remain competitive, and

developed employees by having them work in a variety of positions (Discount Store

News, 1999). Wal-Mart considers its culture the key to its success, and to this day

employees continue to think about “how Sam would have done it” when making

decisions.

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2.7.2 Southwest Airlines

According to Thompson (2003) another good example of a positive corporate culture is

Southwest Airlines. The company’s relaxed culture can be traced directly to its CEO and

co-founder Herb Kelleher. Kelleher encourages employees to be very informal and have

fun at their jobs. This is evident to anyone who has flown on Southwest and heard the

jokes that the stewardesses tell. Kelleher fosters this type of culture by engaging in

unusual acts, such as arriving at shareholder meetings on a motorcycle wearing jeans

and a t-shirt, or holding a 2 a.m. barbeque for the company’s mechanics who work the

night shift . He even challenged another company’s CEO to an arm-wrestle to settle a

dispute over the use of a slogan. Kelleher also strives to value Southwest’s employees,

acknowledging births, deaths, marriages, and other events in their lives by sending a

note or card. Employees are encouraged to pitch in where needed, a fact that is evident

in airports where pilots are often seen checking passengers, for example. This has

allowed Southwest to have a turnaround time at airport terminals that is less than half

the industry average. In order to maintain the culture, prospective employees are

carefully screened to make certain that they will fit in.

2.7.3 Hewlett Packard

According to Thomason (2001) Hewlett Packard is an example of a company that has

been successful in improving its culture. A few years ago, employees at the company’s

Great Lakes division had begun to feel the stress and pressure of their jobs. Attrition

rose to 20 per cent and over 50 per cent of employees surveyed reported feeling

“excessive pressure” on the job. This led the company to make some unusual changes

in order to improve the culture. Employees are now required to formulate three business

and three personal goals each year. Employees are encouraged to cheer on fellow

employees who achieve personal goals, such as spending time with their children or

getting away for a round of golf. Only two years into the program, the company reported

no loss in productivity despite the reduced hours employees now work and has seen an

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increase in its retention rate. This success is attributed to the fact that managers

strongly supported the program and modeled it in their own personal lives (Cole 1999).

2.7.4 Functions of Corporate Culture

Bloisi (2003) came up with five functions of corporate culture,

i. Culture complements rational managerial tools. Culture epitomizes the

expressive character of organizations; it is communicated less through objective

realism and more through symbolism.

ii. Culture supports strategic changes. Culture serves as a rudder to keep the firm’s

strategy on course. Corporate culture can make or break a strategy.

iii. Culture helps socialize new members. Socialisation is the process by which new

members are indoctrinated in the expectations of the organization and its cultural

norms, or unwritten codes of behaviour.

iv. Culture promotes expected behaviours. Although the expressive character of

organizational culture gives it the appearance of being a weak factor in managing

organizations, cultures work best when strong. Culture works best when people

forget why they are doing certain things, but keep on doing them.

v. Subcultures facilitate organizational diversity. Subcultures can serve to enhance

the dominant culture. They promote an independence from the dominant culture

and function as countercultures when they are at odds with it (Wood 2006).

2.8 TEN PARAMETERS OF GOOD CORPORATE CULTURE

According to Andrews (1998) listed below are the ten parameters of good corporate

culture:

1. Pride of the organization - Employees defend their company against unjustified

critique and they say that they like working for their company;

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2. Orientation towards (top) achievements - 'In our company, everybody tries to do a

better job' and 'our company is number one and that should stay so';

3. Teamwork and communication - Employees listen well and try to understand the

ideas/opinions of others and employees and managers really try to help each other;

4. Supervision and leadership -Managers are really interested in the problems of

others and it is customary to ask help when needed;

5. Profit orientation and cost awareness - All expenditures are evaluated if they are

effective or not and all members are strongly thinking about profit;

6. Employee relationships - Employees are not trying to better themselves from the

mistakes of other employees and new employees are accepted quickly;

7. Client and consumer relations - Everything is oriented towards a better service

8.Honesty and safety - Safety rules are strictly implemented

9. Education and development - Everybody supports education and training programs

and the company really tries to develop its employees

10. Innovation - Systems and procedures are constantly being pursued and new ideas

are always welcome.

2.9 IMPACT OF CULTURE ON CORPORATE PERFORMANCE

Peters and Waterman (1982) pointed out that without exception, the dominance and

coherence of culture proved to be an essential quality of the excellent companies. The

two authors also stated that the stronger the culture, the more it was directed towards

the market place, the less the need there was for policy manuals, organization charts or

detailed procedures and rules.

According to Alvesson (2007) there are four views on the relationship between

organizational culture on performance as follows:-

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i. Strong-culture thesis . A distinct organizational culture contributes to

performance through facilitating goal alignment. A common culture makes it

easier to agree upon goals as well as appropriate means for attaining them (Hill

2005).

ii. Reverse relationship . Alvesson (2007) noted that there is also a reverse

relationship between culture and performance. High performance leads to the

creation of a ‘strong’ corporate culture. Success brings about a common set of

orientations, beliefs and values.

iii. Prevailing Conditions . Under certain conditions a particular type of culture is

appropriate and contributes to efficiency. Wilkins (2001) considers culture as an

important regulatory mechanism in organizational settings too complex and

ambiguous to be controlled by traditional means (bureaucracy and the market).

iv. Adaptive Cultures . Shachaf (2005) stated that adaptive cultures are the key to

good performance. These are cultures that are able to respond to changes in the

environment. Such cultures are characterized by people willing to take risk, trust

each other, are proactive, work together to identify problems and opportunities.

According to Bloisi (2003) in adaptive cultures, there is a spirit of doing what is

necessary to ensure long term organizational success provided the behaviours

and operating practices that management is calling for are seen as legitimate

and consistent with the core values and business principles underpinning the

culture.

2.10 CULTURE CHANGE AND CULTURE MANAGEMENT

According to Rollinson (2002) culture change refers to modification of an existing culture

while culture management refers to maintaining or making slight modifications to fine-

tune an existing culture. Therefore influencing culture by management is done through

culture change or culture management. However other theorists like Ogbonna (1993)

highlighted that because culture is so deep-rooted, it is highly resistant to manipulation.

An even stronger position is taken by Morgan (2000) who argues that one of the main

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functions of a culture may well be to enable people to resist change. Indeed Ireland

(1992) argues that many attempts at cultural change are so badly conducted that they

result in degradation of the workforce and raise questions about the ethics of these

initiatives.

Almost all culture change models are derived from the four-step process suggested by

Schein (2005) which are summarized below,

i. Step 1: Analyse existing culture. This usually consists of an extensive survey of

organizational members to establish specific objectives for cultural change.

ii. Step 2: Experiencing the culture. Organizational members are given the

opportunity to examine the existing culture, identify its dysfunctions and

participate in identifying the culture that is required.

iii. Step 3: System Installation. This is where the actual process occurs, usually by

making use of group discussion workshops.

iv. Step 4: Ongoing Evaluation. Here the degree of actual change is assessed as

necessary; other methods are used to bring about or reinforce the desired

changes.

2.11 CRITICISM OF ORGANISATIONAL CULTURE

Some experts have expressed an amount of scepticism regarding the functionalist and

unitarist views of corporate culture put forward by mainstream management analysts.

According to Woodward (2003) it would be incredibly short sighted to accept the belief

that a single, unified culture must exist within all organisations, or that cultural change

will eventually reflect the interests of all parties within an organisation.

According to Wood (2006) the strongest and most widely accepted criticism of modern

theories of organisational culture, is that in effect, it is culture that drives the

organisation and not the organisation that drives the culture. According to Wilkins

(2001) a large company may benefit from proactively monitoring and changing its

organisational culture to maintain maximum health and growth. Every possible

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precaution should be taken to ensure that no lasting damage is caused to the

underlying culture that originally formed the basis of the company (Chatman 2003).

2.12 CORPORATE CULTURE AND STRATEGY

According to Weick (2001) culture as well as strategy guide expression and

interpretation in that they concern acts of judging, creating, justifying, affirming and

sanctioning. Culture and strategy are more or less synonymous (Simmons 2001). The

notion of a culture-strategy fit holds for a strategy to be successful in a strong culture, as

it must be formulated in accordance with the existing culture. A strategy, regardless of

its strengths, will not be successfully accepted, if it is outside the bounds of the culture

(Sadri 2001). On the other hand, if the culture is weak, it can easily adapt to any type of

strategy, with success in this case depending solely on the strength of the strategy.

2.12.1 Strategy Defined

Thompson (2005) define strategy as the competitive moves and business approaches

that managers employ to attract and please customers, compete successfully, grow the

business, conduct operations and achieve targeted objectives. On the other hand

Andrews (1998) defined strategy as a pattern of decisions in a company that determines

and reveals its objectives, purposes, goals, produces the principal policies and plans for

achieving those goals and defines the range of business the company is to pursue, the

kind of economic and human organization it is, or intends to be, and the nature of the

economic and non-economic contribution it intends to make to its shareholders,

employees, customers and communities.

According Cummings (1993) as cited by Macmillan (2000) strategy is knowing the

business you propose to carry out. This definition stresses that strategy requires

knowledge of the business, an intention for the future and an orientation towards action.

According to Mohan (1993) strategy is the direction and scope of an organization over

the long term, which achieves advantage for the organization through its configuration

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of resources within a changing environment and to fulfill stakeholder expectations.

Stoner (1992) defined strategies as being the principles that show how an

organization’s major objectives or goals are to be achieved over a defined time period.

According to Johnson (2007) strategy is also seen as building on or ‘stretching’ an

organization’s resources and competencies to create opportunities or to capitalize on

them. Corporate strategy can be described as an organization’s sense of purpose and

plans or actions needing to be developed to put the purpose into practice (Porter 1985).

According to the Financial Times (2000) business strategy is concerned with the match

between the internal capabilities of the company and its external environment.

An effective strategy is an integrated array of distinctive choices about which markets a

company serves, what unique value proposition it offers to the customers, and how it

arranges its functions to deliver that value (Deal 1982). An organization’s strategy

consists of the pattern of moves an approaches devised by management to produce

successful organizational performance (Thompson 1989).

2.12.2 Aspects of strategy

Macmillan (2000) came up with the following aspects of strategy:-

i. Strategy as a statement of ends, purpose and intent – The role of strategy is

to determine, clarify or refine purpose. This may require creating new visions of the

future to inspire the organization to greater efforts or wider scope.

ii. Strategy as a high level plan – strategy is also concerned with the means by

which intent or purpose will be achieved. The strategy will define such means in broad

and general terms.

iii. Strategy as the means of beating the competition – one aim of strategy is to

win and this means beating the enemy or the competition in a game which may be won

or lost. Strategies are therefore required to keep ahead of the competitors as a bunch.

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iv. Strategy as an element of leadership – strategy is one of the responsibilities of

leaders. Nobody can lead an enterprise if he or she does not agree with its strategy. If

the strategy needs to change, it may be necessary to appoint a new leader

v. Strategy as positioning for the future – strategy may be seen as preparation

for the uncertainty of the future. Some trends may be apparent but other changes may

occur which may contradict the general direction of the trend. One purpose of strategy

is therefore to position the enterprise for the future so as to be prepared for this

uncertainty.

vi. Strategy as building capability –certain capabilities may be seen as improving

the chances of future success so that strategy may relate to building these capabilities.

The capabilities of an enterprise may be exceptional or even unique. Strategic building

of capabilities can exploit this uniqueness.

vii. Strategy as fit between capabilities and opportunit ies – one aim of strategy is

to achieve survival and future success. Success results from a good match between the

capabilities of the enterprise and the opportunities to serve the needs of customers

better than competitors. One aspect of strategy is to improve the fit between capabilities

and the opportunities available and thereby to make the business more successful.

viii. Strategy as a pattern of behavior resulting from em bedded culture - every

enterprise has its own culture. The culture is easy to observe but hard to change. The

strategies that an enterprise is able to adopt are partly determined by this culture. Those

within the enterprise see the outside world through their own conditioned perspective

and this influences everything they do and permeates their strategy even though they

may be unaware of this.

2.13 STRATEGY IMPLEMENTATION

In order to achieve its objectives, an organization must not only formulate but also

implement its strategies effectively (Kotter 1992). According to Thompson (1989)

strategy implementation refers to acting on what has to be done internally to put the

chosen strategy into place and to actually achieve the targeted results. Strategy

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implementation is the process of allocating resources to support the chosen strategies

(Shellenbarger 2000). This process includes the various management activities that are

necessary to put strategy in motion, institute strategic controls that monitor progress,

and ultimately achieve organizational goals (Tvorik 1997). Therefore the implementation

process covers the entire managerial activities including such matters as motivation,

compensation, management appraisal, and control processes. As Andrews (2000)

pointed out, almost all the management functions, planning, controlling, organizing,

motivating, leading, directing, integrating, communicating, and innovation, are in some

degree applied in the implementation process.

Ansoff (1999) says that to effectively direct and control the use of the firm's resources,

mechanisms such as organizational structure, information systems, leadership styles,

assignment of key managers, budgeting, rewards, and control systems are essential

strategy implementation ingredients.

Strategy implementation is primarily an administrative task that involves figuring out

workable approaches to executing the strategy and then, during the course of the day-

to-day operations, getting people to accomplish their jobs in a strategy supportive and

results-achieving fashion (Woodcock 2003). The cornerstones of strategy

implementation are building an organization capable of carrying out the strategy

successfully, steering adequate resources into those internal activities critical to

strategic success, instituting a strategy-supportive set of policies and procedures,

creating a strategy-supportive working environment, tying the reward structure tightly to

achievement of target objectives, inducing people to redirect their energies and modify

their work habits to meet the needs of strategic change, and then personally leading the

implementation-execution of strategy as it applies to one’s own area of managerial

responsibility (Trist 1998).

Simply put the strategy-implementing function consists of seeing what it will take to

make the strategy work and then getting it done in a manner that produces the targeted

performance on schedule.

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Likert (2001) proposed a five-stage model of the strategy implementation process:

i. Determining how much the organization will have to change in order to

implement the strategy under consideration;

ii. Analyzing the formal and informal structures of the organization;

iii. Analyzing the "culture" of the organization;

iv. Selecting an appropriate approach to implementing the strategy;

v. Implementing the strategy and evaluating the results

According to Hofer (1997) there are six principal administrative tasks that shape a

manager's action agenda for implementing strategy. The specific components of each of

the six strategy-implementation tasks are as follows,

i. Building an organization capable of executing the s trategy . The organization

must have the structure necessary to turn the strategy into reality. Furthermore,

the firm's personnel must possess the skill needed to execute the strategy

successfully. Related to this is the need to assign the responsibility for

accomplishing key implementation tasks to the right individuals or groups.

ii. Establishing a strategy-supportive budget . If the firm is to accomplish

strategic objectives, top management must provide the people, equipment,

facilities, and other resources to carry out its part of the strategic plan.

iii. Installing internal administrative support systems . Internal systems are

policies and procedures to establish desired types of behavior, information

systems to provide strategy-critical information on a timely basis, and whatever

inventory, materials management, customer service, cost accounting, and other

administrative systems are needed to give the organization important strategy-

executing capability.

iv. Devising rewards and incentives that are tightly li nked to objectives and

strategy . People and departments of the firm must be influenced, through

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incentives, constraints, control, standards, and rewards, to accomplish the

strategy.

v. Shaping the corporate culture to fit the strategy . A strategy-supportive

corporate culture causes the organization to work hard (and intelligently) toward

the accomplishment of the strategy.

vi. Exercising strategic leadership . Strategic leadership consists of obtaining

commitment to the strategy and its accomplishment. It also involves the

constructive use of power and politics, and politics in building a consensus to

support the strategy (Blunt 1992).

2.13.1 Problems of Successful Strategy Implementati on

Problems of successful implementation center around how well or badly the existing

organization responds and how adequate it’s reporting proves to be (Korth 2000).

According to Child (2003) in practice there are four problem areas associated with the

successful implementation of strategies

i. The first problem is that, although strategies need to be developed around the

business units (SBUs), of the corporation, these units often do not correspond to

parts of the organization’s structure

ii. Traditional management reports are not sensitive enough to monitor the

implementation strategies, thus the strategic manager not fully aware of what is

happening.

iii. Implementing strategy involves change, which in turn involves uncertainty and

risk. Therefore, motivating managers to make changes is a key determinant.

iv. Management systems (such as compensation schemes, management

development, communications systems) are often in place as a result of past

strategies; they are rarely tuned or revised to meet the needs of new ones.

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Pugh (1998) adds additional factors that are also significant,

i. The failure to predict the time and problems which implementation will involve

ii. Other activities and commitments that distract attention and possibly cause

resources to be diverted

iii. That the bases upon which the strategies were formulated change, or were

forecast poorly and insufficient flexibility has been built in.

To counter these problems Hawkins (2001) suggests the following:

i. Allocating clear responsibility and accountability for the success of the overall

strategy project

ii. limiting the number of strategies pursued at any one time

iii. identifying actions to be taken to achieve the strategic objective, allocating

detailed responsibilities for actions - and getting agreement for them

iv. identifying key performance measures to be monitored throughout the life of the

strategy project, and creating an information system to record progress

2.14 IMPORTANCE OF CORPORATE STRATEGY

According to Lynch (2001) there are six important factors of strategy to an organization

as follows:-

i. Corporate strategy involves the whole organization – it covers all areas and

functions of the business. It borrows best practice from each part and combines

these, thus creating more than just the sum.

ii. Corporate strategy concerns itself with the survival of the business as a minimum

objective and the creation of value added as a maximum objective.

iii. Corporate strategy covers the range and depth of the organization’s activities.

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iv. Corporate strategy directs the changing and evolving relationship of the

organization with its environment

v. Corporate strategy is central to the development of distinctiveness

vi. Corporate strategy development is crucial to adding value, rather than sales,

profitability, market share, earnings per share or other indicators.

2.15 A CULTURAL APPROACH TO STRATEGY

Alvesson (2007) noted that culture and strategy are intertwined and a cultural

understanding of strategy is productive. Brown (2003) points at the following ways in

which culture directly affects or guides strategy formulation, that is, culture acts as a

perception filter, affects the interpretation of information, sets moral and ethical

standards, provides rules, norms and heuristics for action and influences how power

and authority are wielded in reaching decisions regarding what action to pursue.

Woodward (2003) further notes that the formulated strategy is a cultural artifact which

helps employees understand their role in the organization, is a focus for identification

and loyalty, encourages motivation, and provides a framework for ideas that enables

individuals to comprehend their environment and the place of their organization within it.

2.16 CREATING A FIT BEWEEN STRATEGY AND CULTURE

According to Thompson (1989) anything so fundamental as implementing and executing

the chosen strategic plan involves moving the whole organizational culture into

alignment with strategy. It is the strategy- maker’s responsibility to choose a strategy

that is compatible with the ‘sacred’ or unchangeable parts of the prevailing corporate

culture. According to Porter (2000) it is the strategy maker’s responsibility to select a

strategy compatible with the sacred or unchangeable parts of the organization’s

prevailing corporate culture. Thompson (1989) came up with five steps which enable the

creation of a fit between strategy and culture.

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i. Step 1 : is to diagnose which facets of the present culture are in line with strategy

and which are not.

ii. Step 2 : is to develop ways to make the needed changes in culture and to

recognize how long it will take for the new culture, once culture changing actions

are initiated, to take hold.

iii. Step 3 : is to use the available opportunities to make incremental changes that

improve the alignment of culture and strategy. Such opportunities crop up

regularly: new and vacant positions to be filled with people who are willing and

able to refashion the old ways of doing things; the appearance of a new problem

can pave the way for making a desirable policy change; those proposals of

subordinates which have positive culture impacts can be strongly supported;

individuals and sub-units that ‘get with program’ can be visibly rewarded and

singled out for praise; and the annual budgetary process can be used as a

vehicle to steer resources into activities and events that promote the desired

culture

iv. Step 4 : is to insist that subordinate managers take actions of their own to set an

example and to do things which will further instill organizational values and

reinforce culture.

v. Step 5 : is to proactively build and nurture the emotional commitment that

managers and employees have to the strategy, to produce a temperamental fit

between culture and the overall strategic plan.

2.16.1 How Culture Alignment Stimulates Strategy Ex ecution

According to Frost (1991) culture alignment can stimulate strategy in the following

ways:-

i. Through Goal Alignment

Goal alignment focuses on ‘what is done’ in the organization on a day-to-day basis. It

ensures that the task performed by each individual or group is focused on strategically

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important areas. Organizational culture aligns goals with structures, processes, and

employee interaction, for successful strategy execution and goal achievement (Robbins

1999).

ii. By Enhancing Productivity

When people in the organization act and interact in the same way, there is better mutual

understanding among employees and they can work in a more efficient manner.

According to a study by Kotter (1992) the organizations that aligned culture and strategy

yielded a three times higher Return-On-Investment than those with a non-aligned

culture and strategy.

iii. Mergers & Acquisitions

In this age of cut-throat competition, large corporations are hungry for mergers &

acquisitions. However the success of mergers and acquisitions solely depends on the

integration of cultural parameters in the acquisition plans (Hatch 2004).

According to McGuire (2003) misaligned organizational cultures mar the organization’s

growth engines and prevent strategies from being achieved to their full potential. The

strategic orientation of an organization is just another expression of its dominant cultural

values (Pullen 2005).

2.16.2 Promoting Culture-Strategy Fit

According to Schein (1991) management needs to promote a culture-strategy fit through

the following ways:-

i. Consistency

ii. Keep making small but valuable changes over time.

iii. Promote management groups and employees to come up with innovative ideas

and practices.

iv. Use effective communication practices to concentrate on what is important.

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According to Thomason (2001) there are nine activities that change the culture to

support strategy.

i. Sell the new strategic intent.

ii. Interpret the existing organizational culture.

iii. Develop group decision making skills.

iv. Introduce innovative mindsets that welcome change.

v. Develop skills and knowledge base.

vi. Encourage staff to feel secure.

vii. Develop means of helping staff deliver consistent performance.

viii. Enable accessibility to management during periods of change.

ix. Encourage thinking that focuses on the outside world.

2.17 BUSINESS STRATEGIES

According to Kotler (2005) a competitive advantage is an advantage over competitors

gained by offering consumers greater value, either by means of lower prices or by

providing greater benefits and service that justifies higher prices. Following on from his

work analysing the competitive forces in an industry, Michael Porter suggested four

"generic" business strategies that could be adopted in order to gain competitive

advantage. The four strategies relate to the extent to which the scope of business

activities are narrow versus broad and the extent to which a business seeks to

differentiate its products.

i. Low cost leadership strategy

A low cost leadership strategy is a pricing strategy in which a company offers a

relatively low price to stimulate demand and gain market share (Johnson 2004). With

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this strategy, the objective is to become the lowest-cost producer in the industry. Many

(perhaps all) market segments in the industry are supplied with the emphasis placed on

minimising costs (Plunkett (2001). If the achieved selling price can at least equal (or

near) the average for the market, then the lowest-cost producer will (in theory) enjoy the

best profits. According to Thompson (2005) this strategy is usually associated with

large-scale businesses offering "standard" products with relatively little differentiation

that are perfectly acceptable to the majority of customers. The major challenge with this

strategy is that a low-cost provider’s product offering must always contain enough

attributes to be attractive to prospective buyers, low price, by itself, is not always

appealing to buyers (Kotler 2005).

ii. Differentiation strategy

This strategy involves selecting one or more criteria used by buyers in a market and

then positioning the business uniquely to meet those criteria (Porter 2000). This strategy

is usually associated with charging a premium price for the product, often to reflect the

higher production costs and extra value-added features provided for the consumer.

Differentiation is about charging a premium price that more than covers the additional

production costs, and about giving customers clear reasons to prefer the product over

other, less differentiated products (Singh 2004).

Differentiated goods and services satisfy the needs of customers through a sustainable

competitive advantage (Robbins 1989). This allows companies to desensitize prices

and focus on value that generates a comparatively higher price and a better margin.

The benefits of differentiation require producers to segment markets in order to target

goods and services at specific segments, generating a higher than average price

(Simmons 2001). The major challenge with this strategy is that any diffentiating feature

that works well is a magnet for imitators (Thompson 2005).

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2.18 CONCLUSION

The concepts of corporate culture and strategy implementation have been widely

publicized in literature. This topic covered the major aspects contained in the research

topic. The next chapter deals with the research methodology.

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CHAPTER 3

RESEARCH METHODOLOGY

3.0 INTRODUCTION

In this chapter the researcher highlights the research framework used and the research

design.

The sampling techniques and procedures used during the study of Interfin Bank will also

be discussed. According to Babbie (1990) the research methodology is the general

approach the researcher takes in carrying out the research project; to some extent, this

approach dictates the particular tools the researcher selects. The researcher used a

combination of a qualitative and quantitative approach to assess the impact of corporate

culture in strategy implementation at Interfin Bank.

3.1 METHODOLOGICAL CONVICTIONS

Methodological convictions are beliefs concerning the nature of social sciences and

scientific research (Clark 1996). The methodical convictions that were applied to this

research are stated below.

3.1.1 Ontological Dimension

The ontological dimension refers to the discussions and disputes on the various ways in

which research domains can be defined and classified and defines the reality that is

being measured (Clark 1996). This research focused on the measurement of the culture

profile and strategy implementation of Interfin Bank.

3.1.2 Sociological Dimension

The sociological dimension emphasizes that scientists operate within a clearly defined

scientific community and that they are linked in research networks which form the basis

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for their further research. Within this dimension, research is classified as experimental,

scientific and exact (Levin 1994). This research focused on the quantitative analysis of

variables and made use of research networks through the analysis of various literature.

3.1.3 Epistemological Dimension

The epistemological dimension relates to the search for the truth (Fowler 1993). The

aim of research is thus to generate valid findings which are as close to the truth as

possible. This research sought to achieve this truth through a good research design.

3.1.4 Teleological Dimension

According to Caldwell (2006) the teleological dimension refers to the fact that social

science is goal driven. Research objectives can be classified as theoretical and

practical. Theoretical research is exploratory, descriptive and solves problems (Fowler

1993). The aim of this research was to analyse whether corporate culture has a bearing

on strategy implementation.

3.2 RESEARCH DESIGN AND APPROACH

Wengraf (2001) defined research design as the plan and structure of investigation so

conceived as to obtain answers to research questions. According to Bryman (2001) the

research design provides the overall structure for the procedures the researcher follows,

the data the researcher collects, and the data analyses the researcher conducts. In this

study the researcher used both primary and secondary data. The researcher also used

both qualitative and quantitative methods to collect data. The study aims to find out the

answer to an inquiry through numerical evidence, which is, quantitative research design.

Secondly the study aims to explain why a particular phenomenon exists, thereby using

qualitative research.

The researcher let the two complement each other since the study aims to find out what

the dominant human behavior at Interfin Bank is towards strategy implementation.

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In this study the researcher’s assumptions followed an objective approach on the

philosophy of science, which states that the business world is real. Interfin Bank is an

institution that exists and the researcher was able to undertake a study of the institution

through the use of interviews and questionnaires.

Therefore the research approach may be categorized into two types, that is, qualitative

and quantitative.

3.2.1 Qualitative Research

Qualitative Research generates non-numerical data (Coomber 1997). It focuses on

gathering of mainly verbal data rather than measurements. Gathered information is then

analyzed in an interpretative manner, subjective, impressionistic or even diagnostic

(Crawshaw 1990).

Advantages of Qualitative Research design

According to Nueman (2000), qualitative techniques are extremely useful when a

subject is too complex to be answered by a simple yes or no hypothesis. These types of

designs are much easier to plan and carry out. They are also useful when budgetary

decisions have to be taken into account (Hagan 2000).

The broader scope covered by these designs ensures that some useful data is always

generated, whereas an unproved hypothesis in a quantitative experiment can mean that

a lot of time has been wasted (Fowler (1993). Qualitative research methods are not as

dependent upon sample sizes as quantitative methods; a case study, for example, can

generate meaningful results with a small sample group (Converse 1986).

Disadvantages of Qualitative Research design

Whilst not as time or resource consuming as quantitative experiments, qualitative

methods still require a lot of careful thought and planning, to ensure that the results

obtained are as accurate as possible (Newbold 1995).

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Qualitative data cannot be mathematically analyzed in the same comprehensive way as

quantitative results, so can only give a guide to general trends (Senese 1997). It is a lot

more open to personal opinion and judgment, and so can only ever give observations

rather than results. According to Silverman (2004) any qualitative research design is

usually unique and cannot be exactly recreated, meaning that they do lack the ability to

be replicated.

3.2.2 Quantitative Research

Quantitative research generates numerical data or information that can be converted

into numbers (Voelker 1993). The question is always when to perform the quantitative

research design. According to Sudman (2001) quantitative research is all about

quantifying relationships between variables. Variables are things like weight,

performance, time, and treatment. You measure variables on a sample of subjects,

which can be tissues, cells, animals, or humans. You express the relationship between

variable using effect statistics, such as correlations, relative frequencies, or differences

between means.

Advantages of Quantitative Research

Quantitative research design is an excellent way of finalizing results and proving or

disproving a hypothesis. The structure has not changed for centuries, so it is standard

across many scientific fields and disciplines (Rossi 2002). After statistical analysis of the

results, a comprehensive answer is reached and the results can be legitimately

discussed and published (Rosenberg 1999). Quantitative experiments also filter out

external factors, if properly designed and so the results gained can be seen as real and

unbiased. Therefore quantitative experiments are useful for testing the results gained by

a series of qualitative experiments, leading to a final answer, and a narrowing down of

possible directions for follow up research to take (Hagan 2000).

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Disadvantages of Quantitative Research

Quantitative experiments can be difficult and expensive and require a lot of time to

perform. They must be carefully planned to ensure that there is complete randomization

and correct designation of control groups. According to Wegner (1993) quantitative

studies usually require extensive statistical analysis, which can be difficult, due to most

scientists not being statisticians. The field of statistical study is a whole scientific

discipline and can be difficult for non-mathematicians (Wright 2001).

In addition, the requirements for the successful statistical confirmation of results are

very stringent, with very few experiments comprehensively proving a hypothesis; there

is usually some ambiguity, which requires retesting and refinement to the design (Tufte

1993). This means another investment of time and resources must be committed to

fine-tune the results.

Quantitative research design also tends to generate only proved or unproven results,

with there being very little room for grey areas and uncertainty (Voelker 1993). For the

social sciences, education, anthropology and psychology, human nature is a lot more

complex than just a simple yes or no response.

3.2.3 Point-By-Point Comparison between the Two Typ es of Research

According to Clark (1996) the following are the point-by-point comparisons of qualitative

and quantitative research.

i. Goal or Aim of the Research -t he primary aim of a qualitative research is to

provide a complete, detailed description of the research topic. Quantitative

research on the other hand focuses more in counting and classifying features

and constructing statistical models and figures to explain what is observed

(Rowntree 2003).

ii. Usage - qualitative research is ideal for earlier phases of research projects while

for the latter part of the research project, quantitative research is highly

recommended (Wegner 1993). Quantitative research provides the researcher

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with a clearer picture of what to expect in his research compared to qualitative

research.

iii. Data Gathering Instrument – According to Babbie (1990) the researcher serves

as the primary data gathering instrument in qualitative research. Here, the

researcher employs various data-gathering strategies, depending upon the thrust

or approach of his research. Examples of data-gathering strategies used in

qualitative research are individual in-depth interviews, structures and non-

structured interviews, focus groups, narratives, content or documentary analysis,

participant observation and archival research. On the other hand, quantitative

research makes use of tools such as questionnaires, surveys and other

equipment to collect numerical or measurable data (Cooper 1998).

iv. Type of Data - the presentation of data in a qualitative research is in the form of

words (from interviews) and images (videos) or objects, such as artifacts (Clark

1996). If you are conducting a qualitative research what will most likely appear in

your discussion are figures in the form of graphs. However, if you are conducting

a quantitative research, what will most likely appear in your discussion are tables

containing data in the form of numbers and statistics (Gelman 2002).

v. Approach - qualitative research is primarily subjective in approach as it seeks to

understand human behavior and reasons that govern such behavior (Hagan

2000). Researchers have the tendency to become subjectively immersed in the

subject matter in this type of research method. In quantitative research,

researchers tend to remain objectively separated from the subject matter

(Kendall 2003). This is because quantitative research is objective in approach in

the sense that it only seeks precise measurements and analysis of target

concepts to answer his inquiry.

vi. Role of researcher - another major difference between qualitative and

quantitative research is the underlying assumptions about the role of the

researcher. According to Levin (1994), in quantitative research, the researcher is

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ideally an objective observer that neither participates in nor influences what is

being studied. In qualitative research, however, it is thought that the researcher

can learn the most about a situation by participating and/or being immersed in it

(Mann 2000).

Although there are clear differences between qualitative and quantitative approaches,

some researchers maintain that the choice between using qualitative or quantitative

approaches actually has less to do with methodologies than it does with positioning

oneself within a particular discipline or research tradition (Miles 1994). The choice of

which approach to use may reflect the interests of those conducting or benefitting from

the research and the purposes for which the findings will be applied. Decisions about

which kind of research method to use may also be based on the researcher's own

experience and preference, the population being researched, the proposed audience for

findings, time, money, and other resources available (Crawshaw 1990).

3.3 POPULATION AND SAMPLING

Kendall (2001) described a target population as a group of people from which a sample

is to be chosen. The population includes all objects of interest. According to Gelman

(2002) a population is a group of individual persons, objects, or items from which

samples are taken for measurement, for example, a population of presidents or

professors, books or students.

Sampling is an exercise where we pick some elements from a finite population using an

appropriate method such that the sample elements are representative of the population

characteristics (Reinard 2006). Sampling is that part of statistical practice concerned

with the selection of individual observations intended to yield some knowledge about a

population of concern, especially for the purposes of statistical inference (Wegner

1993). Each observation measures one or more properties of an observable entity

enumerated to distinguish objects or individuals. Survey weights often need to be

applied to the data to adjust for the sample design. Results from probability theory and

statistical theory are employed to guide practice. Another author Moore (1999) defined a

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sample as a finite part of a statistical population whose properties are studied to gain

information about the whole. When dealing with people, it can be defined as a set of

respondents (people) selected from a larger population for the purpose of a survey

(Rowntree 2003). The main objective in sampling is not to make statements about the

sample but rather to draw conclusions about the population behavior (Nachmias 2001).

3.3.1 Stages in the Sampling Process

According to Caldwell (2006) the sampling process comprises several stages,

i. Defining the population of concern.

ii. Specifying a sampling frame, a set of items or events possible to measure.

iii. Specifying a sampling method for selecting items or events from the frame.

iv. Determining the sample size.

v. Implementing the sampling plan.

vi. Sampling and data collecting.

vii. Reviewing the sampling Sample design. According to Tufte (1993) the term

sample design refers to the scheme used to select elements of the population

for the sample. In order to ensure that inferences about the population made

using the sample are valid, the sample should be representative of the

population with respect to the characteristics of interest. More precisely, the

probabilistic structure of the sample should depend on the population parameter

of interest in a known way (Pedler 1996).

3.3.2 Advantages of sampling

i. Cost – a sample can provide reliable and useful information at a much lower

cost.

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ii. Timeliness – a sample of smaller size makes it possible to collect the sample

data more quickly than the census data. Faster collection, presentation and

analysis make for more timely decision-making.

iii. Accuracy – a sample can often provide information that is even more accurate

than a complete census because the errors can be controlled more effectively.

iv. Infinite populations – a sample is necessary when it becomes impossible to

study all elements of the population, for example, a biological study of

mosquitoes.

3.4 SOURCES OF ERRORS IN SURVEYS

According to Silverman (2004) there are two major groupings of the source of data

errors.

i. Sampling errors – these arise due to the fact that a sample cannot capture the

desired information in a population. Sampling error comprises the difference

between the sample and the population that is caused by certain units that

happen to be selected. According to Senese (1997) there are two basic types for

the sampling error. The first one is chance, that is, the error that occurs due to

bad luck and this may result in untypical choices. Secondly sampling error is

caused by sampling bias, which is the tendency to favour the selection of units

that have particular characteristics.

ii. Sampling bias is usually the result of a poor sampling plan (Wengraf 2001). The

most notable is the bias of non-response when for some reason some units have

no chance of appearing in the sample. Bias can be very costly and has to be

guarded against as much as possible. An example of sample bias would be

where you would like to know the average income of some community and you

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decide to use the telephone numbers to select a sample of the total population in

a locality where only the rich and middle class households have telephone lines.

You will end up with high average income which will lead to the wrong policy

decisions.

iii. Non-Sampling errors - these have nothing to do with the sampling design.

These may be caused by non-response errors when elements objectively picked

to come into the sample fail to respond, this introduces bias in the data,

particularly as elements with a special interest could be the ones responding

(Wright 2001). Like sampling error, non-sampling error may either be produced

by participants in the statistical study or be an innocent by product of the

sampling plans and procedures (Clark 1996). Therefore a non-sampling error is

an error that results solely from the manner in which the observations are made.

3.5 TYPES OF SAMPLING

i. Non-Probability Sampling - In this type of population sampling, members of the

population do not have equal chance of being selected (Sudman 2001). Due to

this, it is not safe to assume that the sample fully represents the target

population. It is also possible that the researcher deliberately chose the

individuals that will participate in the study. Non-probability population sampling

method is useful for pilot studies, case studies, qualitative research, and for

hypothesis development (Silverman (2004). This sampling method is usually

employed in studies that are not interested in the parameters of the entire

population. Some researchers prefer this sampling technique because it is

cheap, quick and easy.

ii. Probability Sampling - In probability sampling, every individual in the population

have equal chance of being selected as a subject for the research (Wegner

1993). This method guarantees that the selection process is completely

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randomized and without bias. The most basic example of probability sampling is

listing all the names of the individuals in the population in separate pieces of

paper, and then drawing a number of papers one by one from the complete

collection of names. According to Levin (1994) the advantage of using probability

sampling is the accuracy of the statistical methods after the experiment. It can

also be used to estimate the population parameters since it is representative of

the entire population. It is also a reliable method to eliminate sampling bias.

iii. Cluster sampling- can be used whenever the population is homogeneous but

can be partitioned (Converse 1986). In many applications the partitioning is a

result of physical distance. For instance, in the banking industry, there are small

"clusters" of employees in branches scattered about the country. In such a case,

a random sampling of employee work habits might not require travel to many of

the "clusters" or field offices in order to get the data. Totally sampling each one of

a small number of clusters chosen at random can eliminate much of the cost

associated with the data requirements of management. Sometimes it is cheaper

to 'cluster' the sample in some way, for example, by selecting respondents from

certain areas only, or certain time-periods only. Nearly all samples are in some

sense 'clustered' in time - although this is rarely taken into account in the

analysis. Cluster sampling is an example of 'two-stage sampling' or 'multistage

sampling': in the first stage a sample of areas is chosen; in the second stage a

sample of respondent within those areas is selected (Coomber 1997).

iv. Stratified Random Sampling - can be used whenever the population can be

partitioned into smaller sub-populations, each of which is homogeneous

according to the particular characteristic of interest (Wright 2001). Therefore a

stratified random sample is obtained by separating the population elements into

non-overlapping groups of similar characteristics called strata and then selecting

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a simple random sample from each stratum (Andersen 2000). A stratified sample

is obtained by taking samples from each stratum or sub group of a population.

Stratification is critical because we are dealing with a highly heterogeneous

population which a simple random sample may fail to capture the population

characteristics. Where the population embraces a number of distinct categories,

the frame can be organized by these categories into separate "strata." A sample

is then selected from each "stratum" separately, producing a stratified sample.

The two main reasons for using a stratified sampling design are firstly to ensure

that particular groups within a population are adequately represented in the

sample, and secondly to improve efficiency by gaining greater control on the

composition of the sample (Render 2001). In the second case, major gains in

efficiency (either lower sample sizes/survey cost or higher precision) can be

achieved by varying the sampling fraction from stratum to stratum. The sample

size is usually proportional to the relative size of the strata. However, if variances

differ significantly across strata, sample sizes should be made proportional to the

stratum standard deviation (Black 2004). According to Downing (2000)

disproportionate stratification can provide better precision than proportionate

stratification.

Stratification also allows different sampling techniques to be used for different

subpopulations (McGrave 2000). This may be desirable due to differences in

frame data for example, units with missing data might be treated as a separate

stratum, or operational considerations for example, a survey may employ

clustering in areas where travel is expensive, but reduce clustering where

interviewing expenses outweigh travel.

v. Simple Random sampling - is probably the most popular sampling method used

in decision making today. Many decisions are made, for instance, by choosing a

number out of a hat or a numbered bead from a barrel, and both of these

methods are attempts to achieve a random choice from a set of items. If a

sample of size ‘n’ is drawn from a population of size ‘N’, in such a way that every

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possible sample of size ‘n’ has the same chance of being included in the sample

under selection, then we are dealing with simple random sampling. Each

individual is chosen entirely by chance and each member of the population has

an equal chance of being included in the sample. But true random sampling must

be achieved with the aid of a computer or a random number table whose values

are generated by computer random number generators (Groebner 2005).

vi. Cross-Sectional Sampling - Cross-Sectional sampling study the observation of

a defined population at a single point in time or time interval. Exposure and

outcome are determined simultaneously (Thomas (1997).

vii. Quota sampling - is a method of sampling widely used in opinion polling and

market research (Wisniewski 1996). Interviewers are each given a quota of

subjects of specified type to attempt to recruit for example, an interviewer might

be told to go out and select twenty adult men and twenty adult women, ten

teenage girls and ten teenage boys so that they could interview them about their

television viewing. Quota sampling is a non-probability sampling technique

wherein the assembled sample has the same proportions of individuals as the

entire population with respect to known characteristics, traits or focused

phenomenon.

viii. Systematic sampling – with systematic sampling elements are selected from

the population at a uniform interval that is measured in time, order or space

(Waller 2008). This technique is faster and covers the whole population. It is

meant to improve the tedious process of getting a large random sample from a

very large population. It secures a spread of the sample across the entire

population, whereas simple random sampling could pick up elements from round

the same section of the population (Kazmier 2009). According to Baker (2001) it

can be biased if the first random elements selected coincide with some cycles in

the data.

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ix. Convenience sampling is a non-probability sampling technique where subjects

are selected because of their convenient accessibility and proximity to the

researcher (Kemp 2004). The subjects are selected just because they are

easiest to recruit for the study and the researcher did not consider selecting

subjects that are representative of the entire population. The most obvious

criticism about convenience sampling is sampling bias and that the sample is not

representative of the entire population (Anderson 2000). This may be the biggest

disadvantage when using a convenience sample because it leads to more

problems and criticisms.

x. Snowball sampling - Snowball sampling is a non-probability sampling technique

that is used by researchers to identify potential subjects in studies where

subjects are hard to locate (Fleming 1996). Researchers use this sampling

method if the sample for the study is very rare or is limited to a very small

subgroup of the population. This type of sampling technique works like chain

referral (Targett 1995). After observing the initial subject, the researcher asks for

assistance from the subject to help identify people with a similar trait of interest.

The process of snowball sampling is much like asking your subjects to nominate

another person with the same trait as your next subject. The researcher then

observes the nominated subjects and continues in the same way until the

obtaining sufficient number of subjects.

Disadvantages of Snowball Sampling

• The researcher has little control over the sampling method. The subjects that the

researcher can obtain rely mainly on the previous subjects that were observed.

• Representativeness of the sample is not guaranteed. The researcher has no idea

of the true distribution of the population and of the sample.

• Sampling bias is also a fear of researchers when using this sampling technique.

Initial subjects tend to nominate people that they know well. Because of this, it is

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highly possible that the subjects share the same traits and characteristics, thus, it

is possible that the sample that the researcher will obtain is only a small

subgroup of the entire population.

The population of this study included all 105 Interfin Bank employees who are graded

as being managerial employees, that is, excluding clerical and non-clerical employees.

According to Stoker (1985) as cited by Kazmier (2009) the expected sample size from

the 105 Interfin Bank employees is 45 participants. A list of managerial staff members

was obtained by the researcher from the bank’s Human Resources department. Interfin

Bank has a total of 208 employees of which 105 are graded as managers. From the 105

employees the researcher separated these into four categories depending on the level

of management. These categories are executives, senior management, managers and

supervisors. Therefore each category became a stratum. From each stratum simple

random sampling was then used to come up with a representative sample. Therefore

the researcher applied stratified random sampling in this study.

The reason for selecting stratified random sampling was that all levels of management

had to be fairly represented and their opinions sought on the analysis of the impact of

corporate culture on strategy implementation at Interfin Bank.

Table 3.1 Samples Chosen

Type

Total Number of possible

Respondents (N) Sample selected (n)

Executives 8 4

Senior Management 13 6

Managers 30 13

Supervisors 54 22

Total 105 45

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3.6 NATURE OF THE INVESTIGATION

The study focused on an analysis of establishing whether corporate culture supports

strategy execution at Interfin Bank. The study is essentially a case study that entailed

the use of descriptive survey and qualitative research. Therefore the researcher used

both the questionnaire and the interview method on the selected sample at Interfin

Bank.

3.7 SURVEYS

According to Silverman (2004) survey research entails studying large and small

population by selecting and studying samples chosen from the population to discover

the relative incidence, distribution and interrelations of sociological and psychological

variables. A sample survey is a study that obtains data from a subset of a population, in

order to estimate population attributes (Downing 2000).

3.7.1 Advantages of Survey Research

i. Sample surveys are a cost-effective and efficient means of gathering information

about a population.

ii. Survey sampling makes it possible to accurately estimate the characteristics of a

target population without interviewing all members of the population.

iii. Survey sampling is particularly useful when the population of interest is very

large or dispersed across a large geographic area.

3.7.2 Disadvantages of Survey Research

i. Surveys do not allow researchers to develop an intimate understanding of

individual circumstances or the local culture that may be the root cause of

respondent behavior.

ii. Respondents often will not share sensitive information in the survey format.

iii. A growing problem in survey research is the widespread decline in response

rates.

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3.8 CASE STUDY

Voelker (1993) states that the case study is a method that usually combines both

quantitative and qualitative data through participant observation, interviews and

questionnaires. A case study is a detailed account of a company, industry, person, or

project over a given amount of time. The content within a case study may include

information about company objectives, strategies, challenges, results,

recommendations, among others.

According to Neuman (2000) the advantages of using a case study include the capacity

to explore processes as they unfold in organizations; understanding processes in their

organizational context and exploring behavior that is little understood.

Interviews were conducted on senior management who guide the organization on a day

to day basis. Their input was required since the questions they were asked where

deliberately omitted from the questionnaire by the researcher. The lower level staff

members of Interfin Bank were not expected to effectively answer the questions by the

researcher. The main interview question was on the key features of Interfin bank’s

culture.

Another author Gelman (2002) noted that a case study is an ideal methodology when a

holistic, in-depth investigation is needed. Case studies are designed to bring out the

details from the viewpoint of the participants by using multiple sources of data.

Basically, a case study is an in depth study of a particular situation rather than a

sweeping statistical survey (Render 2001). It is a method used to narrow down a very

broad field of research into one easily researchable topic. Whilst it will not answer a

question completely, it will give some indications and allow further elaboration and

hypothesis creation on a subject (Black 2004).

The case study research design is also useful for testing whether scientific theories and

models actually work in the real world (Rosenberg 1999).

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3.9 THE INTERVIEW METHOD

Nachmias (2001) described this technique as a face-to-face questionnaire and further

reiterated that it is a two-way conversation initiated by an interviewer to obtain

information from a respondent. Although the collection of data could be done using

various methods, the researcher decided that the interviews and questionnaire are more

appropriate for this type of study. Interviews are among the most challenging and

rewarding forms of measurement. They require a personal sensitivity and adaptability

as well as the ability to stay within the bounds of the designed protocol (Sudman 2001).

Interviews are a far more personal form of research than questionnaires (Fleming

1996). In the personal interview, the interviewer works directly with the respondent.

Unlike with mail surveys, the interviewer has the opportunity to probe or ask follow-up

questions. Interviews are generally easier for the respondent, especially if what is

sought is opinions or impressions. However interviews can be very time consuming and

they are resource intensive. The interviewer is considered a part of the measurement

instrument and interviewers have to be well trained in how to respond to any

contingency.

The researcher being the interviewer and the senior Interfin Bank management being

respondents, the researcher undertook face-to face interviews with the interviewees

from the bank’s divisions. The interview technique was used because of the following

reasons:

i. The data secured will be very detailed.

ii. Non-verbal behaviour is observed.

iii. The interviewer clarified doubts and ensured that the responses were being

properly understood by repeating or rephrasing the questions.

iv. Questions regarded as sensitive were sandwiched between other questions.

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However, the interview technique had its own drawbacks, like, there could have been

interview bias with the senior executives at Interfin Bank giving the researcher answers

that just suit the interview. Interviews were also time-consuming, in setting up,

interviewing, transcribing, analyzing, feedback and reporting. Some of the executives’

personal assistants took time to set up the appointments. However these drawbacks

were overpowered by the advantages. The researcher overcame these weaknesses by

backing the interviews with the questionnaire technique since this improves validity and

reliability of the data to be collected.

The researcher will look at the various interview methods,

3.9.1 Personal Interviewing

This is a direct or face to face interview that the researcher used. The advantages are

that people will usually respond when confronted in person. Secondly the interviewer

can note specific reactions and then eliminate misunderstandings about the questions

asked. The interviewer can collect non-verbal data, simultaneously has more control of

the situation and the interviewer can also probe some more issues. Generally personal

interviewing is considered to be more flexible. The disadvantages include the fact that it

is a costly method in terms of money as interviewers travel to and from and it is time

consuming. Interviewer bias is common.

3.9.2 Telephone Interviews

The respondent remains anonymous and hence can feel more comfortable giving more

sensitive information. The sample can be more dispersed and hence more

representative. The disadvantage is that the interviewer has no power to continue the

interview, such that generally a telephone questionnaire must be short, that is, limited to

short and simple questions. Another disadvantage with telephone interviews has to do

with telephone sampling frame which may not contain the telephone population listing,

as the telephone directory has many numbers that correspond to the given units and

many units have no telephone numbers listed or have no telephones at all. The

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researcher did not use telephone interviews since all the senior management

interviewed are based at Interfin Bank’s Harare head office.

Therefore the interview method was used a way of finding out the general perception of

senior managers about the elements of Interfin Bank’s culture.

3.10 THE QUESTIONNAIRE INSTRUMENT

The researcher used a questionnaire. This is a preformatted written set of questions to

which respondents record their answers, usually within rather closely defined

alternatives (Wegner 1993). A questionnaire is relevant if no unnecessary information

is collected and the information needed to solve the problem is obtained (Sudman

2001).

To avoid asking wrong and irrelevant questions, a pilot questionnaire was sent out to

ten managers at Interfin Bank, randomly selected from the bank’s five divisions. Several

questions were asked about instructional clarity, item clarity, relevance and the time

needed to complete the questionnaire in an attempt to establish the reliability of the

measures effectively. Additions and corrections suggested on the questions in the

questionnaire were made thereafter. The questionnaire was administered through the

bank’s internal e-mail to the selected participants. Generally the questions in the

questionnaire were clear, simple, understandable and unbiased. After sending the

questionnaire through e-mail, the researcher made appointments for face to face

interviews with some of the respondents.

A questionnaire is therefore an efficient data-collection mechanism when the researcher

knows exactly what is required and how to measure the variables of interest (Newbold

1995). A self-administered questionnaire was used and it made the researcher enjoy

the most cost-effective method for securing feedback on the impacts of corporate

culture on strategy implementation at Interfin Bank. The researcher used both open-

ended and closed questions to gather data.

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3.10.1 Open-ended questions versus Close-ended Ques tions

Open-ended questions are those questions that allow the respondent to answer them in

any way they choose and closed questions are those questions that ask the respondent

to make choices among a set of alternatives given by the researcher (Wright 2001).

This technique enabled the researcher to enjoy the following advantages:

i. Respondents fill in the questions at their own pace and convenience.

ii. Anonymity of respondents is retained resulting in answers that are more reliable

iii. Questionnaire eliminates interview bias, because the questions are

predetermined and manageable.

iv. The responses are gathered in a standardised way, so questionnaires become

more objective than interviews.

v. Generally it is relatively quick to collect information using a questionnaire.

vi. Potential information is collected from a large portion of a group.

vii. Because of the size of the population the questionnaire allows comparability

when different people from different divisions answer similar questions from the

same questionnaire.

However the questionnaire has its own disadvantages such as:

i. The response rate may be low resulting in delays in the compilation and analysis

of the data gathered.

ii. Delays in the distribution of questionnaires

iii. Questionnaires, like many evaluation methods occur after the event, so

participants may forget important issues.

iv. Questionnaires are standardised so it is not possible to explain any points in the

questions that participants might misinterpret. This however was solved by

piloting the questions on a small group of Interfin Bank employees.

v. Open-ended questions can generate large amounts of data that can take a long

time to process and analyse. However to overcome this researcher limited open-

ended questions to just one such question on the questionnaire.

99

vi. Respondents may answer superficially especially if the questionnaire takes a

long time to complete. However to overcome this structured questions were used

by the researcher.

vii. The interviewees might not be willing to answer the questions. They might not

wish to reveal the information or they might think that they will not benefit from

responding perhaps even be penalised by giving their real opinion. However to

overcome this, the interviewer fully explained to the respondents why the

information was being collected and how the results will be beneficial to the

interviewee. The respondents were asked to reply honestly and were informed

that if their response is negative this was just as useful as a more positive

opinion. Respondents were also informed that the questionnaires were also

anonymous.

3.11 MEASUREMENT SCALE FOR THE QUESTIONNAIRE

The 5 -point Likert scale was chosen because this research is mainly about assessing a

practice and expressing an opinion. The five point Likert scale was also chosen since

research has shown that increasing the scales beyond five does not result in any

improvements in the quality of data (McGrave 1997). The scale was as follows:-

1 : Strongly disagree

2 : Disagree

3 : Not sure

4 : Agree

5 : Strongly agree

3.12 REPORT ON COLLECTION OF DATA

The questionnaires were all sent by internal e-mail to the recipients. The respondents

were asked to complete the questionnaires and e-mail them back to the researcher

100

using the institution’s internal e-mail. In order to push for responses, the researcher set

reminders on all the recipients’ e-mail inboxes which would alert the recipient about the

need to send back the completed questionnaire to the researcher. This alert system

was installed with the assistance of Interfin Bank’s information technology department

experts. The alert message was set to pop out after every forty eight hours from date of

receipt of the questionnaire and it would go away as soon as the questionnaire was e-

mailed back to the researcher. In this study a response rate of 80% was achieved.

Interviews were done by the researcher to senior management at Interfin Bank after

liaising with the senior management’s personal assistants. The interviews were very

fruitful since senior management cooperated well with the researcher.

3.13 DATA ANALYSIS TECHNIQUES

Data analysis is an integral part of any research process and without an appropriate

analytical procedure it is not possible to come up with meaningful findings. For this

study the researcher used tables and graphical presentations in order to calculate

percentages of categorized data. Frequencies were converted to percentages for

comparison purposes. The use of figures makes analysis of data clearer.

3.14 LIMITATIONS OF THE STUDY

The major limitation was the hesitation by staff members to complete the

questionnaires. Due to the merger of CFX Bank and Interfin Merchant Bank, the

respondents had some hesitation about the study and the researcher had to explain in

detail the objectives of the study. This was uncertainty emanating from the respondents.

3.15 CONCLUSION

This chapter looked at the methodology adopted by the researcher during the study.

The following chapter looks at the research findings and analysis of the data.

101

CHAPTER 4

4.0 RESEARCH FINDINGS AND ANALYSIS

4.1 INTRODUCTION

This chapter details the research findings and the analysis. The analysis of the findings

will be made in reference to literature on corporate culture and business strategy. The

analysis will be based on the objectives of this study and will focus on the following

broad areas,

i. Culture features of Interfin bank.

ii. Culture change at Interfin Bank.

iii. Strategic options at Interfin Bank.

iv. Competitive advantage of Interfin Bank.

4.2 RESPONSE RATE

The questionnaires were sent to the selected sample comprising executive

management, senior management, heads of department, managers and supervisors.

The researcher sent the questionnaires to the recipients through the bank’s internal e-

mail. The statistics of the responses from the different managerial categories were as

shown below in table 4.1.

102

Table 4.1 Summary of responses received

Type Questionnaires sent

out

Questionnaires

received

Response rate (%)

Executives 4 4 100

Senior management 6 6 100

Managers 13 8 62

Supervisors 22 18 82

Total 45 36 80

The response rate was very high at 80%. All the executives and senior management

had a 100% response rate which was encouraging. This was attributable to the

understanding by the senior management of the importance of the study considering the

merger that took place between CFX Bank and Interfin Merchant Bank in the year 2010.

The 80% response rate allowed for a fair assessment of the issues under study at

Interfin Bank. The high response rate is also attributable to the way the questionnaire

was structured. All questions except one were close-ended questions which enabled

respondents to answer the questions in the shortest possible time. The close-ended

questions also made the research work lighter for the researcher. According to Babbie

(2000) the major advantage with close-ended questions is that the researcher avoids

gathering irrelevant information.

There was also a fair representation of the respondents as the entire bank’s divisions

were covered as shown in figure 4.1 below,

103

Figure 4.1: The percentage response rate per divisi on

Figure 4.1 shows that the responses were fairly spread out which gives credit to he type

of responses received. There was no concentration in one or two single divisions of the

bank. This was because of the stratified random sampling technique used by the

researcher. According to Hagan (2000) stratification is critical because when dealing

with a highly heterogeneous population a small simple random sample may fail to

capture the population characteristics very well.

The sample consisted of staff members who used to work for Interfin Merchant Bank

and those who were with CFX Bank Limited. Figure 4.2 below shows the spread of the

responses from these two groups of staff members.

10%

17%

9%10%

3%

20%

7%

10%

7% 7%

0%

5%

10%

15%

20%

25%

Figure 4.2: Responses based on former employer

The proportions shown in figure 4.2 show that 63% of respondents were former Interfin

Merchant Bank employees while 33% were former CFX Bank staff members.

Considering the fact that Interfin Merchant bank took over CFX Bank and most of the

current staff members are from Interfin Bank, the responses give a fair representation of

staff members’ backgrounds. However the fact that there were more responses from

former Interfin Merchant Bank employees, according to Levin (2000) this may be

construed to mean a non-sa

objectively picked to come into the sample fail to respond and this introduces some bias

in the data.

4.3 CORPORATE CULTURE

In analyzing the corporate culture at Interfin Bank the following areas wer

i. Features of Interfin Bank’s culture

ii. The subcultures at Interfin Bank

iii. Importance of culture

iv. Changing the culture at Interfin Bank

37%

104

Responses based on former employer

proportions shown in figure 4.2 show that 63% of respondents were former Interfin

Merchant Bank employees while 33% were former CFX Bank staff members.

Considering the fact that Interfin Merchant bank took over CFX Bank and most of the

s are from Interfin Bank, the responses give a fair representation of

staff members’ backgrounds. However the fact that there were more responses from

former Interfin Merchant Bank employees, according to Levin (2000) this may be

sampling error caused by non-response errors when elements

objectively picked to come into the sample fail to respond and this introduces some bias

4.3 CORPORATE CULTURE

In analyzing the corporate culture at Interfin Bank the following areas wer

Features of Interfin Bank’s culture

The subcultures at Interfin Bank

Importance of culture

Changing the culture at Interfin Bank

63%

Interfin Merchant Bank

CFX Bank Ltd

proportions shown in figure 4.2 show that 63% of respondents were former Interfin

Merchant Bank employees while 33% were former CFX Bank staff members.

Considering the fact that Interfin Merchant bank took over CFX Bank and most of the

s are from Interfin Bank, the responses give a fair representation of

staff members’ backgrounds. However the fact that there were more responses from

former Interfin Merchant Bank employees, according to Levin (2000) this may be

response errors when elements

objectively picked to come into the sample fail to respond and this introduces some bias

In analyzing the corporate culture at Interfin Bank the following areas were examined,

4.3.1 KEY FEATURES OF INTERFIN BANK’S CULTURE

Figure 4.3: Responses on views on Interfin Bank’s k ey cultural feat

From the evidence shown

30% strongly disagreed with the notion that the bank espoused shared values,

processes, routines, interests and beliefs. Only 1% strongly agreed while 23% agreed

and just 3% were not sure. The results showed that a total of 73% of the respondents

disagreed with this notion. The 1% of respondents that strongly agreed came from the

bank’s senior executives. According to Thompson (2005) the taproot of corporate

culture is the organization’s beliefs and philosophy about how its affairs ought to be

conducted. However the views of the respondents show that the values, beliefs and

practices that undergird Interfin Bank’s culture have not yet effectively come from the

bank’s hierarchy. According to Cartwright (2001) key elements of a company’s culture

often originate with a founder or other strong leader who articulated them as a set of

business principles or company policies.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Strongly

Disagree

Disagree

30%

43%

105

4.3.1 KEY FEATURES OF INTERFIN BANK’S CULTURE

Figure 4.3: Responses on views on Interfin Bank’s k ey cultural feat

From the evidence shown in Figure 4.3 above, 43% of the respondents disagreed and

30% strongly disagreed with the notion that the bank espoused shared values,

processes, routines, interests and beliefs. Only 1% strongly agreed while 23% agreed

t 3% were not sure. The results showed that a total of 73% of the respondents

disagreed with this notion. The 1% of respondents that strongly agreed came from the

bank’s senior executives. According to Thompson (2005) the taproot of corporate

e organization’s beliefs and philosophy about how its affairs ought to be

conducted. However the views of the respondents show that the values, beliefs and

practices that undergird Interfin Bank’s culture have not yet effectively come from the

rchy. According to Cartwright (2001) key elements of a company’s culture

often originate with a founder or other strong leader who articulated them as a set of

business principles or company policies.

Disagree Not Sure Agree Strongly

Agree

43%

3%

23%

1%

Figure 4.3: Responses on views on Interfin Bank’s k ey cultural feat ures

43% of the respondents disagreed and

30% strongly disagreed with the notion that the bank espoused shared values,

processes, routines, interests and beliefs. Only 1% strongly agreed while 23% agreed

t 3% were not sure. The results showed that a total of 73% of the respondents

disagreed with this notion. The 1% of respondents that strongly agreed came from the

bank’s senior executives. According to Thompson (2005) the taproot of corporate

e organization’s beliefs and philosophy about how its affairs ought to be

conducted. However the views of the respondents show that the values, beliefs and

practices that undergird Interfin Bank’s culture have not yet effectively come from the

rchy. According to Cartwright (2001) key elements of a company’s culture

often originate with a founder or other strong leader who articulated them as a set of

106

According to O’Donovan (2006) unique, shared values can provide a strong corporate

identity; enhance collective commitment; provide a stable social system and reduce the

need for formal and bureaucratic controls.

4.3.2 DEVELOPMENT OF UNIQUE AND SHARED CULTURE

Figure 4.4: Responses on whether Interfin Bank deve loped its unique and shared

culture

With reference to figure 4.4 above, the question was asking respondents whether

Interfin Bank has developed its own unique culture since the merger of the two banks.

The results show that 47% of the respondents disagreed and 33% of the respondents

strongly disagreed leaving just 20% of the respondents agreeing with this notion.

Therefore the results show that the majority of the respondents feel that the bank is yet

to develop its own unique and shared culture. This has something to do with the fact

that the two merged banks had their own cultures which now need to be blended into

one. According to Macmillan (2000) weak culture companies are fragmented in the

sense that no one set of values is consistently preached or widely shared, few

33%

47%

0%

20%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly

Disagree

Disagree Not Sure Agree Strongly Agree

behavioural norms are evident in operating practices and few traditions are widely

revered or proudly nurtured by company personnel. Another author

noted that weak cultures provide little or no strategy

there are no traditions, beliefs, values, common bonds or behavioural norms that

management can use as levers to mobilize commitment to executing the chosen

strategy. Bloisi (2003) noted that a weak culture prevails when there is the a

common assumptions and norms, which means

of them or how the organization believes it will succeed. Linstead (2009) noted that

organizational culture still relates in many ways to a system of shared meaning

members that distinguishes the organization from other organizations. The results in

figure 4.4 are in contrast to what this author wrote.

acquisitions may produce countercultures which have a pattern of values a

philosophy that reject the surrounding culture.

4.3.3 TEAM SPIRIT

Figure 4.5: Responses on whether Interfin Bank has an effective team spirit

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly

Disagree

Disagree

27%

47%

107

behavioural norms are evident in operating practices and few traditions are widely

revered or proudly nurtured by company personnel. Another author

noted that weak cultures provide little or no strategy – implementing assistance because

there are no traditions, beliefs, values, common bonds or behavioural norms that

management can use as levers to mobilize commitment to executing the chosen

strategy. Bloisi (2003) noted that a weak culture prevails when there is the a

common assumptions and norms, which means people, are unsure of what is expected

of them or how the organization believes it will succeed. Linstead (2009) noted that

organizational culture still relates in many ways to a system of shared meaning

members that distinguishes the organization from other organizations. The results in

figure 4.4 are in contrast to what this author wrote. Child (2003) noted that mergers and

acquisitions may produce countercultures which have a pattern of values a

philosophy that reject the surrounding culture.

Figure 4.5: Responses on whether Interfin Bank has an effective team spirit

Disagree Not Sure Agree Strongly

Agree

47%

2%

20%

4%

behavioural norms are evident in operating practices and few traditions are widely

revered or proudly nurtured by company personnel. Another author Black (2003) further

g assistance because

there are no traditions, beliefs, values, common bonds or behavioural norms that

management can use as levers to mobilize commitment to executing the chosen

strategy. Bloisi (2003) noted that a weak culture prevails when there is the absence of

are unsure of what is expected

of them or how the organization believes it will succeed. Linstead (2009) noted that

organizational culture still relates in many ways to a system of shared meaning held by

members that distinguishes the organization from other organizations. The results in

Child (2003) noted that mergers and

acquisitions may produce countercultures which have a pattern of values and a

Figure 4.5: Responses on whether Interfin Bank has an effective team spirit

108

The above figure 4.5 shows that 47% of the respondents disagreed that Interfin Bank

has an effective team spirit in place. Another 27% of the respondents strongly disagreed

while 20% of the respondents agreed that there is an effective team spirit in place. The

results indicate that the majority of the respondents feel that the staff members are not

pulling in one direction and staff members in different divisions are pursuing their own

agenda which is different from the rest of the bank employees. This is attributable to the

coming together of two institutions. According to Chatman (2003) culture helps socialize

members in the organization whereby socialization is a process by which new members

are indoctrinated into the expectations and rituals of the organization, its norms or

unwritten codes of behaviour. This creates team spirit. According to Rollinson (2002)

the roots of an organization’s culture can often be located in an organization’s history

but culture is usually sustained and replicated by socialization of new organization’s

members and resocialisation of people as culture adjusts to changing circumstances.

According to Smith (2002) strong cultures and shared values and beliefs characterize

an organizational setting in which people are committed to one another and to an

overriding sense of mission.

4.3.4 RESOLVING ISSUES

Figure 4.6: Responses on the view that Interfin Ban k resolves issues through

teams

The results shown in figure 4.6 show that a total of 73% of the

with the notion that the bank resolves issues through teams. A mere 3% strongly agree

and just 17% agree that the institution is resolving conflicts through teams. This means

the respondents were of the view that senior management at I

issues on their own without involving the rest of the team members. According to

George (2001) culture is the customary and traditional way of doing things, which is

shared to a greater or lesser degree by all members and which the new

learn and at least partially accept in order to be accepted into the services of the firm.

4.4 CHANGING INTERFIN BANK’S CULTURE

An analysis was into the respondents’ views on changing the culture at Interfin Bank.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Strongly

Disagree

Disagree

33%

109

RESOLVING ISSUES THROUGH TEAMS

Figure 4.6: Responses on the view that Interfin Ban k resolves issues through

The results shown in figure 4.6 show that a total of 73% of the respondents disagree

with the notion that the bank resolves issues through teams. A mere 3% strongly agree

and just 17% agree that the institution is resolving conflicts through teams. This means

the respondents were of the view that senior management at Interfin Bank resolve

issues on their own without involving the rest of the team members. According to

George (2001) culture is the customary and traditional way of doing things, which is

shared to a greater or lesser degree by all members and which the new

learn and at least partially accept in order to be accepted into the services of the firm.

CHANGING INTERFIN BANK’S CULTURE

the respondents’ views on changing the culture at Interfin Bank.

Disagree Not Sure Agree Strongly Agree

40%

7%

17%

Figure 4.6: Responses on the view that Interfin Ban k resolves issues through

respondents disagree

with the notion that the bank resolves issues through teams. A mere 3% strongly agree

and just 17% agree that the institution is resolving conflicts through teams. This means

nterfin Bank resolve

issues on their own without involving the rest of the team members. According to

George (2001) culture is the customary and traditional way of doing things, which is

shared to a greater or lesser degree by all members and which the new members must

learn and at least partially accept in order to be accepted into the services of the firm.

the respondents’ views on changing the culture at Interfin Bank.

Strongly Agree

3%

110

Figure 4.7: Responses on whether Interfin Bank’s cu lture and shared values

promote creativity

The above figure 4.7 shows the results on the respondents’ views on whether the

bank’s culture and shared values promote creativity. Creativity is essential in a financial

institution so that you guard against competition. A total of 80% of the respondents

disagreed with this view showing that Interfin Bank’s culture does not promote creativity.

According to Eden (1998) culture serves as a rudder to keep the firm’s strategy on

course. Another author Cooke (2000) noted that while corporate strategy may control a

firm’s successes or failure, corporate culture can make or break the strategy. According

to Wood (2006) shared values lie at the heart of organizational culture. Hill (1997) noted

that shared values help turn routine activities into valuable, important actions. According

to Likert (2001) shared values tie the corporation to the important values of society.

Shared values may provide a very distinctive source of competitive advantage (Klein

2003).

37%

43%

0%

20%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly Disagree Disagree Not Sure Agree Strongly Agree

111

4.5 SUB-CULTURES AT INTERFIN BANK

An analysis was made to gather the respondents’ views on the subcultures at Interfin

Bank.

4.5.1 SUBCULTURES SUPPORTING DEPARTMENTAL STRATEGIE S

Figure 4.8: Responses on sub-cultures at Interfin B ank supporting strategies at

departmental level

From the responses shown in figure 4.8 above, a total of 80% of the respondents

disagreed that the sub-cultures at Interfin Bank are supportive of strategies at

departmental level. A mere 17% agreed with the view that the sub-cultures do support

strategies at departmental level. According to Stoykov (2005) sub-cultures are localized

subsystems of values and assumptions that give meaning to the common interests of

smaller clusters of people within the overall organization. Richard (2005) pointed out

that subcultures have three possible impacts on the organization, that is, they can serve

27%

53%

0%

17%

3%

Strongly Disagree

Disagree

Not Sure

Agree

Strongly Agree

to enhance the dominant culture; they promote an independence from it and thirdly they

function as countercultures when they are

company’s subcultures can clash if they embrace conflicting business philosophies or

operating approaches, or if key executives employ different approaches to people

management. Hawkins (2001) states that subcu

ethnicity, gender, generational differences, socioeconomic status, place within the

organization, political and religious beliefs, among other issues.

4.5.2 SUBCULTURES BOND

Figure 4.9: Responses on whether the subcultures bond the departments

together

From what is depicted in figure 4.9, 30% of the respondents strongly disagreed and

47% disagreed with the view that the bank’s subcultures bond together the various

divisions and departments in the financial institution. Just 3% of the respondents were

not sure and 20% agreed with the notion. According to Phegan (2000) the explicit social

products produced by subcultures within organizations can be widely diverse and even

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly

Disagree

Disagree

30%

47%

112

to enhance the dominant culture; they promote an independence from it and thirdly they

function as countercultures when they are at odds with it. Thompson (2005) noted that a

company’s subcultures can clash if they embrace conflicting business philosophies or

operating approaches, or if key executives employ different approaches to people

Hawkins (2001) states that subculture formation may be influenced by

ethnicity, gender, generational differences, socioeconomic status, place within the

organization, political and religious beliefs, among other issues.

SUBCULTURES BOND ING THE VARIOUS DEPARTMENTS TOGETHER.

4.9: Responses on whether the subcultures bond the departments

From what is depicted in figure 4.9, 30% of the respondents strongly disagreed and

47% disagreed with the view that the bank’s subcultures bond together the various

rtments in the financial institution. Just 3% of the respondents were

not sure and 20% agreed with the notion. According to Phegan (2000) the explicit social

products produced by subcultures within organizations can be widely diverse and even

Disagree Not Sure Agree Strongly

Agree

47%

3%

20%

0%

to enhance the dominant culture; they promote an independence from it and thirdly they

at odds with it. Thompson (2005) noted that a

company’s subcultures can clash if they embrace conflicting business philosophies or

operating approaches, or if key executives employ different approaches to people

lture formation may be influenced by

ethnicity, gender, generational differences, socioeconomic status, place within the

THE VARIOUS DEPARTMENTS TOGETHER.

4.9: Responses on whether the subcultures bond the departments

From what is depicted in figure 4.9, 30% of the respondents strongly disagreed and

47% disagreed with the view that the bank’s subcultures bond together the various

rtments in the financial institution. Just 3% of the respondents were

not sure and 20% agreed with the notion. According to Phegan (2000) the explicit social

products produced by subcultures within organizations can be widely diverse and even

113

result in countercultures. Parker (2000) highlighted that leaders have a better chance of

creating or transforming an organizational culture if they accept and foster productive

organizational subcultures and consistently communicate how employees must perform

in order for the organization to achieve its objectives. According to Wood (2006)

subcultures represent groups of individuals with a unique pattern of values and

philosophy that are not necessarily inconsistent with the organization’s dominant values

and philosophy. Cooke (2000) highlighted that understanding the importance of culture

can help a company to absorb or accommodate the cultures within the organizations

that are acquired or merge, or to manage the complex interplays in alliances, company

formations and employment relations.

4.6 IMPORTANCE OF CULTURE

The researcher will now analyse the results to do with the importance of culture at

Interfin Bank.

114

4.6.1 THE INTERFIN BANK CULTURE AS AN ASSET THAT EA SES

COMMUNICATION WITHIN THE BANK

Figure 4.10: Responses on whether culture is an ass et at Interfin Bank

Figure 4.10 above shows the same trend where a combined total of 73% of the

respondents disagreed with the view that culture is an asset that eases communication

at Interfin Bank. Only 23% of the respondents agreed with this view while 4% were not

decided. Hill (2001) stated that every component of the corporate culture needs to

underpin what is required from all stakeholders in order to realize the strategic goals

and there must be a reinforcing stream of communications. All the actions in the

organization need to translate into the cultural realities. Schein (1992) highlighted that

organizations must use effective communication practices to concentrate on what is

important so that culture becomes an asset.

4.7 MANAGEMENT APPROACH AT INTERFIN BANK

Since the merger there is a type of management approach that is in place. This

question sought to find out the views of the respondents on the type of approach they

40%

33%

4%

20%

3%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Strongly

Disagree

Disagree Not Sure Agree Strongly Agree

feel is in place at Interfin Bank. The tw

either the new management at the bank is seen as being aggressive or as being

conciliative and figure 4.11 below details the findings.

Figure 4.11: Responses on the type of management ap proach

Figure 4.11 above, shows that 63% of the respondents view

being aggressive, that is, radical and conflict centered. On the other hand

respondents view the new management as being conciliative, that is, desire a win

approach and involve groups in problem solving. According to Linstead (2009)

organizations with aggressive cultures encourage or require members to appear

competent, controlled, and superior. Members who seek assistance, admit

shortcomings, or concede their position are v

(2001) further notes that these organizations emphasize finding errors, weeding out

“mistakes,” and encouraging members to compete against each other rather than

competitors. The short-term gains associated with these s

expense of long-term growth.

0%

10%

20%

30%

40%

50%

60%

70%

Aggressive

63%

115

feel is in place at Interfin Bank. The two options made available by the researcher were

either the new management at the bank is seen as being aggressive or as being

conciliative and figure 4.11 below details the findings.

Figure 4.11: Responses on the type of management ap proach

shows that 63% of the respondents view the new management as

being aggressive, that is, radical and conflict centered. On the other hand

respondents view the new management as being conciliative, that is, desire a win

olve groups in problem solving. According to Linstead (2009)

organizations with aggressive cultures encourage or require members to appear

competent, controlled, and superior. Members who seek assistance, admit

shortcomings, or concede their position are viewed as incompetent or weak. Kaplan

(2001) further notes that these organizations emphasize finding errors, weeding out

“mistakes,” and encouraging members to compete against each other rather than

term gains associated with these strategies are often at the

term growth.

Aggressive Conciliative

63%

37%

o options made available by the researcher were

either the new management at the bank is seen as being aggressive or as being

the new management as

being aggressive, that is, radical and conflict centered. On the other hand, 37% of the

respondents view the new management as being conciliative, that is, desire a win-win

olve groups in problem solving. According to Linstead (2009)

organizations with aggressive cultures encourage or require members to appear

competent, controlled, and superior. Members who seek assistance, admit

iewed as incompetent or weak. Kaplan

(2001) further notes that these organizations emphasize finding errors, weeding out

“mistakes,” and encouraging members to compete against each other rather than

trategies are often at the

116

4.8 CULTURE SUPPORTS STRATEGY AT INTERFIN BANK

One of the major objectives of this study is to determine whether the culture at Interfin

Bank supports strategy.

4.8.1 INVOLVEMENT OF STAFF IN STRATEGY FORMULATION.

Figure 4.12: Views on whether the bank involves sta ff in strategy formulation

The results in figure 4.12, show that 47% of the respondents disagree that the bank

involves its staff in strategy formulation. The results also show that 23% of the

respondents strongly disagree with this view while only 17% agree and 9% strongly

agree that all staff members are being involved in strategy formulation. Thompson

(2005) noted that among all the things managers do, nothing affects a company’s

ultimate success or failure more fundamentally than how well its management team

charts the company’s direction, develops competitively effective strategic moves and

business approaches. Cole (1999) further notes that the tasks of crafting and executing

company strategies are the heart and soul of managing a business enterprise and

winning in the market place. Robbins (1999) noted that effectively communicating the

strategic vision down the line to lower-level managers and employees is as important as

23%

47%

4%

17%

9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly

Disagree

Disagree Not Sure Agree Strongly Agree

117

the strategic soundness of the journey and destination for which top management has

opted. Johnson (2004) agreed with this view by acknowledging that if company

personnel do not know what management’s vision is and do not buy into the rationale

for the direction management wants the company to head, they are unlikely to

wholeheartedly commit themselves to making the vision a reality.

4.8.2 A RELEVANT CULTURE THAT ENHANCES PERFORMANCE AND

PRODUCTIVITY.

Figure 4.13: Responses on whether Interfin Bank has a relevant culture which

supports performance and productivity

Figure 4.13 above, shows that only 23% of the respondents agreed that the bank’s

culture supports performance and productivity. A total of 77% disagreed with this view

showing that the majority of the respondents do not feel that the current culture is aiding

in improving the performance of the bank. David (2005) pointed out that the managerial

purpose of setting objectives is to convert the strategic vision into specific targets and

then use these objectives as yardsticks for tracking the company’s progress and

performance. According to Hatch (2000), management’s interest in culture is less likely

37%40%

0%

23%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Strongly

Disagree

Disagree Not Sure Agree Strongly Agree

to be prompted by curiosity about why this happ

effects, for example whether culture has an impact on the commercial or financial

performance of the organization.

4.8.3 INTERFIN BANK’S CORPORATE CULTURE SUPPORTS STRATEGY

IMPLEMENTATION.

Figure 4.14: Views on whethe

This question sought to bring out respondents’ view on the

According to figure 4.14,

disagreed. A total of 23% of the respondents agreed

3% that strongly agreed to views from the senior executives of the bank. This shows

that the majority of the respondents are of the view that the prevailing culture at Interfin

Bank is not supporting strategy implementatio

grounded in strategy-supportive values, practices and behavioural norms adds

significantly to the power and effectiveness of a company’s strategy execution effort.

Kotter (1992) further noted that a culture that encou

execution not only provides company personnel with clear guidance regarding what

behaviours and results constitute good performance but also produces significant peer

pressure from co-workers to conform to culturally accept

Mulling (1999) highlighted that a culture imbedded with values and behaviours that

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly

Disagree

Disagree

47%

30%

118

to be prompted by curiosity about why this happens than by its possible bottom

effects, for example whether culture has an impact on the commercial or financial

performance of the organization.

INTERFIN BANK’S CORPORATE CULTURE SUPPORTS STRATEGY

Figure 4.14: Views on whethe r culture supports strategy implementation

This question sought to bring out respondents’ view on the main subject under study.

, 47% of the respondents strongly disagreed and 30%

disagreed. A total of 23% of the respondents agreed and the researcher attributes the

3% that strongly agreed to views from the senior executives of the bank. This shows

that the majority of the respondents are of the view that the prevailing culture at Interfin

Bank is not supporting strategy implementation. Finlay (2000) noted that a culture

supportive values, practices and behavioural norms adds

significantly to the power and effectiveness of a company’s strategy execution effort.

Kotter (1992) further noted that a culture that encourages actions supportive of good

execution not only provides company personnel with clear guidance regarding what

behaviours and results constitute good performance but also produces significant peer

workers to conform to culturally acceptable norms. Another author

Mulling (1999) highlighted that a culture imbedded with values and behaviours that

Disagree Not Sure Agree Strongly

Agree

0%

20%

3%

ens than by its possible bottom-line

effects, for example whether culture has an impact on the commercial or financial

INTERFIN BANK’S CORPORATE CULTURE SUPPORTS STRATEGY

r culture supports strategy implementation

subject under study.

47% of the respondents strongly disagreed and 30%

and the researcher attributes the

3% that strongly agreed to views from the senior executives of the bank. This shows

that the majority of the respondents are of the view that the prevailing culture at Interfin

noted that a culture

supportive values, practices and behavioural norms adds

significantly to the power and effectiveness of a company’s strategy execution effort.

rages actions supportive of good

execution not only provides company personnel with clear guidance regarding what

behaviours and results constitute good performance but also produces significant peer

able norms. Another author

Mulling (1999) highlighted that a culture imbedded with values and behaviours that

119

facilitate strategy execution promotes strong employee identification and commitment to

the company’s vision, performance targets and strategy.

4.9 STRATEGIC PLANNING WORKSHOPS

The researcher sought to gather views on how often the respondents hold strategy

planning workshops in their various divisions and departments.

Figure 4.15: Views on frequency of strategic planni ng workshops

The results in figure 4.15 above, show that 66% of respondents hold strategic planning

workshops each quarter of the year while 22% of the respondents hold them monthly.

Just 11% of the respondents hold the strategic planning workshops weekly. Authors like

Wilkins (2001) pointed out that managing the implementation and execution of strategy

is an operations-oriented, make-things-happen activity aimed at shaping the

performance of core business activities in a strategy supportive manner. According to

Adler (2004) crafting strategy is concerned principally with forming responses to

changes under way in the external environment, devising competitive moves and

0%

11%

22%

66%

1% 0%0%

10%

20%

30%

40%

50%

60%

70%

Daily Weekly Monthly Quarterly Half yearly Annually

market approaches aimed at producing sustainable competitive advantage. Tvorik

(1997) noted that with decentralized

of all stripes, it is now typical for key pieces of a company’s strategy to originate in a

company’s middle and lower ranks. Hence it is

planning workshops must be held by I

4.10 INTERFIN BANK’S COMPETITIVE ADVANTAGE

The researcher sought views from respondents on how competitive the bank is and the

strategic options the respondents feel the bank is pursuing.

4.10.1 THE BANK IS BEI NG A LOW COST LEADER.

Figure 4.16: Responses on whether Interfin Bank is being a low cost leader

The responses in the above figure

agree that the bank is pursuing a strategy of being a low cost leader in t

7% of the respondents strongly disagreed followed by 15% who disagreed. A mere 3%

were not sure of the strategic option the bank is pursuing. Thompson (2005) referred to

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Strongly

Disagree

Disagree

7%

15%

120

market approaches aimed at producing sustainable competitive advantage. Tvorik

(1997) noted that with decentralized decision making becoming common at companies

of all stripes, it is now typical for key pieces of a company’s strategy to originate in a

company’s middle and lower ranks. Hence it is the researcher’s view that strategic

planning workshops must be held by Interfin bank’s management on a weekly basis.

INTERFIN BANK’S COMPETITIVE ADVANTAGE

The researcher sought views from respondents on how competitive the bank is and the

strategic options the respondents feel the bank is pursuing.

NG A LOW COST LEADER.

Figure 4.16: Responses on whether Interfin Bank is being a low cost leader

The responses in the above figure 4.16 show that a total of 75% of the respondents

agree that the bank is pursuing a strategy of being a low cost leader in t

7% of the respondents strongly disagreed followed by 15% who disagreed. A mere 3%

were not sure of the strategic option the bank is pursuing. Thompson (2005) referred to

Disagree Not Sure Agree Strongly

Agree

15%

3%

42%

33%

market approaches aimed at producing sustainable competitive advantage. Tvorik

decision making becoming common at companies

of all stripes, it is now typical for key pieces of a company’s strategy to originate in a

he researcher’s view that strategic

nterfin bank’s management on a weekly basis.

The researcher sought views from respondents on how competitive the bank is and the

Figure 4.16: Responses on whether Interfin Bank is being a low cost leader

show that a total of 75% of the respondents

agree that the bank is pursuing a strategy of being a low cost leader in the market. Only

7% of the respondents strongly disagreed followed by 15% who disagreed. A mere 3%

were not sure of the strategic option the bank is pursuing. Thompson (2005) referred to

121

a competitive strategy as the specifics of management’s game plan for competing

successfully and achieving a competitive edge over rivals. The same author noted that

a low-cost leader’s basis for competitive advantage is lower overall costs than

competitors. Goffee (1998) stressed that to achieve a cost advantage; a firm must make

sure that its cumulative costs across its overall value chain are lower than competitors’

cumulative cost. Financial Times (2000) highlighted that this is achieved through out

managing rivals in the efficiency with which value chain activities are performed and in

controlling the factors that drive the costs of value chain activities. However according to

Kotler (2005) a low cost provider’s product must always contain enough attributes to be

attractive to prospective buyers, that is, low price by itself, is not always appealing to

buyers.

4.10.2 PRODUCT DIFFERENTIATION.

An analysis was made on whether the bank is practicing product differentiation in its

chosen markets.

Figure 4.17: Views on product differentiation at In terfin Bank

19%

60%

0%

17%

4%0%

10%

20%

30%

40%

50%

60%

70%

Strongly

Disagree

Disagree Not Sure Agree Strongly Agree

122

As shown in figure 4.17, the majority of the respondents were of the view that the bank

is not practising product differentiation as a strategy. It shows that 60% disagreed while

19% strongly disagreed. A small proportion of a combined total of 21% agreed with this

view. Thompson (2005) highlighted that the essence of broad differentiation strategy is

to be unique in ways that are valuable to a wide range of customers. In the banking

sector we already note that differentiation strategies are attractive since buyers’ needs

are too diverse to be fully satisfied by a standardized product. Finlay (2000) noted that

successful differentiation allows a firm to command a premium price for its product; to

increase unit sales and lastly to gain buyer loyalty to its brand. Denison (1990)

emphasized that easy to copy differentiating features cannot produce sustainable

competitive advantage. On the other hand Hill (2001) stressed that a differentiator’s

basis for competitive advantage is either a product or service offering whose attributes

differ significantly from the offerings of rivals or a set of capabilities for delivering

customer value that rivals don’t have.

4.11 CONCLUSION

This chapter focused on the research findings. The next chapter looks at the conclusion

and recommendations.

123

CHAPTER 5

5.0 CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION

The chapter outlines the conclusions drawn from the research on Interfin Bank as well

as the recommendations to the study on corporate culture and strategy execution. The

conclusions and recommendations will be drawn from the discussions from Chapter four

of this study.

5.2 CONCLUSIONS

The list below details the conclusions that were arrived at by the researcher based on

the on the research findings and results,

i. Interfin Bank does not have distinct features of culture.

ii. The bank is yet to develop a unique culture.

iii. Cooperation among departments still lacks within the bank.

iv. The bank’s executives did not create a buy-in of the new bank’s vision and

mission by staff members.

v. Interfin Bank’s management does not involve staff members in decision making,

strategy formulation and implementation.

vi. The bank’s management does not welcome creative ideas from all staff

members.

vii. There is lack of goal congruency at Interfin Bank.

viii. The bank is experiencing internal communication challenges.

124

ix. The institution’s culture is not aiding in gaining competiveness in the financial

services sector.

x. Interfin bank’s sub-cultures do not support departmental strategies.

xi. Culture at Interfin Bank does not support strategy formulation and

implementation.

xii. The bank’s staff members view the senior management as being aggressive.

xiii. The bank’s culture does not support organizational performance and

productivity.

xiv. Interfin bank is pursuing low cost leadership strategy.

xv. The bank is not pursuing product differentiation as a strategy.

It is the conclusion of this research that corporate culture at Interfin Bank does not

support strategy implementation.

5.3 RESEARCH PROPOSITION TESTING

The research proposition was that corporate culture at Interfin Bank does support

strategy execution. However after undertaking this study, corporate culture at Interfin

Bank does not support strategy execution.

5.4 RECOMMENDATIONS

The following recommendations were derived from the research,

i. Interfin Bank needs to develop its own unique culture to cater for the merged

entity through team building initiatives.

ii. Management needs to clearly articulate the new bank’s vision, mission, goals

and strategic direction to the staff members through staff meetings so as to cater

for the different backgrounds the staff members came from.

125

iii. Interfin Bank has to develop an intranet for policies, in-house journals and

internal communication so as to improve the internal communication.

iv. Teamwork needs to start from the top executives and be cascaded down to lower

level staff members. This will filter down and instill confidence within the

workforce.

v. The bank’s management needs to have a conciliative approach so as to gain the

support of staff members.

vi. The bank has to embark on product differentiation so as to gain competitive

advantage in the market.

vii. Culture features need to be shared across the entire bank through the

participation of employees at all levels.

viii. The bank needs to develop and implement a robust change management

strategy plan as well as develop and implement a robust induction programme

for new employees.

ix. Strong Leadership is required - The leaders, at all levels, need to know what the

required culture is and then determine ways of establishing practices and

procedures in all operations that will closely reflect the desired culture. They also

need to role model the very behaviours they wish exhibited by everyone in the

bank and provide the necessary support to others that will enable them to

function accordingly as well.

5.5 FURTHER AREA OF STUDY

This research recommends a study into the impact of cooperative strategies on

competitive advantage to local financial institutions.

126

5.6 CONCLUSION

Interfin Bank needs to urgently define its own culture so as to successfully implement its

strategy and be competitive in the financial services sector. Its competitiveness will

ensure a return on investment to the bank’s shareholders.

127

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137

APPENDIX 1

UNIVERSITY OF ZIMBABWE

Research Title: An analysis of the impact of corpor ate culture on the execution of

strategy at Interfin Bank (2010-2011)

Student Name: Joshua Gocha

Dear Respondent

I am a final year student with the Graduate School of Management at the University of

Zimbabwe. I am interested in learning more about corporate culture and strategy

execution at Interfin Bank. My objective is to expand the body of knowledge about this

important area in strategic management.

Please take a few minutes to answer the attached questionnaire. Responses provided

will be treated in strict confidence and will be used for academic purposes only. May

you send your responses through by 30 June 2011 to my contact details shown below.

Let me take this opportunity to thank you in advance for taking your time to fill in this

questionnaire.

Regards

Joshua Gocha

International Banking Division, Interfin Bank, Block 4 Tendeseka Office Park, Eastlea

E-mail: jgocha@interfin.co.zw; Tel : 04-251034; Cell: 0772 351972

138

SECTION A : GENERAL INFORMATION

1. Your position in Interfin Bank

Executive Director �

Managing Director �

Company Secretary �

Divisional Director �

Head of Department �

Manager �

Supervisor �

2. Your Division

Retail Banking �

Corporate Banking �

International Banking �

Finance �

Treasury �

Risk and Audit �

Marketing �

Operations �

Executive �

Human Resources �

3. For how long have you been with Interfin Bank

Under 6 months �

6 – 12 months �

13 -18 months �

4. Which institution were you working for before the Interfin / CFX merger

Interfin Merchant Bank �

CFX Bank Limited �

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5. For how long were you with your previous institution before the Interfin / CFX merger

Under 1 year �

1-2 years �

3 – 4 years �

4 – 5 years �

Over 5 years �

6. Did your grade/position change after the merger

Yes �

No �

7. If your grade/position changed, was it an upgrade or downgrade

Upgrade �

Downgrade �

No Change �

SECTION B: CORPORATE CULTURE

Corporate culture is a set of important understandings, that is, norms, values, attitudes

and beliefs shared by the organization’s members.

The ratings are as follows:-

Strongly Disagree (SD) = 1

Disagree (D) = 2

Not sure (NS) = 3

Agree (A) = 4

Strongly Agree (SA) = 5

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1. In your view:

1

SD

2

D

3

NS

4

A

5

SA

The bank espouses shared values, processes, routines,

interests and beliefs

The bank’s executives clearly stated the new bank’s vision,

mission

The bank’s executives make every effort to collectively

resolve challenges

The bank has an effective team spirit in place

Interfin Bank resolves issues through teams

The bank enables free contribution of ideas by all staff

members

The bank’s business is conducted in a creative environment

Interfin Bank’s shared values and culture promotes creativity

Both sets of workers ex-CFX bank and ex-Interfin Merchant

Bank are working towards a common goal

The Interfin Bank culture is an asset that eases

communication within the bank

At Interfin Bank the culture drives towards competitive

advantage

Since the merger the bank has developed its own unique

and shared culture

Interfin Bank’s subcultures in different divisions support

strategies at departmental level in terms of profitability and

cost cutting

The bank’s subcultures bond the various departments

together

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2. With reference to the new management at Interfin Bank, how best would you

describe it

Aggressive (radical, win-lose, conflict centred) �

Conciliative (win-win, group problem solving) �

SECTION C: BUSINESS STRATEGY FORMULATION AND IMPLEM ENTATION

Strategy is the broad programme for defining and achieving an organization’s objectives

and its response to its environment over time.

1. In your view:

1

SD

2

D

3

NS

4

A

5

SA

Interfin Bank involves all its staff in strategy formulation

The bank’s staff are involved in the implementation of the

bank’s plans

The bank’s core values are in line with the departmental

strategic plans and targets

The bank’s balanced scorecard has been merged with the

business and operational plans

The bank has a strategically relevant culture to enhance

organization performance and productivity

The bank’s culture is in line with the banking environment

prevailing in the country

The bank’s staff are fully aware of the bank’s corporate

balanced scorecard

Corporate culture at Interfin Bank influences the degree to

which strategic planning is integrated and implemented

As the bank’s strategy is that of being a low cost leader, the

bank is sensitive to increases in transaction costs for

customers

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Since the merger the bank has practiced product

differentiation in view of competition

Interfin Bank’s corporate culture supports strategy

implementation

2. In your division/department how often do you hold strategic planning and

implementation workshops

Daily �

Weekly �

Monthly �

Quarterly �

Half-yearly �

Annually �

3. Do you have any comments you may wish to make regarding the proposition that

culture supports strategy execution at Interfin Bank.

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………

Thank you for your time.

143

APPENDIX 2

An analysis of the impact of corporate culture on t he execution of strategy at

Interfin Bank (2010-2011):

INTERVIEW SCHEDULE

i. What are the key culture features at Interfin Bank

ii. Are we able to describe the Interfin values as shared

iii. In your view is there a fit between culture and strategy at Interfin Bank