TURNAROUND STRATEGIES IN A COMPETITIVE ENVIRONMENT

A CASE OF UCHUMI SUPERMARKET

BY:

JOYCE NANCY OCHIENG

UNITED STATES INTERNATIONAL UNIVERSITY

SPRING 2018

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TURNAROUND STRATEGIES IN A COMPETITIVE ENVIRONMENT

A CASE OF UCHUMI SUPERMARKET

By

JOYCE NANCY OCHIENG

A Research Project Report Submitted to the Chandaria School of Business

in Partial Fulfillment of the Requirement for the Degree of Masters in

Business Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY - AFRICA

SPRING 2018

iii

STUDENT’S DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to any other

college, institution or university other than the United States International University in

Nairobi for academic credit.

Signed: ________________________ Date: ________________________

JOYCE NANCY OCHIENG (650194)

This Research Project Report has been presented for examination with my approval as the

appointed supervisor.

Signed: ______________________________ Date: ___________________________

Prof. Paul Katuse

Signed:______________________________ Date: ___________________________

Dean, Chandaria School of Business

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COPYRIGHT

© Copyright Joyce Nancy Ochieng, 2017

All Rights Reserved

v

DEDICATION

I dedicate this paper to my family Persons, for their continued support during my study and

in preparation of this research paper.

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ACKNOWLEDGEMENT

I acknowledge the presence of God the Almighty in my life. For giving me the strength and

wisdom to have been able to prepare for the execution of this research project and finalizing

the research paper. My sincere gratitude goes to my supervisor Prof. Katuse for his guidance,

advice and effective timely response at each stage in the preparation and execution of this

research paper for examination. Thank you for your support and inspiration.

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ABSTRACT

This study seeks to analyze the turnaround strategies in a competitive environment a case of

Uchumi Supermarket. The study was guided by the following specific objectives; to evaluate

the turnaround process in a competitive environment, to determine the turnaround strategies in

a competitive that should be adopted by Uchumi supermarket and to establish the challenges

that Uchumi supermarket may face in adoption of the turnaround strategies in a competitive

environment.

In conducting this a descriptive research design was adopted. The population for the study was

the 84 respondents. The sampling frame was 84 employees comprised top level management,

middle level management and lower level management staffs at the Uchumi supermarket head

office. A sample of 50% of the total population was thus considered sufficient and was used

therefore 42 respondents constituted the sample population for the study and simple random

sampling was used. The study carried out a pilot study to pretest and validates the

questionnaire. The researcher selected a pilot group of 9 individuals from the target population

to test the reliability of the research instrument. The study used primary data in form of

questionnaire that was administered through drop and pick method to respondents who were

the owners or the managers of the SMEs. Analysis was done by use of Excel and SPSS

software. This generated frequency distributions, tables, percentages and mean.

The study established that Uchumi Supermarket used a number of turnaround strategies in

order to survive in the present competitive environment in Kenya. The strategies that were

mostly used were repositioning and restructuring strategies, retrenchment and change in the

top management of the company so as to make Uchumi Supermarket more competitive and

also reduce the operational cost of the company. It was also established that turnaround

strategy’s may help put back organisations to normality in terms of liquidity, solvency,

profitability and cash flow. Finally, it was established Uchumi Super market faced a number

of challenges when implementing turnaround strategies, key among them are resistance to

change by the employees, inadequacy of resources and technology to facilitate the change,

weak management and unaligned organizational system.

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It was concluded that the adoption of misplaced strategies is a cause of a company failure, a

company decline leads to crisis where the survival of the firm is threatened and the major cause

of a company failure lies within finance, operations and marketing the internal elements of its

business. The study concluded that the turnaround strategy’s may help put back a company to

normality in terms of liquidity and to achieve a successful turnaround a company management

team must first stem a firm’s decline. The study concluded that companies face a number of

challenges when implementing turnaround strategies, failure to ensure that companies’ daily

activities, work efforts and resources are directed to the implementation of strategy has led to

companies’ failure and companies have run into difficulties because of failure to acknowledge

and address strategic drift.

The study recommends that to enable companies implement the turnaround strategies

companies must take advantage of the new technological opportunities, managers of

companies need to create strategic management systems that integrate all disciplines and all

areas of operation of the organization in outcome-based structures and the managers of

organizations’ must critically look at their performance and compare it to other companies.

Further it was recommended that turnaround strategies should be adopted in a competitive

environment this is because they help put back companies to normality in terms of liquidity

and the turnaround strategies that should be adopted are repositioning and restructuring

strategies; retrenchment strategies and top management changes. Finally, it was recommended

that management should put in place measures to reduce the challenges that face organisation

in implementing turnaround strategies which include putting in place adequate resources to

help implement the strategy, having proper plans and policies to implement the strategies and

educating all levels of employees on the important of the strategy in order to help reduce

resistance from them.

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THE TABLE OF CONTENTS

STUDENT’S DECLARATION ............................................................................................ iii

COPYRIGHT ......................................................................................................................... iv

DEDICATION......................................................................................................................... v

ACKNOWLEDGEMENT ..................................................................................................... vi

ABSTRACT ........................................................................................................................... vii

THE TABLE OF CONTENTS ............................................................................................. ix

LIST OF TABLES ................................................................................................................ xii

CHAPTER ONE ..................................................................................................................... 1

1.0 INTRODUCTION............................................................................................................. 1

1.1 Background of the Study ................................................................................................ 1

1.2 Statement of the Problem ................................................................................................ 5

1.3 General Objective ........................................................................................................... 7

1.4 Specific Objective ........................................................................................................... 7

1.5 Significance of the Study ................................................................................................ 7

1.6 Scope of the Study .......................................................................................................... 8

1.7 Definition of Terms......................................................................................................... 9

1.8 Chapter Summary ......................................................................................................... 10

CHAPTER TWO .................................................................................................................. 12

2.0 INTRODUCTION........................................................................................................... 12

2.1 Introduction ................................................................................................................... 12

2.2 The Role of Turn Around Strategies in Solving Financial Decline in Organisations .. 12

2.3 Turnaround Strategies that Should be Adopted in a Competitive Environment .......... 17

2.4 Challenges in Implementing Turnaround Strategies in a Competitive Environment ... 21

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2.5 Chapter Summary ......................................................................................................... 25

CHAPTER THREE .............................................................................................................. 27

3.0 RESEARCH METHODOLOGY .................................................................................. 27

3.1 Introduction ................................................................................................................... 27

3.2 Research Design............................................................................................................ 27

3.3 Population and sample design ....................................................................................... 27

3.4 Data Collection Method ................................................................................................ 29

3.5 Research Procedure ....................................................................................................... 30

3.6 Data Analysis ................................................................................................................ 30

3.7 Chapter Summary ......................................................................................................... 31

CHAPTER FOUR ................................................................................................................. 32

4.0 RESULTS AND FINDINGS .......................................................................................... 32

4.1 Introduction ................................................................................................................... 32

4.2 General Information ...................................................................................................... 32

4.3 The Role of Turn Around Strategies in Solving Financial Decline .............................. 35

4.4 Turnaround Strategies that Should be Adopted in a Competitive Environment .......... 39

4.5 Challenges in Implementing Turnaround Strategies in a Competitive Environment ... 44

4.6 Chapter Summary ......................................................................................................... 48

CHAPTER FIVE .................................................................................................................. 50

DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ................................... 50

5.1 Introduction ................................................................................................................... 50

5.2 Summary of the Study .................................................................................................. 50

5.3 Discussion ..................................................................................................................... 52

5.4 Conclusions ................................................................................................................... 58

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5.5 Recommendations ......................................................................................................... 60

REFERENCES ...................................................................................................................... 62

APPENDICES ....................................................................................................................... 67

Appendix I: Introduction Letter .......................................................................................... 67

Appendix II: Questionnaire................................................................................................. 68

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LIST OF TABLES

Table 3.1: Sample Size ........................................................................................................... 29

Table 4.2: Response Rate ........................................................................................................ 32

Table 4.3: Gender of the Respondents .................................................................................... 33

Table 4.4: Age of the Respondents ......................................................................................... 33

Table 4.5: Level of Education of the Respondents ................................................................. 34

Table 4.6: Number of years worked at Uchumi Supermarket ................................................ 34

Table 4.7: The Turn Around Process in a Competitive Environment .................................... 36

Table 4.8: The Signs of Financial Decline .............................................................................. 37

Table 4.9: The Causes of Financial Decline ........................................................................... 38

Table 4.10: The Steps in Turnaround Process ........................................................................ 39

Table 4.11: Turnaround Strategies that Should be Adopted ................................................... 40

Table 4.12: Repositioning and Restructuring Strategies......................................................... 41

Table 4.13: Retrenchment ....................................................................................................... 42

Table 4.14: Top Management Changes .................................................................................. 43

Table 4.15: Challenges in Implementing Turnaround Strategies ........................................... 45

Table 4.16: Resistance to Change ........................................................................................... 46

Table 4.17: Inadequate Resources .......................................................................................... 47

Table 4.18: Strategic Drift ...................................................................................................... 48

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CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

According to Thompson (2013) strategies are the means by which long-term objectives will be

achieved. They further point that strategies are unified, comprehensive and integrated plans

that relate the strategic advantages of the firm to the challenges of the environment. They are

designed to ensure that the basic objectives of the enterprise are achieved through proper

execution by the organization. According to Wheelan and Hunger (2015) there are also other

types of strategies that can apply especially when the prospects of the firm appear too bleak to

continue as an ongoing operation. They include the exit strategy which can further be divided

into an immediate abandonment strategy that exits the market by immediately liquidating or

selling to another firm or a harvest strategy where the firm plays the end-game maximizing

near-term cash flows.

Turnaround refers to recovery to profitability from a loss situation. Following a loss, a firm’s

top management team must respond in an effort to ensure that the firm’s survival. A faltering

firm will most likely continue to decline and may eventually fail if its top management team

lacks the ability to respond successfully to external and internal factors causing decline. To

achieve a successful turnaround, a management team must first stem a firm’s decline and select

an appropriate strategy for recovery (Situma, 2016). Turnaround is a process dedicated to

corporate renewal. It uses analysis and planning to save troubled companies and returns them

to solvency. Once analysis is completed, a long term strategic plan and restructuring plan are

created. These plans may or may not involve a bankruptcy filing (Thompson and Strickland,

2007).

An industry environment consists of a particular set of competitive situations that establish

both opportunities and threats. The pattern of situational changes is a result of the actions of

'competitors'. Porter (2008) uses forces of change to make reference to buyers, suppliers,

substitute products, potential industry entrants, as well as rivalry among firms within the

industry. Strategic moves by any of these competitors can alter prevailing relationships and

thereby change the situation in a firm's environment. Organizations are open systems, and the

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external environment in which they operate is very important. Organizations need support from

their environment if they are to survive and perform well. The environment is the key factor in

determining the level of available resources and the ease with which an organization can carry

out its activities. To understand how industry environment drives competition, one needs to

determine the level of industry profitability (Sirmon et al., 2007).

The role of strategy is to identify the general approaches that the organization utilize to achieve

its organizational objectives. Various strategies are available to the firm depending on the

circumstance in the environment the firm operates which includes Corporate Turnaround,

Retrenchment, and Portfolio Restructuring Strategies. Thompson & Strickland (2008)

established that Retrenchment differs from turnaround in that retrenchment is a pullback and

leaning-up in the face of adverse conditions. The strategic posture of retrenchment is one of

defensively “battening down the hatches and weathering out the storm,” withdrawing from

activities where return on investment in supbar. They further explained Portfolio restructuring

strategies involves radical surgery on the mix and percentage makeup of the types of businesses

in the portfolio (Situma, (2016).

In the corporate world, failure is commonplace such that one-third of companies fail within

the first five years, and listed companies fail at a rate of 2% per year (Morris, 2007).

Organizational failure is hard to predict and results in a loss of economic viability, illiquidity,

and breach of legal obligations. Despite efforts being made to predict a firm’s failure, the

models developed have not proven successful. Failure in the competitive market can result

from a range of factors. In situations where the firm operations and performance have been

experiencing challenges, there is need for the firm to undertake turnaround strategies that will

drive it out of the declining performance trends. The likelihood of a successful turnaround will

depend on the strategies that are undertaken by the leadership of the firm. Research on

turnaround strategies has considered a number of factors that influence the likelihood of

recovery (Ramanujan & Varadarajan, 2007). According to Lohrke, Bedeian and Palmer

(2010), the severity of the financial deterioration and management failure has been highlighted

as one of the contributing factors to turnaround strategy formulation and likelihood of a

successful recovery.

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In these economically challenging times there are more and more businesses that find

themselves in a difficult situation where sales are falling, costs are rising and the creditors

getting ever more agitated (Finkin, 2007). Before a business owner or investor throws in the

towel and winds up the business it is worthwhile considering a turnaround approach which

before formulation, the root causes of the crisis must be established. The frequently

encountered causes include revenue downturn caused by a weak economy, overly optimistic

sales projections, poor strategic choices, poor execution of a good strategy, high operating

costs, high fixed costs that decrease flexibility, insufficient resources, unsuccessful Research

and Development projects, highly successful competitor, excessive debt burden, inadequate

financial controls and many others (Wheelan and Hunger, 2015).

Nearly every firm experiences a stage in their life-cycle with declining performance

threatening firm survival. While some firms continue to decline and eventually fail others

undergo successful turnarounds and return to prosperity. To enable this turnaround the

management should come up with smart strategies, implementation process and have

control/monitoring measures in place (Bowman, Schoenberg & Collier, 2013). Turnaround

strategies often fail since they focus on achieving a longer-term vision without getting out of

the hole in the first place thereby dying in the process, (David, 2016) some also fail because

they focus on getting out of hole without a strategy for sustainable recovery. Such turnarounds

which focuses on short-time survivability or a financial turnaround alone tend to be short-lived.

To get out of the hole successfully, certain longer-term sacrifices often need to be made if the

financial crisis is severe. Seamlessly dovetailing the actions of getting out of the hole, and

climbing the mountain, requires careful stakeholder management (Robins & Pearce, 2012).

According to Thompson and Strickland (2007), the overall goal of turnaround strategy is to

return an underperforming or distressed company to normal in terms of acceptable levels of

profitability, solvency, liquidity and cash flow. Turnaround strategy is described in terms of

how the turnaround strategy components of managing, stabilizing, funding and fixing an

underperforming or distressed company are applied over the natural stages of a turnaround.

Pearce and Robinson (2007) suggested that to achieve its objectives, turnaround strategy must

reverse causes of distress, resolve the financial crisis and yearn to achieve a rapid improvement

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in financial performance, regain stakeholder support, and overcome internal constraints and

unfavorable industry characteristics.

In order to achieve its objectives a turnaround strategy must reverse causes of distress, resolve

the financial crisis, achieve a rapid improvement in financial performance, regain stakeholder

support, and overcome internal constraints and unfavorable industry characteristics (Walshe,

2014). Turnaround management does not only apply to distressed companies' it in fact can help

in any situation where direction, strategy or a general change of the ways of working needs to

be implemented. Therefore, turnaround management is closely related to change management,

transformation management and post-merger-integration management (Boyne & Meier,

2009).). The turnaround strategy is meant to improve financial performance. It is aimed at

improving productivity of the existing operations, the confidence levels of the total workforce

and resources that could potentially be mined and ensuring that the full potential of land-based

operations is achieved (Pearce & Robinson, 2007).

Like many other developing markets, the retail industry in Kenya is highly fragmented with an

estimated 120,000 shops. It is estimated that the three quarters of all retail shopping is

transacted through small single shops and kiosks spread across the country while the remaining

quarter is covered by numerous supermarkets. Supermarkets in Kenya have grown from a tiny

niche market in 1990 to 20% of urban food retail today (Walshe2014). According to Nielsen

(2015) supermarkets are self-serving stores handling predominantly food, drug and fast-

moving consumer goods with at least 150m of floor space. By use of the above parameters

there were two four hundred supermarkets in Kenya as of 2007 (Kamau, 2017). The major

supermarket chains in Kenya include Nakumatt, Uchumi, Tuskys and Ukwala whose outlets

are concentrated on major towns such as Nairobi, Mombasa, Nakuru, Kisumu and Eldoret.

Uchumi Supermarkets Ltd (Uchumi Supermarkets Limited) is a Kenya-based company

engaged in the retail supermarkets operation. It distributes bakery, wines, meat, fish,

vegetables, as well as kitchen appliances and decoration, among others. On 17th December

1976, Uchumi shareholders-Industrial Commercial & Development Corporation (ICDC),

Kenya Wine Agencies Limited (KWAL) and Kenya National Trading Corporation (KNTC) -

all Government owned parastatals entered into a management contract with Standa SPA of

Italy. In the 1990's Uchumi spearheaded the hypermarket concept in Kenya. In early 2000s

5

Uchumi started to experience financial and operational difficulties occasioned by a sub-optimal

expansion strategy coupled with weak internal control systems. As a result, on 31st May 2006,

the Board of Directors resolved that the Company ceases operations and on 2nd June 2006, the

Debenture Holders placed the Company under receivership. Simultaneously, the Capital

Markets Authority (CMA) suspended the Company’s listing on the Nairobi Securities

Exchange (NSE) (Uchumi Supermarket, 2017).

Following a framework agreement between the Government of Kenya, suppliers and debenture

holders, the company was revived and commenced operations from 15th July, 2006 under

Specialized Receiver Manager (SRM) and interim management. The management and staff

have since worked tirelessly to redeem the company. From a negative bottom line in 2006, the

company has reported profits in the last three financial years. The lending banks in turn lifted

the company’s receivership in 2010 and the company was successfully re-listed in the Nairobi

Securities Exchange on 31st May 2011 exactly five years to the date that it was suspended

(Uchumi Supermarket, 2017).

1.2 Statement of the Problem

The dynamism of the environment implies that organization have to constantly redesigned their

strategies in order to remain competitive or to survive (Thompson, 2013). Failure to effectively

adapt the organization leads to a strategic problem. Such a problem will be evidenced by a

mistake between what the organization offers and what is in the market. Achieving turnaround

calls for a totally different set of skills to probe into the causes of decline and to formulate

appropriate strategies to transform the company for a fresh lease of life. Turnaround strategies

are vital for firms in the realization of sustainable economic growth since their activities impact

directly on overall public and private sector expenditures and resources (Walshe, 2014). Top

management must rescue a declining firm by responding swiftly through strategies and policies

to external and internal factors causing decline with an aim of substantial recovery. A firm may

be said to be in decline when it experiences a resource loss sufficient to compromise its

viability. Turnaround may be considered to have occurred when a firm recovers adequately to

resume normal operations (Finkin, 2007).

Not all turnaround cases are a success story, Schendel, Patton and Riggs (2016) studied two

hundred and sixty cases of turnaround and only fifty-six had managed to recover over a four-

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year period. This suggests that turnaround especially in difficult operating environment like

mature, competitive businesses is not easy. Turnaround attempts more often than not fail where

firms concede defeat and have to wind up. Turnaround failure presents harsh realities of

liquidating a firm’s assets to try returning some capital to shareholders, creditors or owners. It

is always a drastic and sad situation to face up to the hard reality of liquidation, however, it

may be sometimes be the best thing to do rather than to go on into even the sadder and worse

situation (Khandwalla, 2011).

Uchumi has had a bad reputation over the years regarding the financial ability to sustain

profitability. Last year, it survived a court petition to wind up after several creditors held that

it owed them close to Sh300 million. In January, it announced that it made a Sh2.8 billion post

tax loss. The latest scandal will send stakeholders crying to the bank because there is no waking

up from a Sh67 million debt ((Kamau, 2017). The current situation of Uchumi can be likened

to that of a patient fighting for life in an Intensive Care Unit. Even as it continues denying the

allegations made by Euromart regarding the Sh67 million debt, Uchumi has in the past failed

to pay back suppliers. It has also made no successive attempts of revival that can put it on the

ranks of fellow competitors. At this moment, all it needs is an exit strategy to give space to

those in the same business ((Kamau, 2017).

There has been research carried out on turnaround strategies but little has been done in the

retail businesses sector hence the need to fill the gap. Mbwale (2014) conducted a study in

Namibia on Namdeb’s turnaround strategy to improve its financial performance and

established the need to review the current introduced turnaround strategy might be useful to

improve the financial performance. Roberts (2015) conducted a strategy in United Kingdom

on the role of management in the turnaround process and established that management has a

role in the turnaround process. Ngati (2013) did a study on turnaround strategies adopted by

the New Kenya Cooperative Creameries Limited and found that turnaround strategies were

employed in order to achieve a turnaround process in New KCC Ltd. Ondimu (2015)

conducted a study on turnaround strategies and performance of selected Commercial Banks in

Kenya and showed that turnaround strategies had a positive effect on the performance. All the

above studies have been done in different contexts, therefore this study seeks to establish the

turnaround strategies that should be adopted by Uchumi supermarket in order to fill the gap.

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1.3 General Objective

The purpose of the study was to assess the turnaround strategies in a competitive environment

a case of Uchumi Supermarket.

1.4 Specific Objective

The study was guided by the following specific objective

1.4.1 To evaluate the role of turn around strategies in solving financial decline in

organisations.

1.4.2 To determine the turnaround strategies in a competitive that should be adopted by

Uchumi supermarket.

1.4.2 To establish the challenges that Uchumi supermarket may face in adoption of the

turnaround strategies in a competitive environment.

1.5 Significance of the Study

1.5.1 Uchumi Supermarket Management

This study will be of value to the management of Uchumi Supermarket as the study will be a

source of information on the different turnaround strategies that can employed by the

supermarket in changing its fortune in a declining environment. From the study, the

management of the supermarket will be able to identify their appropriate strategy to be adopted

and ways in which to customize the turnaround strategies to their individual organization’s

situation to make it profitable.

1.5.2 Management of Other Organisations

The findings of the study will be of benefit to other organisations which are in decline and also

the stable organisations as they will know the signs and process of decline and also identify

the turnaround strategies to be employed to revive them to better their performance through

employment of such strategies. The outcomes of this study will give rise to the formulation of

an appropriate strategic framework to assist organizations in implementing organizational

turnarounds.

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1.5.3 The Government and Policy Makers

The Government of Kenya and the policy makers will benefit from the findings of this research

since they shall be quite interested on the turnaround strategies being adopted by Uchumi

Supermarket and hence put in place policies that will guide and encourage other firms within

and outside the industry in coming up with strategies that threatens the survival of the firms

and also put in place a conducive environment to prevent their decline.

1.5.4 The Academia and Researchers

The findings of the research will be used to develop new models for implementing turnaround

strategies that will be adopted under various situations. The research will also provide more

insight into the implication of turnaround strategies on organizational performance and build

their body of knowledge for more expounded research which they will use as a reference for

future studies.

1.6 Scope of the Study

The study aimed at establishing the turnaround strategies that should be adopted by Uchumi

supermarket. The target population was limited to the 84 employees at the Uchumi

supermarket head office (Uchumi Supermarket, 2017). The study was partial in terms of

coverage as it only covered the head office for easier collection of data and the limitation of

time. The study was conducted for a period of 3 months from July to September 2017.

The study experienced a number of limitations; first the respondents to be approached did not

give full information fearing that the information sought would be used against them or against

Uchumi supermarket. The study assured them of confidentiality and that the information would

not be shared to anyone as it would be used purely for academic purposes. The study also

encountered problems in eliciting information from the respondents as the information required

was subject to areas of feelings, emotions, attitudes and perceptions, which could not

accurately be quantified and/or verified objectively. The study minimized this by making the

questions objective. Some respondents even turned down the request to fill questionnaires. The

study handled the problem by carrying an introduction letter from the University and assuring

them that the information they gave would be treated with confidentiality.

9

1.7 Definition of Terms

1.7.1 Strategy

According to Thompson and Strickland (2007) strategies are the means by which long-term

objectives will be achieved. They further point that strategies are unified, comprehensive and

integrated plans that relate the strategic advantages of the firm to the challenges of the

environment.

1.7.2 Turnaround

Turnaround refers to recovery to profitability from a loss situation. Following a loss, a firm’s

top management team must respond in an effort to ensure that the firm’s survival (Situma,

2016).

1.7.3 Retrenchment

Retrenchment means involuntary separation of an employee due to the replacement of labour

by machines or the close of the department. Retrenchment strategies involve cutting operating

costs and divestment of non-core assets (Beeri, 2009).

1.7.4 Corporate repositioning

Corporate repositioning is about repositioning your company and its products and services to

be seen as having few credible substitutes in the marketplace. It's about largely winning the

sale before a salesperson ever talks to the prospect or knows the prospect is in the market to

buy (Collard, 2011).

1.7.5 Restructuring

Restructuring is defined as a significant modification made to the debt, operations or structure

of a company (Heany, 2015). This type of corporate action is usually made when there are

significant problems in a company, which are causing some form of financial harm and putting

the overall business in jeopardy.

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1.7.6Turnaround Process

Turnaround process is a process dedicated to corporate renewal. It uses analysis and planning

to save troubled companies and returns them to solvency (Thompson and Strickland, 2007).

1.7.7 Turnaround Strategy

Boyne, (2009) points out that turnaround strategy is defined by the components of the

turnaround strategy which include stabilizing, managing, fixing and funding of a distressed or

underperforming corporation that are implemented during the stages of the turnaround.

1.7.8 Challenges

Challenges are the prevailing, new or emerging circumstances that threaten the existence and

sustainability of firm/ business entity (Morris, 2007).

1.7.9 Strategy Implementation

Is the process through which a chosen strategy is put into action. It involves the design and

management of systems to achieve the best integration of people, structure, processes and

resources in achieving organizational objectives (Thompson & Strickland, 2007).

1.7.10 Competitive Environment

A competitive environment is the dynamic external system in which a business competes and

functions (Porter, 1996).

1.8 Chapter Summary

This chapter presents the introduction to the study. The chapter provided the background

information of the stud and the problem statement of the study. The objective of the study was

also presented that was to determine the turnaround strategies that should be adopted by

Uchumi supermarket. The specific objectives were also clearly outlined that included; to

evaluate the turnaround process that determine the strategies to be used at Uchumi

Supermarket, to determine the turnaround strategies that should be adopted by Uchumi

supermarket and to establish the challenges that Uchumi supermarket may face in adoption of

the turnaround strategies. Finally, the scope, definition of specific terms that was used in the

project was presented. The next chapters represented literature review that reviewed the

11

turnaround strategies that should be adopted by Uchumi supermarket. The third chapter was

research methodology that focused on research design, population and sample design, data

collection method, research procedures, data analysis method and chapter summary. The fourth

chapter was the interpretation and presentation of the result findings obtained from the field

and finally discussion, conclusion and recommendations that provided the major summary of

the study was made.

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CHAPTER TWO

2.0 INTRODUCTION

2.1 Introduction

The following chapter will review turnaround strategies in a competitive environment a case

of Uchumi supermarket. The chapter will then determine the turnaround strategies that should

be adopted in a competitive environment. Finally, it will determine the strategic management

practices that address challenges faced by female entrepreneurs while trying to grow their

businesses. Finally, it will establish the challenges that Uchumi supermarket may face in

adoption of the turnaround strategies in a competitive environment and the chapter summary.

2.2 The Role of Turn Around Strategies in Solving Financial Decline in Organisations

To survive in a globally competitive market, firms need to take advantage of the new

technological opportunities for efficiently serving their target market and quickly responding

to the needs of customers during the turnaround process. This forces firms to become craftier

in their resource management and manipulation. In the end, the ability to deal with a

sophisticated demand results not only in a direction towards more differentiated products but

also in a competitive edge in the global market. Ondimu (2015) points out the role of

demanding customers for driving forward new solutions and products. Decisions should be

made contingent to the prevailing situations.

Turnaround occurs when a firm undergoes a survival threatening performance decline over a

period of years but is able to reverse the performance decline, end the threat to firm survival

and achieve sustained profitability (Chowdhury, 2012). Corporate turnaround is also defined

as the implementation of a set of actions required to save an organization from business failure

and return it to operational normality and financial solvency. Turn around has been discussed

as a number of possible processes. Either a downturn phase followed by upturn phase or decline

stemming followed by reversal of the decline (Robbins & Pearce, 2012). The first task here is

always diagnosis of the underlying reasons for poor corporate performance. Crafting

turnaround strategies then follows (Thomson & Strickland, 2013). Managers need to create

strategic management systems that integrate all disciplines and all areas of operation of the

13

organization in outcome based structures of the future the manager must critically look at their

performance and compare it to others (Thomson & Strickland, 2013).

Turnaround is considered to have occurred when a firm recovers adequately to resume normal

operations, often defined as having survived a threat to survival and regained sustainable

profitability (Barker & Duhaime, 2014). The recovery is due to a decline in performance which

in most cases is situational. When a firm’s Top Management Team responds inappropriately,

it may continue in its effort to reverse a firm’s decline although such efforts will most likely

become more difficult as slack resources become exhausted, organization stakeholders

withdraw support and key managers’ exit (Arogyaswamy et al, 2012). Thus, during decline the

management team must make expeditious well- informed decisions to hasten a firm’s recovery.

Research indicates that when management formulate and implement informed strategies, their

firms can turnaround even when facing declining environment munificence, increasing

environmental dynamism, escalating internal problems or limited slack resources (Barker &

Duhaime, 2014). Pearce & Robinson (2014) present the view that strategic management

research provides evidence the firms that have used a turnaround strategy have successfully

confronted decline.

2.2.1 The Signs of Financial Decline

Early and eminent contributors to the field of turnaround argued that downturns came about as

a result of unfavorable environmental shifts combined with organizational inefficiency or

inappropriate competitive strategies (Schendel, Patton & Riggs, 2016). This view that the roots

of firm decline and possible failure can be traced to industry contraction or firm specific

problems received significant support in the broader management literature (Chowdhury &

Lang, 2013).

According to Scherrer (2013) long before a business commences its decline, warning signals

start flashing, but managers often do not notice the red lights, or they ignore them. Almost

every business will experience financial distress or pressure at some point in time the key to

survival lies in the owner’s ability to diagnose problem areas and take corrective action

quickly. This requires careful monitoring and measurement of key financial metrics which

highlight possible areas of financial pain. Despite the importance of tracking profitability as

14

well as cash flow, many business owners fail to measure even a handful of key performance

indicators (KPI) each month and often ignore the classic warning signs, which if left

unaddressed, could foreshadow the death of their business (Chowdhury & Lang, 2013).

Every business that is in distress shows clear symptoms of impaired profitability and cash flow.

Below are ways but not limited to through which firm’s management can recognize its firm is

about to have financial problems. Business and Management Warning Signs which can be

identified through Information found on financial statements (Chowdhury, 2012). Changes in

the market environment often trigger if not cause deterioration in a company's financial health

i.e. downturn in the economy, the appearance of a strong competitor, an unexpected shift in

buyer's habits, among other things, can put serious pressure on a company's revenues and

profitability. Lack of up-to-date financial information and failure to calculate or forecast cash

flow and continued erosion of gross profit margins, over-reliance on borrowed funds a firm

which is exposed to higher business risk, faces a greater chance of financial distress (Pandey,

2014).

2.2.2 The Causes of Financial Decline

Organizational decline represents substantial resource losses over time (Cameron, Whetten &

Kim, 2012) and can be either a gradual process or a sudden, unexpected disruption. Substantial

organizational decline leads to crisis where the survival of the firm is threatened. Managers

tend to attribute performance decline and any resulting organizational crises to the external

factors beyond their control, such as competition. Empirical studies, however, show that very

few business failures are the 20 results of outside factors only (Boyle & Desai, 2011). Instead

organizational failure is frequently linked to internal problems like failure to update products,

invest in core competencies and control cost. Apart from internal factors, external factors like

political, economic, social, technological, ecological and legal also play a decisive role in the

decline of an organization. It includes the role of unions, governmental regulations, safety and

health improvement measures, consumer organization pressures, shortage of energy and raw

materials etc. Research shows that external causes play a minimal role compared to the internal

causes in shifting the fortunes of the organization (Bruton & Wan, 2011).

15

The major cause of business failure lies within finance, operations and marketing the internal

elements of a business. The management has direct control over these functions and are the

force that drives them, yet 80 percent of business failures are caused by management’s inability

to control the internal elements (Scherrer 2013). Internal causes of financial distress include

Unanticipated changes in the factors providing competitive advantage e.g. the Introduction of

new products or services by competitors (Barker & Duhaime, 2014). The loss of firm specific

skills (human capital) which were the foundation of the firm’s competitive advantage, as noted

by Castanias and Helfat (2011). The adoption of misplaced strategies, or failure to update its

traditional capabilities, experience, knowledge or resources, as noted by Grant (2016)

Insufficient Accounting Practices and poor debt management can also lead to financial distress.

The external environment may also affect the operations of a company adversely. Pandey

(2014) has noted that macro-level environmental forces are all those forces that are external to

the firm. A change in an external uncontrollable element will be felt by all businesses in an

industry, but the impact these changes have on specific business depends on the strength and

stability on the management team (Scherer, 2013). Some of the major issues, which are

generated by the external environment, are Government policies regarding taxation, power

tariff, power supply, customs duties and import duties, restrictions on imports and exports

among others. Quota system imposed by the government on raw materials/ finished goods.

Large numbers of firm’s entry thereby sudden increase in the capacity. Development of new

technology as well as sudden withdrawal by some of the major customers resulting into decline

in orders. Change in consumers’ tastes and preferences. Strained relationship with the external

government. A change in the lending policies of the financial institutions.

2.2.3 The Steps in Turnaround Process

In turnaround strategies, the focus to most stakeholders is on the speed of change, rapid cost

reduction and/or revenue generation. The length of time necessary to complete successful

business turnaround varies (Scherrer, 2013). Much research has been done to find out the

sequence that precedes the turnaround in a company. According to Simister (2014) The

principal aim of any corporate turnaround is to remove the company quickly from any

immediate danger of going into liquidation, and to focus on activities and tasks that restore

16

corporate value. In order to achieve this, Smith and Graves (2015) identified six broad stages

that a company in a turnaround situation will need to go through:

The first stage is management change which involves the board of directors or senior

management recognizing that change is necessary and then initiating a corporate turnaround

programme. The second stage is business review where the company must quickly identify the

underlying problems causing the current situation and understand the business’ chances of

survival. Business restructuring plan is the next stage is to identify appropriate strategies and

develop an achievable recovery plan with detailed functional actions. Typically, this will

include action to: restructure outstanding debt obligations, reduce operating costs, improve

management of working capital, enhance product pricing and customer mix, streamline

product lines and accelerate growth of high potential products (Smith & Graves, 2015).

The plan must then be communicated to all key stakeholders in the business, including the

board of directors, the management team and employees, to ensure buy-in. communicating the

plan with external parties, such as the bank, key suppliers and creditors will be critical to

gaining credibility and restoring confidence in the business (Smith & Graves, 2015).

Implementation is the next stage where at the emergency stage, companies must do whatever

is necessary to survive. This may include: making redundancies, eliminating departments and

drastically reducing all non-essential costs. Positive cash flow is critical and must be

established as quickly as possible. Cash will often be required to implement the turnaround

strategy and this must also be sourced without delay. Often, unprofitable business units or

operations are sold as a means to raise cash. Operations that cannot be sold within a reasonable

timeframe may be liquidated (Smith & Graves, 2015).

Stabilization is the next stage where once the business has stopped hemorrhaging, overheads

have been cut and loss-making operations have either been divested or liquidated; the main

focus is on improving the efficiency and effectiveness of the remaining business operations.

To ensure long-term survival, the company must increase profitability and its return on

investment while ensuring the smooth operation of existing facilities. This is often the hardest

stage for an organization to achieve successfully (Smith & Graves, 2015). Improving return on

investment is typically more challenging than removing loss-making operations or cutting

costs. Embedding the change is the final stage concentrates on embedding the turnaround, with

17

the company gradually returning to financial health. Management behavior and reward and

compensation systems need to focus employees on profitability, return on investment and value

creation (Smith & Graves, 2015).

2.3 Turnaround Strategies that Should be Adopted in a Competitive Environment

Different scholars studying different business environment circumstances have identified

different strategies of addressing prevailing challenges in a competitive environment. Akrani

(2012) describes a turnaround strategy as an analytical approach used in solving the main or

root cause of failure of a firm that is making losses that will help it know the most crucial

reasons behind its failure. To solve the issues facing such a company, restructuring and a long

term strategic plan must be designed and implemented. The turnaround strategy’s overall goal

is to put back a distressed or underperforming firm to normality in terms of satisfactory levels

of cash flow, profitability, liquidity and solvency.

To achieve the above objectives, a turnaround strategy must initially start with reversing the

factors that caused the financial distress, resolution of the financial crisis, achievement of a

speedy financial performance, regaining of shareholders trust and getting past internal

constraints and characteristics of the industry which may not be favorable to the firm (Smith

& Graves, 2015). There are generally two broad and overlapping stages of a turnaround that

are acknowledged in available literature that is; decline stemming strategies and recovery

(Robbins & Pearce, 2012).

The overall goal of turnaround strategy is to return an underperforming or distressed company

to normal in terms of acceptable levels of profitability, solvency, liquidity and cash flow.

Turnaround strategy is described in terms of how the turnaround strategy components of

managing, stabilising, funding and fixing an underperforming or distressed company are

applied over the natural stages of a turnaround (Filatotchev & Toms, 2016). Turnaround refers

to recovery to profitability from a loss situation. Following a loss a firm’s top management

team must respond in an effort to ensure the firm’s survival. A faltering firm will most likely

continue to decline and may eventually fail if its top management team likes the ability to

respond successfully to external and internal factors causing decline. To achieve a successful

18

turnaround, a management team must first stem a firm’s decline and select an appropriate

strategy for recovery (Situma, 2016).

2.3.1 Repositioning and Restructuring Strategies

Corporate repositioning is about change. It's about repositioning the company in the mind of

prospects. Corporate repositioning is about repositioning your company and its products and

services to be seen as having few credible substitutes in the marketplace. It's about largely

winning the sale before a salesperson ever talks to the prospect or knows the prospect is in the

market to buy. Corporate repositioning is about repositioning your brand (Heany, 2015). If

nearly every sale of yours seems to come down to price, if you're closing fewer sales than you

used to, if your margins keep shrinking, you may need to reposition your company in the

marketplace, in the minds of both your prospects and your people.

Restructuring is defined as a significant modification made to the debt, operations or structure

of a company (Heany, 2015). This type of corporate action is usually made when there are

significant problems in a company, which are causing some form of financial harm and putting

the overall business in jeopardy. The hope is that through restructuring, a company can

eliminate financial harm and improve the business. When a company is having trouble making

payments on its debt for instance, it will often consolidate and adjust the terms of the debt in a

debt restructuring. After a debt restructuring, the payments on debt are more manageable for

the company and the likelihood of payment to bondholders increases. A company restructures

its operations or structure by cutting costs, such as payroll, or reducing its size through the sale

of assets. This is often seen as necessary when the current situation at a company is one that

may lead to its collapse (Akrani, 2012).

Keith (2008) posits that corporate reorganization can be tricky and difficult to get through. The

approach to successful repositioning includes four distinct phases. The first two, Research and

Repositioning, are aimed at converting the brand. Phase three which is Realignment, focuses

on making believers of your staff and Phase four referred to as Reinforcement, is about

converting others. Successful repositioning is about faith; Staff members' faith that

management is committed to and will support the revised market strategy.

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2.3.2 Retrenchment

Retrenchment strategies involve cutting operating costs and divestment of non-core assets. In

times of turbulent environment, business horizons often shorten with owners/managers

focusing on immediate survival rather than on long-term aims (Hanks,2009). Believing it is

easier to reduce costs than generate additional revenue, many businesses choose to retrench.

Beeri (2009) suggests that successful turnarounds are characterized by strategies of

retrenchment, repositioning and reorganization. Failing companies that use one or more of

these strategies are likely to perform better. Retrenchment is an integral component of

turnaround strategy. The critical role of retrenchment in providing a stable base from which to

launch a recovery phase of the turnaround process is well established.

Asset retrenchment which is often implemented concurrently with or immediately after the

cost efficiency drive. An asset retrenchment strategy involves assessing areas of the

organization that are underperforming and determining whether their efficiencies can be

increased or if it would be best to discontinue or divest from such an asset (Heany, 2015).

Various studies have also shown that the asset retrenchment strategies are only implemented

if strategies on cost efficiency don’t have a substantial effect on the company’s financial

stability. However, it is normally the second step to follow after the cost efficiency strategy.

(Robbins & Pearce, 2012). Robbins and Pearce (2012) state that the effectiveness of asset

retrenchment strategy as a part of the turnaround strategy largely relies on the ability of the

firm to generate cash from disposal of any asset.

Reorganisation deals with all the people issues in the business. It entails restructuring,

restaffing, reskilling and turnaround leadership revitalization to yield improved leadership,

management, organisational structure, organisational alignment and culture. Reorganisation is

invariably required to ensure success of the other turnaround strategies. Depending on the

turnaround situation, reorganisation can be limited to leadership alignment, and better

management systems for planning and control of the company. Often, however, the extent of

reorganisation required goes as far as changes in top management and in the organisational

structure (Lohrke, Bedeian & Palmer, 2010).

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2.3.3 Top Management Changes

Turnaround management demands competent leadership to pave way on the implementation

of the policies, motivate the subordinates and communicate the importance of the process.

Collard (2011) emphasizes that it is always safer to change the leadership whenever an

organization is conducting turnaround management. Experience at the top management is

crucial since the existent leadership has a clear understanding of the culture of the organization.

Despite that, retaining the existent leadership who are not ready to admit failure on their part

in provision of competent guidance in implementation of the organization’s corporate strategy

is risky (Bibeault, 2012).

Managers attempt to turn around their organizations, through structural changes in the

organization and/or market repositioning (Banaszak-Holl, 2010). In addition, there are a wide

variety of managerial responses used during periods of crisis and decline that reflect more

general processes, routines, and rituals of managerial decision making. Slatter and Lovett

(2014) notes that management change phase involves selecting a chief executive officer who

can successfully lead the turnaround. This individual must have a proven track record and the

ability to assemble a management team that can implement the strategies to turn the company

around. Collard (2011) argued that they are less motivated to engage in turnaround strategies

especially if they are strongly committed to the firm’s current strategy or attribute decline to

external causes only. They further argue that changes of the top management team can endow

with important signals to outside stakeholders like lenders and creditors that the firm is

separating itself from past failed strategies.

A change of the company’s chief executive officer is normally implemented early in the

turnaround strategy It acts as an indication of how deep the firm’s crisis are and urgent action

is needed to correct the rot (Lee & Johns, 2014). There are two main reasons why the chief

executive officer is replaced. The first being that the shareholders and the media place the

responsibility of the negative performance on the CEO. When the incumbent CEO is replaced

it sends out the message that change is in the air both to external parties and also to the

employees (Daily & Dalton, 2015). The change is also a sign that the status quo in untenable,

that the firm is serious in its readiness to transform itself and that the strategic turnaround has

begun (Arogyaswamyet al., 2015). The second common reason for the chief executive officer’s

21

replacement is when the current CEO either ignores or does not see the existing problems or

he applies past solutions to current problems.

The top management must employ diversification strategies, where a company’s prior-

acquisition diversification strategy profile influences a company’s diversification strategy.

Jeyavelu (2014) suggests that organizational behavior is guided by routines that stem from

prior experience and from performance feedback. When a company has more experience with

a strategic action, it increases the likelihood of repeating that action in the future. Over time,

the strategic action becomes a routine for the firm. The possibility of a firm will be continuing

the same diversification strategy in the future is dependent on the performance feedback

outcome of a company’s prior diversification strategy. Positive performance feedback

increases the likelihood the company will repeat its diversification strategy in the future.

The successful carrying out of a diversification strategy makes the firm more confident that

they have the skills, knowledge and capabilities to be successful in that diversification strategy

(Lee &Johns, 2014). Furthermore, repeating a successful diversification strategy is perceived

to be less risky than using alternative strategies with limited organizational experience.

Therefore, positive performance feedback reinforces the persistency of using a diversification

strategy in the future. However, when a company is experiencing negative prior-diversification

performance feedback it will explore for alternative strategies.

2.4 Challenges in Implementing Turnaround Strategies in a Competitive Environment

According to Beer, Eisenstat and Specter (2010) organizations seems to have difficulties in

implementing their strategies in a competitive environment, however, researchers have

revealed a number of problems in strategy implementation e.g. weak management roles in

implementation, lack of communication, lack of commitment to the strategy, unawareness or

misunderstanding of the strategy, unaligned organizational systems and resources, poor

coordination and sharing of responsibilities (Beer & Eisenstat, 2010). Lewin and Volberda

(2009) stated clearly that most of the individual barriers to strategy implementation that have

been encountered fit into one of the following interrelated categories: too many and conflicting

priorities, a top down management style, inter functional conflicts, poor vertical

communication and inadequate management development. Jeyavelu (2014) identified

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challenges to be; insufficient partner buy-in; insufficient leadership attention; ineffective

leadership; weak or inappropriate strategy and resistance to change.

Drazin and Howard (2014) asserts that the most complicated and time-consuming part of

strategic management is execution of the strategy, whereas formulation of the strategy is

basically intellectual and creativity with emphasis on synthesizing and analyzing. Turnaround

strategies implementation has been affected by severe challenges ranging from limited

resources, severe time pressures and the reduced support by stakeholder. Firms face unique

challenges when implementing turnaround strategies which arise from internal and external

sources alike.

2.4.1 Resistance to Change

Implementation of turnaround strategy does not automatically follow strategy formulation

(Barker, & Duhaime, 2014). There is always some resistance, which occurs whenever there is

a departure from historical behavior, culture and power structure. It is therefore a multifaceted

phenomenon which introduces delays, additional costs and instabilities into the process of

change. Kottler (2016) cites a culture of complacency from an inept leadership as the main

reason that necessitates many turnaround situations. He states that a typical 20th century

organization has not operated well in a rapidly changing environment because of lack of

leadership.

Firms in turnaround tend to be over managed and under led” have a shortage of leaders who

are able to create the badly needed change. Managers who resist change develop a strong

arrogant culture and fail to acknowledge the value of customers and stakeholders. (Stopford &

Baden-Fuller, 2010) stated that there were mostly individual barriers to turn around strategy

implementation such as too many and conflicting priorities, insufficient top team functions, a

top down management style, inter-functional conflicts, poor vertical communication, and

inadequate management development (Barker, & Duhaime, 2014).

The employees should be undertaken through a proper training and development program to

understand the business processes and ways of handling issues. The managers and supervisors

should put more emphasis in cultural norms in the course of everyday tasks (Bibeault, 2012).

Slatter and Lovett (2014) contends that the organization that aspires to recover from decline

23

should have leaders who are competent and knowledgeable to overcome strategy

implementation challenges. Competent leaders contribute greatly towards the success of a

business especially on the way they make decisions and the strategies that they choose.

Resistance to change also impacts negatively to turn around strategy implementation. Change

aimed at making improvement in the organization is at the heart of strategic management.

Every strategy developed by senior managers is aimed at strengthening and enhancing

organization’s performance as well as sustaining and nourishing its very existence. To

overcome the resistance, education and effective communication, which, involves the

explanation of the reasons for and means of strategic change can play a key role (Johnson &

Scholes 2012).

2.4.2 Inadequate Resources

Resources available to an organization underpin the strategic capability of an organization

since it is resources that are deployed into the various stages of turnaround strategy

implementation. Inadequate resources may hinder sound strategy implementation in any

organization or may limit the choices of strategy available to it (Donaldson, 2014). Change

aimed at making improvement in the organization is at the heart of strategic management.

Every strategy developed by senior managers is aimed at strengthening and enhancing

organization’s performance as well as sustaining and nourishing its very existence. To

overcome the resistance, education and effective communication, which, involves the

explanation of the reasons for and means of strategic change can play a key role.

Most companies attempting to develop new organization capacities stumble over these

common organizational hurdles, competence, coordination, and commitment. Jeyavelu (2014)

indicated that these hurdles can be translated into the following implementation problems,

coordination of implementation activities was not effective enough, capabilities of employees

were insufficient, training and instruction given to lower level employees were inadequate and

leadership and direction provided by departmental manager were inadequate (Beeri, 2014).

Collard (2011) indicates that some firms lack adequate funds to invest in modern technologies

for example information communication technology (ICT) is a major challenge that impact

negatively on the performance of an organization. Failure to adopt modern to technologies may

24

lead to reduced efficiency, poor quality services, and increased costs of operation this might

expose the organization to poor performance (Slatter and Lovett, 2014).

Lack of adequate resources namely funds, machinery /equipment, human capacity, skills and

experience. The adoption of proper or appropriate policies can be quite useful. Equally

important is the adoption of an effective control system during strategy implementation. Turn

around strategies often fail to succeed due to lack of commensurate logistical and financial

back up (Scherrer, 2013). The resources and competences of the organization make up its

strategic capability, which enables success in implementation of chosen strategies. Just as there

are outside influences on the organization and its choice and implementation of strategies, so

there are internal influences. These internal influences constitute strengths and weaknesses.

Competences such as skills and knowhow enhance successful strategy implementation (Grant,

2016).

2.4.3 Strategic Drift

According to Lee and John (2014) strategies progressively fail to address the strategic position

of the organization and performance deteriorates. History suggests that most organizations run

into difficulties because of failure to acknowledge and address strategic drift. Strategic drift is

a situation where strategies progressively fail to address the strategic position of the

organization. Firms go through long periods of relative continuity during which established

strategy remains largely unchanged or changes incrementally. This can go on for considerable

periods of time in some organizations (Scherrer, 2013). This is then followed by a flux if it is

not well managed and the flux sets in which strategies fail but not in a very clear direction.

There may then be transformational change fundamental change in which there is change in

strategic direction. There are usually strong forces at work that are likely to push firms into a

strategic drift. Incremental strategic change is a natural outcome of the influence of

organizational culture, individual and collective experience, political processes and prior

decisions (Pandey, 2014).

Failure to work out the strategy by ensuring that the organization’s daily activities, work efforts

and resources are directed as much as possible towards the implementation of strategy which

involves developing operational plans and tactics through which the otherwise abstract strategy

25

will be implemented (Chowdhury, 2012). These plans and tactics are developed at operational

or functional level of strategic management. It is actually the inability to match strategy to the

institutions of the organization which include, structure, leadership, culture, support systems,

processes and policies. Many of the organization strategies and tactics overlap each other.

There are many possible sets of answers for the same set of requirements. There could be many

situations like that when a set of strategic tactics is chosen for implementation. Suitability of

chosen strategic tactics depends on the current production process, culture and many other

factors that are in place. Thus, a line of strategic tactics initially identified at the start of a

production process may not be valid later in the production process. Because of the competing

nature, an updated set of tactics might be more appropriate and cost effective later (Kamau,

2014).

However, if changes in an organization’s environment are at a greater rate than that rate of

incremental strategic change, the organizations will get out of line with its environment (David,

2016). There is another danger that organizations become merely reactive to their environment

and fail to question or challenge what is happening around them or to innovate to create new

opportunities. This means that strategy development processes in organizations need to

encourage people to have the capacity and willingness to challenge and change their core

assumptions and ways of doing things. Internationalization affects size of the market and range

of competitors, relations with potential partners’ overseas and organizational activities across

national boundaries (Situma, 2016).

2.5 Chapter Summary

This chapter basically reviews empirical literature regarding turnaround process that determine

the strategies to be used at Uchumi Supermarket, the turnaround strategies that should be

adopted by Uchumi supermarket and the challenges that Uchumi supermarket may face in

adoption of the turnaround strategies. It recognizes that turnaround occurs when a firm

undergoes a survival threatening performance decline over a period of years but is able to

reverse the performance decline, end the threat to firm survival and achieve sustained

profitability. The turnaround strategy’s overall goal is to put back a distressed or

underperforming firm to normality in terms of satisfactory levels of cash flow, profitability,

liquidity and solvency. Turnaround strategies implementation has been affected by severe

26

challenges ranging from limited resources, severe time pressures and the reduced support by

stakeholder. The next chapter three will cover the research methodology that will be used, in

an attempt to achieve the objectives of the study.

27

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter focused on the research methodology that will be used, in an attempt to achieve

the objectives of the study which is to assess the turnaround strategies in a competitive

environment a case of Uchumi Supermarket. Attention is focused on research design,

population and sample design, data collection method, research procedures, data analysis

method and chapter summary.

3.2 Research Design

The study will adopt a descriptive research design which is concerned with determining the

frequency with which something occurs or the relationship between variables. A descriptive

research design was preferred in this study since it allows for analysis of different variables at

the same time and enables the researcher to describe variables, situations and conditions

(Erikand & Marko, 2011). In addition, descriptive research design was chosen because it

enables the researcher to generalise the findings to a larger population. Thus, this approach is

appropriate for this study, since the researcher intends to collect detailed information through

descriptions and was useful for identifying variables and hypothetical constructs. This method

provided descriptions of the variables in order to answer the research questions in the study. It

was therefore an efficient way to use to obtain information needed to describe the attitudes,

opinions and views of the respondents on the assessment the turnaround strategies in a

competitive environment a case of Uchumi Supermarket.

3.3 Population and sample design

3.3.1 Population

According to Kothari and Garg (2014) a population is a well-defined set of people, services,

elements, events and group of things or households that are being investigated. Target

population is the specific population about which information is desired (Kothari, 2006). This

definition ensures that population of interest is homogeneous. Population studies are more

28

representative because everyone has an equal chance to be included in the final sample that is

drawn according to (Mugenda & Mugenda, 2003). The population for this study was limited

to the 84 employees at the Uchumi supermarket head office, where there was 7 senior

management employees comprising of 8%, 22 senior management employees comprising of

26% and 55 senior management employees comprising of 65% (Uchumi supermarket, 2017).

3.3.2 Sampling Design

3.3.2.1 Sample Frame

A sampling frame is a list of all the elements in the population from which the sample is drawn

(Cooper and Schindler, 2011). A sampling frame is also a list or other device used to define a

researcher's population of interest (Kombo & Tromp, 2006). The sampling frame defines a set

of elements from which a researcher can select a sample of the target population. Because a

researcher rarely has direct access to the entire population of interest in social science research,

a researcher must rely upon a sampling frame to represent all of the elements of the population

of interest

3.3.2.2 Sampling Technique

Sampling technique is the procedure a researcher uses to gather people, places or things to

study, (Kombo & Tromp, 2006). To achieve the desired homogenous grouping, the probability

sampling technique will be the most relevant as it allows for some form of random selection

(Gill & Johnson, 2006). The sample was 84 employees that comprised top level management,

middle level management and lower level management staffs at the Uchumi supermarket head

office. Stratified random sampling technique was used to select the sample from the 3 strata.

According to Cooper and Schindler (2011), stratified random sampling technique produces

estimates of overall population parameters with greater precision and ensures a more

representative sample is derived from a relatively non-homogeneous population.

29

3.3.2.3 Sample Size

Mugenda & Mugenda (2008) explain a sample to be a small group that is obtained from an

accessible population. It is further recommended that a sample of at least 10% of the total

population be used as a representation for true and accurate data. For descriptive studies, at

least 10% - 20% of the total population is enough to fulfill a study (Mugenda & Mugenda,

2008). A sample of 50% of the total population is thus considered sufficient and was used

therefore 42 respondents constituted the sample population for the study.

Table 3.1: Sample Size

Category Population Frequency Sample Ratio Sample Size

Senior management 7 0.5 4

Middle level management 22 0.5 11

Low level management 55 0.5 28

Total 84 0.5 42

3.4 Data Collection Method

Data collection procedure is the process of acquiring subjects and gathering information

needed for a study (Erikand & Marko, 2011). The study used primary data which was collected

using questionnaires to carry out the study. The study used both structured questionnaires and

unstructured questions to gather primary data. The structured questions were used in an effort

to conserve time and money as well as to facilitate in easier analysis as they were in an

immediate usable form; while the unstructured questions were used so as to encourage the

respondents to give an in-depth and give responses without holding back any information. The

questionnaires included closed and open-ended questions to ensure that the respondents give

relevant information. For the structured questions, a scale of 1 to 5 was used where 1

represented ‘very much agree’, 2 represented ‘disagree’, 3 represented ‘neutral’, 4 represented

‘agree’ and 5 ‘very much agree’. The questionnaire was divided into 2 sections. The 1st section

contained demographic information concerning age of the respondents, gender of the

respondents, education level and years of experience. The questioner also contained

30

organisation information that included statement as per research questions on Uchumi

supermarket head office.

3.5 Research Procedure

The study carried out a pilot study to pretest and validates the questionnaire. The researcher

selected a pilot group of 8 individuals from the target population to test the reliability of the

research instrument. Kothari (2014) recommends that a pilot of at least 10% of the population

should be represented thus the choice of 8 individuals is considered a representative pilot. The

pilot data was not included in the actual study. The pilot study allowed for pre-testing of the

research instrument to enhance the instrument’s validity and reliability. The pilot study enabled

the researcher to be familiar with research and its administration procedure as well as

identifying items that require modification. Pilot study also helps the researcher to correct

inconsistencies arising from the instruments, which would ensure that they measure what is

intended.

After the pretest, the researcher then proceeded to do the actual data collection. The researcher

carried an introduction letter from the university to assure the respondents that the information

that they give would be treated confidentially and it would be used purely for research

purposes. The researcher made use of network to persuade targeted respondents to fill up and

return the questionnaires to ensure a high response rate. The researcher also encouraged the

respondents to participate without holding back the information that they might had as the

research instruments would not bear their names. The questionnaire was then administered

through drop and pick method to respondents and the respondents that would not able to fill

the questioners within the stipulated time were contacted through email and telephone.

3.6 Data Analysis

Data analysis is the process of evaluating data using analytical and logical reasoning to

examine each component of the data provided which help in inspecting, cleaning,

transforming, and modeling the data (Bryman & Bell, 2007). Data collected was quantitative

in nature. The descriptive statistical tools was used to describe the data and determine the extent

used. Analysis was done quantitatively by use of descriptive statistics. This included frequency

31

distributions, tables, percentages and mean etc. Data analysis was also done with the use of

SPSS and Microsoft excel. Tables were used to summarize responses for further analysis and

facilitate comparison. This generated quantitative reports through tabulations, percentages, and

measures of central tendency. Cooper and Schindler (2011) notes that the use of percentages

is important for two reasons; first they simplify data by reducing all the numbers to range

between 0 and 100. Second, they translate the data into standard form with a base of 100 for

relative comparisons.

3.7 Chapter Summary

This chapter exposed the research methodology that will be used for the study. The study

adopted a descriptive research design. The population for the study was the 84 Uchumi

supermarket head office. The sampling frame was 84 employees that comprised top level

management, middle level management and lower level management staffs at the Uchumi

supermarket head office. A sample of 50% of the total population is thus considered sufficient

and was used therefore 42 respondents constituted the sample population for the study and

simple random sampling. The study carried out a pilot study to pretest and validates the

questionnaire. The researcher selected a pilot group of 9 individuals from the target population

to test the reliability of the research instrument. The study used primary data in form of

questionnaire that was administered through drop and pick method to respondents who were

the owners or the managers of the SMEs. Analysis was done quantitatively by use of

descriptive statistics. This included frequency distributions, tables, percentages and mean. Data

analysis was done with the use of SPSS and Microsoft excel.

32

CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction

This chapter discusses the results and findings obtained from the field. The chapter presents

the background information of the respondents, findings of the analysis based on the objective

of the study; to analyze turnaround strategies in a competitive environment a case of Uchumi

Supermarket. The chapter closes with a summary of the findings.

4.2 General Information

4.2.1 Response Rate

Out of the targeted 42 respondents, 38 filled in and returned the questionnaires since the

researcher was not able to cover the entire sample and thus made a response rate of 90% which

was satisfactory. According to Mugenda and Mugenda (2003), a response rate of 50% is

adequate for analysis and reporting; a rate of 60% is good and a response rate of 70% and over

is excellent. This response rate therefore was satisfactory to make conclusions on turnaround

strategies in a competitive environment a case of Uchumi Supermarket.

Table 4.2: Response Rate

Response Frequency Percentage

Response 38 90

Non Response 4 10

Total 42 100.0

33

4.2.2 Gender of the Respondents

Results on gender distribution amongst respondents showed that 53.3% of the target sample

were male while 44.7% were female; the study showed fair engagement of male and female

respondents.

Table 4.3: Gender of the Respondents

Gender of the Respondents Frequency Percentage

Male 21 55.3

Female 17 44.7

Total 38 100

4.2.3 Age of the Respondents

The study was interested in establishing the age of the respondents to deduce the difference in

opinion. Most of the respondents showed that 55.3% fell between the age brackets of 21 to 30

years, 34.2% were aged between 31 to 40 years and 10.5% were aged between 41 to 50 years.

Table 4.4: Age of the Respondents

Age of the Respondents Frequency Percent

21-30 years 21 55.3

31-40 years 13 34.2

41-50 years 4 10.5

Total 38 100

4.2.4 Level of Education of the Respondents

On the level of education of the respondents in the organization, the study requested the

respondents to indicate their level of education, from the findings; the study recognized that

39.5 % of the respondents had attained a bachelor’s degree, 36.8% had a diploma, 13.2% had

post graduate while 10.6% indicated they had attained secondary education level. Therefore,

the respondents had the relevant education necessary to complete the questionnaire and in

running their businesses.

34

Table 4.5: Level of Education of the Respondents

Level of Education Frequency Percent

Secondary 4 10.3

Diploma 14 36.8

Bachelor’s degree 15 39.5

Post graduate 5 13.2

Total 38 100

4.2.5 Number of years worked at Uchumi Supermarket

With regards to the number of years worked at Uchumi Supermarket, 89.5% respondents

indicated that they had worked at Uchumi Supermarket for less than 5 years while 10.5% had

worked for 5 to 10 years. This implied that most of the respondents had been in the business

for quite a long time which implies they were in a position to give credible information relating

to this study.

Table 4.6: Number of years worked at Uchumi Supermarket

Number of Years Worked Frequency Percent

Below 5 years 34 89.5

5 to 10 years 4 10.5

Total 38 100

35

4.3 The Role of Turn Around Strategies in Solving Financial Decline

4.3.1 Turnaround Strategies that Have Been Used by Uchumi Supermarket

It was deduced that Uchumi Supermarket used a number of turnaround strategies in order to

survive in the present competitive environment in Kenya. The strategies that were mostly used

were repositioning and restructuring strategies, retrenchment and change in the top

management of the company so as to make Uchumi Supermarket more competitive and also

reduce the operational cost of the company. Investigation on turn around process in a

competitive environment showed that; the respondents strongly agreed that to survive in a

globally competitive market, Uchumi Supermarket need to take advantage of the new

technological opportunities (mean = 4.14, std deviation = 0.38).

Decisions regarding Uchumi Supermarket turn around process need to be made contingent to

the prevailing situations (mean = 3.86, std deviation = 0.39), to deal with the demand of

customers Uchumi Supermarket need to differentiate its products (mean = 3.83, std deviation

= 0.39). Further it was strongly agreed that Uchumi Supermarket need to take advantage of the

new technological opportunities to respond to the needs of customers (mean = 3.64, std

deviation = 0.37) and managers at Uchumi Supermarket need to create strategic management

systems that integrate all operation of the organization (mean = 3.54, std deviation = 0.40).

Finally, it was agreed that Uchumi Supermarket need to take advantage of the new

technological opportunities to ensure service of its target market (mean = 3.48, std deviation =

0.39). It was noted that the standard deviation represented the variation of responses from the

mean were less than 1 hence there was less variation of responses.

36

Table 4.7: The Turn Around Process in a Competitive Environment

Mean Std Deviation

To survive in a globally competitive market, Uchumi

Supermarket need to take advantage of the new

technological opportunities

4.14 0.38

Uchumi Supermarket need to take advantage of the new

technological opportunities to ensure service of its target

market

3.48 0.39

Uchumi Supermarket need to take advantage of the new

technological opportunities to respond to the needs of

customers

3.64 0.37

To deal with the demand of customers Uchumi

Supermarket need to differentiate its products

3.83 0.39

Decisions regarding Uchumi Supermarket turn around

process need to be made contingent to the prevailing

situations

3.86 0.39

Managers at Uchumi Supermarket need to create

strategic management systems that integrate all operation

of the organization

3.54 0.40

4.3.2 The Signs of Financial Decline

Investigation on the signs of financial decline showed that; the respondents strongly agreed

that Uchumi Supermarket downturns came about as a result of unfavorable environmental

shifts (mean = 3.84, std deviation = 0.55). Uchumi Supermarket managers ignore the red lights

of downfall (mean = 3.82, std deviation = 0.56) and Uchumi Supermarket managers often do

not notice the red lights of downfall (mean = 3.76, std deviation = 0.54). Further it was strongly

agreed changes in the market environment often trigger a company's financial health (mean =

3.63, std deviation = 0.71) and lack of up-to-date financial information and failure to calculate

or forecast cash flow lead to financial distress (mean = 3.63, std deviation = 0.75). Finally, it

was agreed that Uchumi Supermarket managers do not diagnose problem that lead to its

downfall (mean = 3.50, std deviation = 0.92) and Uchumi Supermarket tracks its profitability

37

as and cash flow (mean = 3.16, std deviation = 0.31). It was noted that the standard deviation

represented the variation of responses from the mean were less than 1 hence there was less

variation of responses.

Table 4.8: The Signs of Financial Decline

Mean Std

Deviation

Uchumi Supermarket downturns came about as a result of

unfavorable environmental shifts

3.84 0.55

Uchumi Supermarket managers often do not notice the red lights

of downfall

3.76 0.54

Uchumi Supermarket managers ignore the red lights of downfall 3.82 0.56

Uchumi Supermarket managers do not diagnose problem that

lead to its downfall

3.50 0.92

Uchumi Supermarket tracks its profitability and cash flow 3.16 0.31

Changes in the market environment often trigger a company's

financial health

3.63 0.71

Lack of up-to-date financial information and failure to calculate

or forecast cash flow lead to financial distress

3.63 0.75

4.3.3 The Causes of Financial Decline

Investigation on the causes of financial decline showed that the respondents strongly agreed

that the adoption of misplaced strategies is a cause of Uchumi Supermarket failure (mean =

3.71, std deviation = 0.87). Uchumi Supermarket decline leads to crisis where the survival of

the firm is threatened (mean = 3.66, std deviation = 0.97) and the major cause of Uchumi

Supermarket failure lies within finance, operations and marketing the internal elements of its

business (mean = 3.58, std deviation = 0.68). Further it was agreed that change in consumers’

tastes and preferences is a cause of Uchumi Supermarket declining dominance (mean = 3.39,

std deviation = 0.75) and Uchumi Supermarket decline represents substantial resource losses

over time (mean = 3.37, std deviation = 0.97). Finally, it was agreed that change in lending

38

policies of the financial institutions is a cause of Uchumi Supermarket declining dominance

(mean = 3.32, std deviation = 0.87) and it was strongly disagreed that Uchumi Supermarket

failure is frequently linked to its internal problems (mean = 1.18, std deviation = 0.39). It was

noted that the standard deviation represented the variation of responses from the mean were

less than 1 hence there was less variation of responses.

Table 4.9: The Causes of Financial Decline

Mean Std

Deviation

Uchumi Supermarket decline represents substantial resource

losses over time

3.37 0.97

Uchumi Supermarket decline leads to crisis where the survival of

the firm is threatened

3.66 0.97

Uchumi Supermarket failure is frequently linked to its internal

problems

1.18 0.39

The major cause of Uchumi Supermarket failure lies within

finance, operations and marketing the internal elements of its

business

3.58 0.68

The adoption of misplaced strategies is a cause of Uchumi

Supermarket failure

3.71 0.87

Change in consumers’ tastes and preferences is a cause of Uchumi

Supermarket declining dominance

3.39 0.75

Change in lending policies of the financial institutions is a cause

of Uchumi Supermarket declining dominance

3.32 0.87

4.3.4 The Steps in Turnaround Process

Investigation on the steps in turnaround process showed that the respondents strongly agreed

that Uchumi Supermarket board of directors and senior management identifies the underlying

problems causing the current situation (mean = 3.58, std deviation = 0.67) and Uchumi

Supermarket identifies appropriate strategies to an achievable recovery plan (mean = 3.58, std

deviation = 0.86). It was agreed that Uchumi Supermarket board of directors and senior

management recognize that change is necessary (mean = 3.39, std deviation = 0.95). Finally,

39

it was disagreed that management behavior and reward systems need to focus employees on

profitability (mean = 2.63, std deviation = 0.76). It was noted that the standard deviation

represented the variation of responses from the mean were less than 1 hence there was less

variation of responses.

Table 4.10: The Steps in Turnaround Process

Mean Std

Deviation

Uchumi Supermarket board of directors and senior management

recognize that change is necessary

3.39 0.95

Uchumi Supermarket board of directors and senior management

identifies the underlying problems causing the current situation

3.58 0.69

Uchumi Supermarket identifies appropriate strategies to an

achievable recovery plan

3.58 0.86

The recovery plan is usually communicated to all key stakeholders

in Uchumi Supermarket

3.37 0.68

Management behavior and reward systems need to focus employees

on profitability

2.63 0.76

4.4 Turnaround Strategies that Should be Adopted in a Competitive Environment

4.4.1 Whether Uchumi Supermarket Adopted Any Turnaround Strategies

It was noted that Uchumi Supermarket had adopted some turnaround strategies as represented

by 78.9% of the respondents compared to 21.1% who indicated there were no strategies.

Frequency Percent

Yes 30 78.9

No 8 21.1

Total 38 100

40

4.4.2 Turnaround Strategies that Should be Adopted

It was strongly agreed that the turnaround strategy’s may help put back Uchumi Supermarket

to normality in terms of liquidity (mean = 3.74, std deviation = 0.55) and to achieve a

successful turnaround Uchumi Supermarket a management team must first stem a firm’s

decline (mean = 3.58, std deviation = 0.79). It was agreed that the turnaround strategy’s may

help put back Uchumi Supermarket to normality in terms of solvency (mean = 3.21, std

deviation = 1.07) and to solve the issues facing Uchumi Supermarket, restructuring and long

term strategic plan must be designed and implemented (mean = 3.18, std deviation = 0.95).

Finally, it was agreed the turnaround strategy’s may help put back Uchumi Supermarket to

normality in terms of profitability (mean = 2.84, std deviation = 1.13) and that the turnaround

strategy’s may help put back Uchumi Supermarket to normality in terms of cash flow (mean =

2.71, std deviation = 0.93). It was noted that some of the standard deviation represented the

variation of responses from the mean were less than 1 while others were more. The standard

deviation represented the variation of responses from the mean with the highest variation being

0.13 an indication that the variations in response was great while the least was 0.55.

Table 4.11: Turnaround Strategies that Should be Adopted

Mean Std

Deviation

To solve the issues facing Uchumi Supermarket, restructuring and long

term strategic plan must be designed and implemented

3.18 0.95

The turnaround strategy’s may help put back Uchumi Supermarket to

normality in terms of cash flow

2.71 0.93

The turnaround strategy’s may help put back Uchumi Supermarket to

normality in terms of profitability

2.84 1.13

The turnaround strategy’s may help put back Uchumi Supermarket to

normality in terms of liquidity

3.74 0.55

To achieve a successful turnaround Uchumi Supermarket a

management team must first stem a firm’s decline

3.58 0.79

The turnaround strategy’s may help put back Uchumi Supermarket to

normality in terms of solvency

3.21 1.07

41

4.4.3 Repositioning and Restructuring Strategies

It was strongly agreed that Uchumi Supermarket has restructured its operations to cope with

its challenges (mean = 4.39, std deviation = 0.50) and Uchumi Supermarket has restructured

its operations by cutting costs (mean = 4.29, std deviation = 0.46). It was strongly agreed that

Uchumi Supermarket has restructured its operations by reducing its payroll (mean = 4.24, std

deviation = 0.63) and Uchumi Supermarket has restructured its operations by reducing its size

through the sale of assets (mean = 4.16, std deviation = 0.64). It was also strongly agreed that

Uchumi Supermarket has restructured its debt structure to cope with its challenges (mean =

3.74, std deviation = 0.72) and that Uchumi Supermarket repositions its products and services

so as to be seen as having few credible substitutes in the marketplace (mean = 3.50, std

deviation = 0.60). Finally, it was agreed that Uchumi Supermarket repositions itself in the mind

of prospects (mean = 3.50, std deviation = 0.60). The standard deviation represented the

variation of responses from the mean with the highest variation being 0.72 an indication that

the variations in responses were acceptable since the standard deviations were less than 1.

Table 4.12: Repositioning and Restructuring Strategies

Mean Std

Deviation

Uchumi Supermarket repositions itself in the mind of prospects 3.50 0.60

Uchumi Supermarket repositions its products and services so as to

be seen as having few credible substitutes in the marketplace

3.61 0.55

Uchumi Supermarket has restructured its debt structure to cope

with its challenges

3.74 0.72

Uchumi Supermarket has restructured its operations to cope with its

challenges

4.39 0.50

Uchumi Supermarket has restructured its operations by cutting

costs

4.29 0.46

Uchumi Supermarket has restructured its operations by reducing its

payroll

4.24 0.63

Uchumi Supermarket has restructured its operations by reducing its

size through the sale of assets

4.16 0.64

42

4.4.4 Retrenchment

It was strongly agreed that the critical role of retrenchment is providing a stable base from

which to launch a recovery phase of the turnaround process (mean = 4.26, std deviation = 0.32)

and successful turnarounds at Uchumi Supermarket are characterized by strategies of

retrenchment (mean = 4.24, std deviation = 0.63). Uchumi Supermarket uses asset

retrenchment which is often implemented concurrently with or immediately after the cost

efficiency drive (mean = 4.21, std deviation = 0.62) and retrenchment is an integral component

of turnaround strategy at Uchumi Supermarket (mean = 4.11, std deviation = 0.61).

Effectiveness of asset retrenchment strategy at Uchumi Supermarket largely relies on the

ability of the firm to generate cash from disposal of any asset (mean = 3.37, std deviation =

0.67) and reorganization at Uchumi Supermarket is limited to leadership alignment (mean =

3.24, std deviation = 0.63). The standard deviation represented the variation of responses from

the mean with the highest variation being 0.67 an indication that the variations in responses

were acceptable since the standard deviations were less than 1.

Table 4.13: Retrenchment

Mean Std

Deviation

Successful turnarounds at Uchumi Supermarket are characterized by

strategies of retrenchment

4.24 0.63

Retrenchment is an integral component of turnaround strategy at

Uchumi Supermarket

4.11 0.61

The critical role of retrenchment is providing a stable base from

which to launch a recovery phase of the turnaround process

4.26 0.32

Uchumi Supermarket uses asset retrenchment which is often

implemented concurrently with or immediately after the cost

efficiency drive

4.21 0.62

Effectiveness of asset retrenchment strategy at Uchumi Supermarket

largely relies on the ability of the firm to generate cash from disposal

of any asset

3.37 0.67

Reorganisation at Uchumi Supermarket is limited to leadership

alignment

3.24 0.63

43

4.4.5 Top Management Changes

On top management changes, it was strongly agreed that the top management at Uchumi

Supermarket must employ diversification strategies (mean = 4.36, std deviation = 0.72) and

managers at Uchumi Supermarket use structural changes in the organization turnaround (mean

= 4.16, std deviation = 0.64). It was strongly agreed that turnaround management at Uchumi

Supermarket demands competent leadership to pave way on the implementation of the policies

(mean = 4.13, std deviation = 0.74) and the successful carrying out of a diversification strategy

makes Uchumi Supermarket more confident (mean = 4.05, std deviation = 0.61). It was

strongly agreed that experience at the top management is crucial at Uchumi Supermarket in its

turnaround (mean = 3.94, std deviation = 0.48). The standard deviation represented the

variation of responses from the mean with the highest variation being 0.74 an indication that

the variations in responses were acceptable since the standard deviations were less than 1.

Table 4.14: Top Management Changes

Mean Std

Deviation

Turnaround management at Uchumi Supermarket demands

competent leadership to pave way on the implementation of the

policies

4.13 0.74

Experience at the top management is crucial at Uchumi

Supermarket in its turnaround

3.94 0.48

Managers at Uchumi Supermarket use structural changes in the

organization turnaround

4.16 0.64

The top management at Uchumi Supermarket must employ

diversification strategies

4.39 0.72

The successful carrying out of a diversification strategy makes

Uchumi Supermarket more confident

4.05 0.61

44

4.5 Challenges in Implementing Turnaround Strategies in a Competitive Environment

The study sought to establish the challenges in implementing turnaround strategies in a

competitive environment. It was established that Uchumi Super market faced a number of

challenges when implementing turnaround strategies, key among them are resistance to change

by the employees in the company since the employees’ fear change as they thought that the

change would result to entrenchment. Other challenges were inadequate resources and

technology to facilitate the change. On challenges in implementing turnaround strategies in a

competitive environment the respondents strongly agreed that weak management roles in

strategy implementation is a challenge at Uchumi Supermarket (mean = 4.29, std deviation =

0.69) and Uchumi Supermarket seems to have difficulties in implementing their strategies in a

competitive environment (mean = 4.24, std deviation = 0.68). Unaligned organizational

systems is a challenge in strategy implementation at Uchumi Supermarket (mean = 4.18, std

deviation = 0.69) and lack of resources is a challenge in strategy implementation at Uchumi

Supermarket (mean = 4.11, std deviation = 0.61).

It was strongly agreed that unawareness or misunderstanding of the strategy is a challenge at

Uchumi Supermarket (mean = 4.08, std deviation = 0.67) and that lack of communication in

strategy implementation is a challenge at Uchumi Supermarket (mean = 4.05, std deviation =

0.77). Poor coordination is a challenge in strategy implementation at Uchumi Supermarket as

strongly agreed (mean = 4.08, std deviation = 0.67). The standard deviation represented the

variation of responses from the mean with the highest variation being 0.77 an indication that

the variations in responses were acceptable since the standard deviations were less than 1.

45

Table 4.15: Challenges in Implementing Turnaround Strategies

Mean Std

Deviation

Uchumi Supermarket seems to have difficulties in implementing their

strategies in a competitive environment

4.24 0.68

Weak management roles in strategy implementation is a challenge at

Uchumi Supermarket

4.29 0.69

Lack of communication in strategy implementation is a challenge at

Uchumi Supermarket

4.05 0.77

Unawareness or misunderstanding of the strategy is a challenge at

Uchumi Supermarket

4.08 0.67

Unaligned organizational systems is a challenge in strategy

implementation at Uchumi Supermarket

4.18 0.69

Lack of resources is a challenge in strategy implementation at Uchumi

Supermarket

4.11 0.61

Poor coordination is a challenge in strategy implementation at Uchumi

Supermarket

3.87 0.43

4.5.1 Resistance to Change

On resistance to change as a challenge in implementing turnaround strategies in a competitive

environment the respondents strongly agreed that there are insufficient top team functions at

Uchumi Supermarket, (mean = 4.18, std deviation = 0.73), there is always some resistance

when implementing Uchumi Supermarket turnaround strategies (mean = 4.16, std deviation =

0.68) and resistance to change impacts negatively to turn around strategy implementation

(mean = 4.16, std deviation = 0.72). It was strongly agreed that to overcome the resistance,

education and effective communication (mean = 4.13, std deviation = 0.58) and there is a

shortage of leaders who are able to create the badly needed change at Uchumi Supermarket

(mean = 4.13, std deviation = 0.74).

It was strongly agreed that unawareness or misunderstanding of the strategy is a challenge at

Uchumi Supermarket (mean = 4.08, std deviation = 0.67) and that lack of communication in

46

strategy implementation is a challenge at Uchumi Supermarket (mean = 4.05, std deviation =

0.77). Poor coordination is a challenge in strategy implementation at Uchumi Supermarket as

strongly agreed (mean = 4.08, std deviation = 0.67). The standard deviation represented the

variation of responses from the mean with the highest variation being 0.77 an indication that

the variations in responses were acceptable since the standard deviations were less than 1.

Table 4.16: Resistance to Change

Mean Std

Deviation

There is always some resistance when implementing Uchumi

Supermarket turnaround strategies 4.16 0.68

There is a shortage of leaders who are able to create the badly needed

change at Uchumi Supermarket 4.13 0.74

There are too many and conflicting priorities at Uchumi

Supermarket

4.05 0.66

There are insufficient top team functions at Uchumi Supermarket 4.18 0.73

There is inadequate management development at Uchumi

Supermarket

4.08 0.71

Resistance to change impacts negatively to turn around strategy

implementation

4.16 0.72

To overcome the resistance, education and effective communication 4.13 0.58

4.5.2 Inadequate Resources

On inadequacy of resources as a challenge in implementing turnaround strategies in a

competitive environment the respondents strongly agreed that inadequate resources may hinder

sound strategy implementation of Uchumi Supermarket (mean = 4.26, std deviation = 0.60),

coordination of implementation activities is not effective at Uchumi Supermarket (mean =

4.21, std deviation = 0.58) and failure to adopt modern to technologies lead to reduced

efficiency at Uchumi Supermarket (mean = 4.18, std deviation = 0.72). It was strongly agreed

that leadership is not effective at Uchumi Supermarket (mean = 4.16, std deviation = 0.82) and

to overcome the resistance, education and effective communication must be enhanced (mean

47

= 4.13, std deviation = 0.58). It was strongly agreed that competences such as skills and

knowhow enhance strategy implementation at Uchumi Supermarket (mean = 4.05, std

deviation = 0.57) and resources available to Uchumi Supermarket underpin its strategic

capability (mean = 3.67, std deviation = 0.41). The standard deviation represented the variation

of responses from the mean with the highest variation being 0.58 an indication that the

variations in responses were acceptable since the standard deviations were less than 1.

Table 4.17: Inadequate Resources

Mean Std

Deviation

To overcome the resistance, education and effective communication

must be enhanced

4.13 0.58

Resources available to Uchumi Supermarket underpin its strategic

capability

3.67 0.41

Inadequate resources may hinder sound strategy implementation of

Uchumi Supermarket

4.26 0.60

Coordination of implementation activities is not effective at Uchumi

Supermarket

4.21 0.58

Leadership is not effective at Uchumi Supermarket 4.16 0.82

Failure to adopt modern to technologies lead to reduced efficiency at

Uchumi Supermarket

4.18 0.65

Competences such as skills and knowhow enhance strategy

implementation at Uchumi Supermarket

4.05 0.57

4.5.3 Strategic Drift

On strategic drift as a challenge in implementing turnaround strategies in a competitive

environment the respondents strongly agreed that failure to ensure that Uchumi Supermarket

daily activities, work efforts and resources are directed to the implementation of strategy has

led to its failure (mean = 4.42, std deviation = 0.60) and Uchumi Supermarket has run into

difficulties because of failure to acknowledge and address strategic drift (mean = 4.29, std

deviation = 0.46). It was also strongly agreed that the strategic plans and tactics are developed

48

at operational and functional level of Uchumi Supermarket (mean = 4.24, std deviation = 0.49).

It was strongly agreed that strategies set fail to address the strategic position of Uchumi

Supermarket and hence performance deteriorates (mean = 4.12, std deviation = 0.52) and

Uchumi Supermarket strategy development processes need to encourage people to have the

capacity and willingness to change their ways of doing things (mean = 4.08, std deviation =

0.59). It was strongly agreed that Uchumi Supermarket strategies and tactics overlap each other

(mean = 3.95, std deviation = 0.54). The standard deviation represented the variation of

responses from the mean with the highest variation being 0.52 an indication that the variations

in responses were acceptable since the standard deviations were less than 1.

Table 4.18: Strategic Drift

Mean Std

Deviation

Strategies set fail to address the strategic position of Uchumi

Supermarket and hence performance deteriorates

4.12 0.52

Uchumi Supermarket has run into difficulties because of failure to

acknowledge and address strategic drift

4.29 0.46

Failure to ensure that Uchumi Supermarket daily activities, work

efforts and resources are directed to the implementation of strategy

has led to its failure

4.42 0.60

The strategic plans and tactics are developed at operational and

functional level of Uchumi Supermarket

4.24 0.49

Uchumi Supermarket strategies and tactics overlap each other 3.95 0.54

Uchumi Supermarket strategy development processes need to

encourage people to have the capacity and willingness to change

their ways of doing things

4.08 0.59

4.6 Chapter Summary

This chapter sought to find out turnaround strategies in a competitive environment a case of

Uchumi Supermarket. The study consisted of demographic factors parts, the role of turn around

strategies in solving financial decline in organisations, turnaround strategies that should be

adopted in a competitive environment and challenges in implementing turnaround strategies in

49

a competitive environment. Results obtained showed that to survive in a globally competitive

market, firms need to take advantage of the new technological opportunities. Also, firms need

to put in place different turnaround strategies in order to survive in a competitive environment.

Finally, firms face a number of challenges when implementing turnaround strategies in a

competitive environment. Chapter five provides a discussion, conclusion and

recommendations on the findings of this research.

50

CHAPTER FIVE

DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

In this chapter, the researcher provides the major summary of the study, a discussion on the

findings of the research compared with the findings in the literature review. The findings were

concluded on the basis of turnaround strategies in a competitive environment a case of Uchumi

Supermarket. Recommendations for further improvement were made through identification of

the measures to be taken on organizational.

5.2 Summary of the Study

The purpose of this study was to analyze the turnaround strategies in a competitive

environment a case of Uchumi Supermarket. The study was guided by the following research

questions: to evaluate the role of turn around strategies in solving financial decline in

organisations, to determine the turnaround strategies in a competitive that should be adopted

by Uchumi supermarket and to establish the challenges that Uchumi supermarket may face in

adoption of the turnaround strategies in a competitive environment.

The study adopted a descriptive research design. The population for the study was the 84

Uchumi supermarket head office. The sampling frame was 84 employees that comprised top

level management, middle level management and lower level management staffs at the Uchumi

supermarket head office. A sample of 50% of the total population was thus considered

sufficient and therefore 42 respondents constituted the sample population for the study and

simple random sampling. The study carried out a pilot study to pretest and validates the

questionnaire. The researcher selected a pilot group of 9 individuals from the target population

to test the reliability of the research instrument. The study used primary data in form of

questionnaire that was administered through drop and pick method. Analysis was done

quantitatively by use of descriptive statistics. This included frequency distributions, tables,

percentages and mean. Data analysis was done with the use of SPSS and Microsoft excel.

It was deduced that Uchumi Supermarket used a number of turnaround strategies in order to

survive in the present competitive environment in Kenya. The strategies that were mostly used

51

were repositioning and restructuring strategies, retrenchment and change in the top

management of the company so as to make it more competitive and also reduce the operational

cost of the company. Uchumi Supermarket downturns came about as a result of unfavorable

environmental shifts, managers ignored the red lights of downfall and managers often do not

notice the red lights of downfall. The adoption of misplaced strategies is a cause of Uchumi

Supermarket failure, Uchumi Supermarket decline leads to crisis where the survival of the firm

is threatened and the major cause of Uchumi Supermarket failure lies within finance,

operations and marketing the internal elements of its business. Investigation on the steps in

turnaround process showed that Uchumi Supermarket board of directors and senior

management identifies the underlying problems causing the current situation and Uchumi

Supermarket identifies appropriate strategies to an achievable recovery plan.

On the turnaround strategies that should be adopted in a competitive environment, the

turnaround strategy’s may help put back Uchumi Supermarket to normality in terms of

liquidity and to achieve a successful turnaround Uchumi Supermarket a management team

must first stem a firm’s decline. On the repositioning and restructuring strategies, Uchumi

Supermarket has restructured its operations to cope with its challenges, has restructured its

operations by cutting costs, reducing its payroll and by reducing its size through the sale of

assets. On retrenchment strategies, the critical role of retrenchment is providing a stable base

from which to launch a recovery phase of the turnaround process and successful turnarounds

at Uchumi Supermarket are characterized by strategies of retrenchment. On top management

changes, it was strongly agreed that the top management at Uchumi Supermarket must employ

diversification strategies and structural changes in the organization turnaround.

It was established that Uchumi Super market faced a number of challenges when implementing

turnaround strategies, key among them are resistance to change, inadequate resources,

technology to facilitate the change, weak management roles and difficulties in implementing

their strategies in a competitive environment. Further there are insufficient top team functions

at Uchumi Supermarket, there is always some resistance when implementing Uchumi

Supermarket turnaround strategies and resistance to change impacts negatively to turn around

strategy implementation. Inadequate resources may hinder sound strategy implementation of,

coordination of implementation activities is not effective at Uchumi Supermarket and failure

52

to adopt modern to technologies lead to reduced efficiency. Failure to ensure that Uchumi

Supermarket daily activities, work efforts and resources are directed to the implementation of

strategy has led to its failure and Uchumi Supermarket has run into difficulties because of

failure to acknowledge and address strategic drift.

5.3 Discussion

5.3.1 The Role of Turn Around Strategies in Solving Financial Decline

The objective sought to deduce the role of turn around strategies in solving financial decline.

It was deduced that Uchumi Supermarket used a number of turnaround strategies in order to

survive in the present competitive environment in Kenya. The strategies that were mostly used

were repositioning and restructuring strategies, retrenchment and change in the top

management of the company so as to make Uchumi Supermarket more competitive and also

reduce the operational cost of the company. Investigation on turn around process in a

competitive environment showed that; the respondents strongly agreed that to survive in a

globally competitive market, Uchumi Supermarket need to take advantage of the new

technological opportunities (mean = 4.14, std deviation = 0.38). Managers need to create

strategic management systems that integrate all disciplines and all areas of operation of the

organization in outcome based structures of the future the manager must critically look at their

performance and compare it to others (Thomson & Strickland, 2013).

Decisions regarding Uchumi Supermarket turn around process need to be made contingent to

the prevailing situations (mean = 3.86, std deviation = 0.39), to deal with the demand of

customers Uchumi Supermarket need to differentiate its products (mean = 3.83, std deviation

= 0.39). Further it was strongly agreed that Uchumi Supermarket need to take advantage of the

new technological opportunities to respond to the needs of customers (mean = 3.64, std

deviation = 0.37) and managers at Uchumi Supermarket need to create strategic management

systems that integrate all operation of the organization (mean = 3.54, std deviation = 0.40).

Finally, it was agreed that Uchumi Supermarket need to take advantage of the new

technological opportunities to ensure service of its target market (mean = 3.48, std deviation =

0.39). Research indicates that when management formulate and implement informed

strategies, their firms can turnaround even when facing declining environment munificence,

53

increasing environmental dynamism, escalating internal problems or limited slack resources

(Barker & Duhaime, 2014).

Uchumi Supermarket downturns came about as a result of unfavorable environmental shifts

(mean = 3.84, std deviation = 0.55). Uchumi Supermarket managers ignore the red lights of

downfall (mean = 3.82, std deviation = 0.56) and Uchumi Supermarket managers often do not

notice the red lights of downfall (mean = 3.76, std deviation = 0.54). Further it was strongly

agreed changes in the market environment often trigger a company's financial health (mean =

3.63, std deviation = 0.71) and lack of up-to-date financial information and failure to calculate

or forecast cash flow lead to financial distress (mean = 3.63, std deviation = 0.75). According

to Scherrer (2013) long before a business commences its decline, warning signals start flashing,

but managers often do not notice the red lights, or they ignore them. Almost every business

will experience financial distress or pressure at some point in time the key to survival lies in

the owner’s ability to diagnose problem areas and take corrective action quickly.

Investigation on the causes of financial decline showed that the respondents strongly agreed

that the adoption of misplaced strategies is a cause of Uchumi Supermarket failure (mean =

3.71, std deviation = 0.87). Uchumi Supermarket decline leads to crisis where the survival of

the firm is threatened (mean = 3.66, std deviation = 0.97) and the major cause of Uchumi

Supermarket failure lies within finance, operations and marketing the internal elements of its

business (mean = 3.58, std deviation = 0.68). Further it was agreed that change in consumers’

tastes and preferences is a cause of Uchumi Supermarket declining dominance (mean = 3.39,

std deviation = 0.75) and Uchumi Supermarket decline represents substantial resource losses

over time (mean = 3.37, std deviation = 0.97). The findings supported earlier results by

Cameron, Whetten and Kim (2012) who concurred that Organizational decline represents

substantial resource losses over time and can be either a gradual process or a sudden,

unexpected disruption. Substantial organizational decline leads to crisis where the survival of

the firm is threatened.

Investigation on the steps in turnaround process showed that the respondents strongly agreed

that Uchumi Supermarket board of directors and senior management identifies the underlying

problems causing the current situation (mean = 3.58, std deviation = 0.67) and Uchumi

Supermarket identifies appropriate strategies to an achievable recovery plan (mean = 3.58, std

54

deviation = 0.86). It was agreed that Uchumi Supermarket board of directors and senior

management recognize that change is necessary (mean = 3.39, std deviation = 0.95). Finally,

it was disagreed that management behavior and reward systems need to focus employees on

profitability (mean = 2.63, std deviation = 0.76). In turnaround strategies, the focus to most

stakeholders is on the speed of change, rapid cost reduction and/or revenue generation. The

length of time necessary to complete successful business turnaround varies (Scherrer, 2013).

5.3.2 Turnaround Strategies that Should be Adopted in a Competitive Environment

The objective sought to establish the turnaround strategies that should be adopted in a

competitive environment. The turnaround strategy’s may help put back Uchumi Supermarket

to normality in terms of liquidity (mean = 3.74, std deviation = 0.55) and to achieve a

successful turnaround Uchumi Supermarket a management team must first stem a firm’s

decline (mean = 3.58, std deviation = 0.79). It was agreed that the turnaround strategy’s may

help put back Uchumi Supermarket to normality in terms of solvency (mean = 3.21, std

deviation = 1.07) and to solve the issues facing Uchumi Supermarket, restructuring and long

term strategic plan must be designed and implemented (mean = 3.18, std deviation = 0.95). To

solve the issues facing such a company, turnaround strategy’s must be designed and

implemented. The turnaround strategy’s overall goal is to put back a distressed or

underperforming firm to normality in terms of satisfactory levels of cash flow, profitability,

liquidity and solvency (Akrani, 2012).

On the repositioning and restructuring strategies, it was strongly agreed that Uchumi

Supermarket has restructured its operations to cope with its challenges (mean = 4.39, std

deviation = 0.50) and Uchumi Supermarket has restructured its operations by cutting costs

(mean = 4.29, std deviation = 0.46). It was strongly agreed that Uchumi Supermarket has

restructured its operations by reducing its payroll (mean = 4.24, std deviation = 0.63) and

Uchumi Supermarket has restructured its operations by reducing its size through the sale of

assets (mean = 4.16, std deviation = 0.64). It was also strongly agreed that Uchumi

Supermarket has restructured its debt structure to cope with its challenges (mean = 3.74, std

deviation = 0.72) and that Uchumi Supermarket repositions its products and services so as to

be seen as having few credible substitutes in the marketplace (mean = 3.50, std deviation =

0.60). Finally, it was agreed that Uchumi Supermarket repositions itself in the mind of

55

prospects (mean = 3.50, std deviation = 0.60). A company restructures its operations or

structure by cutting costs, such as payroll, or reducing its size through the sale of assets. This

is often seen as necessary when the current situation at a company is one that may lead to its

collapse (Akrani, 2012).

On retrenchment strategies, it was strongly agreed that the critical role of retrenchment is

providing a stable base from which to launch a recovery phase of the turnaround process (mean

= 4.26, std deviation = 0.32) and successful turnarounds at Uchumi Supermarket are

characterized by strategies of retrenchment (mean = 4.24, std deviation = 0.63). It was strongly

agreed that Uchumi Supermarket uses asset retrenchment which is often implemented

concurrently with or immediately after the cost efficiency drive (mean = 4.21, std deviation =

0.62) and retrenchment is an integral component of turnaround strategy at Uchumi

Supermarket (mean = 4.11, std deviation = 0.61). It was agreed that effectiveness of asset

retrenchment strategy at Uchumi Supermarket largely relies on the ability of the firm to

generate cash from disposal of any asset (mean = 3.37, std deviation = 0.67) and

Reorganisation at Uchumi Supermarket is limited to leadership alignment (mean = 3.24, std

deviation = 0.63). Beeri (2009) suggests that successful turnarounds are characterized by

strategies of retrenchment. Retrenchment is an integral component of turnaround strategy. The

critical role of retrenchment in providing a stable base from which to launch a recovery phase

of the turnaround process is well established.

On top management changes, it was strongly agreed that the top management at Uchumi

Supermarket must employ diversification strategies (mean = 4.36, std deviation = 0.72) and

managers at Uchumi Supermarket use structural changes in the organization turnaround (mean

= 4.16, std deviation = 0.64). It was strongly agreed that turnaround management at Uchumi

Supermarket demands competent leadership to pave way on the implementation of the policies

(mean = 4.13, std deviation = 0.74) and the successful carrying out of a diversification strategy

makes Uchumi Supermarket more confident (mean = 4.05, std deviation = 0.61). It was

strongly agreed that experience at the top management is crucial at Uchumi Supermarket in its

turnaround (mean = 3.94, std deviation = 0.48). According to Collard (2011) turnaround

management demands competent leadership to pave way on the implementation of the policies,

motivate the subordinates and communicate the importance of the process. Collard (2011)

56

emphasizes that it is always safer to change the leadership whenever an organization is

conducting turnaround management.

5.3.3 Challenges in Implementing Turnaround Strategies in a Competitive Environment

The study sought to establish the challenges in implementing turnaround strategies in a

competitive environment. It was established that Uchumi Super market faced a number of

challenges when implementing turnaround strategies, key among them are resistance to change

by the employees in the company since the employees’ fear change as they thought that the

change would result to entrenchment. Other challenges were inadequate resources and

technology to facilitate the change. According to Beer, Eisenstat and Specter (2010)

organizations seems to have difficulties in implementing their strategies in a competitive

environment, however, researchers have revealed a number of problems in strategy

implementation e.g. weak management roles in implementation, lack of communication, lack

of commitment to the strategy, unawareness or misunderstanding of the strategy, unaligned

organizational systems and resources, poor coordination and sharing of responsibilities (Beer

& Eisenstat, 2010).

Weak management roles in strategy implementation is a challenge at Uchumi Supermarket

(mean = 4.29, std deviation = 0.69) and Uchumi Supermarket seems to have difficulties in

implementing their strategies in a competitive environment (mean = 4.24, std deviation = 0.68).

It was strongly agreed that unawareness or misunderstanding of the strategy is a challenge at

Uchumi Supermarket (mean = 4.08, std deviation = 0.67) and that lack of communication in

strategy implementation is a challenge at Uchumi Supermarket (mean = 4.05, std deviation =

0.77). Poor coordination is a challenge in strategy implementation at Uchumi Supermarket as

strongly agreed (mean = 4.08, std deviation = 0.67). Unaligned organizational systems is a

challenge in strategy implementation at Uchumi Supermarket (mean = 4.18, std deviation =

0.69) and lack of resources is a challenge in strategy implementation at Uchumi Supermarket

(mean = 4.11, std deviation = 0.61). Jeyavelu (2014) identified unawareness or

misunderstanding of the strategy as a challenge to an organisation. Other challenges were

insufficient partner buy-in; insufficient leadership attention; ineffective leadership; weak or

inappropriate strategy and resistance to change.

57

It was confirmed there are insufficient top team functions at Uchumi Supermarket, (mean =

4.18, std deviation = 0.73), there is always some resistance when implementing Uchumi

Supermarket turnaround strategies (mean = 4.16, std deviation = 0.68) and resistance to change

impacts negatively to turn around strategy implementation (mean = 4.16, std deviation = 0.72).

It was strongly agreed that to overcome the resistance, education and effective communication

(mean = 4.13, std deviation = 0.58) and there is a shortage of leaders who are able to create the

badly needed change at Uchumi Supermarket (mean = 4.13, std deviation = 0.74). It was

strongly agreed that unawareness or misunderstanding of the strategy is a challenge at Uchumi

Supermarket (mean = 4.08, std deviation = 0.67) and that lack of communication in strategy

implementation is a challenge at Uchumi Supermarket (mean = 4.05, std deviation = 0.77).

Poor coordination is a challenge in strategy implementation at Uchumi Supermarket as

strongly agreed (mean = 4.08, std deviation = 0.67). Implementation of turnaround strategy

does not automatically follow strategy formulation (Barker, & Duhaime, 2014). There is

always some resistance, which occurs whenever there is a departure from historical behavior,

culture and power structure.

On inadequacy of resources as a challenge in implementing turnaround strategies in a

competitive environment the respondents strongly agreed that inadequate resources may hinder

sound strategy implementation (mean = 4.26, std deviation = 0.60), coordination of

implementation activities is not effective at Uchumi Supermarket (mean = 4.21, std deviation

= 0.58) and failure to adopt modern to technologies lead to reduced efficiency (mean = 4.18,

std deviation = 0.72). It was strongly agreed that leadership is not effective at Uchumi

Supermarket (mean = 4.16, std deviation = 0.82) and to overcome the resistance, education

and effective communication must be enhanced (mean = 4.13, std deviation = 0.58). It was

strongly agreed that competences such as skills and knowhow enhance strategy

implementation (mean = 4.05, std deviation = 0.57) and resources available to Uchumi

Supermarket underpin its strategic capability (mean = 3.67, std deviation = 0.41). Inadequate

resources may hinder sound strategy implementation in any organization or may limit the

choices of strategy available to it (Donaldson, 2014).

On strategic drift as a challenge in implementing turnaround strategies the respondents strongly

agreed that failure to ensure that Uchumi Supermarket daily activities, work efforts and

58

resources are directed to the implementation of strategy has led to its failure (mean = 4.42, std

deviation = 0.60) and Uchumi Supermarket has run into difficulties because of failure to

acknowledge and address strategic drift (mean = 4.29, std deviation = 0.46). It was also

strongly agreed that the strategic plans and tactics are developed at operational and functional

(mean = 4.24, std deviation = 0.49). Strategies set fail to address the strategic position of

Uchumi Supermarket (mean = 4.12, std deviation = 0.52) and Uchumi Supermarket strategy

development processes need to encourage people to have the capacity and willingness to

change their ways of doing things (mean = 4.08, std deviation = 0.59). Uchumi Supermarket

strategies and tactics overlap each other (mean = 3.95, std deviation = 0.54). Failure to work

out the strategy by ensuring that the organization’s daily activities, work efforts and resources

are directed as much as possible towards the implementation of strategy which involves

developing operational plans and tactics through which the otherwise abstract strategy will be

implemented (Chowdhury, 2012).

5.4 Conclusions

5.4.1 The Role of Turn Around Strategies in Solving Financial Decline

Based on the results from the analysis and discussion, the study concludes that a number of

turnaround strategies are used in order to survive in the present competitive environment in

Kenya. The strategies that are mostly used were repositioning and restructuring strategies,

retrenchment and change in the top management of the company so as to make it more

competitive and also reduce the operational cost of the company. Further a company downturn

come about as a result of unfavorable environmental shifts and when managers ignore the red

lights of downfall. Also, the adoption of misplaced strategies is a cause of a company failure,

a company decline leads to crisis where the survival of the firm is threatened and the major

cause of a company failure lies within finance, operations and marketing the internal elements

of its business. Finally, the board of directors and senior management need to identify the

underlying problems causing failure, identify appropriate strategies to an achievable recovery

plan and senior management need to recognize that change is necessary.

59

5.4.2 Turnaround Strategies that Should be Adopted in a Competitive Environment

The study concluded that the turnaround strategy’s may help put back a company to normality

in terms of liquidity and to achieve a successful turnaround a company management team must

first stem a firm’s decline. The strategies available are repositioning, retrenchment,

restructuring strategies and top management changes. Most of the companies have restructured

their operations to cope with challenges, some have restructured their operations by cutting

costs, others by reducing its payroll, by reducing their size through the sale of assets while

others debt structure. On retrenchment it was concluded that the critical role of retrenchment

is providing a stable base from which to launch a recovery phase of the turnaround process and

successful turnarounds at companies are characterized by strategies of retrenchment. Some

companies use asset retrenchment which is often implemented concurrently with or

immediately after the cost efficiency drive and retrenchment is an integral component of

turnaround strategy. On top management changes, it can be concluded that top management

must employ diversification strategies and managers use structural changes in the organization

turnaround.

5.4.3 Challenges in Implementing Turnaround Strategies in a Competitive Environment

The study concludes that companies face a number of challenges when implementing

turnaround strategies, key among them are resistance to change by the employees in the

company since the employees’ fear change as they thought that the change would result to

entrenchment. Other challenges were inadequate resources and technology to facilitate the

change. Weak management roles in strategy implementation is a challenge at for companies

and they have difficulties in implementing their strategies in a competitive environment. There

is always some resistance when implementing turnaround strategies and resistance to change

impacts negatively to turn around strategy implementation. Unawareness, misunderstanding

and lack of communication are causes of resistance to change during strategy implementation.

Inadequate resources may hinder sound strategy implementation and failure to adopt modern

to technologies lead to reduced efficiency in companies. Failure to ensure that companies daily

activities, work efforts and resources are directed to the implementation of strategy has led to

companies’ failure and companies have run into difficulties because of failure to acknowledge

and address strategic drift.

60

5.5 Recommendations

5.5.1 Recommendation for Improvement

5.5.1.1 The Role of Turn Around Strategies in Solving Financial Decline

Turn around strategies are crucial in solving financial decline. The studies recommend that to

enable companies implement the turnaround strategies companies must take advantage of the

new technological opportunities, managers of companies need to create strategic management

systems that integrate all disciplines and all areas of operation of the organization in outcome-

based structures and the managers of organisations must critically look at their performance

and compare it to other companies.

5.5.1.2 Turnaround Strategies that Should be Adopted in a Competitive Environment

The study recommends that turnaround strategies should be adopted in a competitive

environment this is because they help put back companies to normality in terms of liquidity.

The turnaround strategies that should be adopted are repositioning and restructuring strategies;

retrenchment strategies and top management changes. The above strategies in addition help

put back companies to normality in terms of solvency and solve the issues facing companies

in terms of restructuring.

5.1.1.3 Challenges in Implementing Turnaround Strategies

It was recommended that management should put in place measures to reduce the challenges

that face organisation in implementing turnaround strategies which include putting in place

adequate resources to help implement the strategy, having proper plans and policies to

implement the strategies and educating all levels of employees on the important of the strategy

in order to help reduce resistance from them.

5.5.2 Recommendations for Further Studies

The study sought to examine turnaround strategies in a competitive environment a case of

Uchumi Supermarket. The study suggests that future research should try to analyze the factors

affecting implementation of turnaround strategies in supermarkets, types of turnaround

61

strategies that can be adopted in supermarkets and the challenges of implementing turnaround

strategies in a competitive environment in organisations.

62

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APPENDICES

Appendix I: Introduction Letter

Dear Sir/Madam,

I am student conducting a study on TURNAROUND STRATEGIES IN A COMPETITIVE

ENVIRONMENT A CASE OF UCHUMI SUPERMARKET in partial fulfillment of my

MBA program at USIU Africa. I am glad to inform you that you have been selected to form

part of this study. I kindly request your assistance in completing the attached questionnaire

which forms a major input of the research process. The information and data will be strictly

used for academic purposes only and strict confidence shall be observed on the same.

Your cooperation will go a long way in ensuring the success of this project. I would like to

thank you in advance for your time and consideration.

Yours Sincerely,

JOYCE NANCY OCHIENG

68

Appendix II: Questionnaire

Section A: General Information:

1. Gender of the respondent?

Male [ ]

Female [ ]

2. What is your age in years………………………...

3. What is your highest level of education achieved………………………

4. How long have you worked at Uchumi Supermarket in terms of

years…………………?

Section B: The Role of Turn Around Strategies in Solving Financial Decline in

Organisations

5. What turnaround strategies have been used by Uchumi Supermarket in order to help it

in financial decline?

…………………………………………………………………………………………

……………………………………………………………………………………….

The Turn Around Process in a Competitive

Environment. Please complete the following

questions by rating on a scale of 1 to 5 where: 1

=Strongly disagree, 2 =Disagree, 3 = Agree, 4

=Strongly Agree and 5 = N/A for Not Applicable. Str

ongly

dis

agre

e

(1)

Dis

agre

e (2

)

Agre

e (3

)

Str

ongly

Agre

e (4

)

N/A

(5)

The Turn Around Process in a Competitive

Environment

6. To survive in a globally competitive market,

Uchumi Supermarket need to take advantage of the

new technological opportunities

7. Uchumi Supermarket need to take advantage of the

new technological opportunities to ensure service

of its target market

69

8. Uchumi Supermarket need to take advantage of the

new technological opportunities to respond to the

needs of customers

9. To deal with the demand of customers Uchumi

Supermarket need to differentiate its products

10. Decisions regarding Uchumi Supermarket turn

around process need to be made contingent to the

prevailing situations

11. Managers at Uchumi Supermarket need to create

strategic management systems that integrate all

operation of the organization

The Signs of Financial Decline

12. Uchumi Supermarket downturns came about as a

result of unfavorable environmental shifts

13. Uchumi Supermarket managers often do not notice

the red lights of downfall

14. Uchumi Supermarket managers ignore the red

lights of downfall

15. Uchumi Supermarket managers do not diagnose

problem that lead to its downfall

16. Uchumi Supermarket tracks its profitability as and

cash flow

17. Changes in the market environment often trigger a

company's financial health

18. Lack of up-to-date financial information and

failure to calculate or forecast cash flow lead to

financial distress

The Causes of Financial Decline

19. Uchumi Supermarket decline represents

substantial resource losses over time

70

20. Uchumi Supermarket decline leads to crisis where

the survival of the firm is threatened

21. Uchumi Supermarket failure is frequently linked

to its internal problems

22. The major cause of Uchumi Supermarket failure

lies within finance, operations and marketing the

internal elements of its business

23. The adoption of misplaced strategies is a cause of

Uchumi Supermarket failure

24. Change in consumers’ tastes and preferences is a

cause of Uchumi Supermarket declining

dominance

25. Change in lending policies of the financial

institutions is a cause of Uchumi Supermarket

declining dominance

The Steps in Turnaround Process

26. Uchumi Supermarket board of directors and senior

management recognize that change is necessary

27. Uchumi Supermarket board of directors and senior

management identifies the underlying problems

causing the current situation

28. Uchumi Supermarket identifies appropriate

strategies to an achievable recovery plan

29. The recovery plan is usually communicated to all

key stakeholders in Uchumi Supermarket

30. Management behavior and reward systems need to

focus employees on profitability

71

Section C: Turnaround Strategies that Should be Adopted in a Competitive Environment

31. Has Uchumi Supermarket adopted any turnaround strategies?

Yes [ ]

No [ ]

If yes, what strategies have been adopted

…………………………………………………………………………………………

…………………………………………………………………………………………

……………..

To complete the following questions please read and then rate each statement between 1 to 5

where: 1 -Strongly disagree, 2 –Disagree, 3 – Neutral, 4 - Agree, 5- Strongly Agree

Turnaround Strategies that Should be Adopted in a

Competitive Environment. Please complete the

following questions by rating on a scale of 1 to 5 where:

1 =Strongly disagree, 2 =Disagree, 3 = Agree, 4

=Strongly Agree and 5 = N/A for Not Applicable. Str

ongly

dis

agre

e (1

)

Dis

agre

e (2

)

(3)

Neu

tral

5A

gre

e (4

)

N/A

(5)

Turnaround Strategies that Should be Adopted in a

Competitive Environment

32. To solve the issues facing Uchumi Supermarket,

restructuring and long term strategic plan must be

designed and implemented

33. The turnaround strategy’s may help put back Uchumi

Supermarket to normality in terms of cash flow

34. The turnaround strategy’s may help put back Uchumi

Supermarket to normality in terms of profitability

35. The turnaround strategy’s may help put back Uchumi

Supermarket to normality in terms of liquidity

36. To achieve a successful turnaround Uchumi

Supermarket a management team must first stem a

firm’s decline

72

37. The turnaround strategy’s may help put back Uchumi

Supermarket to normality in terms of solvency

Repositioning and Restructuring Strategies

38. Uchumi Supermarket repositions itself in the mind of

prospects

39. Uchumi Supermarket repositions its products and

services so as to be seen as having few credible

substitutes in the marketplace

40. Uchumi Supermarket has restructured its debt structure

to cope with its challenges

41. Uchumi Supermarket has restructured its operations to

cope with its challenges

42. Uchumi Supermarket has restructured its operations by

cutting costs

43. Uchumi Supermarket has restructured its operations by

reducing its payroll

44. Uchumi Supermarket has restructured its operations by

reducing its size through the sale of assets

Retrenchment

45. Successful turnarounds at Uchumi Supermarket are

characterized by strategies of retrenchment

46. Retrenchment is an integral component of turnaround

strategy at Uchumi Supermarket

47. The critical role of retrenchment is providing a stable

base from which to launch a recovery phase of the

turnaround process

48. Uchumi Supermarket uses asset retrenchment which is

often implemented concurrently with or immediately

after the cost efficiency drive

73

49. Effectiveness of asset retrenchment strategy at Uchumi

Supermarket largely relies on the ability of the firm to

generate cash from disposal of any asset

50. Reorganisation at Uchumi Supermarket is limited to

leadership alignment

Top Management Changes

51. Turnaround management at Uchumi Supermarket

demands competent leadership to pave way on the

implementation of the policies

52. Experience at the top management is crucial at Uchumi

Supermarket in its turnaround

53. Managers at Uchumi Supermarket use structural

changes in the organization turnaround

54. The top management at Uchumi Supermarket must

employ diversification strategies

55. The successful carrying out of a diversification strategy

makes Uchumi Supermarket more confident

74

Section D: Challenges in Implementing Turnaround Strategies in a Competitive

Environment

56. What challenges does Uchumi Supermarket face in implementing its turnaround

strategies?

………………………………………………………………………………………………

………………………………………………………………………………………………

……………..

To complete the following questions please read and then rate each statement between 1 to 5

where: 1 -Strongly disagree, 2 –Disagree, 3 – Neutral, 4 - Agree, 5- Strongly Agree

Challenges in Implementing Turnaround Strategies in

a Competitive Environment. Please complete the

following questions by rating on a scale of 1 to 5

where: 1 =Strongly disagree, 2 =Disagree, 3 = Agree,

4 =Strongly Agree and 5 = N/A for Not Applicable. Str

ongly

dis

agre

e (1

)

Dis

agre

e (2

)

(3)

Neu

tral

5A

gre

e (4

)

N/A

(5)

Challenges in Implementing Turnaround Strategies in a

Competitive Environment

57. Uchumi Supermarket seems to have difficulties in

implementing their strategies in a competitive

environment

58. Weak management roles in strategy implementation is

a challenge at Uchumi Supermarket

59. Lack of communication in strategy implementation is

a challenge at Uchumi Supermarket

60. Unawareness or misunderstanding of the strategy is a

challenge at Uchumi Supermarket

61. Unaligned organizational systems is a challenge in

strategy implementation at Uchumi Supermarket

62. Lack of resources is a challenge in strategy

implementation at Uchumi Supermarket

75

63. Poor coordination is a challenge in strategy

implementation at Uchumi Supermarket

Resistance to Change

64. There is always some resistance when implementing

Uchumi Supermarket turnaround strategies

65. There is a shortage of leaders who are able to create

the badly needed change at Uchumi Supermarket

66. There are too many and conflicting priorities at

Uchumi Supermarket

67. There are insufficient top team functions at Uchumi

Supermarket

68. There is inadequate management development at

Uchumi Supermarket

69. Resistance to change impacts negatively to turn

around strategy implementation

70. To overcome the resistance, education and effective

communication

Inadequate Resources

71. Resources available to Uchumi Supermarket underpin

its strategic capability

72. Inadequate resources may hinder sound strategy

implementation of Uchumi Supermarket

73. Coordination of implementation activities is not

effective at Uchumi Supermarket

74. Leadership is not effective at Uchumi Supermarket

75. Failure to adopt modern to technologies lead to

reduced efficiency at Uchumi Supermarket

76. Competences such as skills and knowhow enhance

strategy implementation at Uchumi Supermarket

76

Strategic Drift

77. Strategies set fail to address the strategic position of

Uchumi Supermarket and hence performance

deteriorates

78. Uchumi Supermarket has run into difficulties because

of failure to acknowledge and address strategic drift

79. Failure to ensure that Uchumi Supermarket daily

activities, work efforts and resources are directed to

the implementation of strategy has led to its failure

80. The strategic plans and tactics are developed at

operational and functional level of Uchumi

Supermarket

81. Uchumi Supermarket strategies and tactics overlap

each other

82. Uchumi Supermarket strategy development processes

need to encourage people to have the capacity and

willingness to change their ways of doing things

Thank you very much for your cooperation and honest feedback.