Commercial Bank of Africa Case Study Mgt 501

Topics: Bank, Management, Central bank Pages: 13 (4426 words) Published: October 9, 2008
Executive summary
The Commercial Bank of Africa (CBA) case examines the challenges CBA is facing in trying to introduce change in an organization. The problem is compounded because first, the management wants to introduce change in the Information and Communication Technology (ICT) management structure, and secondly, the existing structure is working very well. This results in the Managing Director of CBA, being in a dilemma whether to introduce the change or not. The Kenya’s banking sector has witnessed rapid growth in the recent past resulting in a scramble for the available customers. There were 49 banks in Kenya in 2003. The banks face stiff competition and the only way to survive is by being updated on the latest Information Communication Technology (ICT) since it is an integral part of the banking institutions. ICT is considered a major focus as a strategic key in the attainment of the comparative advantage. Other factors affecting the banks are the business strategic leadership in order to define business policy formulation and the implementation boundaries. Like in any other country the banking environment is punctuated by government regulations (with specific reference to CBK), political interventions, the ever-changing customer needs and other self-imposing forces in the industry. The Commercial Bank of Africa was founded in 1962 in Dar-es-Salaam Tanzania but reincorporated itself in Kenya in 1967. It has eight branches in Nairobi and three in Mombasa. In terms of comparative size using asset base and shareholder capitalization, its competitors included Citibank, Standard Chartered, Barclays Bank of Kenya, Kenya Commercial Bank, Co-operative Bank and National Bank of Kenya. In total there are about 21 banks in the medium category that CBA falls in and most of them are already technologically compliant with a wide base of diversified products. Despite all these, CBA had proved that indigenous banks could compete on equal terms with multinationals by being rated fourth and third best bank in Kenya in years 2001 and 2002 respectively. They managed to achieve this through their efficient IT department which ensured they stayed at the Top. CBA is headed by Mr. Awuondo who is the Managing Director and the CEO. Mr. Bristow, the Executive Director was also a member of the banks board of Directors. CBA has specialised divisions, a high skilled and experienced management, and a top notch IT department with an experienced manager who ensures they win their competitors. CBA is for sure being challenged greatly in its current position, of adopting new strategy and the challenge is to ensure the stay on top after introducing the changes.

The industry became so booming in the 1990s, seeing a number of banks come into the scene of competition for the same customers. The next few years were a different story all together, with the World Bank and the international community withholding funds to the country as a result of the prevailing political situation. In addition the number of non-performing loans was on the increase as banks have raised the lending interest rates up to 70%. This saw a number of banks make considerable losses or no profits at all. Despite this CBA maintained its clientele and the competitive edge it had over a number of banks in the medium sized sector. Unfortunately for them a number of small banks had moved to their scale of medium–sized grade, thereby posing greater challenges.

Key issues
1. Introduction of change in the management of Information Technology To remain on top in the banking sector, CBA has done a major investment in IT systems in order to maintain a competitive edger over the players in the banking industry. They have so far succeeded, but these systems need to be continually upgraded as a response to customer demands and also cope up with the current technological trends. New advancements are invented daily forcing CBA to...
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