Question 1 Efex Bank Uganda Limited (EBUL) is a commercial bank that has operated in Uganda for the past twenty five years

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Question 1

Efex Bank Uganda Limited (EBUL) is a commercial bank that has operated in

Uganda for the past twenty five years. The bank was among the first financial

institutions to be licensed by the central bank under the Financial Institutions

Statute of 1993.

Given its foreign ownership and the related access to foreign funding, EBUL

quickly developed its niche around the corporate customers, largely comprised of

multinational companies and expatriates. These are clients who are willing to

pay whatever it requires to get a good and convenient service.

In line with the expectations of the chosen market segment, the bank's only two

branches were located in the upscale Kampala suburbs of Nakasero and Kololo.

Fitted with top-end lounges and mini cafés, smartly dressed relationship officers

and dedicated personal banking executives, the facilities are the perfect

definition of luxurious banking. , the Uganda banking sector faced turbulence which led to the

closure of three large commercial banks. At the same time, a moratorium was

put in place limiting the licensing of new banks, pending regulatory reforms in

the sector. This moratorium was key in helping EBUL consolidate its position as

the corporate bank of choice. At the time, the entire banking sector comprised

of approximately 15 banks, three of which served the corporate clientele. In

2005, however, the moratorium was lifted leading to the entry of several other

banks in the sector. As of December 2017, the sector comprised of 24

commercial banks. These entrants came along with unconventional banking

approaches that significantly changed the banking landscape. For example,

banking hours were extended to 7.00 pm as opposed to the traditional 3.00 pm,

weekends became normal banking days for some new players, while new credit

and savings products were also introduced.

With customers spoiled for choice, banks started to engage in aggressive

competition that in some cases bordered on price wars. The matter is reported

to have been even discussed by the Bankers' Association, with a view of creating

cooperation under intense competition. It became common sight for banks to

open outlets next to one another in the busy shopping malls in the major towns

across the country, while promotion campaigns at social events and in schools

started attracting several banks at a time, with each promoting its serviceoffering. The central bank was not to be left out either, as it issued financial

consumer protection guidelines as a measure to protect the consumers of

financial services.

Employees were not left out either as their services were on high demand by the

increased number of players in the sector. It became common practice for staff

to move from one bank to another in a space of 2 - 3 years, which movements

came with massive increase in benefits. For the customers, the increased variety

meant better and cheaper service. In the process, some of the customers

realised that it was not worth to spend expensively on luxury banking services at

banks like EBUL, when other competitors were now offering relatively similar yet

less costly services. This was the beginning of the erosion of market share for

EBUL.

In the subsequent years, other developments came along in the form of

advanced use of technology, and the emergence of mobile banking platforms.

Noting the change in the operating landscape, and with a significant reduction in

corporate clientele, EBUL decided to acquire Ugabank Ltd, a smaller institution by

asset size and deposit base, but much larger by branch network. The plan was

that EBUL would leverage Ugabank Ltd's massive regional outreach across the

country to make entry into retail banking where the target bank had a big

footprint. With an increasingly financially literate population and with the

Ugandan government devoting funds to promotion of financial literacy, this was

considered perfect timing for EBUL to enter the retail banking market segment.

In a related development, government commenced the promotion of savings and

credit cooperative societies countrywide as a measure to improve the savings

culture and mobilise capital for eventual investment.

The above aside, Ugabank Ltd had also pioneered and successfully implemented

micro loans via a partnership with a leading telecommunications company.

Under the arrangement, telecommunication users would borrow money from the

bank even when they were not bank clients. This product was based on the

mobile money application and it turned out to be hugely successful. Whereas

the loans are micro in nature, the number of active borrowers was in excess of 5

million as at December 2017. In addition, these borrowers have a very low

default rate yet the interest rates charged are higher than those charged on the

conventional loan products. It is understood that this product and the related

loan portfolio were one of the key attractions for EBUL in making the acquisition

decision, which would make EBUL one of the largest banks by not only asset size

and deposit base, but also branch network.

Following the central bank's approval, the deal was finally sealed in May 2018.

The parties, however, agreed to keep the deal under wraps for one week, to allow EBUL finalise its post-acquisition plan before going public. Following an

internal debate within EBUL, management decided that it was prudent to first

finalise the transition plan before a public announcement can be made. This

notwithstanding, the announcement was to be made before the Bankers'

Exhibition, which was due in a fortnight.

Required:

(a) Using Porter's Five Forces Model, assess the level of competition in the

banking sector.

(16 marks)

(b) Write memo to EBUL management advising them on the following:

(i) Considerations for the successful integration of Ugabank Ltd into

EBUL.

(12 marks)

(ii) Use of promotion as an awareness tool following the acquisition.

(12 marks)

(c) Evaluate the possible organisation structures to be considered by EBUL

following the merger.

(10 marks)

(Total 50 marks)

SECTION B

Attempt any two of the four questions in this section

Question 2

Mac-Holdings Limited (MHL), has a range of apartments that it rents out on a

short-term basis with focus placed on tourists and Ugandans from the diaspora

who visit Uganda once in a while. Whereas the company has done well over the

years, management has ambitions of further growing the profits and client base.

Currently, the company's apartments are only located in Kampala city and Jinja

town. In addition to providing accommodation, MHL also provides meals to its

clients. Research has shown that there is a high correlation between the

occupancy rate of the apartments and the quantity of meals sold. In addition,

the bulk of the company's clients are tourists from European countries and the

Middle East. The clients from the Middle East are known for making bookings for

both accommodation and a whole range of meals that are consumed throughout

the day. This niche has helped MHL to make good annual profits for the past ten

years.

Over the past eight months, however, the overall scale of business in MHL has

dwindled. This is partly attributed to fierce competition that is continuing to

emanate from the increasing number of hotels in Kampala city and Jinja town In

a recent meeting with the managing director (MD), Patrick, the marketing

manager, is reported to have assured the MD that the appropriate use of the

marketing mix can enable them regain competitiveness. The MD has bought into

the idea but he has cautioned Patrick to uphold the company values so as to

discourage unethical practices. In order to reassure himself, the MD has sought

your expert advice.

Required:

(a) Advise the MD on how MHL can apply the marketing mix to achieve its

ambitions.

(18 marks)

(b) Examine the ethical matters that must be considered in the

implementation of the marketing mix.

(7 marks)

(Total 25 marks)

Question 3

Exquisite Designs Limited (EDL) deals in the sale of garments both locally and

internationally. Following a wave of declining employee performance in most of

its branches across the globe, it has decided to employ a specialised human

resource firm to review its human resource management function. The review is

expected to take a wide scope and will include examining the means by which

EDL sources, selects, develops and disengages with staff.

After a laborious scrutiny of available specialised firms that could offer human

resource services, Skilling Personnel International Limited (SPIL) has been

awarded the contract by EDL's managing director. The contract requires SPIL to

advise EDL on the impact of embracing various employee selection methods.

While the formal contract between SPIL and EDL has just been formally signed,

informally SPIL has already started work. Draft documents point to the fact that

there is need for some categories of employees at EDL to be trained as a means

for enhancing staff performance as most of them seem to be making technical

errors on the job. Some notable concerns include the inability to persuasively

talk to clients, inability to report on stipulated time, and the inaccurate recording

of sales made.

SPIL has offered you a lucrative consultancy on the challenges being faced by

the company.

Required:

(a) Discuss the stages that SPIL will have to undertake as part of its efforts to

train employees at EDL.

(12 marks)

(b) Examine the employee selection methods that SPIL may recommend for

consideration by EDL.

(13 marks)

(Total 25 marks)

Question 4

The Uganda Tax Agency (UTA) is the statutory body in charge of administering

taxes and other non-tax revenue on behalf of government. UTA collects

revenues at all its branches located in all major towns across the country.

Smaller tax offices are also located in other smaller towns across the country.

With the advent of technology, UTA is in the process of automating all its tax

administration processes, from the registration of taxpayers, to the payment of

taxes. This initiative will reduce physical interaction between the staff of the

agency and the taxpayers as all correspondences will be automated.

Management is optimistic that the limited physical interface will reduce the highly

prevalent tax fraud, improve staff efficiency and result into cost savings as UTA

will need less staff. It is also expected to address the increasingly loud public

complaints about bureaucracy in tax administration.

The automation will also involve formation of strategic partnerships with financial

institutions which will receive all taxes going forward. In this new approach, no

cash will be received at UTA's offices. Other system enhancements will allow

taxpayers to get instant tax assessments and instant notices after their taxes

have been paid.

Management is in advanced stages of commissioning the tax administration

automation project for kickoff (pilot phase), but they are concerned by the silent

yet highly prevalent staff resistance. Most of the staff are against this change in

processes, for fear of possible loss in benefits, uncertainty about the ease of

operation for the systems being introduced and possible loss of jobs. Arguing

against the proposals, one of the longest serving staff was overheard

commenting that ............"we should have been involved in the project right from

the start. That is what management by objectives dictates; otherwise how do

you expect us to support something that management is just imposing on us? I

would rather be paid my terminal benefits and quit than stay on to be humiliated

with new information technology systems and reporting to young people."

You work for Huda Consults, a firm that specialises in organisational

development consultancy. The firm's managing director has assigned you as the

lead consultant to advise UTA on the staff resistance to the impending project.

The firm's leadership has decided that the primary tools to guide the assignment

will be Kurt Lewin's freeze model and business process engineering.

Required:

Prepare memo to the managing director evaluating the following:

(a) Application of Kurt Lewin's Freeze model as a tool to manage change at

the UTA.

(12 marks)

(b) Application of business process re-engineering as an intervention at UTA.

(8 marks)

(c) Role of management by objectives as a contemporary approach to

management at UTA.

(5 marks)

(Total 25 marks)

Question 5

Within the manufacturing industry, operations management has the potential to

cause the corporate strategy to fail or to succeed. For this reason, strategic

managers must envision and incorporate the role that operations management

will play in creating competitive advantage for the particular manufacturing

organisation. One of the key operations management issues that the strategist

will be concerned with, is the nature of production processes to embrace. This is

because different organisational goals may call for the adoption of differing

production systems. While some production system may be appropriate for

standard products and could be aligned to cost leadership strategies, others may

be appropriate for customised products and synonymous with other types of

strategies.

Required:

(a) Analyse the role of operations management in supporting organisational

corporate strategy.

(10 marks)

(b) Critically appraise the various production systems that an organisation can

use to support the pursuance of its corporate strategy.

(15 marks)