BBS 420 – STRATEGIC MANAGEMENT

EXERCISE / QUIZ 2

Date Given: Friday 27th November 2020. Date Due: Monday 30th November 2020. Time: 16:55 Hrs.
Submission Mode: Hard Copy and soft Copy.

Read the Passage below and answer the question that follows.

National Bank of Zambia

In the end, National Bank of Zambia (NBZ) could not keep up the pretence any longer. The bank’s Chief
Executive, Robert Tusheni, who came from Barclays Bank in 1997, and its Chairman, Mr. Patrick Kunda, an
old hand, were at each other’s throats and one of them had to go. It was Mr. Tusheni, the young, well-regarded
Zambian MBA graduate, who was ousted last week, rather than Mr Kunda, who is 67 years old and due to
retire in 2009.
As soon as Mr Tusheni arrived at the bank, he made the bank’s top managers face some uncomfortable truths.
In the late 1970s, he reminded them, NBZ and the other commercial banks in Zambia, had roughly similar
geographical reach, balance sheets, market capitalizations, profits and staff numbers. Why was it, he asked,
that NBZ had so dismally underperformed its rival banks ever since? If it was not to lose even more ground,
Mr. Tusheni told them, its culture and strategy would have to change.
Under his leadership, NBZ increased the number of branches countrywide. In the urban area, the bank still
faced competition from the private banks, notably, Barclays Bank, Stanbic, Standard Chartered, Finance Bank,
Indo-Zambia Bank and Investrust. NBZ nevertheless had an edge on the private banks because of its
unquestionably privileged relationship with the government. This special business relationship with the
government was rooted in the fact that the bank was a joint venture between the governments of India and
Zambia, and the Zambian government deemed it financially prudent to channel all its business through NBZ.
In the case of rural areas, the vacuum created by the withdrawal of private commercial banks was an added
bonus for NBZ. The bank’s market share standing was also boosted by its liberal credit policy and affordable
minimum balance requirement. The bank thus became a natural and automatic attraction to low income groups
and, more importantly, to rural dwellers who included government civil servants, peasant farmers and an
assortment of retirees who had opted to settle away from the hustle and bustle of urban life. The turn in fortunes
of the bank under Mr. Tusheni’s stewardship was also manifested by an increase in business in the region
attributed to the decision to headquarter Comesa in Lusaka. The share of the bank’s profit that came from the
region rose sharply.
Last year Mr. Tusheni started to back away from the unspoken tradition of granting soft loans and advances to
old political hands, whose default rate on repayments was becoming a matter of concern. This did not however
please Mr Kunda who drew his support from the political establishment of the ruling party. Moreover, so Mr
Kunda argued, NBZ was a “national and people’s bank.” On his part, Mr. Tusheni made no secret of his disdain
for what he considered Mr. Kunda’s “archaic banking practices.” Mr. Tusheni also riled the expatriate staff
who felt insecure by Mr Tusheni’s slant toward indigenization of the bank. A firm believer in the “African
way of doing things,” Mr. Tusheni had, in the last two years, began promoting local fellow Zambians and
Africans from COMESA member states to managerial positions, traditionally a role reserved for British and
Asian expatriates.

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Forcing the pace of change at NBZ, half of which dates from the 1980s, was a hard task, and Mr. Tusheni
made enemies along the way. Critically, he failed to keep in with the bank’s non-executive board members,
viewed in the City of Lusaka as a conservative lot, and hopelessly locked and steeped in English tradition. It
was these folk who turned on Mr. Tusheni last week, despite his support from the executive managers. Most
recently, differences between Mr. Tusheni and his Chairman had been aggravated by Mr. Tusheni’s open
enthusiasm for a proposal from advocates of privatization for the government of Zambia to sell its shares in
the bank to ordinary citizens. Mr. Kunda is known to be passionately opposed to any “watering down” of
government ownership.
How the bank charts its course in the post-Tusheni era will now be the job of Mukela Mundia, NBZ’s former
Operations Manager, who was promoted to Managing Director last week. Mr. Mundia is known to be a close
confidant of Mr. Tusheni and reliable sources believe there will be no major shift from Mr Tusheni’s stance.
So Mr. Tusheni’s ideas, if not his management style, will continue.
Source: Adapted from The Economist, December 8-14, 2001, p.72.

Required:
Strategic Management is said to involve consideration of three questions:
 Where an organization is;
 Where an organization wants to go; and
 How the organization gets to where it wants to go.

In terms of strategy, describe the moves Mr. Tusheni made to take the bank to where it was at the time
he left the bank.

(NB: You are not supposed to reproduce the story)