Reference no: EM132300129

National Bank of Zambia (NBZ) In the end, National Bank of Zambia (NBZ) could not keep up the pretence any longer. The bank's Chief Executive Officer, Robert Tusheni, who came from Barclays Bank in 2012, 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, wellregarded Zambian MBA graduate, who was ousted last week, rather than Mr Kunda, who is 65 years old and due to retire in 2015. As soon as Mr Tusheni arrived at the bank, he made the bank's top managers face some uncomfortable truths. In the late 1990s, 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. •leadership„ NBZ increased the number of branches countrywide. •In the urban area, the bank stilt 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, NBZ quickly filled the vacuum created by the withdrawal of private commercial banks that were of the view that the rural sector was not a good business proposition. The bank's market share standing was also boosted by its liberal credit policy and affordable minimum balance requirement. By this policy, the bank was able to attract small and relatively poor account holders that could not afford the relatively higher minimum balances demanded the private banks. 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. Under Mr. Tusheni's stewardship, NBZ was also able to exploit the business that came with the decision to headquarter COMESA in Lusaka. Mr Tusheni's acumen at tapping the business that was associated with trade in the COMESA region. 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 go down well with 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 fellow Zambians and Africans from COMESA member states to managerial positions, traditionally a role reserved for British and Asian expatriates. 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 2 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 and an admirer of Mr. Tusheni's policies. 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,

Required

Strategic management is about analyzing where a firm is, where it wants to go and how it gets to where it wants to go.

Describe where the bank was when Mr. Tusheni first arrived at the bank, and the strategies that were pursued to take the bank to where Mr. Tusheni left it at the time he left the Bank.