EFFECTS OF STRATEGIC CHANGE ON ORGANIZATIONAL PERFORMANCE: A CASE OF KENYAN MOBILE TELECOMMUNICATIONS INDUSTRY, By Gershom Habile

EFFECTS OF STRATEGIC CHANGE ON ORGANIZATIONAL
PERFORMANCE: A CASE OF KENYAN MOBILE
TELECOMMUNICATIONS INDUSTRY
BY
HABILE GERSHOM
A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA)
GRADUATE BUSINESS SCHOOL (GBS)
FACULTY OF COMMERCE
CATHOLIC UNIVERSITY OF EASTERN AFRICA
APRIL 2013

II
DECLARATION
This research project is my original work and has not been presented anywhere to the best of my
knowledge. No part of this proposal may be reproduced without the prior permission of the
author.
Habile Gershom
Signature _____________________________ Date _________________
SUPERVISORS
This project has been submitted with my approval as the university supervisor.
Dr. Aloys B. Ayako
Signature _________________________ Date _________________
Mr. Solomon Okumu
Signature _________________________ Date _________________

III
DEDICATION
I dedicate this work to my father Mr. S. Habile, my late mother Mrs. Dorothy K. Habile (+2001),
my step mother Mrs. Judith Habile, my late brothers Morgan (+1998) and Sebastian (+2005), my
late sisters Esther (+1992) and Emma (+2013). I also dedicate it to my brothers Daniel, Wezi and
Oswald, my sisters Bridget, Mazyani, Masuzyo and Mbose, my step sisters Paniso and Rachael,
my uncle Dr. Michael Habile, my extended family, all my friends and not forgetting all those
who have played a part in my life and my academic journey.

IV
ACKNOWLEDGEMENT
After all the hard work, the struggles and all the challenges encountered, finally my project has
come to completion. This has been possible due to the various individuals who dedicated
themselves in assisting me in various ways. I will forever remain indebted. I therefore wish to
express my sincere gratitude first of all to almighty God for giving me the blessings I needed to
complete my project and my studies in general. Special thanks goes also to my family who,
though were miles away, supported and encouraged me especially my brothers Wezi and Oswald
and my sister Mazyani. I also wish to extend my sincere gratitude to my uncle Dr. Michael
Habile for all the financial support he gave me.
I would also like to thank my supervisors Dr. Aloys Ayako and Mr. Solomon Okumu Ndiao for
their dedication in helping and guiding me in writing my thesis. Thanks too to Dr. Mwanza, Mr.
Lumbama, Ignatius Chicha, Faith Mutie, Aaron Chanda, Floyd Chanda, Fr. Richard
Chimfwembe, my classmates and friends and all those who helped and supported me in one way
or the other.
Finally I would like to thank CUEA for providing me with the necessary and qualified members
of staff and the necessary material and infrastructure that made my studies possible.

V
ABSTRACT
With changing environment, organizations too need to undergo change in order to remain
competitive and enhance their performance. This calls for strategic change which is a very costly
and time consuming exercise which can either be helpful or harmful to an organization. It is
therefore important for an organization to know whether strategic change is helping them i.e.
whether it is enhancing organizational performance or actually leading to organizational decline.
This study was dedicated to establishing the effects of strategic change on organizational
performance and specifically on financial performance in the mobile telecommunications
industry in Kenya. Descriptive survey design was employed in carrying out the research. This
enabled the researcher to investigate the effects of strategic change on the financial performance
of the four leading mobile telephone service providers in Kenya. A sample of 60 respondents
familiar with issues of strategic change was targeted and a questionnaire was used to collected
data. Descriptive statistics such as frequencies and percentages was used. Furthermore,
inferential statistical analysis was also employed in analyzing the data. These included cross
tabulation, chi-square tests, correlation and regression. The findings of the study revealed that
strategic change has actually enhanced the financial performance of these organizations.
Strategic change has directly and greatly contributed to increased cash flow, sales, profits, capital
and return on investment while it has had little influence on stock price, return on assets, return
on capital and dividends. Therefore, it can be said that strategic change in the four companies has
greatly enhanced only certain financial performance areas while it has had little or no influence
at all on other financial performances areas.

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Table of Contents
DECLARATION............................................................................................................................ II
DEDICATION...............................................................................................................................III
ACKNOWLEDGEMENT............................................................................................................. IV
ABSTRACT.....................................................................................................................................V
LIST OF FIGURES.................................................................................................................... VIII
LIST OF TABLES......................................................................................................................... IX
LIST OF ABBREVIATIONS AND ACRONYMS...........................................................................X
CHAPTER ONE.............................................................................................................................. 1
INTRODUCTION ........................................................................................................................... 1
1.1 Introduction.........................................................................................................................1
1.2 Background of the Study ......................................................................................................1
1.2.1 Mobile Telecommunications Industry in Kenya .....................................................................4
1.3 Statement of the Problem .....................................................................................................7
1.4 Research Questions..............................................................................................................9
1.5 Significance of the Study....................................................................................................10
1.6 Scope and Delimitations of the Study..................................................................................11
1.7 Conceptual Framework ......................................................................................................12
1.8 Organization of the study .......................................................................................................14
CHAPTER TWO........................................................................................................................... 15
LITERATURE REVIEW.............................................................................................................. 15
2.1 Introduction.......................................................................................................................15
2.2 Theoretical Literature.........................................................................................................15
2.2.1 Effects of Strategic Change ................................................................................................15
2.2.2 The Change Problem..........................................................................................................18
2.2.3 Managing/Leading Change.................................................................................................21
2.3 Empirical Literature...........................................................................................................25
2.4 Research Gap ....................................................................................................................30
CHAPTER THREE....................................................................................................................... 32
RESEARCH METHODOLOGY................................................................................................... 32
3.1 Introduction ..........................................................................................................................32
3.2 Research Design ................................................................................................................32

VII
3.3 Target Population ..............................................................................................................33
3.4 Sampling Plan ...................................................................................................................34
3.5 Data Collection Instruments and Procedures........................................................................35
3.6 Data Presentation and Analysis ...........................................................................................35
CHAPTER FOUR ......................................................................................................................... 37
PRESENTATION, DISCUSSION AND INTERPRETATION OF EMPIRICAL FINDINGS....... 37
4.1 Introduction.......................................................................................................................37
4.2 Response Rate...................................................................................................................37
4.3 Strategic change.................................................................................................................37
4.4 Challenges of Strategic Change...........................................................................................41
4.5 Organizational Financial Performance.................................................................................51
4.6 Effective Strategies to be explored ......................................................................................56
CHAPTER FIVE........................................................................................................................... 63
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY......................... 63
5.1 Introduction.......................................................................................................................63
5.2 Summary of the findings ....................................................................................................63
5.3 Conclusions.......................................................................................................................66
5.4 Recommendations..............................................................................................................66
5.5 Limitations of the study and Suggested areas for further research..........................................67
REFERENCES...........................................................................................................................68
Appendix i: Questionnaire ............................................................................................................. 78

VIII
LIST OF FIGURES
Figure 1.0: Conceptual Framework....................................................................................................13
Fig. 1.1: Lewins three-step- model (Source: Lewin 1951) ....................................................................24

IX
LIST OF TABLES
Table 3.0: Total Target Population.....................................................................................................33
Table 3.1: Sample Population ............................................................................................................34
Table 4.1: Extent to which strategic change is employed .....................................................................38
Table 4.2: Extent to which challenges affect the process of managing/leading change ...........................41
Table 4.2.1: Cross tabulation of Lack of employee involvement by Process/systems change..................43
Table 4.2.2: Cross tabulation of employee resistance by Process/systems change..................................45
Table 4.2.3: Cross tabulation of Lack of support by top management by Process/systems change...........47
Table 4.3: Extent to which strategic change has been successfulin achieving enhanced financial
performance.....................................................................................................................................51
Table 4.3.1: Model summary of predictors .........................................................................................53
Table 4.3.2: Relationship between P, MC, SP, CVC, SC, PSC and cash flow........................................53
Table 4.3.3: Coefficients of predictor variables...................................................................................54
Table 4.4: Extent to which effective strategies ensured strategic change enhances organizational
performance.....................................................................................................................................56
Table 4.4.1: Cross tabulation of training by cash flow .........................................................................58
Table 4.4.2: Cross tabulation of creation of a change atmosphere by cash flow .....................................60

X
LIST OF ABBREVIATIONS AND ACRONYMS
IT = Information Technology
SMS = Short Messages
GPRS = General Packet Radio Service
3G = Third Generation
FLE = Front Line Employee
S&Ls = Savings and Loans
U.S = United States
HMOs = Health Maintenance Organizations
ANOVA = Analysis Of Variance
SP = Strategic Planning
CVC = Culture/Values Change
R = Restructuring
PSC = Process/Systems Change
MC = Management Change
P = Partnerships

1
CHAPTER ONE
INTRODUCTION
1.1 Introduction
This chapter will give a brief overview of the concept of strategic change giving some of the
perspectives on strategic change and some models of strategic change. It will thereafter look at
the statement of the problem which explains why this study is necessary. Furthermore it will look
at the research questions which give what the research is trying to establish. Then it will explore
the benefits of the research and who will be beneficiaries of the study and also the scope and
delimitations of the study. The conceptual framework will follow and finally the organization of
the study.
1.2 Background of the Study
The topic of strategic change, defined by the dictionary of business (2013) as a restructuring of
an organization’s business or marketing plans that is typically performed in order to achieve an
important objective, is a very wide topic. It has attracted so much attention and has been at the
center of growing literature in both strategy and organizational fields (Fombrun, 1993; Ginsberg,
1988; Hofer and Schendel, 1978; Johnson, 1987; Zajac and Shortell, 1989). Rajagopalan and
Spreizter (1997) define strategic change as a radical shift in key activities or structures that goes
beyond incremental changes to preexisting processes while Van de Ven and Poole, (1995) define
it as the form, quality, or state over time in an organization’s alignment with its external
environment.

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Literature on strategic change identify two types of change which have been described by
Watzlawick, Weakland and Fisch (1974) as first-order vs. second order change, and by Yetton,
Johnston and Craig (1994) as evolutionary/incremental vs. revolutionary/transformational/radical
change. Revolutionary or discontinuous change is a radically innovative change in its aspects,
frequently altering the organization’s business framework and involving instantaneous
modifications in its strategy, formation, procedures and culture (Tushman & O'Reilly III, 2006).
Evolutionary change on the other hand involves regularly adjusting or acclimatizing the business
so that it develops in balanced relation with the transformations in its surroundings (Qamar &
Qamar, 2012).
According to Cameron and Green (2004), strategic change begins with an internal or external
trigger which makes an organization scrutinize itself resulting in reviewing of where an
organization wants to be, how it wants to get there and what it needs to do to get there. This calls
for strategic planning i.e. developing of new vision and mission. Although all sorts of change
need to happened as a result of this exercise, Cameron and Green (2004) identify four generic
strategic change options namely: structural change (restructuring) e.g. decentralizing, reducing
number of line managers; cultural/values change i.e. how things get done around the
organization and the required and acceptable behaviors, process change e.g. IT; and mergers and
acquisitions (partnerships) i.e. two or more companies pulling their resources together to achieve
a common objective. Burke (2002) also presented strategic change in a similar way though he
divided it into two categories: the human-processual which involved people and organizational
processes and the techno-structural approach which involved technology and organizational
structures .This is what this study will use when referring to strategic change.

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Balogun (2001) pointed out that for strategic change to become a reality, it is necessary to
change the way in which individuals within an organization behave which requires more than
restructuring and new systems. According to her, change is all about changing people and not
organizations as organizations change only when managers and employees change their way of
doing business.
Pettigrew and Whip (1991) identify three dimensions of strategic change namely: Content which
includes Objectives, purpose and goals and aims to answer the question of what is to be changed;
the process which is about implementation and aims at answering the question of how to change
and finally the context which covers the internal and external environment and aims at answering
the question of why the change is to take place. Worley, Hitchin, and Ross (1996) assert that the
process of strategic change encompasses four basic steps: Strategy analysis; Strategy making;
strategic plan design and finally implementation of the plan.
Kanter, Stein and Jick (1992) identify three cluster forces that trigger change in and around
organizations namely: Relationship between organization and their external environment;
Organic growth through the organizations’ life cycle and constant power struggle within the
organization for control among individuals and groups.
Dowling, Boulton and Ellliot (1994), identify four major forces that are changing the face of the
Telecommunication industry thereby posing a challenge to the industry namely: Technological
change, Changes in market demands/consumer tastes, Deregulation and,
Internationalization/globalization. Because of all these, the telecommunications landscape has

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become very turbulent so much so that firms in the telecommunication industry are struggling to
adapt both internally and externally (Dowling et. al., 1994). Therefore, by the fact that there are
shifts in the Telecommunication industry’s environment means that firms in the industry also
need to shift their formula if they are to be successful (Freeman, 2001).
1.2.1 Mobile Telecommunications Industry in Kenya
Some of the strategic responses taken by firms in the telecommunications industry globally
include change of structures to customer focused structures so as to respond to customer needs as
customers have become more sophisticated and prefer individualized or customized products and
services (Dowling et. al., 1994). This has led to customization which has been one of the main
strategies adopted by these firms. Apart from restructuring and customization, other strategies
employed by telecommunications service providers include acquisitions, mergers, joint
ventures/partnerships and strategic alliances with other carriers (Chan-Olmsted and Jamison,
2001).
Becoming global players has become another important strategy for firms in the
telecommunication industry to achieve sustainable growth (Grundey, 2007). They, as Lal and
Strachan (2007) put it, need to sharpen their focus on growth by concentrating on both their
respective home markets and on their cross-border activities. Other strategies include lowering
costs and downsizing i.e. reducing overhead costs and the number of staff so as to increase
efficiency (Dowling et. al., 1994).

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Kenya’s mobile telecommunications industry players, comprised of four major players namely
Safaricom Limited, Telkom-Orange Kenya, Bharti Airtel and finally YU Essar Kenya (Taiyou
Research, 2012) also undertake strategic changes in order to respond to environmental changes.
According to Elman (2009), the mobile telecommunications industry in Kenya, like world over,
is being affected by changes in the market environment such as competition from competitors,
technological advancement, changes in customer needs, globalization to mention but a few.
Therefore, firms in this industry are going through profound changes which call for strategic
changes. Previously firms in the industry concentrated mainly in Nairobi but now have moved to
other major towns across the country.
Other than just selling air time, firms in the industry have also widened their core businesses and
have ventured into partnerships. Some players in the industry operate as two different companies
so as to serve more than one operator. 10 years ago the telecommunications market was all about
making and receiving calls but now it has widened to short messages (SMS), GPRS which has
made available internet access. Recently the installation of 3G is shifting the market to data,
audio as well as video streaming. With such changes come software and hardware changes by
players in the industry.
Thus players in the Kenyan mobile telecommunication industry have had a number of strategic
changes so as to adapt to the changing environment thereby maintaining a competitive
advantage. For example Safaricom Limited formed in 1997 and the leading mobile network
operator in Kenya with over 19.1 million subscribers maintains a three to five year strategic
planning cycle and review its’ social, environmental and economic contexts of its operations

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(Safaricom Digital Sustainability Report, 2012). Safaricom’s strategies are based on four
perspectives: First, People; Secondly, Customers; thirdly, Financial performance and Risk; and
finally, Control. Safaricom has undergone many strategic as well as operational changes in the
past and today it is implementing a major transformation strategy that is expected to run for five
years. The goal of this transformation strategy is to deliver business growth, increase
productivity, drive efficiency i.e. enhanced service delivery, rationalize costs, enhance
stakeholder’s value i.e. profitability and capital growth and launch Safaricom to the next level
(Mativa, 2012).
On the other hand, because of the rapidly declining revenues and customer numbers, Telkom-
Orange made a strategic decision in 2005 to carry out extensive business reengineering and
restructuring of the company, with a hope to turnaround the situation and improve the
competitiveness of the company. Thus Telkom-Orange has undertaken, among others, culture
change, partnerships, restructuring and business reengineering (Kipkurui, 2008). Airtel too has
taken measures such as organizational restructuring, improvement in information technology
governance and security processes, enhancing competence in all its departments through
investments in innovative strategies and of the business enterprise structures. YU Essar despite
being young in the industry is also carrying out strategic changes as can be seen by its use of
organizational restructuring and partnering with other companies (Riany, Musa & Odera, 2012).
All this shows that the four players in the mobile telecommunication industry in Kenya are
facing stiff competition which in forcing them to undertake strategic changes. These strategic

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changes being undertaken by various players in the industry are actually being managed and
what remains now is to analyze their effects on organizational performance.
Various theories and studies on the effects of strategic change have come to conclude that
strategic change leads to both economic and non-economic outcomes (Rajagopalan & Spreitzer,
1997). This study will focus on the economic outcomes i.e. the financial performance. Kaplan
(2009) suggests the use of a balanced scorecard in measuring organizational performance.
According to him the balanced scorecard looks at the following performance areas: finance,
internal business process, learning and growth and finally the customer. This study will focus on
the finance aspect e.g. return on investment, cash flow, return on capital employed and financial
results (quarterly/annually).
1.3 Statement of the Problem
Strategic change can either be helpful or harmful to organizational performance (Trinh &
O’Connor, 2002). Successful implementation of strategic change will reinvigorate the business
while failure will lead to catastrophic consequences including organizational decline and
eventually death (Hofer & Schendel, 1978). Therefore, it is important for firms to carry out a
cost benefit analysis so as to actually measure whether the effects that strategic change has on the
organization are of more value than the cost of undertaking it. In this way, firms will be able to
know whether strategic change is actually leading to enhanced organizational performance or
vice versa. Changes in the telecommunications industry pose challenges that greatly affect the
service providers.

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These challenges cannot be ignored because the industry plays a significant role in the economy
and the service providers should operate efficiently and effectively in order to survive. The
changing demands of the telecommunication industry mean that the service providers have to
make a deliberate effort to put in place strategic plans that would ensure they develop rational
strategies to effectively respond. In this regard, one may wish to establish the strategic planning
practices in use by the service providers in the telecommunication industry and their effects on
the performance of the organization.
It is evident that as a result of changing environment, firms in the telecommunications industries
are engaging in strategic change. Strategic change is very costly and time consuming and if not
well managed can lead to huge loses and even firm death but despite this the link between
strategic change and organizational performance has not been the subject of much attention
among telecommunications service provider researchers. Previous studies have tended to
highlight the triggers of change, the strategic responses, change management and the challenges
of change in the telecommunications industry (Kipkurui, 2008; Onyango, 2007; Kappler, 2007;
Pennings et. al., 2005; Ochako, 2007; Gichangi, 2011; Mativa, 2012). Other studies have tried
to analyze the effects of strategic change on organizational performance and have realized
varying results.
For example a study by Zajac, Kraatz and Bresser (2000) show that organizations that deviated
from their model's prediction of dynamic strategic fit (i.e. changed more or changed less than
their model prescribed) experienced negative performance consequences. Nevertheless, the study
concluded that adherence to the normative model for strategic change had positive performance

9
consequences and that congruence with individual contingencies generally had beneficial effects
on subsequent performance. Another study by Trinh and O’Connor (2002) discovered that
strategic change can either be helpful or harmful to an organization depending on the type of
strategy employed. Furthermore, a study by Ye, Marinova and Singh (2007) found that strategic
change can lead either to enhanced organizational performance or to organizational failure
depending on front line employee (FLE) detachment, perception and participation. Caroline
(2008) discovered that strategic change improved financial performance while Akoth (2011) too
found that strategic change led to organizational success.
Researchers, managers, and policy makers frequently call for telecommunications service
providers to adapt to meet the needs of dynamic environments, but they rarely examine the
performance implications of such exhortations. Studies carried out in the mobile
telecommunications industry in Kenya have not looked at the effects of strategic change on
organizational performance to know if it does enhance organizational performance or not.
Therefore, this study aims at filling this gap by examining the telecommunications industry’s
changing environment and how players in the industry are strategically changing in order to
adapt to the environment and how they are managing and implementing strategic change so that
it does not fail but succeed by achieving its desired goal which is enhancing organizational
performance and what effects strategic change have on organizational performance.
1.4 ResearchQuestions
i. What strategic changes have mobile telecommunications industry players in Kenya
implemented to enhance their financial performance?

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ii. What challenges do mobile telecommunications industry players experience in
managing/leading strategic change?
iii. What are the effects of strategic change on the financial performance of mobile
telecommunications industry players?
iv. What effective strategies should players in the mobile telecommunications industry in
Kenya explore to make sure strategic change enhances financial performance?
1.5 Significance of the Study
This study is conducted to gather information on how strategic change affects performance of
Kenyan mobile telecommunications industry players. It will be significant because it analyses
the recent developments in the telecommunication industry and the strategic problem that this
brings. It also shows how the strategic problem facing firms in this industry can be managed for
better performance. Most of the earlier research on this industry has focused more on responses
that firms in this industry take in order to effectively respond to the challenges arising from the
rapidly changing environment. This study focuses on how these responses can be effectively
managed to make sure they do not fail. Thus, this study will be very helpful to the management
of Kenyan mobile telecommunications industry players in managing their strategic change so
that it does not fail but achieve its goal and thereby enhance the performance of the organization.
Since there are other players in the Telecommunication industry in Kenya, this study will not
only be beneficial to Safaricom Limited, Bharti Airtel, Telkom-Orange and YU Essar but also to
other players in the industry as it will set a platform that other players in the industry can learn
from and thus also effectively manage their strategic change processes and improve firm

11
performance. Even new entrants in the industry will benefit as the study will provide them with
the tools they need to successfully manage changes that they may have to undergo due to the
rapidly changing environment.
Furthermore, the study will contribute to the body of knowledge in the telecommunication
industry and will also help in the bridging of the knowledge gap on strategic change and
organization performance as it will give another perspective on the topic that other studies have
not yet tackled. This will also help further studies to be carried out on the topic.
Finally, the study will be of great importance to the researcher as it will help the researcher to
have a deeper understanding of the issues affecting the telecommunication industry and the
responses that firms in the industry are undertaking in order to effectively respond to the
challenges brought about by these issues and how these responses can be managed so as not to
allow them to fail but rather to succeed and thus enhance organizational performance. All this
will be vital to the researcher for self-professional development and enrichment.
1.6 Scope and Delimitations of the Study
The telecommunications industry in Kenya is made up of several players but this study focuses
only on the mobile telephone providers which are made up of four players namely Safaricom
Limited, Yu Mobile, Airtel and Orange. The four are said to be the major players in the
telecommunication industry and so have real experience of strategic change and its effects on
organizational performance. The study focuses on the effects of strategic change on the
performance of Safaricom Limited, Bharti Airtel, Telkon-Orange and YU Essar and how they

12
manage strategic change in order to respond to the challenges they face so as to ensure that their
strategic change efforts do not fail but achieve their goal i.e. enhancing organization
performance. Organizational performance measurement has four aspects according to Kaplan’s
balanced score card but this study will only focus on the financial aspect.
It focuses on staff of Safaricom Limited, Bharti Airtel, Telkon-Orange and YU Essar, and
basically staffs at the head offices in Key departments as these are the more and easily
accessible to the researcher and are more acquainted with issues of strategic change in the
organization. The study will cover the last five years of the four companies’ operations because
during this time these companies have undergone tremendous change and also because since
strategic change is a process it can be best analyzed over a period of time. On the other hand,
despite perceived enhanced performance, the named companies experience some challenges in
managing their strategic change and thus this study will propose other effective solutions to the
problems faced with strategic change in these companies.
However, the study does not cover other players in the telecommunication industry of Kenya.
Also the proponent had limited time as the study had to be completed in one semester and also
the researcher had limited funds to finance the study as he had to rely only on pocket money in
carrying out the study.
1.7 Conceptual Framework
Figure 1.0 below provides the conceptualization of the strategic change process. The key features
of this framework are (1) the independent variables which consists of leaders having a vision and

13
doing some strategic planning; establishing a project management team for implementing
change. This will have to do with issues of policy and strategy e.g. strategic implementation
plans and then; operationalization and involving all relevant teams and individuals. This calls for
change in structures, systems, processes, culture and management. (2) Intermediate variables
which are the facilitators of strategic change or rather which are what should happen for strategic
change to lead to enhanced organizational performance e.g. communication, training and
employee engagement in the strategic change process and (3) the dependent variable which is the
outcome of the strategic change process which in this case is organizational performance i.e.
financial performance.
Figure 1.0: Conceptual Framework
Independent Variables Dependent Variable
Intermediate Variables
Strategic Change options
 Strategic planning
 Culture/values change
 Restructuring
 Processes/systems change
 Management change
 Partnerships
Organizational
performance
Financial performances
e.g. return on
investment, cash flow,
return on capital
employed and financial
results
(quarterly/annually).
What should happen for
strategic change to enhance
organizational performance
 Communication
 Training, coaching etc.
 Employee engagement

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1.8 Organization of the study
This study consists of five chapters. The first chapter gives the background of the study by
highlighting the concept of strategic change, the statement of the problem, the research
questions, the significance of the study, the scope and delimitation of the study and then the
conceptual framework. Chapter two on the other hand gives the literature review and looks at
theoretical as well as empirical literature and also the research gap. Chapter three highlights the
research methodology and it tackles the research design, target population, sampling plan, data
collection instruments and procedures and data presentation and analysis. Chapter four is about
presentation, discussion and interpretation of empirical findings. Finally chapter five is about
summary, conclusion and recommendations.

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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
There is growing literature on the topic of strategic change. The study of organizational practices
that enact, construct and advance effective strategy is theoretically and practically based on two
main concepts, strategic change processes and organizational practices of strategizing and
enacting effective strategy. This chapter reviews and discusses the relevant theoretical and
empirical literature on the issue of strategic change and also presents the research gap on this
topic.
2.2 Theoretical Literature
2.2.1 Effects of Strategic Change
Organizations that carry out strategic change are likely to perform differently. They will either
perform better or worse. There is ongoing debate as to whether strategic change helps enhance
organization performance or it harms the organization (Barnett & Carroll, 1995). Organizational
adaption theorists suggest that strategic change helps organizations adjust to environmental
conditions, prepare for the future, reduce external dependence and improve overall
organizational coordination for better performance. Thus without strategic change, organizations
will be unable to reposition themselves in the new environment and will consequently perish
(Trinh & O’Connor, 2013).
According to Haveman (1992) strategic change leads to improved organizational performance in
certain contexts (1996). On the other hand Singh, House and Tucker (1986) argue that similar

16
strategic change in different contexts leads to organizational failure. Some theorists of strategic
change and organizational performance show that strategic change enhances organizational
performance and the likelihood of firm survival (Hambrick & Schecter, 1993; Haveman, 1992;
Zajac & Kraatz, 1993) while others show that similar strategic changes reduce financial
performance (Graham & Richards, 1979; Jauch, Osborne & Glueck, 1980) and the likelihood of
firm survival (Singh et. al., 1986). Others still find either no relationship between strategic
change and organizational performance or firm survival (Kelly & Amburgey, 1991; Zajac &
Shortell, 1989) or mixed relationships (Smith & Grimm, 1987).
In trying to harmonize these contradictions, Rajagopalan and Spreitzer (1997) presents an
integrative framework which highlights three critical sets of managerial processes that influence
performance effects of strategic change. First, managerial actions which can mitigate an
organization’s resistance to change and ensure strategic change is effected effectively; second,
managerial actions aimed at building environmental support which can effectively enhance the
range of options available to the organization, provide resources and increase the likelihood that
the change will be accepted by environmental stakeholders and third, managers ability to learn
from initial problems as strategic change is being implemented and then use this learning to
modify subsequent actions and cognitions thereby leading to the likelihood of managers making
choices that result in positive economic and non-economic outcomes.
This integrative framework is comprised of the rational, learning and cognitive lens perspectives.
According to the rational lens perspective, which focuses exclusively on the financial
performance e.g. return on investments, growth, productivity, production time, operating ratio

17
and so on and on organizational survival, strategic change mainly leads to improved economic
performance
The learning lens perspective, assert that strategic change leads to both economic and non-
economic outcomes and it concludes that changes in strategy are closely related to improved firm
economic performance if they are accompanied by executive succession and personnel changes
(Tushman, Virany & Romanelli, 1985) and changes in organizational structures and processes
(Barr, Stimpert & Huff, 1992). Non-economic outcomes include perceived managerial
effectiveness (Simons, 1994), commitment and morale (Greiner & Bhambri, 1989), perceived
quality of change (Nutt, 1987) and enduring changes in ideology (Meyer, 1982). On the other
hand, the cognitive lens perspective theorizes that strategic change leads to profitability
(Thomas, 1993), employee productivity (Child & Smith, 1987) and firm survival (Barr et. al.,
1992). This has led Rajagopalan and Spreitzer (1997) to conclude that if properly handled,
strategic change should enhance organizational performance.
Change management and organizational development (n.d.) argues that the goal of strategic
change is improved organizational performance. It further says organizational performance is not
only about application of hard and fast rules for achievement but rather an acceptance of
ownership of the impact that change factors have in shaping organizational behaviors during
change. If strategic change objectives are not seen to be remotely achievable, they can
unintentionally prevent organizations from creating the conditions necessary for gaining an
improved and sustainable performance.

18
Bloodgood and Morrow (2003) theorizes that strategic organizational change is influenced by
environmental structure, internal conscious awareness and organizational knowledge. This
strategic change in turn influences organizational performance. They therefore argue that a fit
between the type of organizational change strategy that a firm choses and the type of knowledge
resources that a firm needs to successfully implement this strategy will have a positive effect on
the performance of the firm. In line with this, Hitt et al. (1996) and Markides and Williamson
(1996) assert that proper fit between a firm’s strategy and its structure, its governance
mechanisms and its control systems enhance organizational performance. Bodaracco (1991) says
firm performance resulting from change strategies that rely largely on explicit knowledge may be
increased if the firm is able to disperse the explicit knowledge rapidly and efficiently throughout
the organization.
Ingram (2013) asserts that strategic change can have a number of positive effects, for example, a
company’s adaptation to changes in the marketplace, effective performance or cost-efficiency,
increase profitability and organizational growth. Strategic change can at the same time have
negative effects on an organization. It can leave the organization in a worse position than it was
before the change.
2.2.2 The Change Problem
Despite all the literature, money and efforts thrown into strategic change, most organizational
change efforts fail. Studies by Marks (2006), Paper and Chang (2005) and Quin (2004) show that
about fifty percent (50%) of all organizational changes fail to deliver expected results and or
meet intended objectives and a similar survey of global companies reported that only one-third of

19
organizational change initiatives were considered to be successful by organization executives
(Meaney & Pung, 2008). A report “20/10 Consulting” (2009) show that about seventy five
percent (75%) of change efforts do not achieve intended results as they fail to achieve set
objectives, mobilize and engage people, change the behaviors of people involved and remain
sustainable.
There are so many explanations for the high percentage of failure of strategic change but a
notable reason for such a phenomenon is employee resistance as employees play a major role in
the success or failure of change in their organizations (Kotter & Cohen, 2002; Martin & Taylor,
2006). Employees play a major part in the success or failure of strategic change in their
organizations as their attitude and behavior are closely related to post change organization
performance e.g. if they are committed, change will be a success but if they are not, then it is
likely to fail (Shin, Taylor & Seo, 2012). Yet employees are reluctant to commit to
organizational change as they view it to be intrusive and disruptive of the routines and social
relationships formerly relied upon to complete important work tasks (Beer, Eisenstat & Spector
1990). They also perceive increased workloads because of the introduction of new strategic goals
and as such become change averse and reluctant to enact supportive behaviors directed at
achieving goals set by the organization’s leaders (Kiefer, 2005).
This becomes an obstacle to organizational change and therefore calls for strategies to overcome
the obstacle so as to make change a success, it calls for management of organizational change
defined by Kumar (2012) as the process of planning and implementing change in the
organization in such a way as to minimize employee resistance and cost to organization, while

20
also maximizing the effectiveness of change effort. Resistance may arise at all levels of the
organizational hierarchy. The people at higher levels resist a change effort because of the threat
on their interests, power and control over resources. At lower levels, it arises because change
brings uncertainty and uncertainty creates insecurity.
According to the University of Adelaide (2012), one of the goals of change management is the
alignment of people and culture with strategic shifts in the organization, to overcome resistance
to change in order to increase engagement and the achievement of the organization’s goal for
effective transformation. Achieving sustainable change begins with a clear understanding of the
current state of the organization, followed by the implementation of appropriate and targeted
strategies. The focus of change management is on the outcome the change will produce. A
comprehensive change management strategy should lead to the desired objectives and create a
sense of ownership, enable sustained and measurable improvement and build capability to
respond to future change.
Thus, change needs to be understood and managed in a way that people can cope effectively with
and since change can be unsettling, the manager logically needs to be a settling influence, he
must make sure that people affected by the change agree with, or at least understand, the need for
change, and have a chance to decide how the change will be managed, and are also involved in
the planning and implementation of the change (Change Management Principles, 2012).
Strategic change implementation thus becomes one of the most important undertakings of any
organization as successful implementation can reinvigorate a business i.e. lead to enhanced

21
organizational performance while a failure can lead to catastrophic consequences including death
of an organization (Hofer & Schendel, 1978).
2.2.3 Managing/Leading Change
There are several models of managing strategic change. Kotter (1995) in trying to give a solution
to the problem of failure of the change process say that first executives and other players in the
firm need to assess potential risks and stir a sense of urgency among all stakeholders to be
affected by the change process in an effort to generate motivation to spur change within the firm.
Once this has been established and change is seen as the solution to issues of market share, profit
loses or other catalysts, it is now up to the leaders to band together and make sure they propel
and guide the change process. It is this same group that should coalesce to create a shared vision
for corporate change which should include transformation steps that are coordinated to propel the
organization towards its goals and this vision should be communicated not only in words but also
by actions of managers, supervisor and executives. The transformation process should have short
term goals that can be tracked to show executives and workers that the change process is making
progress in achieving the vision.
He thus highlights eight steps to successful management of change and he says firstly, establish a
sense of urgency by discussing today’s competitive realities, looking at potential future scenarios
and increasing the felt need for change. Secondly, form a powerful guiding coalition by
assembling a powerful group of people who can work well together. Thirdly, create a Vision to
guide the change effort together with strategies for achieving this. Then communicate the vision
at least ten times the amount you expect to have to communicate because the vision and

22
accompanying strategies form the new behaviors. Furthermore, empower others to act on the
vision by getting rid of obstacles to change such as unhelpful structures or systems and allow
people to experiment. Then consolidate improvements and produce still more change by
promoting and rewarding those able to promote and work towards the vision and energizing the
process of change with new projects, resources and change agents. Finally institutionalize new
approaches by ensuring that everyone understands that the new behaviors lead to corporate
success.
“20/10 consulting” (2009) present strategic change levers which it believes once an organization
attends to them, increases its chances of success in its strategic change process and these levers
include: leading change which is all about having a champion who sponsors the change and
engaging leaders who provide resources, remove obstacles and take accountability for success;
creating a shared need for change, that is, establishing a compelling case for change which
should exceed its resistance; Shaping the right vision, that is, establishing a vision so that the
desired outcome of change is clear, legitimate and widely understood and shared by all;
Mobilizing commitment, that is, involving and informing all relevant stakeholders to obtain
ownership and support; Communicating relentlessly, that is, ensuring an ongoing flow of
information is shared in a timely manner and in a way the audience responds to; Aligning the
infrastructure, that is, ensuring that management practices are used to complement and reinforce
change and finally sustaining momentum/monitoring and adapting, that is, ensuring that once the
change is started, it endures, flourishes and learning is transferred throughout the organization.

23
Lewin (1951), building on his principle of the ‘force-field’ which assumes that strategic change
to be successful driving forces must outweigh resisting forces, suggests a three step model for
implementing strategic change: unfreeze-move-refreeze. This model is implicitly or explicitly
indorsed by many theoretical and practitioner models of change as can be seen from mangy
contemporary management texts which uncritically adopt it (e.g. Corley & Gioia 2004; Fiol,
2002; Isabella, 1990; Labianca, Gray & Brass, 2000).
The first step unfreezing the current state of affairs implies defining the current state, surfacing
the driving and resisting forces and picturing a desired end-state and it may take various forms
e.g. creating a sense of urgency about the need for change by presenting data to organizational
members that shows the gap between where they are and where they should be to meet growing
demand or changing environment, merging with another organization to mention but a few with
the intention of shaking up the system, confronting it with a compelling need to do business
differently and making it accessible and amenable to change interventions (Lewin, 1958).
The second is about moving to a new state or new directions with different technologies and
ways of operating or changing the organization through participation and involvement i.e.
educating managers to behave differently toward their subordinates to improve customer care
and implementing action plans for changing work processes or improving information systems
(Schneider, 1980). The third and last is about refreezing, that is, making change permanent by
setting new standards and reinforcing the new changed condition/state and putting in place a
process and infrastructure that will maintain the new system e.g. having a new reward system
that reinforces the behaviors that are congruent with the new, changed organization or having

24
different organizational structure and information systems (Lewin, 1958). Figure 1.1 illustrates
well Lewins’ three step model.
Fig. 1.1: Lewins three-step- model (Source: Lewin 1951)
Stanleigh (2013) says to begin with, we must recognize that change is a process and to move
from crisis to control, we must follow the process and engage everyone in the change. He
suggests seven stages in the strategic management process and says at stage one form a strategic
change management steering committee comprised of both management and staff who will
oversee the entire process of change, make recommendations, develop implementation strategies
and implement approved strategies. These have to engage and bring staff together and provide
them with an opportunity to vent, that is, to express themselves on how they feel about the
change and what they feel should be done to make change happen successfully. This helps to
prevent a crisis as it brings control to the change process from the very beginning so much so
that all those involved and to be affected feel they own it. The second stage is to identify
organizational culture i.e. commonly held attitudes, believes, values and behaviors of employees
and change readiness i.e. how receptive or resistant to change is the culture of the organization.
This too will help overcome resistance.
Unfreeze
Move
Refreeze
Examine status quo Increase
driving forces for change
Decrease resisting forces against
change
Take action Make
changes Involve people
Make change permanent,
Establish new way of
things, Reward desired
outcomes

25
Stage three is creating a strategic change vision i.e. depicting what the future will look like once
the entire change process is successfully implemented and new culture is apparent. Here the
concern is with future structure, culture and how work will be done and what actions should be
taken and what strategies put in place to get from the present to the future. The next stage is now
developing change strategies, that is, developing plans that will help to know what is it that has
to be done to achieve their vision and satisfy employee as well as customer expectations. Then
analyze the risks, that is, identify what might prevent the organization from successfully
implementing their change strategies and how costly will this be compared to the benefits to be
received and what contingencies are in place to ensure that all roadblocks are removed.
Next create the change plan by identifying the objectives required to meet each of the change
strategies and the detailed action plan required to meet each identified objective. Finally establish
values and principles which form the culture of the organization and defines required employee
behavior and action to successfully fit into this culture. These become the strengths of the
organization as they are the essence of the organization understood and respected by all
employees and the guides on how employees live their values and influence the results they
achieve.
2.3 Empirical Literature
Most of the studies carried out on the issue of strategic change focus on the ease or difficulty of
organizational change and the likely performance consequences of that change (Bloodgood &
Morrow Jr., 2003). Zajac, Kraatz and Bresser (2000) in their study “Modeling the dynamics of
Strategic fit: A normative approach to strategic change” found that (1) the timing, direction, and

26
magnitude of strategic changes can be logically predicted based on differences in specific
environmental forces and organizational resources, and (2) organizations that deviated from their
model's prediction of dynamic strategic fit (i.e. changed more or changed less than their model
prescribed) experienced negative performance consequences. The study concluded that
adherence to the normative model for strategic change had positive performance consequences
and that congruence with individual contingencies generally had beneficial effects on subsequent
performance.
The research design used in this study was the case study and data used was secondary data
collected from financial reports submitted by all Savings and loans institutions (S&Ls) in the
United States (U.S.) to the federal home loan bank board over a 9 year period. Collected data
was analyzed using time series regression methods and specifically the generalized least-squares
regression. Also employed was a discrete time event history model which entails per-forming
simple logit analysis on pooled time series data with a binary dependent variable. The population
of this study was 4000 U.S. savings and loan institutions spanning the decade of the 1980s.
In trying to contribute to the debate as to whether strategic change helps or harms organizations
Trinh and O’Connor (2002) in their study, helpful or harmful? The impact of strategic change on
the performance of U.S urban hospitals examine how strategic change influences performance
change in urban hospitals. They examined three aspects of performance (1) market share (2)
operational efficiency and (3) financial performance and discovered that strategic change can be
either helpful or harmful to organizations. Their study revealed that affiliation with health
maintenance organizations (HMOs) is significantly associated with an increase in revenue and

27
market share, whereas signing more HMO contracts is associated with a reduction in both
revenue and patient day market shares. On the other hand increases in contractual discount rate
urban hospitals negotiate with HMOs have negative effects on all measures of operational
efficiency and financial performance (return on assets, operating margin).
The study employed the longitudinal approach using a panel design and a path analytic model.
Data used was secondary data which was collected from American Hospital Association (AHA)
annual survey (1994-1996), Health care financing administration’s Medicare cost reports (1994-
1996) and Medicare HMO files (1994), US Bureau of the census county business patterns files
(1994) and area resources files (1994). The unit of analysis was the private (non-profit of for-
profit) general acute care urban hospitals which comprised of 2,423 urban hospitals. Collected
data was recorded and transformed to normal scores using the preprocessor for linear structural
relations (PRELIS) statistical software package. Once transformed, PRELIS computed a matrix
of polyseric correlations of the variables which was later used as input into the path analysis.
Ochako (2007) in his study on Strategic issue management practices by mobile telephony
companies operating in Kenya: A case study of Safaricom Limited discovered that for the past
five years the benefits realized as a result of practicing strategic issue management innovation
included competiveness of the company, growth of the company, brand enhancement and
increased customer base. Nevertheless, some challenges in implementing strategic issue
management practices were also discovered and these include resistance to change by
employees, inadequate preparation for change, inadequate training in strategy formulation and

28
implementation, inaccurate correlation between market needs and strategic plans, new
competition, change in policy and lack of total support and fear of change.
A study by Ye, Marinova and Singh (2007) Strategic Change Implementation and Performance
Loss in the Front Lines reveals that (1) Frontline Employee (FLE) detachment is effective in
separating out the negative and positive effects of change (2) FLE change perceptions are
sensitive to the focus of strategic change (cost containment versus revenue enhancement
strategies) and (3) FLE participation significantly enhances the positive effects of change and
mitigates performance loss. As a result, the study suggests that when FLE are not involved in the
goal setting and decision making process of strategic change, detachment and subsequent
performance loss occur. FLE participation not only fosters functional FLE attitudes and quality
performance but also mitigates performance loss. This study used survey as its research design.
The non-profit health care sector was the setting of the study and 3626 hospital FLEs with direct
patient interactions were selected. Data was collected using questionnaires and was analyzed
using measurement model analysis and structural model analysis.
In her case study of strategic management practices and performance at the co-operative bank of
Kenya limited, Caroline (2008) discovered that strategic change was helping the financial
performance i.e. increase in sales and profit before tax of co-operative bank for the last five years
that it was implemented. However, the study also revealed that despite the enhanced financial
performance, strategic change had little effect on share capital growth and growth in return on
assets. The research design employed in this research was the case study and data collection was
done using structured questionnaires and interviews. Collected data was analyzed using

29
descriptive statistics such as frequencies, percentages, mean scores and standard deviation with
the help of statistical packages on social sciences.
Akoth (2011) in his study strategic response by jubilee insurance to changing competitive
environment found out that strategic change actually led to the success of the company as the
company experienced expansion to new regions, maintained its market lead and remained the
number one biggest insurer in East Africa. He used the case study research design and primary
and secondary data. Primary data was collected using interviews while secondary data was
obtained from existing documents at jubilee insurance including management accounts, strategic
corporate plans, annual reports and accounts, magazines and newsletters and so on. Content
analysis was used in analyzing collected data.
Bett (2012) analyzing the challenges facing the implementation of change strategies at Kenya
commercial bank group limited found that strategic change helped the organization to adapt to its
environment. This helps prevent underperformance, manage crises and consequently lead to
increased profitability and growth. The case study design was adopted and both primary and
secondary data was used. Interviews were mainly used but also bank bulletins in collecting data.
Content analysis was used in analyzing the data collected. Since the study relied solely on
interviewing senior management, the information provided was impartial leading to some the
information given to be unreliable.

30
2.4 ResearchGap
Strategic change which involves restructuring, change of mission/vision, objectives and the form,
quality or state over time of an organization has attracted a lot of attention from researchers.
Most of the studies that have been carried out on strategic change in the telecommunications
industry have mainly focused on the triggers of strategic change, the strategic responses of firm
and challenges these firms face in the change process. They have mainly targeted people in either
top management or middle level management. Research on the effects of strategic change has
not explicitly been carried out especially on firms in the telecommunication industry and more
specifically on Safaricom limited, Airtel, Orange – Telkom and Yu Essar.
As such there is a research gap as there has been no research on what effects strategic change has
had on the four Kenyan mobile telecommunications industry players. Looking at the empirical
literature of this study, we discover that a lot of studies have been carried out which highlight the
triggers of change, the strategic responses, change management and the challenges of change in
the telecommunication industry (Kipkurui, 2008; Onyango, 2007; Kappler, 2007; Pennings et.
al., 2005; Ochako, 2007; Gichangi, 2011; Mativa, 2012). However, these studies have not
looked at the effects of strategic change and in particular in the Kenyan mobile
telecommunications industry. Though there are other studies that have analyzed the effects of
strategic change on organizational performance (Zajac, Kraatz & Bresser, 2000; Trinh and
O’Connor, 2002; Ochako, 2007; Ye, Marinova & Singh, 2007; Caroline, 2008; Akoth, 2011;
Bett, 2012), none of these studies are concerned with the telecommunications industry. This
therefore, leaves a gap in research on strategic change as the effects of strategic change in the
telecommunications industry have not been fully covered.

31
Strategic change is costly and therefore, it is very vital for firms undertaking any strategic change
processes to do a cost benefit analysis so as to evaluate how beneficial the strategic change
process is to the organization. Therefore, this study aims at filling this gap by examining the
telecommunications industry’s changing environment and how players in the industry are
strategically changing in order to adapt to the environment whilst enhancing organization
performance. It also looks at how these players manage and implement strategic change so that it
does not fail but succeed by achieving its desired goal which is enhancing organizational
performance. It further looks at what some of the effects of strategic change are on these
organizations’ performance.

32
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter presents the research design used in collecting data and the target population of the
study. Furthermore, the chapter presents the sampling plan, data collection instruments and
procedures used in collecting the same and finally it looks at how data will be analyzed and
presented.
3.2 ResearchDesign
A research design involves an arrangement of conditions for collecting and analyzing data in a
manner that aims at combining relevance with the research purpose. Orodho (2003) defines
research design as the scheme, outline or plan that researchers use to generate answers to
research problems. Furthermore, Kothari (2003) says that it constitutes the blue print for the
collection, measurement and analysis of data. This study uses descriptive survey defined by
Orodho (2003) as a method of collecting information by interviewing or administering
questionnaires to a sample of individuals.
The descriptive survey design is used because it provides the best means to answering the
questions raised in the study. Survey allows the collection of a large amount of data in a
relatively short period of time and is less expensive compared to many other designs. Also
survey can be created quickly and administered easily and can be used to collect information on
a wide range of things, including personal facts, attitudes, past behaviors and opinions, for
example by use of questionnaires.

33
3.3 Target Population
According to Kombo and Tromp (2006), target population is a group of individuals, objects or
items from which samples are taken for measurement. This study’s target population consists of
those in top, middle and lower level management from the four organizations. These are the key
informants responsible with strategic planning, management and implementation as well as
organizational performance and are in a position to have knowledge on strategic changes taking
place in these companies and its effect on organizational performance. This group has been
selected because they are in a better position to give information that is relevant to the
completion of this study because of their enormous experience and knowledge on strategic
changes in the organization. Total targeted population for this study is 253 and they are in
proportion to the size of the each organization as shown in the table below. Proportionality
enables the results to be representative of the whole population of each organization.
Table 3.0: Total Target Population
Company Top level Middle level Lower level total
Safaricom 11 12 53 76
Airtel 12 11 43 66
Telkom-Orange 9 10 51 70
YU Essar 8 8 25 41
Total 40 41 172 253
Population – 253

34
3.4 Sampling Plan
Sampling plans are divided into two: Probability designs and non-probability designs. This study
employs a probability sampling technique and specifically stratified random sampling. This is so
because the population is be divided into subgroups e.g. top level management, middle level
management and lower level management and then a simple random sample selected from each
subgroup. The use of this sampling plan ensures that each subgroup in the population is
represented in the sample in proportion to their number in the population. The sample population
consists of sixty respondents and using a method of proportional allocation under which the sizes
of the samples from the different strata are kept proportional to the sizes of the strata, the sample
population is divided as shown in the table below.
Table 3.1: Sample Population
Company Top level Middle level Lower level total
Safaricom 3 4 15 22
Airtel 3 3 11 17
Telkom-Orange 2 2 10 14
YU Essar 1 1 5 7
Total 15 21 24 60
Sample size = 60
Proportionality is calculated by the formula suggested by Kothari (2004) as follows: S = n.P1
where S is number of elements selected from stratum i, n is the total sample size and P1 is the
proportion of population included in the stratum i, e.g. supposing we want a sample size n = 30

35
to be drawn from a population of size N = 8000 which is divided into three strata of size N1 =
4000, N2 = 2400 and N3 = 1600. Proportional sample size for each strata will be as follows:
Strata with N1 = 4000, we have P1 = (4000/8000) and hence S = 30 (4000/8000) = 15

3.5 Data Collection Instruments and Procedures
There are two sources of data, that is, primary data and secondary data. Primary data is
information obtained directly from the respondents while secondary data is information which is
neither collected directly by the user nor specifically for the user. This is obtained from books,
journals and the internet. In this study, primary data was obtained through self-administered
questionnaires. The questionnaire was semi-structured with the use of both closed and open
ended questions. The inclusion of open ended questions gives respondents the opportunity to
give their own opinion on certain questions. The use of closed-ended questions limits
respondents to limited options of the proposed answers. Secondary data on the other hand was
obtained by use of desk search techniques from published company reports and other documents
both physical and digital.
3.6 Data Presentation and Analysis
Since data analysis is all about examining the data that has been collected then making
deductions and inferences, in this research data analysis methods used include thematic analysis
as well as content analysis, that means data is categorized into related themes/topics/major
subjects and inferences made by systematically and objectively identifying specified

36
characteristics of messages and using the same to relate trends respectively. Content analysis
allows both qualitative and quantitative operationalism which this study employs.
Data collected was analyzed using descriptive statistics such as frequencies and percentages.
Descriptive statistics included statistical procedures that are used to describe the population
under study. Furthermore, since the study involves ordinal variables, inferential statistical
analysis was used in analyzing data. These included chi-square, cross tabulation, ANOVA,
correlation and regression analysis which enabled the study to investigate the effects of predictor
variables on an outcome variable. With inferential statistics, the study was able to measure the
confidence levels and test the hypothesis.
Data presentation simply refers to the way collected data is presented after analysis and it is
comprised of three ways: using statistical techniques, graphical techniques or a combination of
both. This study uses statistical techniques and all the responses were critically analyzed and
properly sorted and coded in order to have a proper statistical analysis. The captured data was
processed using Statistical Package for Social Sciences (SPSS). The processed or analyzed data
was then presented in tables where applicable.

37
CHAPTER FOUR
PRESENTATION, DISCUSSION AND INTERPRETATION OF EMPIRICAL
FINDINGS
4.1 Introduction
This chapter presents the findings and discussions of the data that was collected from the field
based on specific objectives of the study presented in chapter one. This is done through the use
of frequencies, chi-square, correlation and regression. Results have been presented in such a way
that they answer the research questions. These have been divided into four main sections namely
strategic change practices, challenges, organizational performance and effective strategies to be
explored.
4.2 Response Rate
Sixty questionnaires were distributed to the four companies understudy and out of the sixty only
forty seven were collected representing a 78% response rate. This represents a fairly strong
response rate which can be attributed to the fact that respondents were assured that the
information given would be used purely for academic purposes and that absolute confidentiality
would be upheld. The high response rate can also be attributed to the fact that the researcher
appealed to authority by distributing the questionnaires through high ranking officials in the
named organizations. This high response rate will ensure the reliability of the data collected as
the data collected will be representative of the target population.
4.3 Strategic change
The study sought to establish to what extent strategic change was employed to enhance
organizational performance and Cameron and Greens’ (2004) generic strategic options namely:

38
strategic planning, culture/values change, restructuring, process/systems change, management
change and partnerships where used. Respondents were therefore asked to state, from a very
small extent to a very large extent, the extent to which identified strategic change options were
employed. The respondents’ results are shown in table 4.1 below.
Table 4.1: Extent to which strategic change is employed
Items Very small
extent
Small
extent
Moderate
extent
Large
extent
Very large
extent
F P
(%)
F P
(%)
F P
(%)
F P
(%)
F P
(%)
a. Strategic
planning
0 0 1 2.1 13 27.7 17 36.2 16 34
b. Culture/values
change
0 0 2 4.3 19 40.4 7 14.9 19 40.4
c. Restructuring 1 2.1 4 8.5 19 40.4 18 38.3 5 10.6
d. Process/systems
change
0 0 6 12.8 13 27.7 7 14.9 21 44.7
e. Management
change
0 0 13 27.7 15 31.9 17 36.2 2 4.3
f. Partnerships 3 6.4 13 27.7 9 19.1 7 14.9 15 31.9
According to table 4.1, two key factors emerged as highly rated strategic options that are
employed to enhance organizational performance. These were process/systems change and
culture/values change. From the various strategic options looked at, process/systems change was
identified by majority of respondents (44.7%) as the most important since it was employed to a

39
very large extent. Culture/values change and restructuring emerged second with 40.4% of
respondents saying that the two are strategic options that are considered to a moderate extent
when it comes to improving organizational performance. Though all the strategic options are
employed to enhance organizational performance, management change was said to be employed
to a minimal extent as evidenced by 27.7% of respondents who said it is employed to a small
extent.
This is explained by the rapidly changing environment with which organizations need to keep
abreast with. This can be achieved through change in processes or systems that organizations
use. For example with development of technology an organization that does not adapt to and
adopt new technology is likely to lag behind its competitors and this would reflect badly on its
continued survival. Therefore, as process/systems i.e. structures by which an organization does
what is necessary to create value for customers e.g. purchasing, manufacturing,
advertising/marketing to mention but a few are improved through change, it will lead to
effectiveness and efficiency in meeting customers and consequently this will enhance
organizational performance because as many customers are satisfied the more likely they will
make repeated use of the products offered to them and the more likely they are to tell others
about what a company offers leading to improved financial organizational performance.
It can therefore be observed that companies understudy have undergone process/systems change
which has helped in enhancing Organizational performance. For example it was discovered that
in all 4 companies understudy, there has been great changes in terms of information technology

40
(IT) which has changed the way business was done before e.g. money transfer, purchase of
good/services using mobile phones, data bundles etc.
These findings concur with the study by Sheila (2008) on strategic responses by Barclays Bank
of Kenya Limited to changes in the environment who found out that culture/values change and
process/systems/technology change were among the strategies that were very much used in order
for the bank to gain competitive advantage over other banks. Other studies by Olunga (2007) on
Responses of Safaricom limited to changes in the telecommunication industry in Kenya and
Akoth (2011) on strategic responses by Jubilee insurance found that adapting to new technology
by being very innovative is a key strategic change strategy to gaining a competitive edge over
competitors. Also Palvia (1997) and Buxmann and Gebauer (1999) found out that information
technology was one of the key success factors in any organization. The more any of the four
companies understudy has been very innovative, the more it has enhanced its performance in
general. This is further evidenced from the results which reveal that majority of respondents i.e.
41 out of the 47 who took part in the research said that process/systems is employed to a
moderate, large and very large extent respectively with only 6 saying it is employed to a small
extent.
In conclusion, it can be observed that process/systems change is a very important strategic
change option to be employed if a company is to enhance its performance as lack of it can have a
very negative impact on the performance of an organization as this can make an organization
unable to compete in a highly competitive and rapidly changing environment and thereby render

41
it unworthy to continue operating in the industry. This means it can lead to firm death, a result
that no company aspires to.
4.4 Challenges of Strategic Change
The second aspect that was found to be worth probing in this study was the challenges faced in
implementing strategic change in an organization. The key target under this objective was to find
out from the respondents the extent to which they felt challenges of strategic change affected the
process of managing/leading change. The various challenges identified are presented and
discussed in the frequency table 4.2 below.
Table 4.2: Extent to which challenges affect the process of managing/leading
change
Items Very small
extent
Small
extent
Moderate
extent
Large
extent
Very large
extent
F P
(%)
F P
(%)
F P
(%)
F P
(%)
F P
(%)
a. Employee Resistance 11 23.4 25 53.2 8 17 2 4.3 1 2.1
b. Communication
Problem
22 46.8 18 38.3 5 10.6 1 2.1 1 2.1
c. Organizational
structure hindrance
19 40.4 21 44.7 5 10.6 2 4.3 0 0
d. Lack of support by top
management
26 55.3 16 34 3 6.4 1 2.1 1 2.1
e. Lack of monitoring 23 48.9 19 40.4 2 4.3 2 4.3 0 0
f. Lack of institutionaliza
tion of change
11 23.4 25 53.2 7 14.9 2 4.3 1 2.1

42
g. Lack of employee
involvement
7 14.9 17 36.2 16 34 5 10.6 2 4.3
Table 4.2 shows that majority of the respondents (10.6%) said lack of employee involvement
was a challenge that affected the process of managing/leading change to a large extent. This was
followed by employee resistance (4.3%), lack of monitoring (4.3%) and organizational structure
hindrance (4.3%). The last was lack of support from top management (2.1%) and communication
(2.1%). This can be attributed to the fact that the success or failure of any strategic change is
defined by employees as they are actually the enablers of any strategic change. Therefore, a lack
of involvement of employees in strategic change can prove to be very detrimental as employees
may not feel they own the change thereby will not be willing to put in a lot of effort to make sure
the change achieves desired results. It is this that leads to employee resistance which is identified
by 17% of respondents as the next challenge to lack of employee involvement that affected the
process of managing/leading change to a moderate extent.
Although all the identified challenges of strategic change affect the process of managing/leading
change, 55.3% of the respondents said lack of support by top management affected
managing/leading change to a very small extent. This can be attributed to the fact that there are
very rare circumstances where top management does not support the process of
managing/leading change. Mostly in business management, strategic change is initiated by top
management and therefore it is very unlikely that the same people who initiated it would not
support it. To demonstrate the extent to which challenges affect the process of managing/leading
change, a cross tabulation between lack of employee involvement and process/systems change

43
was done. The statistical values generated from the cross tabulation are presented in table 4.2.1
below.
Table 4.2.1: Cross tabulation of Lack of employee involvement by
Process/systems change
Process/systems change Total
Small
extent
Moderate
extent
Large
extent
Very large
extent
Lack of
Employee
Involvem
ent
Very
small
extent
Count 1 0 1 5 7
% of
Total
2.1% .0% 2.1% 10.6% 14.9%
Small
extent
Count 0 4 2 11 17
% of
Total
.0% 8.5% 4.3% 23.4% 36.2%
Modera
te
extent
Count 4 5 3 4 16
% of
Total
8.5% 10.6% 6.4% 8.5% 34.0%
Large
extent
Count 1 3 0 1 5
% of
Total
2.1% 6.4% .0% 2.1% 10.6%
Very
large
extent
Count 0 1 1 0 2
% of
Total
.0% 2.1% 2.1% .0% 4.3%
Total Count 6 13 7 21 47
% of
Total
12.8%
27.7% 14.9% 44.7%
100.0
%
Chi-Square = 17.168 df = 12 Sig = .143 Cramer’s V = .349 Pearson’s R = -.398

44
At 12 degrees of freedom the chi-square value (17.168) is significant at .143. This means that
lack of employee involvement and process/systems change have no statistical association given
that the chi-square value is greater than .05. Furthermore, the study results show that there is a
fairly weak negative correlation between lack of employee involvement and process/systems
change as shown by the Pearson’s R. This means that as lack of employee involvement
increases, process/systems change is reduced. The results further reveal that there is a .398
degrees of association between lack of employee involvement and process/systems change. This
means that 39.8% of challenges experienced in process/systems change is as a result of lack of
employee involvement.
Despite the lower degree of association between lack of employee involvement and
process/systems change, it can be observed from the results that lack of employee involvement
actually has a greater challenge on process/systems change as shown by 40 of the 47 respondents
involved in the study who said lack of employee involvement causes a challenge to the process
of leading/managing strategic change to a moderate, small and very small extent respectively.
This implies that lack of employee involvement negatively affects change in processes/systems
of the organization and thereby negatively affecting the organizations’ performance.
From the table, 23.4% of respondents who said that lack of employee involvement was a
challenge to a small extent also said that process/systems change is affected to a very large
extent. This implies that in instances where lack of employee involvement has been high,
process/systems change has been very low. This is evidenced by 5 of the 47 respondents who
not only said that lack of employee involvement is a challenge to a moderate extent but also said

45
process/systems change was also influenced to a moderate extent. This can be attributed to the
face that when employees feel not to be involved in the process of change, they lack the feeling
of ownership of the change and thus they tend to resist that change. This leads to low success of
process/systems change.
In summary, it can be noted that lack of employee involvement is a challenge that organizations
undergoing strategic change are experiencing most and that it negatively affects organizational
performance.
Table 4.2.2: Cross tabulation of employee resistance by Process/systems change
Small
extent
Moderate
extent
Large
extent
Very large
extent
Employee
Resistanc
e
Very
small
extent
Count 1 3 2 5 11
% of
Total
2.1% 6.4% 4.3% 10.6% 23.4%
Small
extent
Count 1 8 2 14 25
% of
Total
2.1% 17.0% 4.3% 29.8% 53.2%
Modera
te
extent
Count 4 0 2 2 8
% of
Total
8.5% .0% 4.3% 4.3% 17.0%
Large
extent
Count 0 2 0 0 2
% of
Total
.0% 4.3% .0% .0% 4.3%
Very
large
extent
Count 0 0 1 0 1
% of
Total
.0% .0% 2.1% .0% 2.1%
% of
Total
12.8% 27.7% 14.9% 44.7%
100.0
%
Chi-Square = 26.476 df = 12 Sig =.009 Cramer’s V =.433 Pearson’s R = -.213

46
As shown in the table above, it can be noted that employee resistance and process/systems
change has a significant association as indicated by the chi-square value (26.476) which is
significant at .009. There is a significant association between the two because the chi-square
significance is less than .05. The Pearson’s R, as shown on the table, shows that the kind of
relationship between the two variables is a negative linear one meaning that as one of the
variables increases, it causes a decrease in the other. The table further reveals that only 43.3% of
the challenges experienced during process/systems change can be attributed to employee
resistance as indicated by the Cramer’s V.
From the table above, 29.8% of respondents who took part in the study indicated that a small
extent of employee resistance affects process/systems change to a very large extent. This is so
because mostly those who make use of the process/systems and make them work well to achieve
their purpose are employees so once employees offer even the slightest resistance it is very likely
that the process/systems being introduced will fail as employees tend to sabotage the
process/system so as to render it unhelpful with the hope of convincing management to change it
to suit the employees wishes or revert to the old one. This is in line with studies by Kotter and
Cohen (2002) and Van Knippenber, Martin and Kyler (2006) who concluded that employees
play a major role in the success or failure of change in their organizations. With such
implications, all four companies understudy are putting up efforts to mitigate the challenge of
employee resistance as evidenced by their efforts in empowering employees, increased
engagement of employees and promoting culture change through training.

47
Furthermore, results show that 44 out of the 47 respondents said that employee resistance is a
challenge to process/systems change to a moderate, small and very small extent while only 3 said
it is a challenge to a large extent and very large extent respectively. This can be explained by the
fact that though the impact of employee resistance is great, mobile telecommunications service
providers understudy are giving it utmost attention so as to minimize it while maximizing the
effectiveness of the change effort.
All in all, employee resistance though a challenge that can greatly affect an organizations’
performance as employees are the enablers of change is being minimized by the mobile
telecommunications’ service providers thereby rendering it less a challenge than it has been in
the past before companies embarked on efforts to minimize it.
With 55.3% of respondents saying lack of support from top management affects strategic change
to a very small extent, the study found it important to analyze this. So the study sought to
establish the extent to which lack of support from top management affect strategic change and
strategic change was represented by process/systems change. Results of this analysis are
presented in table 4.2.3 below.
Table 4.2.3: Cross tabulation of Lack of support by top management by
Process/systems change
Small
extent
Moderate
extent
Large
extent
Very large
extent
Lack of
support
Very
small
Count 3 1 3 19 26
% of 6.4% 2.1% 6.4% 40.4% 55.3%

48
by top
managem
ent
extent Total
Small
extent
Count 2 10 2 2 16
% of
Total
4.3% 21.3% 4.3% 4.3% 34.0%
Modera
te
extent
Count 1 1 1 0 3
% of
Total
2.1% 2.1% 2.1% .0% 6.4%
Large
extent
Count 0 1 0 0 1
% of
Total
.0% 2.1% .0% .0% 2.1%
Very
large
extent
Count 0 0 1 0 1
% of
Total
.0% .0% 2.1% .0% 2.1%
% of
Total
12.8% 27.7% 14.9% 44.7% 100.0
%
Chi-Square = 32.426 df = 12 Sig = .001 Cramer’s V = .480 Pearson’s R = -.412
The statistical values of table 4.2.3 above depict a significant association between lack of support
from the top management and process/systems change. As demonstrated by the cross tabulation,
the chi-square is significant at .001 (less than .05). This is an indication that lack of support from
top management and process/systems change exhibit a very significant association. The degree
of association between these two variables is .480 meaning that on a scale of 0 -1, the degree at
which lack of top management support would influence process change is located at .480.
Presented in another way, it means that 48% of the changes experienced in the processes/systems
changes of the organizations studied could be attributed to the lack of support from top
management.

49
However, it should be observed that top management of the four organizations studied gave the
required support to their organizations since a total of 42 out of 47 respondents said that lack of
support is a challenge to a very small extent and small extent respectively. This explains the
reason why the two variables depict a negative correlation as exemplified by the value of the
Pearson’s R. This indicates that lack of support from the management which is to a very small
extent as revealed by this study minimizes the effective take off of key process changes in an
organization thus minimizing the organizations performance. The initial explanation to the
scenario being presented here is that changing a system that is being used by an organization
(e.g. technological systems) largely depends upon the approval of the leadership at the top level
of management. This is because policies that drive an organization emanate from the top
management and trickle down to the other employees for implementation. Therefore if the
managers do not approve of a particular change, it will not be possible for the organization to
embrace such a change.
Based on the researchers’ observation, nearly all the communication providers that were visited
during this study had undergone great changes in as far as technology is concerned. This has
been occasioned by the competition in the communication industry which has compelled the
various service providers to impress their customers with good services since this might provide
an opportunity for each of them to increase their customer base and consequently returns as well.
Key among these changes have been the introduction of mobile money transfers that is supported
by nearly all the service providers and provision of internet services which is also provided by all
the four service providers at different rates. The availability of such changes in the last few years
is a proof of support by the management since without them no organization can adopt such

50
fundamental changes. However, worthy to observe is that the negative association between the
two variables being correlated in table 4.2.3 has emanated from the fact that support from the
management is not lacking as such but the few instances where there has been no support from
the top management, the adoption of process changes has been negatively affected.
The direct proportionality between the column variable and the row variable in the two-way table
presented above is further demonstrated by the cell values. From the table, 40.4% of respondents
who said that lack of support from the top management was a challenge to a very small extent
also said that process change was influenced to a very large extent. This indicates that in
instances where the support has been high, the process changes have been greater. However,
when the support is lower, the process changes also take off at a slower pace. This is
demonstrated by 10 respondents who apart from saying that lack of support was a challenge to a
small extent also said that process change had been affected to a moderate extent. The opinion
expressed by the 10 respondents above is indeed a reality in some organizations visited. This is
because some organizations had not adopted customer friendly services such as affordable rates
of communication and other services that could improve customer satisfaction. Furthermore,
some service providers were also slow in embracing services that would attract customers at the
initial stages when they entered the market hence their poor performance today. The inability to
have embraced the desired changes at the right time in order to respond to the needs of their
customers has negatively influenced their performance today hence the reason why their profits
margins are relatively lower compared to their colleagues in the market.

51
In conclusion however, it can be said that though lack of support from the management is not a
great challenge now, it has been a challenge in the past and it has occasioned the poor
performance of some service providers today. In a nut shell however, the indication is that lack
of support from the top management of an organization bears a negative impact on
organizational performance since this has been demonstrated by the extent to which it bears the
possibility of frustrating the adoption of process/systems changes.
4.5 Organizational Financial Performance
Another aspect the study was interested in was to establish the extent to which strategic change
enhanced organizational performance. Data was collected and analyzed as presented below.
Table 4.3: Extent to which strategic change has been successful in achieving
enhanced financial performance
Items Very small
extent
Small
extent
Moderate
extent
Large
extent
Very large
extent
F P
(%)
F P
(%)
F P
(%)
F P
(%)
F P
(%)
a. Sales 0 0 1 2.1 11 23.4 21 44.7 14 29.8
b. Profit 0 0 1 2.1 16 34 16 34 14 29.8
c. Dividends 1 2.1 10 21.3 19 40.4 10 21.3 5 10.6
d. Stock price 1 2.1 11 23.4 17 36.2 7 14.9 8 17
e. Capital 0 0 3 6.4 21 44.7 4 8.5 18 38.3
f. Cash flow 0 0 3 6.4 14 29.8 11 23.4 19 40.4
g. Return on assets 0 0 10 21.3 16 34 16 34 5 10.6
h. Return on capital 0 0 11 23.4 16 34 15 31.9 5 10.6
i. Return on investment 0 0 5 10.6 17 36.2 11 23.4 14 29.8

52
From the various financial performance measures looked at in this study (sales, profit, dividends,
stock price, capital, cash flow, return on assets, return on capital and return on investment), cash
flow was identified as an aspect of organizational financial performance that was enhanced most
by strategic change as stated by 40.4% of respondents. Cash flow defines a company’s solvency,
that is, it shows a company’s financial performance as companies with ample cash at hand are
able to pump that money back into the business in order to generate more cash and profit.
Therefore, cash flow is very crucial to a company’s survival as it supports the operations of the
organization e.g. paying of creditors, employees, investing in technology etc. Other performance
measures identified by respondents as ones that were enhanced more by strategic change are
capital (38.3%) which are financial resources available for use, sales, profit and return on
investment (29.8% each), stock price (17%) and lastly dividends, return on assets and return on
capital (10.6% each).
However, to explain these opinions statistically, a simple linear regression analysis was
conducted to establish the extent to which cash flow (An indicator of organizational
performance) could be predicted by independent variables such as strategic planning (SP),
culture/values change (CVC), restructuring (R), process/systems change (PSC), management
change (MC) and partnerships (P). The simple linear regression analysis generated the statistical
values presented in tables 4.3.1, 4.3.2 and 4.3.3 below:

53
Table 4.3.1: Model summary of predictors
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .722a .521 .449 .734
a. Predictors: (Constant), P, MC, SP, CVC, SC, PSC
According to table 4.3.1, the R value indicates a relatively strong correlation between predictor
variables and the consequent variable (cash flow). This is because the R value is positive (.722).
This means that cash flow that the studied mobi-tech companies recorded was attributed to a
certain percentage of predictor variables. According to the value of the R-Square, 52.1% of the
cash flow recorded in the various companies could be explained by independent variables.
Therefore independent variables would have a 52.1% influence on the performance of the
studied organizations in as far as their cash flow is concerned while the remaining 47.9% could
be attributed to other factors other than predictor variables.
The correlation between these two variables is further demonstrated by the ANOVA table
presented below.
Table 4.3.2: Relationship between P, MC, SP, CVC, SC, PSC and cash flow
ANOVAb
Model
Sum of
Squares df Mean Square F Sig.
1 Regression 23.424 6 3.904 7.245 .000a
Residual 21.554 40 .539
Total 44.979 46
a. Predictors:(Constant), P, MC, SP, CVC, SC, PSC
b. DependentVariable:Cash flow

EFFECTS OF STRATEGIC CHANGE ON ORGANIZATIONAL PERFORMANCE: A CASE OF KENYAN MOBILE TELECOMMUNICATIONS INDUSTRY, By Gershom Habile

EFFECTS OF STRATEGIC CHANGE ON ORGANIZATIONAL PERFORMANCE: A CASE OF KENYAN MOBILE TELECOMMUNICATIONS INDUSTRY, By Gershom Habile

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