MCOM Theses and Dissertations (2016)

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An assessment of airline disruptions of passenger perceptions and expectations of service quality – a case of passengers at Jomo Kenyatta International Airport
(Strathmore University, 2016-06) Mugai, Faith Marigu
The purpose of this study was to analyze the influence of airline disruptions on passengers’ expectations and perception of service quality for the airlines operating at JKIA. The respondents of this study were passengers and management of airlines. This study sampled a total of 196 passengers and 10 airlines. However, 106 passengers and 8 representatives of management responded. This study employed quantitative methods to analyze the effect of airline disruptions on passengers’ expectations and perception of service quality. Percentages, mean and standard deviations were computed which aided in analysis of data collected. Qualitative data collected was coded so as to be analyzed using factor analysis. Majority of the passengers (81%) believe that delays are the major type of disruptions they faced. Causes of airline disruptions experienced at JKIA in the past one year included maintenance problems, crew problems, extreme weather conditions, fire outbreak and runway closures. Seventy five percent of the management of the airlines ranked the highest the following ways of responding to disruptions: use of state of the art forecasting systems; rescheduling delayed operations among others. This study also established that the following strategies were found be commonly employed by the airlines to mitigate the effects of disruptions: use of state of the art forecasting systems; use of appropriate system redundancy during disruptions; training employees on how to effectively handle disruptions; pre-treating runways overnight to eliminate closures among others. The study found out that airline disruptions affect passengers’ perception and expectations of service quality. Passengers’ expectations of service quality namely: Responsiveness, Empathy and Assurance were established to be affected by airline disruptions with an average mean factor loadings of 0.836, 0.825 and 0.814 respectively. For perception of service quality, three components were found to be affected by airline disruptions. These components included Assurance, Empathy and Reliability with average factor loading values of 0.944, 0.899 and 0.609 respectively.
An assessment of the relationship between audit quality characteristics and client satisfaction perceptions in government parastatals in Kenya
(Strathmore University, 2016-06) Kamuruchi, Reuben Migwi
The study sought to assess whether there was a relationship between audit quality characteristics and client satisfaction perceptions in Government parastatals in Kenya. The study targeted all the 94 Government parastatals in Kenya audited by private auditors with the target respondents being the chief finance officers or their equivalents of these parastatals. The audit quality characteristics studied were; auditor technical competence, auditor independence and auditor responsiveness to client needs. The study found that there is a strong positive association (r = 0.73) between auditor independence and client satisfaction. The study also found that there is a moderate positive association (r = 0.50) between auditor responsiveness to client needs and client satisfaction. However, the study found that there was a weak positive association (r = 0.34) between auditor technical competence and client satisfaction. The study also found out that government parastatals in Kenya were satisfied with the overall audit. The study also found a very strong positive association (r = 0.90) between auditor independence and technical competence while association between auditor independence and responsiveness to client needs was strong and positive (r = 0.61). However, association between responsiveness to clients’ needs and technical competence was found to be weak (r = 0.39). In addition, the chief finance officers or their equivalents in the government parastatals in Kenya gave other suggestions for enhancing satisfaction in their organizations. The most common suggestions were that: the auditors need to provide other non-audit services and give value added suggestions, auditors need training on Public Sector Accounting and Auditing Standards and Standards of Supreme Audit Institutions for uniformity in the sector, and that the audit to be carried out directly by the Auditor-General. The study recommends that auditors appraise themselves with public sector audit standards to enhance their competencies, avoid relationships that would impair their independence and offer unsolicited advisory services to enhance their responsiveness.
An assessment of user perceptions on the usefulness of corporate annual reports of listed companies in Kenya
(Strathmore University, 2016-06) Sagoo, Rupinder Kaur
The purpose of this study was to examine the perceived importance and usefulness of corporate annual reports in Kenya. In addition, the study determined the factors affecting usefulness of corporate annual reports of listed companies in Kenya. It attempted to find the useful sources of information to users. An explanatory and descriptive research design was adopted for this study. The Primary data was collected through questionnaires that were administered to investment managers, lenders and Chief Financial Officers of the listed companies in Kenya. Descriptive statistics were used to determine the useful sources of information to users. In addition, simple regression analysis was used to determine the relationship between personal factors and usefulness of annual reports. In addition, a chi square test was done to identify if any of the personal factors had a relationship with usefulness. The analysis indicated that the user groups surveyed in the study rely mainly on information from the annual reports of listed companies in Kenya for making investment decisions. Further, the analysis also revealed that respondents found the traditional annual reports most useful in making informed decisions. These traditional statements include income statement, balance sheet and cash flow statements. The Auditor’s report was also perceived to be of importance. The least ranked items in the annual reports included notes to financial statements and chairman’s statement. In terms of the qualitative features used to measure usefulness of annual reports, timeliness, credibility, adequacy and relevance were found to be associated with usefulness. However, understandability was found not to be associated with usefulness of annual reports. The regression analysis revealed personal factors (gender, age, highest educational qualification, experience, accounting and financial qualification and type of user) had no significant relationship with usefulness of annual reports. However, the chi square tests revealed work experience, type of user and age were significant and had an association with usefulness. The findings may give some indications to researchers, preparers and policy makers. For example, policy makers may need to think about what kind of information to be included in the annual reports. The study attempted to fill the knowledge gap regarding the usefulness of annual reports of listed companies in Kenya.
Corporate Environmental Reporting (CER) in Kenya and its link to Corporate Financial Performance (CEP)
(Strathmore University, 2016-06) Mbuthia, Zacharia Kagai
This study seeks to assess Corporate Environmental Reporting (CER) by publicly listed companies at Kenya’s Nairobi Securities Exchange (NSE) and its relationship with Corporate Financial Performance (CFP) over a time period of four years, 2011 to 2014. Management perception on the value of CER, motivation and critical barriers to the adoption of CER was sought from company management of publicly listed companies through questionnaires. The amount of environmental information disclosed in each of the environmental reporting media used by the respondents: annual reports, sustainability reports, and stand-alone environmental reports was extracted through content analysis. A time series analysis was used to show the trend of CER among the sample companies and the different industry sectors. The study then established if there existed a relationship between CER and CFP among the publicly listed companies between the years 2011 to 2014. Pearson correlation coefficient was used to test the relationship between CER and CFP. Majority of the companies’ management was found to perceive CER as being important to the business and have adopted CER in their companies, and published their Corporate Environmental Reports (CERs). CER is found to be low, but on an upward trend from 2011 to 2014, with the telecommunication and technology industry publishing the highest amount of information in their CERs, while the Insurance industry published the least amount of information. This study finds the existence of a relationship between CER and CFP. Two control variables, firm size and industry, are introduced to check if they have a positive moderating effect on the relationship between CER and CFP. Firm size is found to have a positive moderating effect while Industry has no positive moderating effect. The findings of this study will help company management, shareholders, potential investors, and stakeholders understand the association between environmental disclosure vis-à-vis the profitability of a firm, thus allowing these important stakeholders understand why responsible environmental behaviour by companies in Kenya is worth paying a premium for. The study contributes to the academic discourse on the status of environmental disclosure by companies in Kenya and its link to financial performance.
Effects of customer retention strategies on customer retention – a case study of the banking industry in Kenya
(Strathmore University, 2016-06) Kaguri, Magdalene Njoki
The purpose of the study was to examine the perception of customer relationship managers on effects of customer retention strategies on customer retention in Kenya’s banking industry. The study examined how three customer retention strategies: customer relationship management, relationship marketing and perceived pricing tactics affect customer retention in the Kenyan banking sector. The respondents of the study were customer relationship managers of all the 43 banks surveyed. Using a questionnaire, data were collected from the banks. Correlation analysis was used. Customer Relationship Management (CRM) had a moderately strong positive relationship with customer retention. Price Perceived tactic was used to establish the extent to which customer relationship managers perceived that the pricing of their products and services to affect customer retention. There was a weak positive relationship between price tactic and customer retention. This weak relationship was attributed to the fact that most prices are regulated in the industry and as a result, it may not be a very good indicator of customer retention strategies. Customers may fail to switch service providers owing to the standardizing of products, services and prices. On relationship marketing there was a very weak positive relationship with customer retention, contrary to previous studies. This was attributed to product customization was not common in the market, and the ‘know your customer’ procedures appeared to be similar in different banks. As such, customers may fail to switch services providers because the relationship marketing appears similar across banks. Again, this appeared not to be a strong indicator of customer retention. The study therefore concludes that in sectors with similar products and prices, customer retention will largely be driven by customer relationship management. The study recommends that banks invest more in managing relationships with their customers as a way of retaining them, and attracting new customers. Customer relationship management will give them more competitive advantage than pricing or relationship marketing.
Effects of supply chain management strategies on competitive advantage on food and beverage processing companies
(Strathmore University, 2016-05) Kariithi, Sarah Waithira
The purpose of this study was to analyze effects of Supply Chain Management strategies (SCM) on competitive advantage in the food and beverage processing companies in Nairobi County. The food and beverage industry plays a unique role in expanding economic opportunities because it is universal to life and health however, the industry’s performance is below bar in Nairobi and is facing intense competition from the imported food stuffs from overseas. There is also increasing evidence that most companies in the food and beverage industry have a long way to go before they can realize their full potential for a truly linked SCM system. For instance, most logistics executives do not know exactly how SCM creates value for customers because this phenomenon has not been examined exhaust-fully. Moreover studies done in different geographical areas have diverse approaches of methodologies, scopes and variables therefore resulting in varied findings that may not apply in Nairobi in analyzing effects of SCM strategies on competitive advantage hence the need for this study. The study adopted quantitative approach with food and beverage processing companies as the target population as listed in the Kenya Association of Manufacturers (KAM) directory. Detailed information about perceptions, opinions and attitudes was obtained using a questionnaire administered by the researcher among these companies. Linear regression and correlation statistics were applied to investigate relationship between SCM Strategies and competitive advantage. The study found that to a large extent companies are striving to attain competitive advantage over their competitors. Supply chain integration (1.664) had the greatest effect on competitive advantage followed by supply chain collaboration (0.703) as revealed by the magnitude of their coefficients. Supply chain agility (0.375) had the least effect on competitive advantage. The study concluded that companies’ competitive advantage is achieved through implementing supply chain collaboration, supply chain agility and supply chain integration strategies in their networks. Competitive advantage is achieved when companies manage an integrated chain where customer is the focus, information requirements, physical logistics and chain participants are managed. Company’s brand equity, competitive positioning and forging good customer relationships are companies’ major sources of competitive advantage. The study recommends that the companies should develop a clearly laid out policies and procedures for handling customers’ concerns and/or complaints. Companies should develop interactive websites to achieve effective information sharing and concerns can be addressed in real time. It is imperative for companies develop policies and procedures guidelines in order to ensure continuous product research and development with the aim of satisfying customer ever changing demands and achieve competitive advantage over their competitors. There is need for management to improvement on the existing systems to enhance integration with trust as a key component. Companies have their strengths in supply chain collaboration and supply chain integration however it is the synergy of all three SCM strategies that facilitates a company achieving competitive advantage. This way, it becomes difficult to imitate the same strategies and facilities within a supply chain hence it is difficult to duplicate an exact supply chain keeping the company ahead and differentiated from its competitors
An evaluation of the perceived effectiveness of proactive and reactive strategies in mitigating cyber crime against banks in Kenya
(Strathmore University, 2016) Too, Dennis Kipkorir
The increase in reported losses from cybercrime in the banking industry as a result of the shift to e-banking underscores the importance of finding an effective strategy to mitigate cybercrime. This research set out to identify an effective solution to cybercrime in the banking industry by identifying a set of variables that if controlled will provide managers with a means to abate cybercrime. The objective was achieved by establishing the relationship between the frequency of cyber-attacks and the strategies employed by Kenyan banks to mitigate cybercrime. Questionnaires and interviews were administered to the managers of the IT and internal audit departments of the banks operating in Kenya as at December 2014. A Likert scale was used to capture the frequency of cyber-attacks from the managers and the strategies adopted to mitigate cybercrime. Simple and multiple regressions were then applied to the mean responses to establish the relationship between the frequency of cyber-attacks and the strategies employed. Findings indicate that all 14 previously identified cyber- attack methods were present with varying degrees of frequency. The research established that attacks by viruses, spamming, phishing, adware, worms, spyware and Trojans were experienced on a daily basis by some banks. The highest occurrence of ATM card fraud and, DOS was weekly while attacks by Vishing, SMSishing, botnets and hacking occurred most frequently on a monthly basis. Key loggers had the least frequency of occurrence with most of the banks not attacked. The study found all the banks in Kenya are at different stages of implementing both proactive and reactive strategies as measures against cybercrime. The responses indicated a partiality towards proactive strategies with less than 4% having not implemented any of the previously identified proactive strategies. Regression analyses established both strategies have a negative relationship with the frequency of cyber-attacks. Further, the paper determined reactive strategies to have a higher negative relationship to frequency of cyber-attacks than proactive strategies. The size of the bank was established to have a positive relationship to frequency of attack. This was achieved despite the effort curtailed by less than 100% response rate. The study provides a basis for future research into cybercrime in the banking industry especially on the effectiveness of strategies employed. Further, the research offers impetus for a study on threats from the insider and a view of cybercrime from the customer's perspective.
An evaluation of the relationship between oil price and the share prices of manufacturing companies listed in the Nairobi Securities Exchange
(Strathmore University, 2016-06) Bett, Gilbert Kiprono
This is a study of the relationship between Oil price and the Share price of manufacturing companies listed in the Nairobi Securities Exchange. The theoretical rationale is that Share price is the discounted sum of expected future cash-flows. Oil prices being a key component affecting future expected cash flow and the impact of Oil prices is therefore inevitable. This empirical study puts that economic theory to test using data from 2005 to 2014 within the context of the listed manufacturing companies. First the paper tests for traditional linear cointegration using the 1990 Johansen Co-integration test. Then it applies the Granger Causality test to determine the direction of the relationship. There’s some evidence to support the long run relationship between the two variables within some of the companies. Amongst those that displayed a long run relationship between the variables, there’s also evidence that the Oil price movement granger causes the Share price movements. These mixed results may have been impacted by the unique business and industrial processes run by the individual companies. The paper concludes that while there’s evidence for oil price changes impacting the Share Prices, there’s a need to understand why other companies within the industry aren’t impacted. Outcome of the study advises the actions of management and portfolio managers in as far as their response to changes in oil prices are concerned.
Evaluation of the responsiveness of the foreign exchange rate towards interventions by the Central Bank of Kenya
(Strathmore University, 2016-04) Ndung’u, Ellaine Wanjiru
The foreign exchange market was liberalized in Kenya so as to increase market efficiency, so that it would reflect all available information. However, with the high and persistent volatility in the market, the cost of doing business increased and thus it become necessary for the Central Bank of Kenya (CBK) to intervene in the foreign exchange market. Attempts by the CBK to intervene are either too little or too late with the monetary policy maintaining a “watch and see attitude” as it allows the market to distribute liquidity amongst itself and allow the rates to control its levels. This study sought to measure the level of volatility over the years and determine if the foreign exchange market volatility was responsive to the CBK intervention. The study used Primary data from guided interviews from 35 respondents from 4 of the tier one banks in the country and secondary data from the CBK weekly bulletins over a period of five years from January 2010 to December 2014. The research applied a GARCH model to measure the level of volatility of the foreign exchange market and a multiple regression model to measure the responsiveness of foreign exchange rate volatility to CBK intervention. The results revealed that the GARCH (1,1) value was negative over the years, showing the volatility fluctuations in the foreign exchange rate. Responsiveness of forex volatility and CBK intervention had a beta value of -1.003 for indirect intervention and -1.041 for direct intervention. This implied that the rates were more responsive to direct than indirect intervention. The study recommends that CBK should explore avenues to enhance capacities within the commercial banks for managing foreign currency risk exposure and assist the major stakeholders to understand what really causes the central bank of Kenya to intervene and the level of responsiveness so as to avoid speculation since it increases market volatility.
An examination of the factors influencing earnings management practices among companies listed in the Nairobi Securities Exchange
(Strathmore University, 2016) Njogu, Mary Wang'eri
This study aimed at examining the factors influencing earnings management among companies listed in the Nairobi Securities Exchange. The prevalence of Earnings Management (EM) in most organizations has been a matter of concern to many players in the accounting sector around the globe. In the Kenyan context, listed companies have been experiencing poor management practices attributed to EM. Whereas other studies assessed in this research did not focus on the extent to which earnings management is practiced in the Kenyan environment, this study bridges the knowledge gap and provides an in-depth review on the subject. The thesis adopted both explanatory and descriptive research designs. Both secondary and primary data were analyzed and presented using descriptive statistics , non- parametric analysis, univariate analysis and multivariate analysis. The thesis upholds that the extent to which EM was practiced fluctuated from 36.13% (in 2010) to 29.55% (in 2014), with the highest being in 2013 (47.32%). The main techniques used in perpetrating the practice were found to be manipulation of revenue amount, cash flow amount, and accounts receivable. Controlling the outcome of inventory valuation was also found to be a major technique. The main factors that influenced the extent to which EM was practiced included; free cash flow, size of debt in a company, management bonus and dividend paid. The study contributes to the knowledge on the extent to which EM is practiced in the listed firms and provides a basis for other scholars seeking to undertake research on earnings management. The study also gives pertinent recommendations to key stakeholders in the accounting profession on how to identify and mitigate instances of EM. External and internal auditors are advised to be more skeptical in analyzing financial statements and lay more emphasis on financial statement items that are prone to manipulation. Since the study used the Yoon's model to determine the presence of EM, the findings on extent of EM were limited to this model.
Examination of the One Third Rule on gender diversity and its impact on performance of listed firms on the Nairobi Securities Exchange
(Strathmore University, 2016-06) Maingi, Valentine
Problems of inequality are centuries old all over the world, with the oldest discussion being on the gender equality arena. Advancing gender equality in corporate governance has increasingly become the focus of many debates in the world. While a number of studies have investigated the relationship between gender diversity and firm financial performance, their conclusions are equivocal. In 2010, the Kenyan Constitution in a bid to increase gender diversity in the public organizations introduced a legislation that requires all public firms to ensure that their elected or appointed members are not more than two thirds from the same gender. Thus raises the question; is the gender diversity concept being embraced by firms and has there been a change since the law was enforced? In 2014 the CMA in a bid to increase adoption of the gender rule among listed companies, passed an enforcement requiring its members to abide to a code of conduct that emphasizes the one third rule as per the Kenyan Constitution. Thus the study aimed to determine whether the gender diversity law was being adhered to and whether gender diversity had any impact on the performance of listed firms in the NSE. The results of the study indicate that although there has been some improvement since 2007, the representation of women on Kenyan corporate boards is lower than the acceptable one third rule requirement. Only 4 firms out of the 46 firms studied adhered to the one third gender rule. The study examined the relationship between gender diversity and firm performance for the period from 2007-2014. Findings from multiple regression analysis show a positive relationship between gender diversity at board level and firm performance. The analysis indicates that an increase in women at the board level would significantly improve the firm performance. Therefore, from a financial perspective, the study advocates for the appointment and inclusion of more women on the corporate board of firms as it leads to improved performance. On a policy level, the study recommends the strengthening of the oversight regulation by the governing authorities of listed companies in Kenya to improve adoption of the gender diversity rule.
Examination of the relationship between corporate governance and financial soundness of licensed deposit taking saccos in Kenya
(Strathmore University, 2016) Kariuki, David Kimenju
The aim of this study was to explore the relationship between corporate governance and the financial soundness of the licensed deposit taking SACCOs in Kenya. The study specifically examined how boards’ responsibility, transparency and disclosure and internal controls influence the financial soundness of licensed deposit taking SACCOs in Kenya. Financial soundness was measured using PEARLS monitoring systems. A questionnaire was administered to the CEOs and senior management officers of the SACCOs. These subjects were deemed conversant with the issues of corporate governance in their respective SACCOs. Regression analysis was used to establish the relationship of corporate governance on the financial soundness of the SACCOs. The study found out that internal controls played a significant role in corporate governance. Three variables namely; board responsibility, transparency and disclosure and internal controls were found to be key factors in financial soundness of the SACCOs. However in ranking according to their role in financial soundness of SACCOs, board responsibility was considered the least. Regression analysis showed that when protection and rates of return coefficients were used as a measure of financial soundness; board responsibility, transparency and internal controls did not explain the variation individually. When the effective financial structure and liquidity coefficients were used, the three independent variables explained the variation. Multiple regressions showed that the variations in the financial soundness were explained by the three independent variables. The study concludes that CEOs and seniors officers can also measure the importance of financial soundness using PEARLS since it evaluates and monitors the SACCOs financial systems more than the usual CAMEL method.
An examination of the share price and trading volume behaviour on the exdividend date for securities list
(Strathmore University, 2016-06) Noreh, Michelle
In a semi-strong form efficient market, the shareholder who sells shares cum-dividend should have the same gain as the one who holds on to the same shares which drop to the ex-dividend price, and receives the dividend. This implies that stock prices should fall by the exact amount of the dividend payment on the ex-dividend day in an efficient market, and suggests that there should be abnormal trading volumes around the ex-dividend day to bring down the share prices by the dividend amount. Empirical studies have, however, had varying findings in different markets. While some empirical studies have found the share price to fall by the dividend amount on the ex-dividend day, the majority find that the ex-dividend price behaviour is a price reduction by less than the dividend amount, which is an anomaly when the efficient market hypothesis is taken into account, since from theory the share price should fall by the amount of dividend, on average. Yet other studies have found that the share prices rise on the ex-dividend day. An event study was carried out on price and volume behaviour 5 days before and 5 days after the ex-dividend day as well as how long it took the prices to normalize after the ex-dividend day. The study examined the cash dividends by companies listed on the Nairobi Securities Exchange for the period from September 2006 to November 2015 and found that, on average, the share prices fell by only 20% of the dividend amount on the ex-dividend day, and there were abnormal share volumes of -1% traded on this day. It was also found that the prices did not normalize and actually rose on average within the 5 day period after the ex-dividend day. These findings suggest that the market is not efficient in the semi-strong form and there are likely to be arbitrage opportunities in the Kenyan market, and thus an investor can buy a share cum-dividend, receive the dividend, and sell the share ex-dividend, at a price higher than the expected ex-dividend price.
Influence of Innovation on performance of Insurance companies in Kenya
(Strathmore University, 2016) Kiragu, Rachael Wangu
The need for improved performance by insurance companies in Kenya in both life and non-life segments has been underscored and innovation has been identified as a means to boost performance. The main objective of this study was to determine the influence of innovation on performance of insurance companies in Kenya. The study adopted the use of a descriptive cross-sectional design. A census survey was used with the study population comprising all 49 insurance companies operational in Kenya as at 31st December 2014. Primary data was collected using structured questionnaires. Data was analyzed using SPSS statistical package program version 22 for descriptive and inferential statistics. The results of the study revealed that product innovation positively and significantly influences organizational performance (β=57271.822, t=2.423, p<0.05) and process innovation positively and significantly influences organizational performance (β=91651.229, t=2.485, p<0.05). No evidence was found for a significant relationship between market innovation and performance (β=20108.084, t=0.196, p>0.05). The results also showed that process innovation was the most predominant type of innovation in the insurance industry in Kenya. Additionally, the survey found that among the three types of innovation studied, process innovation registered the strongest correlation to organizational performance (coefficient value 0.584, 0.01 level of significance, and p value 0.001). The study recommends that management of insurance companies in Kenya should place greater emphasis on process innovation in order to improve performance. Further research should adopt a longitudinal research design, multiple informant approach, wider scope of study and the use of both objective and subjective measures to assess performance. These will give useful insight into the relationship between the variables under study.
The influence of marketing capabilities on firm performance in fashion retailing in Nairobi County
(Strathmore University, 2016-06) Musyimi, Anne Katwa
Intense competition and short product life cycles in fashion retailing present a number of marketing challenges for retail firms in Kenya. In order to survive in this industry, it is vital for participants to develop and leverage core marketing capabilities. The purpose of this study was to analyze the relationship between marketing capabilities and firm performance in Nairobi, Kenya. The following three specific objectives were addressed. One, to identify marketing capabilities relevant in the fashion retail industry. Two, to establish the level of performance of firms in the fashion retailing industry and lastly to analyze the influence of marketing capabilities on firm performance in the fashion industry. Primary data was collected using questionnaires. The target population were 62 branded retail stores located in major shopping malls in Nairobi County. Descriptive statistics, correlation analysis and multiple regression analysis were used to analyze the data. Specifically, price management, product management, promotion capability and store image were the marketing capabilities examined for their influence on each of the four firm performance variables namely customer acquisition, customer loyalty, new product/stores and market share. Results showed that product management was significant in explaining customer acquisition, customer loyalty and new product/stores and insignificant in explaining market share. Store image was only significant in explaining new product/stores. Price management and promotional capability were insignificant in all cases. The findings generated from the study should provide marketing managers with an understanding of the relationship between marketing capabilities and firm performance in the Kenyan context and give them insights on which capabilities they should concentrate on in order to gain competitive advantage. This study only looks at one type of capability; marketing capabilities, future research should examine different types of organizational capabilities for example dynamic capabilities, organizational learning capabilities, inside-out capabilities, outside-in capabilities and assess their impact on firm performance. The study was conducted within a period of seven months running from November 2015 to May 2016.
The influence of quality management practices on financial performance of Commercial Banks in Kenya
(Strathmore University, 2016-06) Wokabi, Eric Thuo
Liberalization and globalization of the banking sector has created an era of fierce competition, as a result of which service management and quality performance is expected to assume an increasing important role in financial sector. Banks can become stronger and effective only if they come out with better customer service, quality, costs, and innovation. The main objective of this study is to evaluate the influence of QM practices on the financial performance of Commercial banks in Kenya. This study used a descriptive research design in order to examine the relationship between various QM practices and bank performance. The study population were all the registered commercial banks in Kenya and data was collected through the use of questionnaires for primary data and annual reports, websites and the CMA for the secondary data. Data were analyzed using descriptive analysis and regression analysis through the use of SPSS. The study concludes that the adoption of quality management practices; management commitment, employee involvement, customer focus and process management is critical in improving the quality of services delivered to customers and improving the performance of commercial banks. The study recommends that commercial banks need to include all the quality management practices in order to ensure improved bank performance.
The Influence of vendor support on enterprise resource planning success in manufacturing companies in Nairobi County
(Strathmore University, 2016) Kinyua, Linda Gaceri
ERP software has brought many benefits to Kenyan organizations although implementing these systems is very challenging. There are many factors that come into play in the course of ERP implementation and one of these factors is ERP vendor support which is the role that the ERP seller plays in the implementation of ERP in the organization. The main objective of this study was to establish the influence of vendor support on successful ERP implementation in the Kenyan manufacturing industry. The specific objectives were to find out the influence of vendor training, project management and post implementation support on successful ERP implementation and lastly to establish factors that influence successful ERP implementation. The study adopted a cross-sectional descriptive study and a correlational analysis. To collect data,structured questionnaires were used with the data being analyzed for descriptive statistics. A regression analysis was also done to establish the relationship between the variables and successful ERP implementation. The findings indicated that of the three vendor support variables, only two variables; vendor training and post implementation influenced successful ERP implementation positively and significantly. Vendor training also had a higher correlation with successful ERP implementation albeit to a moderate extent. Vendor project management was found to be insignificant in explaining successful ERP implementation. The study recommends organizations implementing ERP to pay more attention to vendor training and ensure that it is done thoroughly to give the users control over it. Post implementation support will also ensure that the software is running efficiently and that upgrades are made in a timely manner. Once these two factors are taken into consideration, the organization will be able to reap the full benefits of the software in the long run. Though vendor project management was found to be insignificant in influencing successful ERP implementation, organizations implementing ERP should always insist that the vendor should strive to deliver the project within the project timelines and scope. Future studies can replicate the findings in other industries and also have multiple respondents to capture more views about ERP vendor support.
An investigation into the causes and characteristics of fraud in Kenyan SACCOs and whether Benford's Law can be used to detect fraud in the accounting data
(Strathmore University, 2016-06) Kamau, Evans Njoroge
Financial statement fraud is a significant threat facing the survival of the co-operative movement in Kenya. The threat has led to a number of amendments to the Co-operative Societies Act of 1997. The Sacco Societies Regulatory Authority (SASRA) is a Semi- Autonomous Government Agency inaugurated in 2009 charged with the prime responsibility to license and supervise deposit taking Sacco Societies in Kenya. However, fraud continues to appear in the media despite inspections of co-operative societies sanctioned and carried out by the regulator. Owing to numerous cases of fraud that occur in SACCOs, there is a need for measures to detect fraud in order to ensure the sustainability of this sector of the economy. The financial ratios currently computed by SACCOs in Kenya might not assist users of the financial reports to detect fraudulent financial reports. Extra efforts are therefore needed to unearth fraud in SACCOs. This study seeks to investigate the applicability of Benford’s Law to detect fraud in accounting data. Benford`s Law is a statistical tool used to test evidence of human bias and data manipulation. The study attempts to help auditors in their investigation of fraudulent activities in this crucial sector. Two sets of secondary data were used to test whether Benford’s Law could be used to detect fraud in SACCOs. The first set consisted of data from SACCOs with fraud while the second set consisted of SACCOs without fraud. Percentages were used to analyze the first digit of all the line items of the balance sheet, the statement of changes in equity, the income statements, the appropriation account, the cash flow statement, disclosures and notes in the financial statements per SACCO was binned into nine bins of 1 to 9. Chi-Square test statistic was also used to determine the goodness of fit between Benford’s Law and the SACCO transactional level data at 5% confidence level. The first digit entries for SACCOs with fraud partially followed Benford’s Law for both SACCOs with and without fraud. Benford’s Law can therefore be used detect fraud in fraudulent financial statements in Kenyan SACCOs.
A micro and macro prudential approach to financial soundness assessment of Commercial Banks in Kenya
(Strathmore University, 2016-06) Kolum, Micah Cheruiyot
Financial soundness of the banking system is underpinned through effective bank assessment and monitoring. The prevalence of bank failures in Kenya raises the question on how best to identify vulnerabilities in financial condition of banks. This thesis aimed to identify the set of CAMELS-based financial soundness indicators that discriminate between sound and unsound banks, determine whether selected macro-economic indicators have an impact on bank financial soundness and to assess the performance of CAMEL as a tool for assessing bank soundness. The thesis adopted explanatory and descriptive research designs. Secondary data on financial soundness indicators were obtained from bank balance sheets and income statements and those on macro-economic environment obtained from the CBK website. Data analysis and presentation was done using descriptive statistics, binary logistic regression, CAMEL, CAMELS and Z-score index models. The results suggest that the statistically significant indicators discriminating between sound and unsound banks are capital adequacy, asset quality, management quality and liquidity. On the contrary, the selected macro-economic variables; inflation, GDP growth, interest spread and market concentration were found not to be significant. However, the inclusion of the selected macro-economic indicators improved the logistic regression model classification accuracy with a reduction in type II error though type I error remained the same. In addition, CAMEL and CAMELS achieved the same performance category rating as banks classified as sound fell under the same performance category likewise to those classified as unsound. This can be attributed to the range within a performance category of 0.5 and another 0.1 between performance categories. However, CAMELS performed better in terms of producing distinct ratings hence ranked higher than CAMEL and Z-score index. The study suggested that bank managers focus on ensuring that their banks are well capitalized, minimize nonperforming loans, quality management and adequate liquidity to achieve bank soundness. Similarly, investors and depositors should assess banks based on these significant factors when making their investment and banking decisions. In addition, the CBK should consider implementing CAMELS model for bank financial assessment.
Minimization of the cost of solid waste management through alternative financing mechanisms in Kajiado County
(Strathmore University, 2016-06) Sirengo, Enid Nafula
The need for investment in the Solid Waste Management (SWM) sector in Low- and Middle Income Countries (LMIC) far outstrip their financial resources. The real challenge for LMIC is to set up sound SW management for both economic and ecological reasons. One of the Solutions recommended is the involvement of other sectors which will provide alternative sources of finance for managing solid waste. To succeed in waste management, adequate financing is needed. This study aimed to demonstrate both theoretically and empirically that traditional financing is inadequate and thus alternative financing methods are necessary to curb and minimize the costs of Solid waste management. This study was carried out in Kajiado County which is located south of the former Rift Valley province and now county under the new administrative boundaries as per the new constitution. The main objective of this study was to explore the potential of employing alternative financing mechanisms in managing municipal Solid Waste in Kajiado County of Kenya with a view to minimize the costs of SWM. To investigate the potential of employing alternative financing to minimize costs of SWM, this study used a combination of both quantitative and qualitative methodologies to research. It therefore draws on the cross-sectional study design as explained by Bryman (2004) and also on aspects of a phenomenological research design as discussed by Blanche et al., (2006). Statistical analysis showed that there is a great chance that alternative financing reduces the costs of SWM. Other findings revealed that the majority proportion of the public in Kajiado County exhibited concern that with the amount solid waste being generated there is not enough financial resources to pay for the costs involved. Though some within the county still believe that Solid waste Management is the responsibility of the government, a majority agree that other alternative financing methods need to be sought out to effectively manage solid waste. Not a single mechanism has been unanimously agreed upon. The alternative financing mechanisms discussed within this paper include private sector participation, micro finance involvement though SWM projects and use of a combination of both private and public sector participation. From the regression one could deduce that despite their being a high level of awareness of different alternative approaches to solid waste management, there is little uptake of the same. As such, policy makers should concentrate on building capacity within the councils to be able to pursue these options of guiding organizations to uptake alternative financing methods. Thus, more resources should be incurred not on creating awareness of alternative financing mechanisms for solid waste management but in laying down structures to actually obtain financing from alternative sources for enhanced SWM for a cleaner and environment friendly society. Political, cultural and social concerns also prevent the topic of solid waste management to be discussed openly. It is evident from the exponential growth of people migrating from urban to peri-urban regions like Kajiado and increased levels of illegal dumping sites that the government can no longer manage to finance for SWM on its own. There are successful stories from other countries like Bolivia, The Philippines and Argentina. This study wishes to open a forum within the county and encourage the uptake of employing alternative sources for financing SWM activities.

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