Equity Bank: Engaging The East African Sme Space Harvard Case Solution & Analysis

INTRODUCTION

Equity Bank is the leading micro finance bank in Kenya, started its operations in 1984, as a minor institution. Equity Bank was originally established to provide mortgage financing to Kenya’s citizens, which targeted lower-income earners and also offers the wide variety of financial services to its customers. The purpose of targeting the low income earners is that the majority of citizens is earning less than adequate income, the target population of Kenya acted as strength and mainly contributes to the company’s growth.

Equity Bank is considered as one of the best retail banks in Kenya that offers multiple banking services as well as collaborating with other corporations to improve their services such as mobile banking. When equity bank came into being it faced numerous competition from the big players in the banking sector. The banking sector in Kenya is extremely competitive with big players and more than 40 registered commercial banks.

Moreover, Equity Bank is highly succeeding institutions in terms of a country’s growth, consumer base, capital growth and expansion and operational efficiency. However, equity bank that is also known as an Equity building society failed to achieve its target and experienced a downfall in growth, which led the company bankrupt in 1993. On the other hand, the management of the bank is focused on building a positive relationship with its owners and customers.

However, relationship strategy increases the firm leading risks because of unprofessional projects that decrease the standards and control of the bank. After facing the decline and downfall in the profits of the bank, the board of directors decided to reform the management team and recruit the prominent and qualified employees. Moreover, the best-qualified employee helps the company achieve its targets in the long run. The new management team will lead the bank from a failing intuition to a drastically growth business institution. Furthermore, the management should initiate new strategies to achieve the long-term growth and stabilize the company’s return.

In 2005, the management of the equity bank changed their strategy and started expanding their services by transforming the business institution from a mortgage financier to loans and saving institutions. This strategy helps the company to improve its financial and operating costs and increase its revenue.

Moreover, under the leadership of James Mwangi, the managing director and CEO of the Equity bank, the bank enhanced its growth by taking benefit of a ready market for their services. Furthermore, the institution achieved a competitive advantage by defeating competitors through modern technology and innovation process. Currently, the equity bank is considered as one of the best performing financial institutions with the high level of customers’ advantage.

PROBLEM STATEMENT

The world at large is facing a fierce competition in the finance industry, where a large number of the population lacks access to financial services due to proximity to the location as well as income distribution. This condition affected not only the population but also the banks in terms of obtaining a wide coverage of customers and finance market.

Moreover, the government of the country was also affected that subsequently seeked to control the inflows and outflows of the economy, majorly done through banks in terms of policies imposed on the interest rate. The policies and law imposed by the government, in order to control the money supply of the economy will fail to implement if the bank, they do not expand their market and increase the customer's advantage.

According to the case, Equity bank transforms the business institution from a mortgage financier to loans and saving institutions. The reason to transform the bank is that in the year 1993 the bank failed to achieve its target and experienced a downfall in growth, which led the company bankrupt. Moreover, the board of directors decided to reform the management team and recruit the prominent and qualified employees.

Equity Bank Engaging The East African Sme Space Case Solution

According to the James Mwangi, Equity Bank, one of the leading micro finance banks achieved its target and phenomenal growth in the second quarter of 2012. Moreover, the bank performed phenomenally in the key indicators of revenue, the number of loans, number customers, and Net profits. Furthermore, Equity Bank became one the market leader in the finance industry and give strong competition to the competition, with a wide variety of financial services...............................

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