Why Fidelity Bank survived the banking crises in Ghana, but UT Bank collapsed: an explanation from strategic management

Abstract

The question of why some firms succeed whilst others fail even though they operate in the same industry, have similar sizes and face the same market conditions continue to attract research attention. Strategic management addresses this question in part and contends that the explanatory factors for such phenomenon is accounted for by how firms strategically align their internal capacity to the changing trends from their external environment especially political and competitive forces. The paper draws on two strategic management frameworks (i.e., PESTLE and Porter's five forces) to explain why Fidelity survived, but UT failed in the recent environmental turbulence which bedeviled the banking sector of Ghana though both started just about the same time and had similar size. In line with the assumptions of the two frameworks above, the present paper argues that the failure of UT bank and the survival of Fidelity Bank is accounted for by how each bank aligned its internal capacity to the regulatory and competitive forces that hit the banking industry. The paper employs secondary information (e.g., financial reports, web materials, newspaper articles), coupled with the PESTLE and Porter's five forces frameworks to explain the issue. The findings are that whilst the internal capacity of Fidelity Bank (e.g., its capital adequacy) was aligned to the regulatory demands of the Bank of Ghana, UT's internal conditions were so fragile that they failed to satisfy the regulator's demands in the deregulation. Following from the results of the study,  implications on theory, practice and public policy are suggested.