Influence Of Strategic Management Practiceson Performance Of Commercial Banks In Kenya

Abstract

The practice of strategic management has gained significance over the years, especially in the banking industry in Kenya. This is due to the change in both internal and external environment, the result of which is witnessed through the mergers and acquisitions of banks in Kenya. It is in light of the forgoing, that this research was undertaken to find out whether, commercial banks in Kenya practice strategic management and whether, it has an effect on financial institution. Primary data was collected through questionnaires. The population was 42 banks out of which 33 banks gave a complete response which amounted to a feedback per centum of 78%. The study revealed that strategy formulation process was highly practiced in most banks in Kenya, however the performance of tier one banks were impeccable due to the implementation process that formulates the full circle of strategic management practice. The findings portrayed that the banking industry had been affected in both internal and external environment. Most banks last year alone have been vastly affected in the change of legal environment that has seen a number of banks reporting low profitability in their annual financial report. This however, has not deterred the tier one banks in reporting profits, as they invest in technology and system to compete with the change in environment. This has shown that strategic management practice has an influence in the organizational performance. The study has further shown that there is a need to formulate strategy that would guide the banks to its objectives based on its resources. In that regard there is need for further research on the influence of strategic implementation and evaluation process on institutional performance.