Influence Of Strategic Alliances On Performance Of Kenya Women Microfinance Bank Limited

Abstract

Strategic alliances are an important element for the success of any business in the 21st century, which is characterized by a highly competitive environment. It has been projected that the rate of failure of the strategic partnerships could be 70% high, probably due to the fact that they did not satisfy the objectives of their holding firms nor delivered on strategic and operational benefits which they desired to produce. The rates of terminating an alliance have been reported as above 50 per cent. In many instances like termination of such relations has led to destruction of the value of shareholders for firms participating in those alliances. Although many studies have been done on strategic alliances in financial sector few have narrowed down to a microfinance institution. This study therefore sought to fill this research gap by establishing the influence of strategic alliance on performance of Kenya Women Micro Finance Bank Limited. The study was guided by Resource Based Theory, Capability Based View, Resource Dependency Theory and Strategic Alliance Dynamism Model. A case study design that entailed detailed investigation of individuals from the organization was adopted by use of interview guide. The study targeted seven senior managers in the following departments: Finance, Insurance, Information Technology, Legal & Regulatory, Product Development, Credit and Digital Lending. The researcher personally conducted the interviews. Content analysis was applied for analyzing the data. This study concluded that strategic alliances at KWFT are driven by competition, value adding, technology, profitability, joint sales and improved distribution channels. The study concluded Kenya Women MicroFinance Bank Limited used key performance indicators (KPIs) such as loan portfolio growth, profitability, market share and clientele growth. The study revealed that KWFT has continued to register positive growth which can be related to effective and efficient strategic alliances. The study therefore recommended that the structure of the alliance between KWFT and its partners need to be defined in a way that enables mutual balance between competition and co-operation. Senior management should be involved in strategic operations while ensuring clear and common vision to avoid conflict of interest. There should also be clear guidelines which govern the alliance in order to ensure transparency while promoting mutual trust.