Competitive Strategy Drivers and Performance of Commercial Banks in Nairobi City County

Abstract

In a competitive banking industry, organizational performance is achieved through the pursuit of competitive strategy drivers such as cost reduction, product differentiation, or a focal approach to banking industry rivalry. In Kenya it has come to the realization of commercial banks that drivers in competitive markets contribute to bank developing better and competitive strategies. Despite commercial banks dominance in the financial industry market and implementing competitive strategies, there is no empirical evidence on influence of competitive strategies drivers on organization performance in commercial banks. The study therefore sought to analyse the influence of the competitive strategy drivers on organizational performance in commercial banks in Kenya. Resource Base View theory and Porter's Theory of Competitive Advantage were the anchor theories to this study. A cross sectional survey was adopted as the research design in this study. A population 40 Commercial Banks in Kenya was used in this study. Primary data was then collected using a questionnaire which was analysed descriptively by use of statistical package for social science. Further regression test was carried in determining the variable relationship. The study established most of the banks in Kenya had espoused competitive strategy drivers. Such included market-niche or focus strategy, low cost strategies, cost leadership strategy or low-cost strategy, differentiation strategy. Adoption of competitive strategy helped banks to soar past their competitors. The study concluded that commercial banks in Kenya in had adopted Resource Based Drivers. For instance, most of the banks had competent human resources banks in Kenya and used modern technology in their operations which has increasing bank performance. Risk management adopted by most of the banks has also reduced bank. The study recommended that commercial banks in Kenya should continually adopt competitive strategies drivers as these were found to enhance banks performance measured through return on assets, operational efficiencies and customers' base. Commercial Banks should also continually embrace resource based drivers such as quality hiring procedures, continuous employee trainings, quality products development, risk management practices, continuous monitoring and evaluation of banks activities as these practices were found to play a positive transformative role which enhances banks performance. The future on banking industry relies on innovation, thus banking institution that seeks to remain competitive must always embrace innovation, however survey must be carried out to establish economic viability of particular innovation before its conception. This will be instrumental in thwarting possible loses. Commercial banks must too continually find the best match between their operation and environments in which they operate. Strategies' must always be laid to ensure that the banks continually embrace aspects such banking technologies and regulations all which influence competitiveness.