Key success factors and competitive advantage of deposit taking Microfinance Institutions in Kenya

Abstract

Competition in the 21st century’s global economy is complex, challenging, and filled with competitive opportunities and threats. It exerts pressure on firms to be proactive and to formulate successful strategies that facilitate proactive responses to perceived and actual changes in the competitive environment. In any industry, there are certain key success factors that a business must understand in order to enhance its uniqueness and thereby create competitive advantage. These can significantly affect the overall competitive position of companies within any particular industry. The microfinance sector has elicited a lot of interests in the recent past leading to a subsector within the industry known as the deposit taking microfinance institutions. This study undertook a survey on all the 9 DTMs in the country and sought to provide an insight of the critical success factors that have contributed to the competitive advantage of these institutions. The study established that certain key success factors were crucial for the success of these institutions and were a receipt for any successful organization in the industry. Among the factors identified are strong customer service culture and group based lending model which was rated highly. The study recommended that in order for DTMs to remain profitable; they must maintain an optional level of competency on all the identified KSFs