Competitive Strategies and Performance of Financial Sector Companies Listed in the Nairobi Securities Exchange

Abstract

Competitive strategies in essence are designed to exploit an organization’s competitive advantage. A competitive strategy consists of business approaches to attract customers by fulfilling their expectations, withstand competitive pressures and strengthen market position. It is noted that the choice of competitive strategy to a larger extent affects the performance of a firm either financially or non-financially. The Kenyan financial system is well-developed and comprises of a wide variety of institutions which have been listed in the Nairobi Securities Exchange. However, there has been increased competition for the investors’ funds from other companies outside the NSE including mobile financial services, unlisted local banks as well as international banks, some of which are new players in the country. The objective of this study was to conduct an assessment of the relationship between performance of financial sector firms listed in the Nairobi Securities Exchange and competitive strategies they have adopted in the last 3 years. A questionnaire was the major instrument used to gather primary data while past records from the NSE and CMA library were also used to supplement the major instrument and findings analysed using regression analysis. The study found that the firms have achieved improvement along the terms of organisation performance which is measured along various indicators. Performance was guided by both financial and non-financial performance measurements and the determinants were scattered along various competitive strategies. The study concluded that performance was determined to an extent by various strategies each firm adopted in its operations for the last 3 years and that there was no specific strategy rather mostly it was a combination of many competitive strategies across the board. The study recommends that in order for firms to maintain their competitiveness in the industry they should be cost focused as well as expanding their market coverage with different products. The Government also needs to protect the financial sector firms listed in the NSE from stiff competition from international firms through policies. Further research is recommended for the firms listed in the NSE to facilitate generalisation of the findings and conclusively identify the relationship between competitive strategies and performance of firms listed in the NSE.