| dc.description.abstract | In order to survive and thrive in any industry environment, an organization must
compete. In order to create and gain sustainable competitive advantage for itself, an
organization must compete. These conditions also hold in Kenya’s commercial
banking industry. A commercial bank will compete against its peers in the
commercial banking industry. To compete effectively, a bank must be aware of who it
is competing against, so that it formulates strategy to out-compete its competitors. A
firm in pursuit of competitive advantage must also identify those skills and resources
that have the greatest potential to give it enduring competitive advantage. Firms will
then hedge their strategies on these skills and resources so as to obtain and sustain
competitive advantage. Theoretical research presents three main theories of
competitive advantage; the resource based view, the dynamic capability theory and
the game theory. The resource based view focuses on an organisation being a
collection of resources whose performance depends on the ability of the
organisation’s ability to use its resources. The dynamic capability theory emphasizes
on the need for an organisation to have ability to create, adapt and reconfigure its
dynamic capabilities, so as to refresh its resource stock to have competitive
advantage. Game theory provides a method for the organisation’s executive team to
identify objectives and potential strategies of competitors. The main generic strategies
of competitive advantage are cost leadership, differentiation and focus. The
commercial banking industry in Kenya is very competitive having 43 licensed
commercial banks. These banks offer similar services and products. From the
findings, the study implies that banks have to focus on differentiating their products
and services as well as a number of activities in their value chain to create a
perception of having unique value in the eyes of the customers. In so doing, banks
will be able to charge a premium price for its products and services, attract new
customers and investors, penetrate new markets with relative ease, attract new
talented people seeking employment, attract reliable, reputable suppliers and also
draw the attention of strategic partners seeking business alliances. In time, the
strategies employed by banks and their various capabilities may allow banks to
achieve a position of sustainable competitive advantage, which will in turn lead to
increased revenues for the bank and will ultimately meet all stakeholders’ needs. | en |
