Strategies Adopted by Commercial Banks in Kenya to Gain Competitive Advantage
Abstract
The competrtrve environment of a business is a part of company's external
environment that consists of other firms trying to win customers in the same market.
Dealing with competition is never easy. Business organizations, especially the banking
industry of the 21st century operates in a complex and competitive environment
characterized by these changing conditions and highly unpredictable economic
climate. The Kenyan Banking industry is the most competitive in the East African
region according to a survey by IMF (Business Daily, 2013). The threat of more
foreign banks coming into the industry is now more real than ever. Banks have to
keep abreast with what is happening in order to stay afloat. This study adopted a cross
sectional research design. The target population was all the commercial banks in
Nairobi. As at 31st December 2012, there were 43 commercial banks in Kenya. This
was a census survey in which all banks was involved in the study so as to ensure as
much representation as possible. A structured questionnaire was used to collect the
primary data. Responses were edited, classified, coded and tabulated to analyze the
data. Data presentation was done by the use of frequency table's percentages and
charts. This ensured that the gathered information is clearly understood by describing
what the respondents are saying. The study found that commercial banks had adopted
various competitive strategies which were, training of staff, product diversification,
marketing, pricings, financial innovation strategies, financial inclusion strategies ,
research development, information communication technology and service and product
distribution. The study found that commercial banks in Kenya were gaining
competitive advantage through gaining market share, market penetration, through
enhanced performance, through service delivery, increased customer loyalty, increased
product diversification and through growth of the bank. There is need for commercial
banks to adopt various financial inclusion strategies as this will enable them gain
market share and reach the unbanked population. Through financial inclusion
strategies the commercial banks will be able to reach more customers thus increase
their market share and customer base. The findings of this study may be applicable to
only 40 banks which responded and may not be generalized to all 43 banks in Kenya.
Time was limiting a limiting factor more so because some of the bank managers are
very busy. Bank managers were also hesitant to give information on competitive
strategies for fear that it will give competitors an upper hand. They were however
assured that this was purely for research and will be treated as confidential. There is
need for a study to be conducted on factors influencing adoption of competitive
strategies by commercial banks in Kenya. There is also need to study whether the same
strategies are applicable to other sectors in the economy. The study recommends
research on challenges faced in implementing the strategies by commercial banks in
Kenya should also be done.
Publisher
University of Nairobi
Description
MBA