Product Diversification Strategies and Performance of Commercial Banks in Kenya
Abstract
The Kenyan banking industry has been experiencing cut throat competition which has risen
to the point where even international banks have been forced to change their strategies in
order to maintain and enlarge their market shares (Nyatich, 2009). In the last 5 years the
market has experienced a shift in the market leadership where locally instituted
commercial banks have taken over the leadership from the multinational banks. This has
necessitated a research agenda into the forces behind the dislodgement and thus one of the
strategies that has taken a huge focus is diversification and more specifically product
diversification. In retrospect therefore, this research intended to make its contribution by
taking a look at the various product diversification strategies that commercial banks are
adopting in an endeavor to be at tandem with changing customer lifestyles, market trends,
technological advancements, the effects of globalization as well as the economic and legal
regulatory framework. Furthermore the study seeks to assess the relationship of the
strategies to the performance of the commercial banks. Data was obtained from 38
commercial banks in Kenya, targeting medium/senior management staff especially
marketing managers, product managers, sales managers, branch managers and operations
managers across the country. The data was analyzed using descriptive statistics and mainly
there was almost a unanimous view that product diversification has been overly adopted by
commercial banks in an endeavor to ensure that banks remain relevant and continue to
maximize profits in the face of the stiff competition both within the banking industry and
even the entire financial industry.
Citation
Master of Business AdministrationPublisher
University of Nairobi