Strategic Alliance and Performance by Kenya Commercial Bank Group Limited

Abstract

Strategic alliances have turned into a critical part of most organization's portfolios. In a time of quick innovative change, the ever quickly changing competitive scene, and the globalization of rivalry more banks and organizations are taking part in alliances. Strategic alliances involve co-operation between two or more firms who pool resources together to create value proposition for the customers and within themselves. Frequently the choice to take an interest in alliances is not one of the organizations possess choosing. With their rivals going into alliances, firms are frequently confronted with couple of decisions other than that of framing alliances to invalidate the potential favorable position of their competitors. Banks are operating in a very competitive environment. The interest rates which hitherto formed the major source of incomes in most commercial banks are shrinking and have drastically reduced. With the enactment of Central bank amendment act which aimed at controlling the interest rates being charged on customers by banks, incomes are likely to be affected and reduce in the long run. The study was based on the following objectives: to determine the strategic alliances practices adopted by KCB group limited and to determine how strategic alliances influences performance of KCB group limited. The research design led to gaining an in-depth understanding on banks forming strategic alliances. The population was composed of business development department, marketing, relationship manager, information technology manager and human resource manage as well as finance. Data was collected by means of an interview guide who had open ended questions. The data which was qualitative in nature was analyzed using conceptual content analysis which is best suited method of analysis. The study concluded companies faced impediments when formulating a strategic alliance such, failure by top management to be committed towards strategic alliance and failure by management to allocate sufficient resource towards strategic alliance formulation, legal and regulations for commercial undertakings, different priorities. Strategic alliances also provide; new business opportunities, customer satisfaction and increase convenience. The research findings established that profitability, technology, customer satisfaction, competition and value addition as the main reasons as to why banks seek strategic alliances. It was noted that specific technology, culture in banks and benefits were the main challenges banks face when entering into strategic alliances The study confined itself to strategic alliances in the banking industry only. This research therefore should be replicated in other industries and the results be compared so as to establish whether there is consistency among the industries in Kenyan economy. The study was also limited by the sample size of commercial banks spread countrywide hence adequate time of covering all. Further research is therefore recommended on how to negotiate with relevant skills and on how to maintain the strategic alliances relationships in the banking industry. Also the research recommend that management of firms should focus on minimizing impediments facing strategic alliance and promote trust among the firms, eliminate differences in priority interest of the companies, improve top management support and commitment toward strategic alliance and allocate sufficient resource toward strategic alliance formulation.