Strategic Alliance by Commercial Banks in Kenya

Abstract

The movement towards globalization has opened many new opportunities and competition at the same time. No organization can make it on its own, it is evident that organisations are increasingly turning to alliances to help them successfully compete in the market place. Alliances are becoming an alternative business strategy and hence the formulation of strategic alliances in the banking industry due to the maturation of global trends such as, intensified competition, shortened period of product life cycles, soaring cost of capital, including the cost of research and development and the ever growing demand for new technologies. The aim of this study was investigating factors affecting the performance of strategic alliances of firms in Kenya: a survey of commercial banks. The study was of descriptive survey design nature. The target population for the study consisted of all the commercial banks that are registered by Central Bank and operational in Kenya as at 31st December 2015.Primary data was collected using a semi-structured questionnaire. In this study data was collected from staffs in marketing, Human Resource, Finance, administration, operations and customer relations departments. The questionnaires were administered through the “drop and pick” method and others via e-mail. Descriptive statistics involves the use of absolute and relative (percentages) frequencies, measures of central tendency and dispersion (mean and standard deviation respectively). Findings were represented in form of tables, pie charts and frequencies. Secondary data was synthesized and integrated to enrich the finding to enable the researcher come up with reliable conclusions. This study concludes that the underlying reason for the formation of strategic alliance by the banks is to enhance their performance by taking advantage of the resources this type of association brings forth. Moreover, the banks are more willing to enter alliances involving peripheral activities which offer wider scope for organizational learning and less vulnerability from sharing confidential information. In the current competitive market, many organisations cannot operate alone without partnering with others. The study also concludes that strategic alliance has been a good factor that enhances profit and survival of these organisations as posited by the responses of interviewees in these companies