The Influence of Strategy Alignment on Competitive Advantage of Commercial Banks in Kenya

Abstract

Globalization and improved state of technology has increased business challenges as firms struggle to meet changing customer needs in a fast changing internal and external business environment. The banking sector in Kenya has experienced a wide range of challenges which has led to about 5 banks being placed under receivership, liquidated by the regulator or acquired by larger banks in the last five years. A firm’s competitiveness is viewed as being dependent on its ability to align its strategy. Strategy alignment involves matching the strategy of an organization to its purpose by utilizing the most strategic resources, capacities and capabilities of the organization. The study objective was to find out the impact of strategy alignment on competitive advantage of commercial banks in Kenya. The strategy alignment in commercial banks was divided into marketing strategy alignment, financial strategy alignment, HR strategy alignment and IT and Innovations strategy alignment. The study used a descriptive research design. Closed ended questionnaires were used to collect data and distributed to two managers of all the 40 licensed commercial banks in Kenya as at 31st December 2019. 64 questionnaires were successfully completed representing a response rate of 80%. Linear regression analysis and correlation analysis were used to determine the connection between the study factors. The study found that there was significant positive influence of strategy alignment on competitive advantage of commercial banks in Kenya. The regression equation indicated that an increase in marketing strategy alignment by one unit while holding other factors constant decreases competitive advantage but enhancing the alignment of each of the other strategies while holding other factors constant leads to increase in competitive advantage. The research concluded that strategy alignment is vital in ensuring that a commercial bank obtains competitive advantage. The research recommends that commercial banks in Kenya should enhance alignment of their human resource strategy, Finance strategy and IT and Innovations strategy but avoid putting more than necessary resources in enhancing their marketing strategy alignment in order to increase their competitive advantage.