Strategic Responses, External Environment Changes and Performance of NCBA Bank of Kenya

Abstract

Banks such as NCBA bank in Kenya operate in an ever changing external environment that informs the deployment of strategic responses. The inquiry was mainly aim at finding how strategic plans and response influence banks in the country and it involved a case study of NCBA. It also reviewed external environment changes and how this affects firm success. Interview was schedule from 15 managers. Collected Data was analyzed through Content analysis is a data analysis technique. From the results, the study established that NCBA Bank operate in an ever change external environment. Bank responds to change in external environment through deploying various strategies. NCBA Bank Limited adopted strategic collaboration, Mergers and acquisition strategy, Strategic positioning, deployed differentiation, adaptability strategies by resource reconfiguration, foster organizational learning and knowledge management, recovery strategy, strategic outsourcing, deployed rationalization strategy and diversification strategy in response to change in external environment. Strategic responses to change in external environment were found to contribute to bank performance. Bank collaboration merger of bank branches promoted the success of the firms as well as resulted into increase in bank deposit, increase customer to more than 100% rate. The interviewees explained that differentiation strategies increasing customer retention rate up to 87% while product diversification through bancassurance increase bank market share to 60%. Through strategic positioning as strategic responses to change in external environment, the bank focused on customer through customer centric culture approach, deployed corporate and asset banking through expertise approach and rescaling of retail banking distribution. Merger and acquisition were found to contribute to increase in bank’s asset base by 12% and customer deposit rose by 11%. The adoption of the digitalization strategy as adaptive strategy influence increase in lending volume increased by 35% and as well as bank increase lending capacity increasing a single borrower Limit from 8Billion to 16Billion, operating income rose up by 6% and bank increase profitability level by more than 102 for a period of three years. Strategic responses adopted by the Bank reported increased in profit to sh1.29 Billion as customer revenue grew, reduction in operation cost as mergers and acquisition foster integration efficiencies and synergies, reduction of earning per share for ordinary share, the bank increase capital base and increase investments, increased product per customer from 1.7 to 2, the bank recorded increase in profit level by, operating income increased, core capital raised to KES 64.8 billion. The study concluded that strategic responses adapted by NCBA Bank Contributed to bank performance. The study recommends that for commercial banks to continue operate in an ever change external environment, management should deploy resources in formulation and implement of strategic responses to achieved expected performance.