A Case Study of Strategic Management Practices and Performance at the Co-Operative Bank Of Kenya Limited

Abstract

The changes in business environment brought about by globalization and liberalization has increased competition in the banking sector reducing market shares of most banks. Customers have become increasingly aware and demanding and the successful survival by any single bank depends on producing, packaging and delivering products and services which offer superior value than competitors' products. Creating and maintaining a competitive edge over rival firms requires embracing strategic management practices. Consequently, the Co - operative Bank of Kenya Limited has adopted strategic planning aimed at assisting the Bank to maintain its competitive position in the financial market.

The study was a case study of the Co - operative Bank of Kenya Limited and the objectives of the study were to determine the strategic management practices of the Bank and to evaluate the impact of strategic changes to the performance of the Bank. Data was collected by interviewing three general managers drawn from finance and administration, institutional banking and retail banking divisions. A semi - structured interview guide was used to collect data. Descriptive statistics was used to analyze quantitative data while content analysis was use in analyzing qualitative data.

The study found that strategic planning practices existed at the Bank. The Bank has a mission and vision and analysis of external and internal environment is done with the help of marketing research department. Analysis of the internal environment is poorly done raising the danger that the Bank may be ignoring its weaknesses. The results showed that the Bank uses cost leadership and retrenchment strategies to a large extent while market penetration was the least used strategy. Strategic management practices have impact on performance of the Bank as was depicted by notable improvements in sales and profit before tax over the last five years that the Bank adopted strategic planning. Return on equity has also increased following adoption of strategic planning. However, it was revealed that the strategic planning practices did not have significant impact on share capital and return on asset. It was recommended that managers acquaint themselves with basic research skills to enable them understand the quality of external and internal environmental analysis.

Analysis of the bank's internal environment should be improved. It was further recommended that the bank develop strategies aimed at increasing share capital; and given the importance of return on investment towards success of strategy, further research should be done to identify determinants of return on investment.