Competitive Strategies Adopted By Islamic Banks In Kenya To Enhance Performance
The banking industry in the last few years has experienced changes both in terms of changing regulatory framework and customer needs. These coupled with the highly competitive environment has forced most banks to formulate strategies that will ensure they gain competitive advantage over their rivals. The competitive strategy that an organization selects determines the success or failure of a firm. Islamic banking being a relative new phenomenon in Kenya has adopted different competitive strategies to gain and sustain competitive advantage. Islamic banks have to come up with strategies to penetrate the highly competitive banking industry in order to improve on how they perform. This research was carried out with the aim of determining the competitive strategies undertaken by Islamic financial institutions to enhance performance. This study only concentrated on the three generic competitive strategies. Descriptive research design was adopted in this study. 7 banks took part in this study in which only 5 banks duly responded. Primary was used in this study. Questionnaires were used to collect the data. The respondents held the position of managers in their respective organizations. Descriptive statistics and especially SSPS were used to analyze the data. The relationship between competitive strategy and performance was investigated using Regression model. From this study the researcher found out that Islamic banks use cost leadership, differentiation and focus strategy to enhance performance. Limitations faced in this study were time constraints, scope of the study that was limited to Islamic banks and securing appointments with the respondents. These studies recommended policy makers in Islamic banks to market their products to a wider market and also undertake educational seminars to raise awareness about the products and services they offer especially among the non-Muslims. This study also recommends for Islamic banks to aim beyond Muslims and aim for non-Muslim clients too. Islamic banks should also invest in ICT to enable it to cut down on costs and minimize system downtimes. Further studies should be undertaken to establish the strategies used in related industries like Islamic insurance and Islamic Saccos. In addition studies should be conducted to understand other variables that affect a firm’s performance other than competitive strategies.
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