Response strategies adopted by commercial banks in Kenya to changes in economic environment
The objective of this study was to identify which response strategies commercial banks in Kenya have adopted due to changes in the economic environment. Dynamic environment changes impact on organizations goals and objectives. This makes it difficult for an organization to remain viable. To be able therefore to stay ahead of competition, it’s imperative for organizations to continually scan the environment. This enables the organization to adjust their strategic responses to accommodate the demands of the environment. The appropriate response strategies will guarantee a competitive edge. For the last 10 years Kenya’s economy has experienced tremendous changes and they have impacted a lot in all industries in the country. The nature of competition for example has changed. The banking industry has not been spared either. This research project was a survey on all commercial banks. In an effort to meet these objectives the primary data was collected. Primary data was obtained through a questionnaire administered to managers have been involved or responsible for developing strategy. Secondary data was obtained from existing bank publications and annual reports. The study found out that Kenya commercial banks have been able to respond to the changes in their environment through Retrenchment strategies which involved cutting operating costs and divestment of non-core assets. They have also responded to the environment by use of investment strategies which contrast with retrenchment and as such firms perceive these changes as opportunities to invest, innovate and expand into new markets in order to achieve or extend a competitive advantage also noted is the use of Ambidextrous strategies where organizations combine incremental change with discontinuous change, or the exploitation of existing resources to improve efficiency, with exploration of new sources of competitive advantage and innovation. The researcher recommends that in order to stay ahead of competition banks should continuously scan the environment aggressively and also speed up implementation of its strategies.