Organizational structures adopted by Kenya commercial bank as a strategic response to competition within the banking industry in Kenya
Stiff competition has characterised the Kenyan Banking Industry Environment in the past ten years. The Industry consist of 43 banks offering various types of financial services which are largely homogeneous, only differentiated either by the product name or just a few features leading to very stiff competition for market share CBK (2012). It’s in this context that Dumais (2011) has observed that organizational design and the resulting capabilities are the last sustainable sources of competitive advantage that are available to firms. Efficient organisation structures can enable an organisation to reduce the cost of operations, increase production efficiency, improve the Turnaround Time in decision making and generally position the organisation better to manage competition in the industry of operation. Pearce and Robinson, (1997) has observed that in order for organisations to achieve their goals and objectives, it is necessary for them to adjust to their environment. Kenya Commercial Bank, the largest commercial bank in East and Central African has evolved and adjusted continuously to the environment over the last ten years, moving from a loss making organisation, reporting a loss of Kshs. 3 Billion in 2002 to profit making organisation reporting a profit of Kshs. 15.1 Billion in 2011Annual Financial Reports(2003 – 2012). During this time, KCB employed as a major strategic response to competition efficient Organisation Structures. A new IT platform was introduced in 2007 to facilitate the launching of new products like internet and mobile banking targeting new market segments previously served by the competition. New partnerships were established as competition begun to be felt from previously non-traditional quarters like telecommunication companies. New frontiers of competition like Agency and Micro Banking were opened to widen the market scope and reach for KCB. There was Branch Realignment to focus on key customer areas and overtake competitors offering similar products in the industry. The overall KCB’s Organisation VI structure was changed in 2011 to make the organisation more efficient, effective and competitive in the Industry. The international Division was adjusted and realigned to improve the speed of decision making and as a result, raised the levels of efficiency in the Division. All these initiatives were made possible by establishing new or making adjustments in the organisation structures and thus demonstrating how KCB used Organisation Structures as a strategy to respond to competition in the ever changing and highly dynamic Kenyan Banking Industry Environment.