Sources of sustainable competitive advantage in The banking industry in Kenya
In the last two decades, one of the most fundamental questions emerging in strategic management is how firms achieve and sustain competitive advantage. Organizations succeed in a competitive marketplace over the long run because they can do certain things their customers value better than their competitors. Only firms who are able to continually build new strategic assets faster and cheaper than their competitors will earn superior returns over the long run. In a struggle to survive, organizations are continuously looking for a 'sustainable competitive advantage'. As industries mature and companies can no longer differentiate themselves by attributes such as products or pricing, organizations seek alternative ways of survival. Sustainable competitive advantage is born out of core competencies that yield long term benefit to the company. The study was designed with the aim of achieving two objectives: to establish the sources of sustainable competitive advantage in the banking industry, and to determine strategies adopted to achieve and sustain competitive advantage. The data that were analyzed were gathered using a semi-structured questionnaire targeting corporate strategy managers of the banks. Out of the forty-one banks that were targeted, thirty-one responded by returning filled questionnaires. This formed 75.6% response rate, which were considered suitable for analysis. To achieve the study objectives, respondents were presented with a number of sources of strategies for sustainable competitive advantage and were required to score on a 5-point likert scale the extent to which the sources were significant to creating SCA and strategies pursued to achieve SCA. The major findings of the study were that the sources of sustainable competitive advantage were found to be internally generated. It was established that these sources originated out of the possession of superior and high quality internal capabilities and competencies. The sources that were found to be highly significant in generating sustainable competitive advantage include: superior skills/capabilities of personnel (mean score- 4.32), high level of service quality (mean score- 4.32), continuous learning on how to do things better (mean score- 4.26), effective leadership focused on continuous improvement of the bank's value adding systems (mean score- 4.03), and superior/valuable resources (mean score-4.0); while those that were found to be moderately significant include: possession of tacitlimplicitlintangible knowledge (mean score-3.8), brand equity (mean score-3.71), highly charged, motivated and loyal employees (mean score-3.27), rare, valuable, and imperfectly imitable organizational culture (mean score- 3.27), reconfigured value chain of the bank (mean score-3.19), and ability to analyze and predict the behaviour of competition (mean score-3.19). With respect to the second objective, it was determined that the strategies that are pursued tend to be mostly internally focused. Those that were found to be pursued to a very large extent include: continuously developing existing and creating new resources and capabilities (mean score-4.26) and undertaking radical innovations in the way the bank does business (mean score-4.0). Those that were found to be pursued to a large extent include: product differentiation strategy (mean score-3.94), product development (mean score-3.83), leveraging unique firm attributes with information technology (mean score-3.77), matching the bank's resources to the gaps (mean score-3.65), market development (mean score-3.65), cost reduction strategy (mean score-3.58), tacit collusion! cooperation strategy (mean score-3.47); while those pursued to a less extent include: related diversification (mean score-2.74), strategic alliances (mean score-2.58), and unrelated diversification (mean score-l.90). It was however noted that in both the sources of and strategies for SeA, there were variations among respondents with respect to degree to which a source generates SCA and a strategy for SCA is pursued. It was concluded that the results of the study showed consistency on organizational bio data, the sources of sustainable competitive advantage and the strategies for sustainable competitive advantage.