Competitive strategies applied by Commercial Banks
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The 1980s saw the beginning of Structural Adjustment Programmes in Kenya that sought to correct the slow economic growth and stagnation of the public sector. Subsequent to this, the 1990s ushered in the public sector reforms that called for market- driven systems. This amounted to liberalization of controls towards a market - driven economy. Coupled with these local changes were the globalization and Information Technology phenomena. These changes were immense and were bound to impact intensely on a hitherto protected economy. The changes affected all the sectors of the economy. The banks were not spared these monumental changes. The study sought to identify changes that have affected commercial banks in Kenya since 1980s and to further identify the strategies that the commercial banks, which participate in clearing house, have applied in order to respond to these changes. For the purpose of this study, all the commercial banks that participate in clearing house were contacted. These were forty-four (44) as 'at the time of our study. However, only twenty-eight (28) of them responded as at the end of the research period. This constituted about 64% of response. The study was carried out by the use of a questionnaire which consisted of both open-ended and closed questions. The data so collected was analysed by use of statistical package (SPSS) and presented in tables, frequency distribution, percentages and other descriptive statistics. Further, factor analysis was carried out in order to determine the major factors that impacted on commercial banks that participate in clearing house. The study revealed that there were several factors that impacted on commercial banks which included global and local competition, bargaining power of supplies, increasingly demanding customers, changes in Information Technology and threat of substitute products. Factor analysis was however able to determine the key factors as being increased competition and threat of substitute products. These were the changes that impacted most on commercial banks that participate in clearing house, given the turbulence in the external environment. However, other mentioned factors could not be ignored'in strategy formulation, as they constitute 20% of the impact. The study further revealed that the commercial banks have adopted certain strategies to counter the forces that impact upon them. The strategies include delivery of high quality service, rationalizing delivery channels, segmenting the market, applying competitive pricing structure, boosting the company's image and profile and having a presence in appropriate locations. The underlying factor in the delivery of quality service was high quality and appropriate technology that was responsive to the rate and magnitude of its change. The key focus to the strategies so adopted is attention to the customer by being sensitive to his/her needs, both actual and perceived. Given the findings, the study's recommendations are that a heightened environmental awareness should be adopted by organizations and quick responses be formulated to respond to the challenges so detected. A much broader view than the immediate environmental scan should be adopted which will help in forecasting possible trends, given the global nature of business today. Time is of essence in formulating appropriate strategies due to the global nature of competition and magnitude and speed of technological changes.