Critical Success Factors Of Internationalization Of The Major Banks In Kenya
The objective of this study was to establish the critical success factors behind the internationalization of the major commercial banks in Kenya. Noting that successful internationalization is not as a result of applying one given theory of internationalization or a given strategy, the study actually focused on certain critical factors that can be singled out for being important to the spread of Kenya’s major commercial banks to Uganda, Tanzania, Southern Sudan, and Rwanda. International business is different from national business because countries and societies are different. Societies differ because their cultures vary. Doing business in different countries successfully requires adoption of different strategies and tactics by management. There is an increasing trend of uncertainty facing the world’s economy today. While external environment is beyond the control of organizations, they have to take a defining step in expanding their role in promoting external trade, grow and internationalize successfully. Restructuring and re-engineering are vital moves to positioning an organization and its business for success on the global playing field. This should be well timed given the new challenging phase in the world’s economy – a drastic increase in competition brought about by technological advancements, rising shift in manufacturing resources to closer-to-market locations, change in the way entire supply chains operate, growth of services sector and most importantly, the increasing internationalization of business. For successful internationalization, firms must be able to craft a competitive edge stemming from identification of critical success factors from its core competencies. Such critical factors include; Organizational Culture, Management Culture and Technology and Innovation. The Kenya banking sector comprise of the Central Bank of Kenya, as the regulatory authority, 44 banking institutions, 4 representative offices of foreign banks, 6 Deposit taking Microfinance Institutions (DTMs), 118 Forex Bureaus and 2 Credit Reference Bureaus (CRBs). Out of the 44 banking institutions, 31 locally owned banks comprise 3 with public shareholding and 28 privately owned while 13 are foreign owned. The foreign owned financial institutions comprise of 9 locally incorporated foreign banks and 4 branches of foreign incorporated banks. The CBK uses a weighted composite index comprising assets, deposits, capital size, number of deposit accounts and loan accounts to classify banks into three peer groups. Based on the weighted composite index, a large bank has a market share of 5 percent and above; medium bank between 1 and 5 percent and a small bank has less than 1 percent of the market share. There are 6 large banks, 15 medium banks and 22 small banks. Ten Kenyan banks have so far established branches in East African Community (EAC) countries and South Sudan. Kenyan banks have subsidiaries with 223 branches operating in the region. The research discussed the impact on internationalization of Organizational culture, Management culture as well as Technology and Innovation as practiced by the major commercial banks in Kenya.