Factors Influencing The Competitiveness Of Commercial Banks In Kenya
Muthengi, Boniface M
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In highly dynamic and uncertain environments, competitiveness must be regarded as a multi-dimensional construct comprising customer values, shareholder values and an organization’s ability to act and react. Each of these dimensions must be looked at relatively rather than in absolute terms. The world's economic, social and technological changes with the acceleration of globalization, international trade relations, and the removal of borders between countries, such as communication and transportation technologies have revealed the need for continuous self-assessments of the organizations. In order to be relevant to the changing and developing world, to obtain a larger share of growing markets, convert threats to opportunities and to survive have been the primary objectives for companies. The companies being managed for these purposes will gain competitive advantage. However, to make this sustainable and to increase competitive advantage of firms, firms must spend an intense effort. To achieve a sustainable competitive position can be realized through firms and sector specific strategies. The objective of the study was to determine the factors influencing the competitiveness of commercial banks in Kenya. The research design adopted was cross sectional survey research design. The population of the study was all the forty three commercial banks operating in Kenya. The study used primary data which was collected using self-administered questionnaires. The data was analyzed using the Statistical Package for Social Sciences (SPSS) software. The findings of the study were that internal factors, demand factors, pricing strategy, bank strategy, structure and rivalry influenced the bank competitiveness while government influence was minimal. The internal factors influence was through sound financial strength to fund the necessary strategic changes, high utilization of communication and information technologies, high orientation on cost reduction or on cutting production costs, innovation, technological advancement, effective management of organizational activities, management professionalism, good employee-employer relations .Efficient use of the decisive factors of bank development and that the banks offers products and services at lower cost than competitors.. The demand factors resulted in competitiveness through provision of a satisfactory return on investment in the short, medium and long terms to its shareholders, adopt delivery and distribution strategy to attract customers, extent of competition in the sector affect the bank competitiveness, nature of competitive advantage (production resources, efficiency, innovation). Pricing strategy was found to have influenced the bank competitiveness through fair bank chargers, fee implementation and interest rates charged and paid, assessing each competitor’s cost structure and relate this to their prices and having a well planned strategy, to establish policies and to constantly monitor prices and operating costs to ensure profits. The bank strategy, structure and rivalry resulted to the bank competitiveness as a result of differentiation of products, competitiveness of suppliers, strategies applied by the bank, qualification of suppliers and certification. It is therefore recommended that they continue investing in coming up with unique products so that they can differentiate themselves. The commercial banks should ensure that before pricing its products, they should study what the market charges so that they set at a price which is acceptable to the current and potential customers. Although the commercial banks use technology to attract customers, they should embrace the concept whole heartedly as the next battle for the banks will be the technology. The study has established that the commercial banks uses several strategies in order to ensure that they achieve competitiveness and it is recommended that the banks should use only those strategies which would ensure that they maximize the advantage in order to reduce costs to manageable levels.