Strategic Responses To Changes In The External Environment: The Case Of Commercial Banks In Kenya
The changing global environment has led to increased competition, diverse product choice, rising customer demand, lower prices, rapid product innovations in addition to accelerated development and deployment of advanced Information Communication Technology (ICT) to bolster efficiency. Companies face increasingly intense competition from domestic and foreign brands resulting in rising promotional costs and shrinking profit margins. Due to changes in the marketplace, companies must adapt to the dynamic environment in order to survive. The banking sector in Kenya plays a pivotal role in the economy. The rapidly changing environment described above is especially pronounced in this sector. This state of affairs compelled the researcher to conduct this study on the strategic responses by commercial banks in Kenya to the changing environment. The study was modeled on a descriptive design. The population of interest in this study consisted of forty five commercial banks. No sampling was done, as a census of all the commercial banks operating in Kenya shall be considered. The proposed population of forty five commercial banks is small enough to accommodate a census study and give a clearer picture of the findings that can be subsequently used to arrive at justified generalizations on the findings from the study. Primary data was collected using semi- structured questionnaires. The questionnaires were personally administered by the researcher to the commercial banks managers or equivalent. The questionnaire was divided into two parts. Part A contained questions on general information of the respondents. Part B contained questions on business strategies used by the banks. Based on the findings it can be concluded that banks target a new customer segment as far as market development and growth strategy is concerned. This is followed closely by seeking additional distribution channels. It was also revealed that the least used market development strategy used by commercial banks are; opening new geographical branches nationally, Opening new geographical branches regionally, and Opening new geographical branches internationally. Based on the findings it may be recommended that commercial banks should not only concentrate on targeting new customers but also emphasize on developing extensive distribution channels in order to gain a competitive edge in the market. Commercial banks management should change their perception on cost leadership, market share leadership and technology leadership in order to take advantage of the industry growth.
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