Competitive Strategies and Performance of Commercial Banks in Kenya
Firms ability to survive in a competitive business environment is be dependent upon their ability to formulate and implement appropriate strategies that differentiate the firm product offering with the competitors. As the level of competition intensifies, many business units seek profitable ways of differentiating themselves from competitors and the Kenyan banks are not exceptional. The time when banks waited for consumers to come to them and offer similar services to the customers is way gone and instead, they need to identify their niche market and always respond fast enough to the demands of the market. Consequently, all banks should develop appropriate strategies which eventually lead to performance. The objective of this study was to determine the competitive strategies and performance of commercial banks in Kenya. Primary data was collected using questionnaires. The data collected was analyzed by the use of regression analysis, mean and standard deviation while presentations was done using tables, graphs, frequencies and percentages. The findings of the study were that the challenges that impact the banks include competition from other banks, increase in capital requirements by the regulators and cost of operations. The source of competitiveness for the banks include a differentiated product range, a competent work force and internal resources owned by the banks. The areas in which the competitive strategies had influenced most were increased level of competitiveness and increased market share and revenues. The current challenges that the banks face include lack of skilled manpower to implement effectively the bank strategies, lack of top management support to implement the strategies and frequent changes by the regulators. The findings further showed that despite existence of several opportunities, the banks need to re-examine their employee training needs with an aim of equipping them with appropriate skills to guide the organization to fully automation of services. The study concludes that sustainable competitiveness of a firm is crucial to the banks performance and therefore the use of the various competitive strategies by the banks to deal with threats resulting from the rivalry from existing competitors and powers of the suppliers indicates the banks willingness to ensure that they protect their business territory and survive in the dynamic environment. The study recommends that the operational risks that are as a result of the regulatory moves such as capping of interest rates should be an eye opener to the banks and therefore they should be sensitive to the cries of the consumer and be responsive to their needs. Otherwise, a failure to respond accordingly will invite intervention of the government and the other regulators at the same time.
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