COMPETITIVE STRATEGIES AND PERFORMANCE OF SELECTED COMMERCIAL BANKS IN KENYA

Festus Mutei Mulu

Master of Business Administration (Strategic Management Option), Kenyatta University

Mr. Shadrack Bett

Business Administration, School of Business, Kenyatta University.

CITATION: Mulu, F.M & Bett, S. (2019). Competitive Strategies and Performance of Selected Commercial Banks in Kenya: International journal of Economics and Finance. Vol. 8 (4) pp 26 – 39.

ABSTRACT

Performance is multidimensional involving elements such as: economic performance sales, productivity, profit, social performance, employee and customer satisfaction, legal performance obeying of laws, social performance adoption of conduct norms based on ethical considerations. A competitive strategy is the search for a favourable competitive positioning in the industry. It is concerned with how a company can gain advantage through a distinctive way of competing. It aims at establishing a profitable and sustainable position against the forces that determine industry competition. This study sought to establish the competitive strategies and performance of selected commercial banks in Kenya, performance of commercial banks has continued to be impressive. The Kenyan Government will gain from this study in formulating policies and measures that would stifle competitive strategies on performance of commercial bank in Kenya hence stimulate customer’s satisfaction generally. Banking organisations will benefit by learning how to implement competitive strategies on performance of banking sector of commercial bank in their institutions, evaluate and review their performance of banking practices as tools for competitiveness in the face of the changing business environment. The study will enhance the work of other scholars on the competitive strategies on performance of banking sector of commercial bank in Kenya. The study covered the 43 commercial banks in Kenya. The target population were 129 managers which included 43 Operational managers, 43 Marketing managers, and 43 General Manager The study adopted a descriptive research design, the research study used primary data the primary research data was collected from the sample size population using a questionnaires. The study used stratified random sampling procedure and simple random sampling to select a sample that represents the entire population. The research study used primary data which was collected from the target population using a questionnaire. The questionnaire had both open and close-ended questions. Data analysis was done using SPSS. Multiple Regression Analysis, ANOVA data analysis methods was applied to analyze the data. The regression findings in table 4.8 has established that taking all factors into account (Positioning strategy, Cost leadership strategy, Differentiation strategy and Innovation strategy) constant at zero Performance of Commercial Banks in Kenya led to 1.349. The study found out that competitive strategies affects performance of selected commercial banks in Kenya. The study established that the major strategies that affects commercial banks performance include; Positioning Strategy, Cost leadership strategy, Differentiation strategy then Innovation Strategy. the findings indicated that Positioning Strategy have the highest influence on Performance of commercial banks in Kenya followed by Cost leadership strategy, Differentiation strategy then Innovation Strategy had the least influence on Performance of commercial banks in Kenya. All the variables were significant as their P-values were less than 0.05. The study concludes that location of the firm in terms of geographical, technological and communication is important in fostering performance; the study also concludes that innovation strategies affects performance of commercial banks to a moderate extent. The study recommends that the banks should make use of innovation strategy among other strategies to increase their competitiveness in terms of product innovation, customer satisfaction and market orientation. These strategy will ensure that internal strengths of the banks are utilized for the betterment of the banks which will lead to high performance.

Keywords: Competitive Strategies; Performance; Selected Commercial Banks; Kenya

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