EFFECT OF COMPETITIVE STRATEGIES ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Authors

  • Jeffrey Otieno Ooko School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya
  • Winifred Karugu School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya

Abstract

Business banks in Kenya are confronting firm challenges requiring the structure of focused systems to ensure their exhibition. Banks ought to along these lines not just concoct methodologies to counter the challenge yet additionally measure the impacts of the joined procedures that they utilize. The motivation behind this examination was to evaluate the effect of competitive strategies (market focus and differentiation strategies) on financial performance of commercial banks in Kenya focusing on tier one banks categorized as large. The theories that anchor to the study were Dynamic Capabilities Theory and Competitive Theory. A descriptive research design was adopted by the study where the 9 tier 1 commercial banks was focused on. The 62 Tier 1 bank’s branches in Nairobi CBD, Kenya were targeted where two employees in management positions from the department of digital banking and operations were targeted from each bank making the sample size to be 124. Through a structured questionnaire, data was collected on the independent variables while secondary data on financial performance was obtained from the Central Bank of Kenya reports. Using Statistical Package for Social Sciences v 24, this data was analyzed through descriptive and inferential analysis to establish the relationship between the variables. The results indicated that both strategies, that is, Market focus and differentiation had a positive and significant effect on financial performance of commercial banks in Kenya. This led to the recommendation that the management of tier 1 commercial banks as well as other commercial banks and players in the banking industry to increase innovations such as new and improved services, new processes and new marketing methods by investing more in it in order to increase financial performance significantly. There is also a need to allocate more resources to advance market focus strategy by offerings service to suit unique needs, particular segments and offering product for particular segments and needs. Doing that would lead to a significant improvement in financial performance of the commercial banks.

Key Words: Market Focus, Differentiation Strategies, Financial Performance, Kenya

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Published

2020-11-10

How to Cite

Ooko, J. O., & Karugu, W. (2020). EFFECT OF COMPETITIVE STRATEGIES ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA. Journal of International Business, Innovation and Strategic Management, 4(3), 31–54. Retrieved from https://www.jibism.org/core_files/index.php/JIBISM/article/view/136