Competitive Strategies and Performance of Commercial Banks in Mombasa County, Kenya

  • Joseph Mariga Nyachwaya
  • James Maina Rugami
Keywords: Cost Leadership Strategy, Differentiation Strategy, Focus Strategy, Competitive Strategies, Performance of Commercial Banks in Mombasa County

Abstract

Commercial banks in Kenya and especially Mombasa County are facing firm rivalry demanding the use of competitive strategies so as to improve their performance. Most of the commercial banks are deliberating on ways to enhance their performance, with competitive strategies being one of them to arrive a market and afterwards make sense of and ensure its aggressive position. Therefore, this study aimed at establishing the effect of competitive strategies on the performance of commercial banks in Mombasa County. The specific objectives were to determine the effect of cost leadership strategy, differentiation strategy and focus strategy on the performance of commercial banks in Mombasa County. The study was anchored on the theory of resource-based view, strategic balancing and game theory. A descriptive research design was employed in this study. The target population of this study was 280 commercial banks staff in Mombasa County. The sample size was eighty-four after adopting a stratified random sampling technique to select 30% of the target population. The study made use of primary data collection using questionnaires. The data was analyzed using the Statistical Package for Social Sciences (SPSS) Version 24.0 and presented using tables. The study established that despite the challenges in implementation, competitive strategies are very important for banks to remain competitive in the market. The study further concluded that understanding the market structure is a key determinant for the successful implementation of competitive strategies. Banks following a cost leadership strategy realize statistically significant superior performance compared to those that pursue broad differentiation and focus strategy which reports above-average returns. The researcher highly recommends that commercial banks consider shifting more of their focus on the cost leadership strategy in order to realize superior performance. To succeed at offering the lowest price while still achieving profitability and a high return on investment, commercial banks are recommended to operate at a lower cost than its rivals, this could be possible through some fairly unique capabilities to achieve and sustain their low-cost position. The study also recommends strategy planners to integrate and embrace the differentiation strategy which will enable them to differentiate in various methods such as new technology, brand image, design, network customer service or the number of features. Further, commercial banks are recommended to centre on the existing markets and products or services; they can create competitive edge by getting the best mix between existing products and existing markets.

Author Biographies

Joseph Mariga Nyachwaya

Correspondent Author, School of Business, Kenyatta University, Kenya

James Maina Rugami

Lecturer, School of Business, Kenyatta University, Kenya

Published
2020-05-31
How to Cite
Nyachwaya, J., & Rugami, J. (2020). Competitive Strategies and Performance of Commercial Banks in Mombasa County, Kenya. International Journal of Business Management, Entrepreneurship and Innovation, 2(1), 65-74. https://doi.org/10.35942/jbmed.v2i1.109