EFFECT OF COMPETITIVE STRATEGIES ON FINANCIAL PERFORMANCE OF SACCOs IN KENYA: A CASE OF NAROK TOWN

Abstract

The development of Savings and Credit Cooperatives (SACCOs) in Kenya has witnessed significant productivity, with the World Council of Credit Unions acknowledging Kenya's SACCO sector as the most robust in Africa and the seventh fastest-growing globally. This surge in participation has intensified competition within the sector, prompting the need for comprehensive exploration. While prior studies have delved into the impact of competitive strategies on SACCOs' financial performance, research dedicated specifically to SACCOs in Kenya remains relatively limited. In response, this study undertook a detailed investigation into the effect of competitive strategies on the financial performance of SACCOs in the vibrant setting of Narok Town. It evaluated the effects of low-cost strategies, examined differentiation, and explored the impact of focus strategies. The study was guided by, Michael Porter's competitive strategies theory, Bowman's strategy clock, the Resource-based theory, and the Contingency theory. The study used descriptive research design and targeted ten registered SACCOs in Narok Town, Kenya. The study respondents comprised of board of directors and the SACCO’s branch managers. Census was used to select the study sample size which composed of 100 respondents. Data analysis involved descriptive and inferential statistical analysis, including regression and correlation analyses. The findings revealed that the adoption of low-cost strategies (β = 0.321, p < 0.05), differentiation strategies (β = 0.209, p < 0.05) and focus strategies (β= 0.117, p< 0.05) had a significant positive effect on financial performance of SACCOs in Narok Town. Consequently, the study concludes that implementing and integrating competitive strategies is vital to effectively enhance the financial performance of SACCOs, particularly within the competitive market environment prevalent in Narok Town. The study therefore recommends that SACCOs operating within Narok Town proactively consider adopting a holistic approach, strategically combining low-cost strategies, differentiation tactics, and focused strategies to effectively maintain a competitive edge and achieve sustainable financial performance amidst the dynamic and competitive market landscape.