determine the competitive strategies employed in Kenyan banking industry.

Abstract

The purpose of this study was to determine the competitive strategies used in the banking industry in Kenya using a case of National Bank of Kenya Ltd. To achieve this the study was guided by three questions: The forces of competition in the banking industry, the competitive strategies used by National Bank of Kenya Ltd and how effective those strategies were. The target population included 1079 National Bank Kenya Limited employees as at April, 2017. A sample size of 92 employees was selected for the study. The study used a semi structured questionnaire in the collection of data. A five-point Likert scale was applied for closed ended questions. It conducted a pilot study to establish the content validity and reliability of the questionnaire. Data was analyzed using Statistical Package for Social Sciences (SPSS) Version 22.0. Tables and figures were used to present the data and measures of central dispersion including mean and standard deviation were also used. The study found that on the forces of competition in the banking industry, the levels of rivalry in banking services, the advertising campaign by other commercial banks, the level of rivalry in market segments, the level of rivalry in interest rates, rivalry in new product development among commercial and the level of service improvements by other banks affect competitiveness of National Bank of Kenya. The patents at NBK, the stringent regulation by CBK, the financial resource capability of NBK, the scope of financial services offered by other banks, the size of other banks within the Industry and the level of capital requirement in the Banking industry promote the competitiveness of NBK. Flexibility in controlling the suppliers, the number of commercial banks relying on a given supplier, the bargaining power of outsourced suppliers and the competitiveness of ATM support partners affects competitiveness of National Bank of Kenya. On the competitive strategies employed by National Bank of Kenya, the study established that it had created competitive advantage by adopting the strategies cost leadership strategy, by offering low cost prices of their products and services, differentiation strategy and focusing on a certain type of market niche. The bank used and emphasized on the application of cost leadership strategy to a large extent. The bank also uses differentiation. whereby it strives to be unique in the products they offer and market penetration strategies. The study concluded that the Bank faced threats of new entrants and there was high rivalry among commercial banks forcing National Bank of Kenya to use market intelligence to differentiate its products and services. The study also concluded that National Bank of Kenya had created competitive advantage by adopting the strategies cost leadership strategy, by offering low cost prices of their products and services, differentiation strategy and focusing on a certain type of market niche and that that strategies are essential for effective functioning of any organization. The study recommends that commercial banks should focus on developing and implementing effective strategies that will enable them survive in the competitive environment they operate.