Competitive Advantage Practices and Performance of Commercial Banks in Nairobi City County, Kenya
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Date
2023-11
Authors
Kinoti, Purity Karwitha
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Over llht‘ recent years, competition in the Kenyan banking industry has increased,
resulting to various banks adapting key practices to increase their competitive
adv;}nlugu‘. Ilcn‘cc, this research focused on the competitive advantage practices and
p_crlornmncu of commercial banks, in Nairobi County Kenya; a case of Equity Bank,
l\cn:vn Commercial Bank, Absa and Family Bank. Over the recent past, the
p_cr!gr'nmncc 9f commercial banks has been influenced by different factors such as
hq_‘“dl‘()’, capital inadequacy and the efficiency of operational costs. The study’s
objective was; to find out how differentiation strategy, innovation, focus strategy and
cost ]ca'dcrshlp Some of the theories applied include porters five forces, resourcebased
view, stakeholder, and balanced scorecard model. The research applied a case
s(udx method, with detailed questionnaires which examines the respondents on
practices used by Commercial banks in Nairobi County. Also, it examined on how
such practices enhance performance in the county. The summary of the regression
model correlation coefficient explains the interdependence between the independent
variables, - differentiation, focus strategy, cost leadership, innovation and the
dependent variable, which is performance. Key respondents of this study were
employees and customers of the sampled Commercial banks in Nairobi County, with
a focus of Branch managers, regional managers and departmental managers. Data was
collected using questionnaires, with open ended questions. Reliability test was
undertaken, and analysis done through multiple regression and inferential statistics.
The expected outcome is that the four main practices would become useful to Equity
Bank management, future researchers, and the government. Differentiation strategy,
innovation, focus strategy and cost leadership was found to have a positive significant
influence on the performance of commercial banks in Nairobi City County, Kenya.
The study concluded that commercial banks uses differentiation strategy to provide
customers with something unique, different and distinct from items their competitors
may offer in the marketplace. Innovation plays a key role in introducing novelty to
existing product lines or processes, leading to increased market share, revenue, and
customer satisfaction. Focus strategy identifies the market segments where the bank
can compete effectively. Implementing Cost Leadership Strategy creates a different
market size for each product and each industry. The study recommended that the
commercial banks needs to produce or design extremely unique or distinctive
products or services that create increased value for the consumer. Commercial banks
should ensure that they truly understand their customers’ needs; establish
collaborative relationships with their business partners, allocate resources for training
and development etc. The commercial banks should use customer satisfaction ratings
from past months what led to high scores, and what could use improvement 50 as to
develop a proper focus strategy and also consider the demographics of thgir current
clientele.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of The Requirements for the Award of The Degree of Master Of Business Administration (Strategic Management Option) of Kenyatta University, November, 2023
Keywords
Competitive Advantage Practices, Performance, Commercial Banks, Nairobi City County, Kenya