Strategic planning practices and performance of Commercial Banks in Kenya

Abstract

The study was carried out to determine the relationship between strategic planning practices and performance of commercial banks in Kenya. The objectives of the study were; to establish the strategic planning practices adopted by commercial banks in Kenya and secondly to determine the extent to which the strategic planning practices adopted by a bank influences the banks performance. The study was carried out using a survey and managed to study thirty eight banks in Nairobi where the respondents included officers in charge of strategy in these banks. Primary data was collected using questionnaires while secondary data was collected by scanning company records. The analysis was done using percentages to determine demographics such as number of years of service at the bank, response rate and frequency of review of the vision and mission. Mean scores were computed to determine the extent to which strategic planning practices were adopted by commercial banks. Mean scores were also used to determine perceived ```````````````````organization performance and perceived market performance. Correlation coefficient was computed to determine the extent to which strategic planning practices adopted by a bank influences their performance The finding was that strategic planning practice has a positive correction with performance where a proper plan is in place and has a direction, the organization performs. However a good strategy poorly implemented leads to disaster. Therefore a strategy needs to be well devised by selling clear direction and scope of the organization. All the banks in Nairobi are involved in strategic formulation, implementation and evaluation. Strategies are good and act as a road map guiding the bank through the competitive environment. However the bank performance is not uniform. The banks attract different class of customers, differ in deposits, in customer retention among others. This means that the driving force toward achievement of the desired level of performance is the manner in which the strategy is practiced.