Competitive strategies adopted by micro-finance Institutions in Kenya

Abstract

The choice of a competitive strategy is critical for the survival and success of any organization. Superior performance can be achieved in a competitive industry through pursuit of the right strategies. The MFI industry has witnessed a rise in the number of MFIs which are all competing for the same market. Following the changes in the environment, MFIs have been forced to come up with competitive strategies hence this study sought to establish the competitive strategies employed by microfinance institutions in Kenya. Generic strategies formed the basis upon which the objective was investigated. For the above objective to be achieved a cross-sectional survey research design was used and primary data was collected. Semi-structured questionnaires were administered mainly by “drop and pick later” method. The population of interest in this study included all the 53 members of the Association of Microfinance Institutions of Kenya (AMFI) as at 31st December 2011. The respondents were mainly the C.E.Os, Operations managers and other senior managers of the MFIs. Descriptive statistics was used to analyze the data which confirmed the adoption of various competitive strategies by MFIs in Kenya. The research findings established that the competition in the MF sector is high. It also confirmed that MFIs in Kenya applied generic strategies. All the competitive strategies investigated namely; cost leadership, differentiation, focus, operational excellence, customer intimacy and product leadership have all been adopted to a great extent. In the light of the findings, the researcher recommends that microfinance institutions have to keep differentiating their products and services from those of other MFIs to achieve competitive advantage.