Strategic responses to a changing competitive environment: the case study of Kenya commercial bank

Abstract

Over the last 10 years, there have been many changes in the Kenyan economy. These changes have had an impact on all industries within the country. The nature of competition within each industry, for instance, has changed such that organisations have had to find ways of coping with, or pre-empting, the competitive forces facing them. The banking industry has not been spared from the impact of these changes. This research project was a case study on Kenya Commercial Bank (KCB). The two objectives of the study were to identify the challenges faced by KCB in the context of the changing competitive environment, and to document the relevant responses made by the bank. In order to meet these objectives, the pertinent primary and secondary data was

collected. Primary data was obtained from personal interviews with the respondents who were responsible for developing the strategic responses by KCB to its changing competitive situation. The same research interviewees have also been overseeing the implementation of these responses. Secondary data was collected from various sources. The data was then analysed qualitatively. The study established that the changing competitive situation in the Kenyan banking industry has posed some challenges to KCB. These challenges arose from the changes in the business environment in terms of economic decline, liberalisation, legislative changes, increasing level of education, and technological advancements. The management of these changes has been made more difficult by the presence of all five forces that influence the competitive situation in an industry. These forces are barriers to entry, rivalry within the industry, threat of substitutes, power of buyers, and power of suppliers (Porter, 1980) . KCB, according to the research findings, has addressed its changing competitive situation through restructuring, marketing, information technology, and culture change among other responses. These have made KCB more competitive but have not adequately enabled the bank to fully match its environment. However, most of the respondents believe that KCB has the necessary capability to effectively respond to its changing competitive environment. This study was based on four major strategic response variables. A further study can, therefore, be carried out on the other responses that KCB has made to address its changing competitive situation. Alternatively, a cross-sectional survey covering the whole industry can be undertaken to determine the strategic responses by the banking industry. This would give an indication of the responses made by banks, in Kenya, to their changing competitive situation especially with the increasinq growth, in the number and size, of the non-bank financial institutions. This, then, will allow for industry generalisations to be made.