Competitive positioning and performance of commercial

Abstract

The banking Industry has grown immensely in the last 10 years, with several banks entering the market and others merging or acquiring smaller banks to become more competitive. Environmental factors have therefore made the Banking Industry in Kenya very competitive. This research project sort to determine how different banks are positioning themselves in the Banking Industry. It also sort to establish whether there is a relationship between competitive positioning and performance of Kenyan banks. During the study, a semi-structured questionnaire was distributed to the 43 commercial banks in Kenya which were categorized into three tiers based on the banks assets. The data was collected using the "drop and pick later" method and by emails. There was a response rate of 60%.This data was then analysed using the Statistical package for Social Sciences (SPSS) and a Chi-Square test performed to establish the relationship between competitive positioning and performance of banks using the return on average core capital as the performance indicator. The results were then presented using various modes including frequencies, means, standard deviation, percentages and pie charts. The study found out that the most competitive banks are using a mix of cost and differentiation strategies, with the impact of differentiation, technology and service being the greatest. The study also found out that there is a mild relationship between the competitive strategy chosen by a bank and its performance. This means that there are other factors affecting performance which were not within the scope of this study. It would be interesting for other scholars and bank management to find out which other factors affect performance of banks. I would therefore recommend a study to be ') carried out to determine what factors other than competitive positioning needs to be considered by banks to make sure that there performance is enhanced in the very competitive banking industry