Value Chain and Competitive Advantage in Commercial Banks in Kenya

Abstract

This study sought to establish the application of value chain as a competitive advantage tool in Kenya’s banking sector. A value chain is a management tool that helps to analyze specific activities through which the firm can create value and have competitive advantage. The chain uses industry attractiveness as a determinant of profitability with an ultimate goal to maximize value creation while minimizing cost. Competitive advantage is gained when a firm moves into position where it has an edge in coping with the market forces. Kenya’s banking sector is currently facing stiff competition from micro-finances and telecommunications industry and the only way that a firm will stand this competition and remain competitive is by capitalize on the strengths and reduce the weaknesses. The value chain identifies areas of weaknesses which once minimized the firm can easily maximize on margins. Measures of central tendency and content analysis were used to analyze the data and the inferences were made systematically and objectively identifying the application of value chain in banking sector. This study established that value chain is applied to a large extent in banking sector and researcher came up with a value chain for the banking sector. The study was limited to confidentiality of information in banking sector where respondents held information they thought was confidential. The researcher recommended thorough training of employees, talent retention and relationship management be applied in banking sector in order to cut on operational costs hence increase profitability.