Factors Considered by Commercial Banks in Kenya When Forming Strategic Alliances

Abstract

This study was conducted to investigate the factors that influence the formation of strategic alliances by commercial banks in Kenya. The objectives of the study were to determine the type of strategic alliances beneficial to the commercial banks and to evaluate the importance of strategic alliances by commercial banks in Kenya. This study helped to strengthen the banking industry by providing information on what makes companies develop positive perceptions to alliances. The study is also important to the government in the determination and establishment of a regulatory framework for the banking industry in Kenya. The study is useful to the government in policymaking regarding alliances. The research design used in this study was a descriptive survey. The population of the study comprised of all 47 commercial banks in Kenya. The study collected both primary and secondary data. A semi-structured questionnaire comprising both open-ended and close-ended questions were be used to collect data. The questionnaires will be administered using the drop and pick later method Qualitative data was coded and organized into themes and used description of behavior and context in which it occurs. Quantitative data used percentage (%) means and frequencies. Qualitative data was partly used to generate quantitative data. Both were finally integrated to form the report. The study findings indicated that lack of strategic fit, commitment and cultural differences respectively as very important factors leading to strategic alliance failure. From the findings of this study, prospects for growth both in market share and productivity is a key factor banks consider when entering strategic alliance. Trust is a cornerstone of strategic alliance success and choosing the wrong partner is a precursor for failure. Strategic alliances have become the centre piece for competitive edge. There is indication that strategic alliances are increasing in size and further literature show that there is an inclination towards entering new markets in strategic alliances. Thus there is need to earnest the cooperative elements of strategic alliances as these networks evolve into networks of technical, financial and social interactions. Sustainability of these corporations is good for the economy as a whole.