Effect of Strategic Alliances on the Growth of Kenya Commercial Bank Group

Abstract

Intense competition in the marketplace is forcing banks to examine different ways by which they could enhance or retain their competitive edge. Strategic alliance is one such option through which a bank can leverage its resources to emerge as an effective competitor. Such alliances are burgeoning in the Banking industry, which is characterized by rapid changes in service delivery, customer demands and globalization (Rai, 1996). This study was based on the following objectives; To identify the strategic alliances at Kenya Commercial Bank Group Limited and to establish the effects of strategic alliances on the growth of Kenya Commercial Bank Group Limited. This study used a case study research design. Data was both primary and secondary sources. Primary data was obtained using an interview guide and secondary data was obtained from banks strategic plans and annual reports. Responses were analyzed using content analysis. The study found that alliances provide opportunity for participating banks to tap into the resources, knowledge, capabilities and skills of their partners. They offer potential for a commercial bank to leverage its resources capabilities. Finally, the study established that strategic alliances are positive and significantly correlated with banks competitiveness in terms of improving the bank‘s ability for profit maximization, expanding market position as a result of growth in customer base, and increasing sales volume. The study recommends that the commercial bank group should include competitive intelligence in its strategic alliance practices. Especially the impact of technological intelligence will have huge benefits in the level of automation, cost reduction and efficiency in service delivery that the commercial bank group can achieve. The commercial bank group should therefore adopt instruments to gather market intelligence, product intelligence, technological intelligence, and strategic alliance intelligence to complement its strategic alliance practices to ensure it positions itself strategically as the most competitive commercial bank in terms of innovation and customer value-add as compared to rivals