Diversification strategy and perfomance of Kenya Commercial Bank Group

Abstract

Organizations adopt diversification strategy for several reasons. Some include increasing their profits to supplement their income and to take advantage of emerging opportunities in other markets and regions. The purpose of this study was to establish the effect of the diversification strategy on the performance of Kenya Commercial Bank group. Both primary and secondary data were collected by the researcher. Primary data was successfully collected from five senior managers of the bank, whereas secondary data was collected from the audited financial reports of Kenya Commercial Bank group limited. The study took the form of a case study of KCB group. Trend and content analysis were used to establish the effect of diversification on performance. The findings revealed that Kenya Commercial Bank group has adopted three main diversification strategies. The first form of diversification is geographical which involves opening of wholly owned subsidiaries in the region. The other is product diversification where the bank has managed to unveil several products to its customers to meet their needs. The bank also engages in unrelated diversification such provision of insurance services through agency. Diversification has a positive effect on the performance of KCB group. As the income from diversification increases, the total profits of the banks have also registered significant increment. In the course of conducting the research, limitations encountered were inability to access some financial information since the respondents considered it very confidential. In addition, some of the respondents did not provide some information in time due to their busy schedules. Some of the recommendations for further research proposed were that, the bank should explore more ways and forms of diversification in order to enhance its performance. It too recommended a similar study to be done on other organizations in the banking industry.