Strategic Management Practices and Performance of Commercial Banks in Mombasa City, Kenya

Abstract

Kenya’s commercial banks are well renowned for significantly contributing to the overall economic growth of the nation and for the attainment of Vision 2030. They have, however, demonstrated poor performance as seen by diminishing profitability, low customer satisfaction, a smaller market share, and a rise in loans that are not performing. The research set out to ascertain the impact of strategic management practices on the Performance of Commercial Banks in Mombasa City, Kenya. It also employed the use of the following theories; Resource Based View, McKinsey 7S model, Resource Dependence Theory and the Balanced score card. Descriptive research design was used in the study with a target population of 110 staff members from 22 Commercial Banks in Mombasa City. The research also used a census survey of five top management staff collected from each Commercial bank under the study. The key data collection tools that were used included self-administered questionnaires with closed-ended questions and the response rate achieved was 95%. Validity types that were used included face, content and construct validity while Cronbach alpha with a cut-off point of 0.7 was utilized to examine the reliability of the data and the research achieved a score of 0.839. A comprehensive variance analysis was conducted, and the results demonstrated that the model was statistically significant at 95% confidence level because the P – Value was 0.000b which is greater than 0.05. The study model’s R - Squared was able to expound the 41.8% of the variances in the success of Commercial Banks in Mombasa City, Kenya. Inferential analysis study results found that two variables; strategy formulation and strategy implementation are highly important in influencing the performance of Commercial Banks in Mombasa City, Kenya. However, strategy evaluation and control were not found to be highly important. As a result, the study thus recommends that strategy formulation and strategy implementation which were found to be statistically significant should be done by the Commercial Banks in Mombasa City, Kenya to improve their performance. In addition, strategy evaluation should not be ignored because it takes stock of what has been achieved in the strategy formulation and strategy implementation stages. Given that the model utilized demonstrated a significant influence on the Performance of Financial Institutions in Mombasa City, Kenya with a P-Value is 0.000^b and R – Squared of 41.8 %, it is therefore recommended that Strategic Management Practices are crucial for the Performance of Commercial Banks. In conclusion, the top management of commercial banks in Mombasa City, Kenya will particularly benefit from this research by utilizing the strategic management practices to improve results