ABSTRACT
Commercial banks in Kenya and especially Mombasa County are facing firm rivalry demanding the use of competitive strategies so as to pledge their performance. As such, most of the commercial banks are deliberating on ways, with competitive strategies being one of them to arrive a market and afterwards make sense of and ensure its aggressive position. Therefore, this study aimed at establishing the effect of competitive strategies on the performance of commercial banks in Mombasa County. The specific objectives were; to determine the effect of cost leadership strategy on the performance of commercial banks in Mombasa County; to examine the effect of differentiation strategy on the performance of commercial banks in Mombasa County; and to determine the effect of focus strategy on the performance of commercial banks in Mombasa County. The study was anchored on the theory of resource-based view, strategic balancing and game theory. A cross-sectional survey design was employed in this study. The target population of this study was 280 commercial banks staff in Mombasa County. The sample size was eighty-four after adopting a stratified random sampling technique to select 30% of the target population. The study made use of primary data collection. A structured questionnaire was used to collect data from the sampled respondents. Data was collected through use of drop and pick up later method. Quantitative and qualitative data was used in data analysis. The data was analyzed using the Statistical Package for Social Sciences (SPSS) Version 24.0 and presented in the report in the form of tables, bar charts and graphs. The study established that despite the challenges in implementation, competitive strategies are very important for banks to remain competitive in the market. The study further concluded that understanding the market structure is a key determinant for the successful implementation of competitive strategies. Banks following a cost leadership strategy realize statistically significant superior performance compared to those that pursue broad differentiation and focus strategy which reports above-average returns. The differentiation strategy may be difficult to implant in a service industry since services are easily copied and fruitful options may be limited due to the simplicity and imitability of financial services unless the target market is highly sophisticated and knowledgeable. The researcher highly recommends that commercial banks consider shifting more of their focus on the cost leadership strategy in order to realize superior performance. This study recommends for further research to be conducted on other dimensions of competitive strategies, for instance, to determine how external and /or internal environmental factors have influenced the implementation of competitive strategies & thus the performance of commercial banks in Kenya.
