ABSTRACT

The current business environment is relatively dynamic and competitive. This has necessitated financial institutions to design strategies that ensure they maintain their competitive position in a sustainable manner. These demands mainly come from their customers, who in a rapidly advancing technological age have access to information that has changed the dynamics and transactions in the banking industry. The response to these demands determines the strategies used in achieving the desired optimal strategic advantage and business performance. The study therefore sought to examine the association between competitive strategies and performance of commercial banks in Uasin Gishu County. Specific objectives included; to find out the influence of differentiation strategy on performance of commercial banks in Uasin Gishu County. To determine the effect of cost leadership strategy on performance of commercial banks in Uasin Gishu County, to establish result of focus strategy on performance of commercial banks in Uasin Gishu County and to investigate the influence of product innovation strategy on performance of commercial banks in Uasin Gishu County. The findings from this study are useful for the banking sector players especially banking executives in understanding their market and devising strategies to remain resilient and competitive in the face of growing industry challenges, both internal and external. This research was based on theories of resource based view, open systems, strategic balancing, Porter's five forces model and theory of performance. These theories and variables of the study were related with the help of a conceptual framework. The study adopted descriptive research design. Population for the study comprised of 37 commercial banks and their management staff. The sample size was 34 commercial banks from which 102 respondents who were selected through purposive, stratified and simple random sampling. Data collection was done using structured questionnaires. The collected data was coded, cleaned and tabulated through the use of SPSS version 21 software. Descriptive and inferential data analysis including regression analysis were used to analyse the data. Pearson’s Product Moment Correlation Coefficient was also used to determine whether there is significant relationship between differentiation strategy, cost leadership strategy, focus strategy and product innovation strategy and performance of commercial banks in Uasin Gishu County. The results of the correlation analysis indicated no evidence of multicollinearity among the variables. Regression results indicated that the use of differentiation, cost leadership, focus and product innovation strategies had a positive and statistically significant influence on the performance of commercial banks with coefficients of (B=0.560, p