Responses by commercial banks operating in Kenya to changes in the environment: a case of National Bank of Kenya Limited

The objectives of the study were to identify changes in the external \nenvironment affecting National Bank of Kenya and to establish the \nresponse of National Bank of Kenya to the changes in the competitive \nenvironment, and to document the relevant responses made by the bank. \nIn order to meet these objectives, the pertinent primary and \nsecondary data was collected. Primary data was obtained from personal \ninterviews with the respondents who were responsible for developing the \nstrategic responses by NBK to its changing competitive situation. \nThe same research interviewees have also been overseeing the \nimplementation of these responses. Secondary data was collected from \nvarious sources. The data was then analyzed qualitatively. \nThe study established that the changing competitive situation in the Kenyan \nbanking industry has posed some challenges to NBK. These challenges \narose from the changes in the business environment in terms of economic ,> \ndecline, liberalization; legislative changes, incressing level of education and \ntechnological advancements. The management of these changes has been \nmade more difficult by the presence of all five forces that influence the \ncompetitive situation in an industry. These forces are barriers to entry, \nrivalry within the industry, threat of substitutes, power of buyers and power \nof suppliers (Porter, 1980). v \nAccording to the research findings, NBK has addressed its changing \ncompetitive situation through restructuring, marketing, information \ntechnology, re-capitalization and culture change among other responses. \nThese have made NBK more competitive but have not adequately enabled \nthe bank to fully match its environment. \nHowever, most of the respondents believe that NBK has the necessary \ncapability to effectively respond to its changing competitive environment. \nThis study was based on four major strategic response variables. A further \n- study can, therefore, be carried out on the other responses that NBK has \nmade to address its changing competitive situation. Alternatively, a cross sectional \nsurvey covering the whole industry can be undertaken to \ndetermine the strategic responses by the banking industry. This would give \nan indication of the responses made by banks, in Kenya, to their changing \ncompetitive situation especially with the increasing growth, in the number \nand size, of the non-bank financia" l institutio-n.s. This, then, will allow for industry generalizations to be made.