Strategic Management Practices On The Perfomance Of Commercial Banks In Thika Town, Kenya

ABSTRACT

The significance of strategic management in any company can be attained by having an

extensive analysis of strategic management practices and the organization’s performance. Using

strategic management will cause a better effectiveness within companies. Additionally, the

strategy will assist companies in obtaining competitive advantages in the market, thereby,

outperforming their competitors. This study analyzed the effect that strategic management

practices have on the performance of commercial banks in Thika town, Kenya. The research

assessed the outcomes of formulating strategies on the performance of commercial banks in

Thika, with the aim of determining effects of strategy implementation on performance of

commercial banks in Thika town and the effect of strategy evaluation and control on the

performance of commercial banks in Thika town. Organizational performance was assessed

using non-financial and financial indicators. The research employed a census study method to

select all the 14 active commercial banks in Thika town. This research chose Managers in-charge

of Finance, Administration, Institutional Banking, Retail Banking and overall branch managers

from each of the 14 commercial banks in Thika town, as the class of respondents from each bank

which led to a total of 70 respondents, applicable data was gathered from 60 respondents from

the commercial banks (representing86%) response rate. Equally primary and secondary statistics

were applied. Questionnaires were utilized in gathering primary data. The research tested

reliability by Cronbach’s Alpha Reliability test while content validity was evaluated using expert

outlook. Secondary data was gathered from the yearly financial reports, website, journals, and

other bank reports. The research used both descriptive and inferential statistics in analyzing the

study and correlation and regression examination as significant logical models. A descriptive

research design was used for this study and data was gathered using a questionnaire for

collection of quantitative data. The data collected was input in excel and cleaned. Tables and

charts were developed using MS excel. Data was then exported to SPSS Version.21 for analysis.

The findings of the study has shown that a unit increase in strategy formulation led to a (0.528)

increase in performance of commercial banks in Thika town; a unit increase in strategy

implementation led to a (0.641) increase in Performance of commercial banks in Thika town; a

unit increase in strategy evaluation and control led to a (0.693) in performance of commercial

banks in Thika town, this implies that the most significant variable was strategy evaluation and

control, followed by strategy implementation and finally strategy formulation in that order.

Strategy evaluation and control stood out to be the most because it had a significant p value of

(0.0412). In terms of magnitude, the findings indicated that all the variables were important as

their P-values were less than (0.05). The study recommended further on look of strategic

management practices as demonstrated to enhance performance and build a competitive

advantage of the commercial banks in Thika town. Investors, top management teams,

government, scholars, and academicians will greatly benefit from this study since it will offer

great insights that will guide them in future.