Strategic Responses by the Kenyan Commercial Banks to the External Environmental Turbulence: A Case of Sidian Bank Kenya Limited

A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirements for the Degree of Masters in Business Administration (MBA)The general objective of this study was to investigate the strategic responses employed by Sidian bank to external environmental turbulence. The study was guided by specific objectives which sought to determine the external environmental turbulence factors that affect Sidian bank. To establish the strategic responses employed by Sidian bank, and to find out if the strategies employed by Sidian bank in coping with external environmental turbulence are successful. This research adopted a descriptive research design as it sought to describe the relationship between the independent variable-external environmental turbulence and the dependent variables-the external environmental factors, the responses adopted, and the success of the responses. The target population for this research was 400 employees of Sidian Bank Limited. Using purposive stratified sampling technique 10% of the population was considered to represent the total population resulting into 40 respondents. The primary source of data collection method that was used in this study was questionnaires. The research data was analyzed using the Statistical Package for Social Sciences (SPSS) program. Both descriptive statistics (mean, frequency, standard deviation) and inferential statistics (correlation, regression) were used. The results are presented using tables to give a clear picture of the research findings at a glance. A review of the individual turbulence factors showed that political discontinuity was mainly as a result of government regulation, process control and political stability. An analysis of the factors of economic disruptions was caused to a great extent by disposable income and interest rates. On the other hand, social cultural changes revealed that the changes were to a little extent caused by changes in consumer taste and attitude. A review of technology substitution was to a great extent caused by speed and technology adoption and innovation. While industry environment was to a great extent affected by aggressive competition and rising substitute. It was also revealed that majority greed that among the most used strategic response was restructuring although it was also revealed that at the bank, there exist defined controls to mitigate risks. Majority also agreed that they have ventured into new market and used focus strategy. It was also revealed that the firm has improved existing products, diversified product offerings as well as identified strategic issues affecting its operations. The study also revealed that the firm had an understanding of the environmental turbulence level that it operates in and has enabled them tackle environmental uncertainties proactively. It was also established that Sidian bank undertakes a continuous improvement of its processes and system upgrade has enabled it attain operational excellence. The study concluded that external environmental turbulence factors have a very big impact on the banking sector. Government regulation, process control and political stability are among the political issues affecting the industry. It was also concluded that the banking sector is very volatile hence there is a need to have a strategy for response as such the findings show that at Sidian bank there exist defined controls to mitigate risks. The bank has also adapted to the environment and is continuously improving its processes and system upgrade to attain operational excellence. The study recommended that there is a need to also adhere to the government regulation, and have in place mitigations to ensure the firm is not caught up in the political issues affecting the industry. It is also recommended that Sidian bank should affect measures to ensure their ability to mitigate risks; in addition, the strategies should be up to date. There is a dire need for the bank to better analyse its management system and thus achieve prompt organizational responsiveness to changes in the environment. The study was aimed at establishing the challenges facing Sidian Bank in Kenya and the responses they employ to counter the threats. For further research on strategic responses employed by banks, the researcher recommends another study that will include banks and financial institutions to establish their mode of responding to environmental challenges and threats