Effect of operational strategies on performance of commercial banks in Makueni county, Kenya

Abstract

The banking industry in Kenya and the world by extension is characterized by ever changing and turbulent competitive business environment in terms of products and services offered to their customers all geared towards the commercial banks performance. To overcome the above strains and remain profitable commercial banks need to adopt operational strategies that would aid them propel on their performance. This will make identification and pursuit of the right operational strategies as a source of superior performance to become a predominant priority in all organizations nevertheless the application of the right operational strategies is still a concern in many commercial banks. Thus, the purpose of this study was to determine the effect of operational strategies on the performance of commercial banks in Makueni County in respect to banking services. The specific objective of this study was to investigate the influence of debt recovery, promotional strategies, employee training, the quality of bank services and products on the performance of commercial banks in Makueni County. This study was guided by three theories; contingency theory, theory of constrains and resource-based Theory. Although limited, the available literature has revealed a positive relationship between effective operational strategies and the performance of commercial banks. The study used cross-descriptive research design and data was collected using a questionnaire. The target population of this study was bank employees with managerial roles and responsibilities; the bank managers and their assistants. The bank managers and their assistants were targeted because they are familiar and are actively involved in the development of operational strategies of commercial banks. Since the population was small census was used to select all the bank managers and their assistants to form a sample size of at least 130 study participants. The data collected was analysed using descriptive and inferential statistics with the aid of SPSS version 21. Both the correlation and regression results revealed that there was a positive and significant relationship between debt recovery, promotional strategies, quality of services and products and employee training and performance of commercial banks in Makueni County. The study recommends that the bank managers should keep on developing and implementing policies which improve on their operational strategies. The quality of their products as it is likely to impact on their performance positively. More research needs to be conducted on the specific operational strategies so as to obtain in depth information on how each operational strategy influence performance of commercial banks. Further research needs to be conducted on the influence of operational strategy on performance of other financial sectors such as micro-finance.