Report on Maintaining Competitiveness Through Strategic Alliances

Background: The Kenyan financial sector has recently been growing at the high rate due to the inclusion of individuals who previously were unable access banking services. This has led to a competitive situation where banks and microfinance institutions are searching for ways to manage in this competitive sector.

In addition, mobile phone companies are now considered as a competitive threat.

Aim: This study will look into how strategic alliances between banks and mobile phone companies can be used to overcome these challenges with a specific focus on the recent alliance between Equity Bank (Kenya) and Safaricom Ltd. The study will also focus on the management of strategic alliances within different industries.

Method: The analysis of this study is based on qualitative research including the use of interviews with members of both organizations and secondary data which includes written documentation and analysis of previously recorded discussions about the alliance with different members of both organizations.

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Results: The authors found strategic alliances can be used as a tool which enables firms to overcome threats from their competitors while gaining additional benefits. In terms of alliance management, the use of separate teams was found to be an effective management tool in cross-industry alliances.

Kenya is a country located in East Africa and was a British colony until 1963 when it gained independence and became self-governed. During this time, there were a total of 9 commercial banks operating in the country, the earliest bank being Kenya Commercial Bank which was licensed in 1896.

The following two decades (1963-1983), saw the number of commercial banks increase to 19 while currently, the number of licensed commercial banks in Kenya is 44 in total (Central Bank of Kenya, Official Homepage, 2011) serving a population slightly over 40 million (Central Intelligence Agency, World Fact Book, 2011). Furthermore, the majority of the banks formed after 1983 were local banks.

In this context, a local bank will be defined as a bank originating from Kenya with the majority of ownership being held by Kenyans. Despite the increase in the number of licensed banks in recent years, 32.7% of the population still does not have access to banking facilities though this figure has decreased from 40% (FinAccess, 2009).



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