ASSESSMENT OF COMPETITIVE STRATEGY FORMULATION AND IMPLEMENTATION PRACTICES OF PRIVATE BANK IN ETHIOPIA: THE CASE OF UNITED BANK S.C

Abstract

After the establishment of private banks in the Ethiopia, the industry has been facing stiff competition necessitating the designs of competitive strategies to guarantee and enable them become superior performers in their industry. The purpose of this study was to examine competitive strategy formulation and implementation practices of private banks in Ethiopia the case of United Bank S.C. The study used descriptive survey design as it sought to describe data and analysed using statistics based on summarized comparisons using percentages, ratios with the help of a computational software SPSS. Non probability sampling which is called judgmental or purposive sampling technique was applied. The target population for this study was 90 respondents from employees of United Bank, 80 managerial and 10 non-managerial staffs. While selection, adequate knowledge of respondents have been focused. The research used a structured questionnaire and interview instruments to collect primary data. The research also used secondary source documents in reviewing the actual performance of the bank under study company profile, annual reports, newsletters and internal records of the bank. The findings of this study indicate that United Bank under study are facing challenges due to competition and the bank applied combined competitive strategies of cost leadership, differentiation and focus strategies to mitigate the challenge. The study also found out that competitive and economic factors are main external factors whereas unethical move and loss of skilled employees to competitors, financial resource factors and technological factors are main internal factors that have significant influence on the bank’s decision on formulation and selection of its competitive strategies. Based on these conclusions of the study, the researcher recommended that the government should come up with policies that would ensure that the challenges facing private banks in the maintenance of demand are addressed, United Bank has been applying mixed competitive strategies the bank need to be flexible, reduce high cost which is associated with office rent, there is unfair competition among banks so NBE should have strong control the application of code of conduct and ethics of the banking.