Effect Of Competitive Strategies On Performance Of Saccos In Muranga County, Kenya

ABSTRACT

Savings and Credit Cooperative Organisations (SACCOs) mobilize savings and grant members loans at reasonable rates of interest in times of need. The low cost products and ease of formation are among the attributes that have provided a competitive edge to these institutions over the main stream banks in the low income market segment. The study sought to establish the competitive strategies adopted by SACCOs in response to the growing competition from other financial service providers and the impact of such strategies on their performance in Muranga County. The study had four objectives namely; To assess the effects of low cost strategies on the performance of SACCOS; Establish the effects of differentiation on the performance of Sacco’s; Analyse the effects of focus strategies on the performance of SACCOS; and evaluate the effect of Hybrid strategies on the performance of Sacco’s. To achieve the proposed objectives the study adopted a descriptive survey research design. The target population was 140 consisting of 90 board of directors and 50 branch managers and chief executive of the 10 duly registered licensed SACCOs in Muranga County. The sample size was 104 constituting of board of directors and branch managers which was drawn using the simple randomly sampling technique. A self administered questionnaire with both open and closed questions was used to collect data. The data collected was both primary and secondary data and was analyzed using SPSS to generate frequencies, percentages and mean. To establish the relationship between independent dependent variables a linear regression analysis was conducted. The findings were as follows; Locating the branches near the customers, offers low account maintenance charges and low interest rate as cost leadership strategies. A unit change in low cost strategies had corresponding variation on performance of 0.476; Differentiation strategies used were offering of variety of products, branding the SACCOs, establishing ownership structures geared towards creating loyalty and customer driven products and service. A unit change in differentiation strategies had a corresponding variation on performance of 0. 503. Focus differentiation is rarely used by the SACCOs. Specifically price discrimination and market segmentation did not have any effect on the performance of the SACCOs. A unit change in focus had a corresponding variation of 0.390. The findings also indicated that hybrid strategies are the commonly used strategies by SACCOs. A unit change in hybrid strategies had a corresponding variation of 0.635.