INFLUENCE OF PRODUCT DIVERSIFICATION ON THE OPERATIONAL PERFORMANCE OF COMMERCIAL BANKS IN KAKAMEGA COUNTY, KENYA
Abstract
The primary purpose of diversification is to allow an organization to grow. Commercial banks in the Kenya are on different stages of strategizing and implementing diversification plans. While formulating new diversification strategies, many firms often fail to consider problems associated with diversification. Therefore, the objective of this study was to establish the influence of product diversification on the operational performance of commercial banks in Kakamega County, Kenya. The study was conducted using descriptive survey design and targeted the management of 26 commercial banks from the region from which a sample size of 93 respondents were drawn using a stratified random sampling method. Questionnaires were used to collect data after pilot testing them in banks in Kisumu County. The questionnaires were also pretested to ensure content validity and also for reliability at the recommended Cronbach alpha of 0.7. The data was analyzed using both descriptive and inferential statistical methods. The findings of the study established that diversification of banking products into related products leads to increase in number of customers, multiple markets and enhanced performance of banking firms. The hypothesis test was done at a significant level 0.05. The test results showed that there exists a statistically significant correlation between Product Diversification and operational performance. It was recommended that commercial banks should diversify their products into related products which would lead to an increase in number of customers.
Key Words: Product Diversification, Operational Performance, Commercial Banks
CITATION: Alengo, V. O., Okello, B., & Malenya, A. (2019). Influence of product diversification on the operational performance of commercial banks in Kakamega County, Kenya. The Strategic Journal of Business & Change Management, 6 (2), 2342 – 2353.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i2.1267
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