Tailoring competitive strategies to retail banking in South Africa: A managerial perspective.

Abstract

Competitive forces require businesses to modify existing strategies to remain relevant. Retail banking is no exception. While many well-researched strategic tools lead businesses to strategic development, Porter’s five generic strategies remain relevant today. The modern retail banking market has seen a great shift in consumer demands over the last few years, creating gaps in the competitive market. Purpose: The purpose of the study was to investigate the effectiveness of implementing Porter’s generic strategies within the retail banking space of South Africa. The research also identified factors that influence the use of generic strategies in retail banking. It was envisaged that the research produced useful information for retail bank managers on the benefits of implementing Porter’s generic strategies to improve the competitiveness of the bank and satisfy the needs of consumers. Design/methodology: The research employs a quantitative study using questionnaires distributed to a sample of 56 people at the MD Singh Heights building to gather the necessary data to satisfy the research questions. Descriptive statistical tools such as frequency distribution, mean, median, and standard deviation have been employed to identify the relationship between these variables and how they react to one another. The Fisher-Freeman- Halton exact test and Kolmogorov-Smirnov test (K-S test) were used to test the study hypothesis. Findings: The research has uncovered grounds that satisfy the requirements of strategy implementation to secure a competitive advantage. It was found that the implementation of Porter’s generic strategies provides results that lead to a competitive advantage, however, the choice of strategy or combination of strategies is highly dependent on the goals of the institution. The current retail banking market suggests that broad differentiation and focused strategies produce the highest correlation of +0.22 vis-à-vis consumer selection of a bank. Originality/value: The study has uncovered valuable information surrounding the implementation of Porter’s generic strategies within the retail banking market of South Africa. The study highlighted the changing needs of banking consumers within the market and established factors that directly impact how consumers select a bank. The selection of a bank is critical as it exposes current gaps in strategies as well as highlights areas of Porter’s generic strategies that can be implemented to close current gaps and improve the competitive position of the bank.