Lawrence Awuah

116 Pages·2012·1.06 MB·English

by  Peter Annan Aborhey

An Evaluation of Strategies for Achieving Competitive
Advantage in the Banking Industry. The Case of Ghana
Commercial Bank Limited.

By
Lawrence Awuah (BSc. Hons.)

A Thesis submitted to the Institute of Distance Learning,
Kwame Nkrumah University of Science and Technology in
partial fulfillment of the requirements for the degree of

Commonwealth Executive Master of Business
Administration

Institute of Distance Learning
September 2011

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CERTIFICATION
I hereby declare that this submission is my own work towards the Commonwealth
EMBA and that to the best of my knowledge, it contains no material previously
published by another person nor material which has been accepted for the award of
any other degree of the University, except where due acknowledgement has been
made in the text.

Student
………………. Date:
Lawrence Awuah …………….

Supervisor:
……………………….. Date:
Stephen Akwasi Kyeremateng ………………

Professor I.K. Dontwi:
…………………….. Date:
Dean, Institute of Distance Learning …………………

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ABSTRACT
Competition is a fact of business life, unless a business can develop strategies to
compete successfully in the market place, it has practically no chance of growth and
would remain a tiny firm performing far below its potential. In an increasingly
competitive banking industry in Ghana, the absence of well-defined competitive
strategies leads to weak competitive positions and hence performance below the
industry average. The purpose of this study is to examine the competitive strategies
adopted by banks to achieve competitive advantage in the banking industry in Ghana
with Ghana Commercial Bank as a case study. Both primary and secondary data were
sourced and used for the analysis of the study. Primary data was collected using
interviews and questionnaires on a purposive sample of 400 staff. Secondary data
was collected from Annual Reports of GCB for five years from 2005 to 2010, GCB‟s
internal newsletters The Eagle and Commerbank News etc and the Business and
Financial Times. The study revealed that the bank has drawn up several strategic
plans and religiously implemented them since 1990. It also came to the fore that the
bank enjoys competitive advantage in the industry, the most important factor
contributing to the competitive advantage, being the bank‟s extensive branch network.
The study recommended that the bank should improve its IT infrastructure, streamline
its loan application processes, train staff to be more customer-friendly and proactive,
de-congest the banking halls and serve customers faster all in a bid to meet and
exceed customer expectations and sustain the competitive advantage.

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TABLE OF CONTENTS
Content Page
Title Page i
Certification ii
Abstract iii
Table of Contents iv -
vii
List of Tables viii
List of Figures ix
List of Appendices x
List of Abbreviations xi
Acknowledgement xiii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the Study 3 -4
1.2 Statement of the Problem 4 - 6
1.3 Objectives of the Study 6 - 7
1.4 Research Questions 7
1.5 Significance of the Study 7 - 9
1.6 Scope of the Study 9
1.7 Limitations of the Study 9 - 10
1.8 Organization of the Study 10 – 11

CHAPTER TWO
2.0 The Concept of Strategy 12 - 15
2.1 Levels of Strategy 15 - 16
2.2 The Concept and Evolution of Strategic Planning 16 - 18
2.2.1 Mission, Vision, Goals and Objectives 18 - 19
2.2.2 Mission Statement 19
2.2.3 Vision Statement 19
2.2.4 Goals and Objectives 20
2.2.5 The Relationship between Strategic Planning and Performance 20 - 22
2.2.6 The Impact of Strategic Planning on Performance 22 - 25
2.3 Competition 25 - 26
2.3.1 Competitive Advantage 26 - 27
2.3.2 Sustaining Competitive Advantage 27 - 28
2.3.3 Sources of Competitive Advantage 28
2.4 Porter‟s Generic Competitive Strategies 28 - 29
2.4.1 Cost Leadership 29 - 31
2.4.2 Differentiation 31 - 32
2.4.3 Focus 32 - 33
2.5 Competitor Analysis 33 - 34
2.5.1 Competitor Array 34 - 35
2.5.2 Competitor Profiling 35 - 39
2.5.3 Drivers of Competition among Banks 40 - 41
2.5.4 Effects of Competition on Banks 41 - 42
2.5.5 Effects of Competition on Lending by Banks 42 - 44
2.5.6 Effects of Competition on Profits and Deposits of Banks 44
2.5.7 Branch Network and Competition 45 - 47

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2.5.8 Competition and ICT in the Banking Industry 47 - 49
2.5.9 Competition and Customer Service 49 - 50
2.6 Winning Customer Service Strategies 50
2.6.1 Service Strategy and Competition 50 - 51
2.6.2 Customer-Friendly Systems and Competition 51 - 52
2.6.3 Customer-Friendly People and Competition 52
2.6.4 Theoretical Frameworks 52
2.7.4.1 Competition and Time 52 - 53
2.7.4.2 Competition and Efficiency 53
2.7.4.3 Competition and Lending 53
2.8 The Origin of Banking 54 - 56

2.8.1 Banking in Ghana 56 - 59
2.8.2 Overview of Ghana Commercial Bank (GCB) 59 - 61
2.8.2.1 Mission of GCB 61
2.8.2.2 GCB‟s Corporate Values 61 - 62

CHAPTER THREE
3.0 Methodology 63
3.1 Introduction 63
3.2 Research Design 63
3.3 Population 64
3.4 Sample and Sampling Procedure 64 - 66
3.5 Sources of Data 66
3.5.1 Primary Data 66
3.5.2 Secondary Data 66 - 67
3.6 Data Collection Method 67
3.7 Questionnaire 67 - 68
3.8 Method of Data Analysis 68
CHAPTER FOUR
4.0 Introduction 69
4.1 Demographic Background of Respondents 69 - 70
4.1.1 Gender of Respondents 70 - 71

4.1.2 The Range of Ages 71 - 72
4.1.3 The Number of years worked 72 - 74

4.1.4 Current Position Held 74 – 75
4.2 Information Systems 75 -76
4.3 Competitive Advantage 76 – 79
4.4 Image and Reputation 79 - 80
4.5 Profitability 80 - 81

CHAPTER FIVE

5.0 Introduction 81 - 82

5.1 Summary of Findings 81- 83
5.2 Recommendations 83-85
5.1 Conclusion 85-86
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5.3 Suggested Areas of Further Research 87
References 90-97
Appendices 98 -105

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LIST OF TABLES
Table 2.1: A Table showing an illustration of a Competitor Array 35
Table 4.1.1: A Table showing the gender distribution of respondents 72
Table 4.1.2: A Table showing the ages of respondents 74
Table 4.1.3: A Table showing the length of service of respondents 75
Table 4.1.4: A Table showing the most important strategies to GCB 80
Table 4.1.5: A Table showing GCB‟s performance on Image/ Reputation 81

Table 4.1.6: A Table showing GCB‟s performance on Profitability 82

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LIST OF FIGURES
Figure 2.1: The Three Generic Strategies 29
Figure 4.1: A bar chart showing the gender ratio of respondents 73
Figure 4.2: A bar chart showing the ages of respondents 74
Figure 4.3: A bar chart of length of service of respondents 75
Figure 4.4: A pie chart showing positions held by respondents 77

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LIST OF APPENDICES
Appendix 1: Questionnaire for Management and Staff 93 - 100

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LIST OF ABBREVIATIONS
AR Activity Ratios
ATM Automated Teller Machine
BBG Barclays Bank Ghana Limited
CEO Chief Executive Officer
EBG Ecobank Ghana Limited
EFTPOS Electronic Funds Transfer at Point of Sale
EZWICH Brand name for Ghana‟s National Payment Platform
GCB Ghana Commercial Bank Limited
GDP Gross Domestic Product
LR Liquidity Ratios
SME Small and Medium Scale Enterprise
SCB Standard Chartered Bank
SG-SSB Societe General- Social Security Bank
SRR Shareholders‟ Return Ratios
FINSAP Financial Sector Adjustment Program
NIB National Investment Bank
PMSU Professional and Managerial Staff Union
PR Profitability Ratios
ROI Return on Investment
WAN Wireless Area Network

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