Effects Of Strategic Management Practices On Competitive Advantage In Selected Private Banks In Ethiopia

Abstract

The aim of this study was to investigate effects of strategic management practices on competitive advantage in selected private banks in Ethiopia. Data was collected from 332 respondents selected from five private banks. The study employed descriptive and explanatory designs, and mixed approach. Simple random sampling technique was used in this study. Closed-ended questionnaire, semi-structured interviews, and focus group discussion were used to collect both quantitative and qualitative data. Descriptive statistics including frequency, percentage, mean, and standard deviation; and inferential statistics including correlation, regression, and ANOVA were used to analyse quantitative data collected for the study. Qualitative data collected by semi-structured interview and focus group discussion were analysed using codes and themes. The major findings of the study were: private banks in Ethiopia conducted environmental scanning before the strategy formulation; conducted strategy formulation; implementation of the formulated strategy done; and conducted evaluation and control of the performance of the banks; there is a positive and significant relationship between strategic management practices (environmental scanning, strategy formulation, strategy implementation, and evaluation and control) and competitive advantage; and the three strategic management dimensions (evaluation and control, strategy implementation, strategy formulation) have significant impact on competitive advantage whereas environmental scanning have a relatively lower effect on competitive advantage compared to other three elements of strategic management practices dimensions. Based on the major findings of the study and conclusions drawn, the following recommendations were made: environmental scanning, strategy formulation, implementation, and evaluation and control should be done with the involvement of the managers and employees at corporate, divisional, and functional unit levels of the banking industry; the top-management in the banking industry should recognize that institution is essential to make effective strategic decisions