Assessing The Effectiveness Of Competitive Strategies Of Private Commercial Banks In Ethiopia: The Case Of Cooperative Bank Of Oromia And Awash Bank S.C

Abstract

This study investigates the effectiveness of competitive strategies employed by private commercial banks in Ethiopia, focusing specifically on the Cooperative Bank of Oromia and Awash Bank. Despite the growing competition within the Ethiopian banking sector, there is a limited understanding of how specific strategic approaches contribute to sustained performance and competitive advantage.. A purposive sampling method was utilized to select a representative sample of 119 senior staff members from a target population of 3,470 employees at the corporate head offices of the two banks. Data was collected through structured questionnaires and semi-structured interviews, employing both quantitative and qualitative approaches to ensure a comprehensive understanding of the research problem. The collected data was analyzed using a statistical package for social science software (SPSS version.25) by reviewing secondary data sources, taking the effectiveness of competitive strategies as a dependent variable and various competitive strategies such as differentiation, innovativeness, competitor benchmarking, and customer-focused planning as the explanatory variables. The findings indicate a significant positive relationship between the independent variables differentiation, innovativeness, competitor benchmarking, and customer-focused planning and the effectiveness of competitive strategies. The coefficient of determination (R²) is revealed 78.3% of the variation in the effectiveness of competitive strategies can be explained by the independent variables. In conclusion, this study unequivocally demonstrates that differentiation, innovativeness, competitor benchmarking, and particularly customer-focused planning are crucial drivers for enhancing the market competitive performance of private commercial banks in Ethiopia. The strong positive impact of customer-focused planning and innovativeness suggests that these are key areas for strategic emphasis in the dynamic banking landscape. Based on these findings, the study recommends that both Cooperative Bank of Oromia and Awash Bank continue to enhance their customer-centric strategies and invest in innovative practices to maintain a competitive edge. Furthermore, fostering a continuous improvement culture and rigorously benchmarking against competitors can further strengthen their market position and contribute to sustainable growth.