A study of the strategic responses of commercial banks to changes in the external environment in Zambia.
Banking sectors play a crucial part in the growth of a country's economy. As a result, the banking sector's stability is critical to an economy's growth. However, commercial banks are faced with external environmental changes that may render negative as well as positive impacts on commercial banks. Thus, banks need to respond to such changes with strategies. Crafting strategies to suit changes in the external environment is one goal of every organisation whose aim is to remain competitive in the market, generate profits and attain growth. To that end, this study aimed at investigating the response strategies of commercial banks to changes in the external environment in Zambia. Study’s specific objectives were to; establish response strategies employed by commercial banks in Zambia to the economic changes; determine the response strategies employed by commercial banks in Zambia to technology advancements; and establish the response strategies employed by commercial banks in Zambia to social- cultural changes. This study utilized a descriptive research approach. A total number of 38 questionnaires were distributed, from this number, 20 questionnaires were returned and correctly answered. This translates into 52.6% response rate. Data was quantitatively analysed using SPSS and Microsoft excel. The percentages, averages, and means were used to represent the result values. The results revealed that commercial banks did not respond to Social-cultures changes in consumer behaviour in Zambia. However commercial banks responded to economic and technological factors, which led to closure of some branches and bank merges. To that end, commercial banks adopted various response strategies to respond to the changes. Strategies adopted included stability and expansion while no commercial bank adopted retrenchment strategy. Study concludes that Commercial banks adopted stability to respond to economic and technological external environment changes. Study recommends that commercial banks should not only concentrate on stability strategies, but also use other strategies such as expansion and retrenchment strategies to survive the harsh external turbulence. Management of commercial banks should take advantage of advances in information and communication technology that enhances service delivery and meeting customer needs. Banks need to constantly scan the environment using various tools like SWOT, Research and Development and PESTEL in order to be aware of changes in the external environment and prepare for it.
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