Responding to international competition : the formulation of strategic responses in the South African banking industry

Abstract

South African firms, subject to the pressures of globalisation, are having to reassess their mode of competing, as they increasingly find themselves facing foreign and international competitive threats in their domestic markets. This research explores the strategic responses undertaken by South African incumbents subject to international competition by investigating the strategic responses pursued by three South African banks to the entrance of Barclays into the South African market in 2005. The research also aims to explore the level at which these strategic responses are influenced by the firm’s strategy formulation process, as well as the perceptions harboured by the actors within the organisation. A case study methodology is employed to offer a rich description of the processes undertaken by the organisations and the various factors influencing the strategic design process. The research gives evidence to a number of strategic responses implemented by incumbents, ranging from an aggressive defence of domestic market share and profitability to an active expansion, taking South African products and services into new markets. These differences in responses are shown to be influenced by the organisations’ strategy formulation process, its positioning in the market, as well as the perceptions that it has of the competitive threat.