Academic journal article Journal of Finance, Accounting and Management

Competitive Advantage through Market Driving: An Evaluation of Guaranty Trust Bank Experience in Nigeria

Academic journal article Journal of Finance, Accounting and Management

Competitive Advantage through Market Driving: An Evaluation of Guaranty Trust Bank Experience in Nigeria

Article excerpt

Introduction

The competition in the banking industry in Nigeria was very mild or non-existent in the 1970s through 1980s. This was largely due to the limited number of banks and the arm chair banking practice that existed. Customers chose banks based on proximity and convenience rather than superior service delivery expectation. However, with the liberalization of banks in the late 1980s, competition became fierce with most banks having to introduce marketing units and teams. With this the market and industry boundaries became difficult to define because of the entry of new and unfamiliar forms of competition (Jakada, 2007).

Customers started demanding for superior value from the products they purchased and the services they were offered because they were more knowledgeable about products and services and more sophisticated in the judgments they make. In order to cope with the rapid changes taking place in the market, banks had to evolve new innovative business models that question the traditional rules of the industry.

To achieve this, banks had to compete with one another in response to the changing needs of the customers, by making sure they provided adequate services to the customers that is market-driven. Organizations could also choose to learn from the customer and in turn teach the customer, being proactive in other words is market driving. Although both market-driven and market driving revolve around market orientation (Carrillat et al, 2004), there is the need to develop a business culture that facilitates firms in achieving sustainable competitive advantage by creating superior customer value (Lee, 2010).

Given that there are numerous banks in Nigeria all competing for market share and the traditional first generation banks seem to be struggling to retain their customer base, the need to develop a sustainable competitive advantage has become very necessary.

Therefore the focus of this paper is to examine how organizations can use market driving as a strategy to attain sustainable competitive advantage. Guaranty Trust Bank Pc (GT Bank) is our case study.

Literature Review

This section reviews literature relating to competitive advantage, market driving as conceptualized by Carrillat et al (2004) which entails having transformational leadership structure in place, an inspiring organizational culture and innovation.

Competitive Advantage

Firms understand that their long-run survival and eventual success is dependent upon their ability to achieve and maintain sustainable competitive advantage (Hoffman, 2000). A competitive advantage can result either from implementing a value-creating strategy that is not being employed by current or prospective competitors or through superior execution of the same strategy as competitors (Bharadwaj et al, 1993; Carpenter, 1999). In essence, the advantage is said to be sustained when other firms are not able to derive the same benefit from the strategy. Consistent with this position Peters (1987) argues that organizations that want to be ahead of competition must be unique or have differentiating characteristics over competitors.

Day and Wensley (1988) identified two categorical sources of competitive advantage. One, superior skills which borders on the distinctive capabilities of personnel that puts them ahead of those of competing firms. Two, superior resources, which have to do with tangible requirements for advantage that enable a firm to exercise its capabilities. In essence, issues like customized training of personnel, embracing information technology and building customer intimacy will help in attaining competitive advantage. However, Bharadwaj, et al (1993) and Meehan & Barwise (1999) caution that a firm's skills and resources can only be considered sources if they offer benefits desired by customers.

Market Driven

The main thrust of the marketing concept is that organizations should understand the needs and wants of the target market and deliver satisfaction more effectively and efficiently than competitors (Kotler, 2009). …

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