THE EFFECT OF CORPORATE STRATEGY ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN TANZANIA

Abstract

This study examined the effect of corporate strategy on the financial performance of commercial banks in Tanzania, with a particular focus on CRDB Bank in Arusha City. Guided by the Strategic Management Theory, the study adopted a pragmatism research philosophy and employed a mixed-methods approach, combining both quantitative and qualitative techniques. A descriptive research design was used, targeting a population of 115 employees, from which a sample of 89 respondents was selected using stratified and purposive sampling techniques. Primary data were collected through structured questionnaires and semi-structured interviews, while secondary data were obtained from documentary reviews, including institutional records and credible online sources. Quantitative data were analyzed using descriptive statistics, and qualitative data were analyzed thematically. The study investigated the effects of market share growth strategy, operational efficiency and stability strategy, and revenue improvement strategy on the financial performance of CRDB Bank. Findings revealed that market share growth strategies including customer acquisition, market penetration, product innovation, and competitive positioning positively influenced profitability, customer satisfaction, and competitiveness. Operational efficiency and stability strategies, encompassing process optimization, resource management, staff competence development, performance monitoring, and consistent service delivery, enhanced productivity, cost control, and financial sustainability. Revenue improvement strategies, such as income diversification, interest rate optimization, customer-focused pricing, and innovative product offerings, contributed significantly to revenue growth and operational resilience. Overall, CRDB Bank demonstrated strong financial performance supported by profitability, diversified revenue streams, operational efficiency, and effective credit risk management. The study concludes that the strategic focus on growth, efficiency, and revenue enhancement has positioned CRDB Bank as a leading financial institution in Tanzania. It recommends that commercial banks strengthen customer acquisition and retention, optimize operational processes, diversify income sources, adopt innovation-driven practices, and leverage digital banking to sustain competitiveness and long-term financial performance. Future research is suggested to examine the impact of corporate strategies across multiple banks and assess the long-term effects of strategic interventions on financial performance