An Empirical Study On The Types Of Business Strategy Adopted By Microfinance Institutions In Nigeria

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International Journal of Research and Innovation in Applied Science (IJRIAS) | Volume VI, Issue IV, April 2021|ISSN 2454-6194

An Empirical Study On The Types Of Business Strategy Adopted By Microfinance Institutions In Nigeria

Nasiru Liman Zuru1, Jamilu Hussaini2
1Department of Business Administration, Faculty of Management Sciences, Usmanu Danfodiyo University Sokoto Sokoto State, Nigeria.
2Division of General Studies, Kebbi State University of Science and Technology, Aleiro Kebbi State, Nigeria.

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ABSTRACT
The importance of business strategy to organisational performance has been emphasized in the literature. However, there is little research that examined business strategies adopted by organisations in different industries. For instance, in the perspective of microfinance institutions (MFIs), literature indicates few studies have attempted to investigate the types of business strategy implemented by these important financial institutions, particularly in Nigerian context. Given this research gap, this study examines the business strategies adopted by MFIs in Nigeria. The data for the study were collected from 121 MFIs by using structural questionnaires. Results of the study indicate that the MFIs in Nigeria adopted the following strategies; low cost strategy, growth strategy and focus strategy. In addition, the result of the analyses indicates that none of the MFIs adopts differentiation and harvest strategy. The finding of this study has implication to owners/managers of MFIs to not only identify but also formulate and implement effective business strategy. MFIs that adopt effective business strategy will not only be able to improve their social and financial performance but also sustain their success and survival.

Keywords: Business Strategy, Microfinance Institutions, Performance

INTRODUCTION
Regardless of their nature of business, every organisation needs to formulate and implement effective business strategy to compete successfully in the marketplace as well as cope with their business environment. Organisations formulate and implement their business strategy through the strategic management process. More importantly, organisation need to develop and implement effective business strategies based on their competitive advantage.
According to contingency perspective, there is no one best business strategy that is applicable to every type of firm. The contingency perspective prescribes that different firms competing in different business environment adopt different business strategies. Findings from previous studies have also provided evidence that suggested firms which utilized a specific business strategy that fit in particular business environment tend to perform better that those that did not do so.