Effect of Selected Determinants on the Implementation of Strategic Plans by Insurance Companies in Kenya

Abstract

Due to the complexity of insurance activities, regulatory changes and competition there has been need for strategic planning which has become essential for insurance companies. Organizations that are engaged in strategic planning become well managed because they are assumed to be dealing effectively with the fast and varying conditions and hence are able to respond wisely to the ever rising and declining demands in their environment and enhance organization value chains. This is not an exception to the insurance industry as it has been operating in very difficult economic conditions which come with both incentives and opportunities for improvement. The most vital foundation on the implementation of strategy is the fact that specific strategies need specific orientation of the organizational conduct in order to be able to achieve maximum performance. Therefore this study sought to examine the effect of selected determinants on the implementation of strategic plans by the insurance companies in Kenya. The resource based view, transformational leadership theory and goal seeking theory were the main theoretical framework. The study adopted a causal research design. The study targeted 55 insurance companies in Kenya. A questionnaire was used which contained closed ended questions utilizing the Ordinal/Likert type scale format. After the field work, the data was organized by cleaning, coding and categorizing on the basis of the research objectives. The data was analyzed using both descriptive and inferential statistics using the SPSS computer software. The inferential statistics was used to describe the characteristics of a single variable. Statistical modeling was adopted to determine the influence of the dependent and independent variable. The specific effect of each of the independent variables on the dependent variable was established using regression analysis and the results from the analyzed data was presented in tables and charts for interpretation. After the regression analysis, the results showed a positive and strong relationship between the selected determinants and the implementation of strategic plans. The research recommends that government through its various agencies should come up with appropriate policies which are able to support the insurance firms in a way that they are able to contribute positively to the economic growth in Kenya. Further research is recommended on establishing the effect of competitive advantage on the survival of insurance companies and how portfolio mix influences selected determinants on the implementation of strategic plans by the insurance companies in Kenya.