Influence of Strategic Planning Process on Financial Performance of Insurance Companies in Kenya

Abstract

Strategic planning process determines the long-term objectives of an organization by developing and implementing decisions is critical for the survival of most institutions. Financial performance of insurance companies in Kenya has been found to be affected by strategic planning processes. This research purposed to study the influence of strategic planning on financial performance of insurance companies in Kenya. This was founded on the resource-based theory and agency theory. The current research made use of a descriptive survey design. The population consisted of all the 47 registered insurance companies operating in Kenya (AKI, 2017). Primary data was used in this research work. The primary data was collected through questionnaires. Raw data was analyzed majorly by way of inferential, descriptive, and frequencies techniques. Results from the study indicated that mission and objectives, environmental scanning, strategy formulation, strategy implementation and strategy evaluation all had an influence on financial performance as indicated by majority of the respondents. Correlation results also indicated that mission and objectives, environmental scanning, strategy formulation, strategy implementation and strategy evaluation were positively associated with financial performance. Regression findings indicated that mission and objectives, environmental scanning, strategy formulation, strategy implementation and strategy evaluation were statistically significant predictor of financial performance. The researcher concluded that mission and objectives, environmental scanning, strategy formulation, strategy implementation and strategy evaluation did have an influence on financial performance and that mission and objectives was an important determinant of financial performance in insurance firms in Kenya. Furthermore, mission and objectives, environmental scanning, strategy formulation, strategy implementation and strategy evaluation as variable were positively linked to financial performance. The researcher recommended that the management of insurance firms in Kenya should make use of these research findings in assessing the how better to come up with better strategies and work on the existing ones in the conduct of their business so as reach more clients with their services. Further policymakers should use the findings of this study in coming up with better and robust policies to enhance the relationship between strategic planning and financial performance as to enhance better service delivery to the beneficiaries. As a suggestion for further studies, another study on strategic planning process can be done in a different sector like the private sector, manufacturing sector, agricultural sector, etc. to find out whether there will be consistency in findings and results.