| dc.description.abstract | This research was designed to investigate into the responses by Fidelity Shield Insurance Company Ltd. to the changes in the external environment. The study sought to achieve two objectives. The first objective was to establish the forces of change in Fidelity Shield Insurance Company Ltd's external environment and the second was to determine the responses by Fidelity Shield Insurance Company Ltd's to changes in its environment. To achieve these objectives, the study was carried out through interviews using an interview guide in which ten (10) managers drawn from the various departments and branches of the Company were targeted. All the targeted managers were able to be reached and interviewed, hence achieving 100% response rate.
The findings of the study showed that the forces of change in FSIC's external environment are mostly the macro as well as the industry environmental factors. The predominant political developments that have affected the company include the aftermath of post-election violence in December 2007 and early 2008 and the promulgation of the new constitution. In the economic arena, the slow economic growth, high rates of inflation, low interest rates and volume of money in circulation, high capital requirement, and the global economic crunch have had effect on the company.
Among the socio-cultural factors that have had an impact on the company include ethnicity, nepotism, increased crime rate, widespread poverty, high mortality rates, increased HIV/AIDS infection, and high rate of population growth. On the technological front, the most critical developments with implications to the company include the landing of fiber optic cable and increased use of mobile telephony. The ecological issue that was cited is adverse weather conditions due to effects of climate change.
The establishment of the Insurance Regulatory Authority and the Association of Kenya Insurers has resulted into introduction of a number of legal/regulatory requirements. There is stiff competition amongst industry players that is witnessed in aggressive marketing, expansion, and undercutting by insurance companies. The supply of specialized labour on technical areas of insurance is in short supply even though abundance exists in general insurance underwriting. The threat of new entrants is not so strong but there exist a fairly strong threat of substitutes from HMOs NHIF, NSSF, Self Insurance, State Insurance and Welfare organizations.
The study fmdings also showed that FSIC has adopted both strategic and operational responses to changes in the external environment. Strategically, the company has adopted new product development, collaborative arrangements, aggressive marketing, concentration, and corporate image management as well as expansion strategies.
On the operational front the company has undertaken installation of internal control systems, prompt processing of documents and settlement of claims and payment of commission to agents and debottlenecking of service delivery, efficient internal communication systems, automation of operations, extension of working hours, proper documentation and record keeping, and development of procedures manual. It could be generally concluded that the responses adopted by FSIC are contingent upon the nature of changes in its external environment and that the operational responses were fundamentally informed by the strategic responses.
Keywords:
Environmental Changes, Strategic Responses, Operational Responses. | en_US |
