Strategic Responses to Changes in the External Environment by Insurance Companies in Kenya

Abstract

The insurance industry in Kenya has undergone a lot of changes over the last decade. Changes in the operating environment of organizations are unavoidable. Changes can occur as a result of improvements in technology, realignment of government policies and strategies, increase in competition, globalization, liberalization and changes in the political environment among others. Organizations respond to these changes by crafting strategies which guarantee sustainable competitive advantage in spite of the ever changing external environment. This study evaluates the strategic responses being adopted by insurance companies in Kenya in order to stay competitive despite the constant changes in the external environment. The objective of the study was to determine the strategic responses to changes in the external environment by insurance companies in Kenya. The study population consisted of all the insurance companies in Kenya. Data was collected through structured questionnaires Chief Executive Officers and senior managers of the insurance companies. Analysis of data was done using descriptive statistical methods and means, frequencies and percentages computed. These statistics were then presented in frequency distribution tables. The findings indicated that political, economic, socio-cultural and technological factors influence operation of the insurance industry in Kenya. As such, majority of firms adopted strategic responses such as new product development, differentiation and cost advantage. The firms similarly adopt different means of sustaining their competitive strategies. The strongest challenges to the strategic responses were competitor reaction and change management. Based on the findings of the study, various conclusions, recommendations for policy and practice as well as further study have been made.