Strategic responses to changes in environment by first reinsurance brokers in Kenya
The environment in which organizations operate today is turbulent and constantly changing, with many factors contributing to this scenario. The general business operating environment has become more volatile, unpredictable and very competitive. The days when firms could just relax and wait for clients to knock at their doors are long gone. Organizations are today realizing that their products and services, regardless of how good they are, simply do not sell themselves. The Kenyan’s macro environment has undergone numerous changes in the recent past. Notable changes includes but not limited to the following; accelerated implementation of economic reforms, globalization and liberalization of the economy, heightened political activities, discontinuation of price controls, privatization and commercialization of the public sector and increased international competition. The macro environment in Kenya has therefore been dynamic and encompasses the six ingredients which include political, economic, social, technological, ecological and legal factors. For example, the promulgation of the new constitution in August of year 2010 is a clear pointer towards the achievement of the political, economic and social pillars of vision 2030. Decisions by managers have a direct strategic impact on their organizations and contribute to strategic direction of their firms. This study was designed to determine environmental changes that affect reinsurance broking firms and in particular First Reinsurance Brokers and to identify responses adopted by FirstRe to deal with those changes. The study was carried out using a case study design. Data was collected using interview guide as the primary data collection instrument. The interview guide was designed to give a brief introduction of the environmental changes targeted and a number of questions were discussed with the targeted employees of First Reinsurance Brokers. Six respondents were targeted for the research, that is, three senior management level staff members and three staff from middle level management team. Senior Management team included the Group Managing Director, the Managing Director and the Operations Director. Three staff from middle level management included Manager Human Resources, Manager Information technology and Manager Finance. The researcher used secondary data instrument, as well, mainly the company’s annual reports and Company’s profiles. The study found out that the company faced and continues to face a lot of challenges from economic, political, technological and regulatory changes. It responded to the economic changes by diversifying its services and aggressive marketing, thus managing to grow both vertically and horizontally. To deal with changing technological environment, the company introduced a new in house, integrated as well as customer made computer system which has greatly improved automation of its processes. Regarding regulatory changes the company employed expansion strategy. It is currently operating not just in Kenya but the whole of the African continent. The political environment has relatively been stable ever since year 2007 / 2008 post election violence when the company was forced to set up a fully fledged marketing division, to boost its business revenues which had gone down considerably. These findings have implications for other companies within the industry and policy makers as well. In other words, the study will be useful for the entire Insurance and Reinsurance broking fraternity in coming up with similar strategies within their organizations. The findings will also be shared with the Insurance Regulatory Office, hoping that as they make policy guidelines for the Industry they will be fully aware of specific challenges facing industry players. This study will also assist future researchers who might be interested to study this important field in coming up with appropriate topics to be explored further.