Strategic responses to the business environmentand performance of Old Mutual Kenya
Change is the only constant in the world today. Organizations are impacted by this change since they are open systems that rely on the environment for survival. The environment consists of factors and conditions; some of which are beyond the firm’s control, and consequently influences the firm’s strategic choices and its competiveness in the industry. For organizations to fit in the turbulent environment, there must be a strategic fit between the environment wants and what the firm has to offer, as well as between what the firm needs and what the environment can provide. During the last few years, Kenya’s insurance industry has undergone a series of changes through financial reforms, advancement of communication and information technologies, globalization of financial services and economic development. Those changes have had a considerable effect on efficiency, productivity, market structure and performance in the insurance industry. There is an established relationship between business strategy, innovation and organizational performance. This study adopted a case study approach to investigate the strategic responses to the business environment and performance of Old Mutual Kenya. Data was collected using an interview guide which was administered by face to face meetings with the respondents who were the business unit heads for Strategy, Information Technology, Finance, Tax, Operations, Customer Service, Marketing, Distribution, Risk and Compliance, Human Resources and Business Development. The researcher also used secondary sources of data to supplement information given by some interviewees. The qualitative data collected was analyzed using content analysis technique. The study established that Old Mutual Kenya Limited has adopted strategies similar to those adopted by other players in the financial services sector although it has been more aggressive in some aspects. The study concluded that the changes in business environment that affect the operation of the organization were traditional and non-traditional competition, political instability, economic changes, technological changes, regulatory changes, changing customer needs, talent flight due to changing employees expectations, industry’s poor reputation resulting in low penetration and changing customer needs. The study revealed that Old Mutual Kenya responded to the business environment through mergers and acquisitions, product development and differentiation, aggressive brand campaigns, technology advancements and infrastructure refresh, business process automation, branch network and distribution expansion. The study also confirmed that the strategies adopted were effective and resulted in improved financial performance, enhanced brand visibility, better customer retention and diversified product offering. The study sighted some of the challenges faced while responding to the business environment. These included; increased competition, worsening economic performance, changing regulations and integration challenges. This study recommends that IRA should create a flexible regulatory environment. Insurance companies should be monitored and assessed based on their level of risk. This will ensure a stable insurance industry and will play a major role in increasing the penetration levels. It is recommended that in order to stay ahead of competition, Old Mutual Kenya should be flexible to environmental changes through constant review of its strategy and speedy execution. OMK needs to break down bureaucratic structures to enhance speed of execution. The findings of the study indicated that organizations at times are quick to develop strategies to deal with changes in the business environment but don’t follow through execution to harness the benefits of those responses. Thus strategy execution should be accorded due attention and resources as strategic planning. This will ensure that the firm is ready to encounter any challenges that may be encountered during the implementation of the strategic responses.