Application Of Modified Porters’ Five Forces Model In Assessing Attractiveness Of Insurance Industry In Kenya
The insurance industry in Kenya has undergone a lot of changes in the recent past. Many companies have closed shops while others have cropped up on equal measure. There has not been a clear predictable trend on suitability of insurance industry in Kenya. The purpose of this study was to apply the modified porters five forces model in assessing attractiveness of insurance industry in Kenya. This was to shed light on an industry which has witnessed death of as many companies as birth of others. Porter‟s five forces model has been used world over to understand the competitive forces in an industry. In specific terms, the study sought to determine how attractiveness of insurance industry in Kenya is influenced by bargaining power of suppliers & buyers, threat of new entrants, threat of substitute products or services, competitive rivalry in the industry, politics, government and others. A descriptive survey design was undertaken based on self-competition questionnaires. Data was collected from 33 respondents out of the targeted population of 47 insurance companies registered in Kenya. Completed questionnaires were collected and results analyzed using descriptive statistics. Tables, mean score and standard deviation were used for presentation and analysis. The findings of this research revealed that Politics/Government was a minimal force with a mean of 3.44, Industry rivalry 3.59, Barrier to entry 3.63, Threat of substitutes 3.68, bargaining power of suppliers 3.88, and finally bargaining power of buyers 3.98. The research further identified the Presence of Substitute Suppliers Scored a mean of 4.24, Supplier concentration 3.73, impact of supplier on cost 3.97, supplier difference 3.48 and Importance of Volume of business to the suppliers mean of 3.97. The study concluded that the insurance industry in Kenya is growing and looks vibrant as perceived externally.