Influence of competitive strategies on performance of insurance firms in Kenya
Mukya, Charles Mutisya
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The key objective of this study was to investigate the influence of the competitive strategies on the performance of insurance companies in Kenya. The study examined the effect of the three generic competitive strategies (cost leadership, differentiation and focus strategies) on the performance of insurance companies within the Kenyan market. The study was based on Porter's generic theory and the resource based theory. Descriptive cross-sectional design was utilized which covered the 55 registered insurance companies. Using the questionnaire, primary data was collected and analyzed. The study also used descriptive statistics and correlation analysis to show the relationship between the dependent and the independent variables. The study established that cost leadership, differentiation and focus strategies influence the performance of insurance companies positively. Though the cost leadership strategy did not register significant influence on the performance of the insurance, the companies that pursued the differentiation strategy and the focus strategy reported the greatest influence on organizational performance compared to those that do not. Therefore, the study recommended that the insurance companies need to pursue focus strategy since it seemed to have the greatest influence on performance of the insurance companies. The study also recommended that insurance companies can benefit through the lessons learnt so as to tailor their products, focus on the right target market, among others. In this way, they are assured of improving the organizational performance and therefore stand in a better position to serve their intended clients in the best way possible. The limitation of the study was that it only focused on the insurance companies and yet there are other players in the industries such as the agents, brokers and the reinsurance companies. Future studies could therefore focus on the wider coverage in order to assess the effect of the competitive strategies applied by all the players on the overall performance of the insurance industry.