GROWTH STRATEGY AND PERFORMANCE OF INSURANCE COMPANIES IN KENYA
Abstract
The purpose of this study was to investigate on the growth strategy and the performance of insurance companies in Kenya. This research problem was studied through the use of a descriptive research design. The study focused on ten Insurance companies within Nairobi County which had adopted and implemented various growth strategies. The study employed a census where all the respondents were considered. Questionnaires were the major instrument for data collection. Both qualitative and quantitative data was collected in this study while in data analysis, the study adopted SPSS as a tool with the expectation of descriptive and inferential statistics. The study determined that the growth strategies were embraced in the ten insurance companies in Kenya with regards to Nairobi. The study showed that the lowest correlation was between product development and performance of insurance companies (r=0.404, p<0.01). The highest correlation was between market penetration and performance of insurance companies (r=0.692, p<0.01). However, the regression analysis showed a strong relationship, R2=0.589 which showed that 58.9% of change in performance of insurance companies in Kenya could be explained by a change of one unit of all the predictor variables jointly. Therefore, the study concluded that; market penetration leads to a higher performance of the insurance companies as compared to diversification, merger and acquisition and product development. From the findings and conclusion, the study recommended that there was need to strengthen the enlightenment of the public on the significance of insurance. The insurance companies should from time to time train their employees at all levels to ensure that they are highly skilled, competent and capable to win clients trust in their dealing because market penetration strategy requires a lot of skills and resources. Insurance companies should actively deal with the re-creation of marketing and market entry procedures as they use new strategies for the offering. Managers in insurance companies should capitalize on feasibility studies aimed at evaluating the effect of growth strategies and this should help them to become competitively informed into making the right decisions and as a result help in ensuring proper product development. Management should instill discipline upon itself by ensuring good corporate governance, promote technological progress and increase its paid up capital regardless of the statutory requirements so that the continued existence of the firm is not jeopardized after undergoing mergers and acquisition.
Key Words: Market Penetration, Product Development, Diversification, Merger and Acquisition, Growth
CITATION: Kahonga, J., & Kariuki, P. (2020). Growth strategy and performance of insurance companies in kenya. The Strategic Journal of Business & Change Management, 7(3), 133 – 150.
Full Text:
PDFReferences
Abdulmalik, Y. (2011). Conglomerates firms’ growth and shareholder wealth maximization, unpublished journal, Kano state college of Arts, science and remedial studies, Nigeria.
AIB capital (2018). The insurance industry in Kenya. Growth on life premiums. Retrieved on 07/04/2019 from: https://www.aibcapital.com/reports/253/show.
AKI, (2011). Association of Kenya Insurers. Annual Report, 2011
Andrews, R. (2011). Product Growth and Public Interest, Harvard Business Review.
Ansoff, I. (2013). Corporate Strategy: An Analytical Approach to Business for Growth and Expansion. New York: McGraw-Hill.
Barney, C. Y. (2011). Core competencies and sustainable competitive advantage in aircargo forwarding: evidence from Taiwan. Transportation Journal, 35(4): 405- 431.
Barney, J. (2010). Relationship between marketing of services; growth interest, emerging perspectives, journals of the academy of marketing science, 23(3), 48-67.
Burt, N., Dobler, D.W., & Starling, S. (2012). World Class procurement planning: The Key to Supply Chain Management, 7th ed., McGraw-Hill/Irwin, Boston.
Comment, N., & Jarell, S. (2015). Corporate growth, value maximization, and organizational capabilities, Journal of Business, 74(3), 409-32.
Craig, C., & Grant, R. (2013), Strategic Management, Kogan Page Limited: London.
Davis, R., Robinson, J., Pearce, S., Park, S. (2012). Business unit relatedness and performance: a look at the pulp & paper industry, Strategic Management Journal, 1(3), 349-61.
Elango, B. & May, Y. (2013). An Investigation into the Growth Performance relationship. Illinois University Press.
Elton, E., & Gruber, M. (2011). Investments and Portfolio Performance. World Scientific. pp. 3(8)23-34.
Fahy, J., & Smithee, A. (2009). Strategic Marketing and the Resource Based View of the Firm, Journal of the Academy of Marketing Science Review, 2(10), 90-134.
Hatemi-J, A.; El-Khatib, Y. (2015). Portfolio selection: An alternative approach. Economics Letters. 135 (C): 424–427.
Hoskisson, E., Michael, A., & Charles, L. (2011). Managerıal Risk Taking in Diversified Firms: An Evolutıonary Perspectıve’, Organization Science. 2(3):296-317.
Hove, S. (2018). Why Africa must shift from dependency to growth now. Retrieved on 8/4/2019 from; https://www.afdb.org/en/blogs/industrialisation-and-trade-corner/post/why-africa-must-shift-from-dependence-to-growth-now-17962/.
IRA (2013) Insurance Regulatory Authority Annual Report. Nairobi: IRA
Karanja, C. (2016). Mergers and Acquisitions: Case Studies in the Microfinance Industry. Retrieved from: http://biasharaleo.co.ke/index.php/2016/11/08/mergers-and-acquisitions-case-studies-in-the-microfinance-industry.
Klein, P. & Lien, B. (2009). Growth, Industry structure, and firm strategy; An organizational Economics perspective. Advances in strategic management, 2(6), 42-67.
Kothari, C.R. (2014). Research Methodology: Methods and Techniques. New Delhi: New Age International (P) Ltd.
Kotler, P. & Keller, K.I. (2010) Marketing Management. 12th Edition, Dorling Kindersley Pvt. Ltd., New Delhi.
KPMG, (2015). Sector Report Insurance in Africa. Cutting through Complexity.kpmg.com/Africa
Lee, A. (2011). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.
Lins, K., Servaes, H. (2012). International evidence on the value of corporate growth, The Journal of Finance, 54(6), 15-39.
Lubatkin, M., & Sayan Chatterjee (2014), ‘Extendig Modern Portfolio Theory into the Domain of Corporate Growth: Does It Apply?’ Academy of Management Journal 37(1): 109-36.
Markides, C. (2017). To diversify or not to diversify. Retrieved on 20th January 2019 from: https://hbr.org/1997/11/to-diversify-or-not-to-diversify.
Marlin, D., Bruce, T., & Scott, W. (2014). Growth Strategy and Top Management Team Fit. Journal of Managerial Issues, Fall, 3(6), 21-38.
Michael, P. (2014). Research Design. New York Business Review. NY: USA.
Mugenda, O. M., & Mugenda, A. G. (2012). Research Methods, (4th e.d): quantitative and qualitative approaches. Nairobi: Act press.
Mutahi, S.M. (2010). Implementation of Growth Strategy at the Standard Media Group (K) Limited. (Unpublished Research MBA Project) University of Nairobi.
Njenga, G. (2012). Thriving on Borrowed Time: Reviving Invesco Assurance: Case for
Reforming the Insurance Industry. Nairobi: Hope centre International
OECD (2011). Economic growth in Africa countries. Retrieved on 3rd, March 2019 from: http://www.oecd.org/countries/tunisia/46148761.pdf.
Richard, S. (2009). Product Innovation and Small Business Growth: A Comparison of the
Strategies of German, UK and Irish Companies, Small Business Economics, 9,
-537.
Riley, J. (2017). Ansoff matrix. Retrieved on 15th January 2019 from: https://www.tutor2u.net/business/reference/ansoffs-matrix.
Rugman A.M., & Verbeke A., (2010). Edith Penrose’s Contribution to the Resource-Based Views of Strategic Management. Strategic Management Journal; 23, pp.769–780.
Satyendra, N. (2014). Growth strategy and organizational performance. Retrieved on 18th January 2019, from: http://ispatguru.com/growth-strategy/.
Stávková J., Stejskal L., Toufarová Z. (2009): Factors influencing consumer behaviour. Agricultural Economics – Czech, 54: 276–284.
Sundarakani, B., & Ahmed, A. (2012). A critical review of growth theoretical perspectives and its impact on performance', Academy of International Business. Annual International Conference, Academy of International Business Middle East and North Africa Chapter, Dubai: United Arab Emirates.
Tanuja, A. (2017). Growth of firms, Horizontal and vertical. Retrieved on 6th February 2019 from:http://www.businessmanagementideas.com/management/growth strategy/growth-of-firms-horizontal-and-vertical/4799.
Turana, J. O. (2010). New Regulations Seen Hurting Micro-Finance. Nairobi. Business Daily Africa. KPMG Kenya Insurance Survey Report (2016).
UNICTAD (2018). Export growth and employment. Retrieved on 02 March 2019 from: https://unctad.org/en/PublicationsLibrary/aldc2018d3_en.pdf.
Wigglesworth, R. (2018). How a volatility virus infected Wall Street. The Financial Times, New York; USA.
DOI: http://dx.doi.org/10.61426/sjbcm.v7i4.1780
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.