Competitive strategies consist of all those moves and approaches that a firm makes to attract buyers, withstand competitive pressure and improve its market position. These strategies include cost leadership, product differentiation and customer focus strategies drawn from Porter‟s Generic competitive strategies. Due to the benefits of application of Porter‟s Competitive strategies by firms, many studies have been conducted on the effect of Porter‟s Competitive strategies and performance of organizations. However, none of these studies has investigated the effect of these competitive strategies on insurance firms. More so, the studies were conducted in developed countries among non insurance firms. The objective of the study was to determine the effect of Porter‟s Generic Competitive strategies on organizational performance using the case of non-life- insurance companies in Eldoret town, Kenya. The specific objectives of the study were to: determine the effect of product differentiation on performance of non-life-insurance companies in Eldoret, Kenya; establish effect of customer focus on performance of insurance companies in Eldoret, Kenya; determine the effect of cost leadership strategy on performance of insurance companies in Eldoret, Kenya, and to establish the joint effect of product differentiation, customer focus and cost leadership strategies on performance of insurance companies in Eldoret, Kenya. Using a questionnaire, the study used a census method to collect data from 42 branch managers of insurance companies in Eldoret town, Kenya. The data collected was analyzed using correlation and regression analyses with the help of SPSS. The study found out that Porters competitive strategies positively affect performance of non life insurance companies in Eldoret town, Kenya. The findings of the study are of significance to policy makers, practitioners, and scholars in the insurance industry in formulating their competitive strategies. The study recommends that the management and policy makers in the insurance industry should employ the Porter‟s generic competitive strategies while formulating their policies to improve the performance of their organizations. Similar studies on the effect of Porter‟s generic strategies should be done in other developing countries or in other growing towns in Kenya using different industries other than insurance to verify whether the results would be similar to the current study.

Background of the Study 
Competitive strategies consist of all those moves and approaches that a company has and is taking to attract buyers, withstand competitive pressure and improve its market position. Competitive strategies are employed by companies within a particular industry. The strategies adopted are expected to relate to performance of the company. From the scheme developed by Grant (2002), long term strategy should derive from a company‟s attempt to seek and sustain a competitive advantage based on the three generic strategies. These are; cost leadership; product differentiation and customer focus strategies which are the focus of this study. 

Porter’s Generic Competitive Strategies 
Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. There are three/four generic strategies, either lower cost, differentiated, or focus. A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating itself along dimensions valued by customers to command a higher price. A company also chooses one of two types of scope, either focus (offering its products to selected segments of the market) or industry-wide, offering its product across many market segments. The generic strategy reflects the choices made regarding both the type of competitive advantage and the scope (Porter, 1985). 

Differentiation strategy is one in which a company comes up with new and varied products that can give customers wider choice as a way of enhancing competitiveness. The product differentiation helps customers perceive the product as being different and better than competing products. It also creates a new advertising campaign and sales promotions to the organization making the product more attractive to a particular target market (Porter, Kramer, & Mark, 2006). 

Customer focus is where a firm anticipates its customers‟ changing needs and responds to them through continuous innovation. Having customer focus is a strong contributor to the success of a business and involves ensuring that all aspects of customer focus include maintaining an effective relationship and service program (Porter, et al, 2006). 

Cost leadership is a competitive strategy that focuses on gaining competitive advantage by having the lowest cost in a firm. Emphasis on efficiency makes the company positioned itself to withstand price competition from rivals. It also creates benefits relative to potential new entrants and attracts a large market portion of potential customers that find paying low prices for goods and services of acceptable quality (Porter, et al, 2006). 

Organizational Performance 
Organizational performance is the ability of an organization to achieve its goals and objectives (Ricardo and Wade, 2001) such as high sales turnover, returns on equity and returns on assets (Mudaki, Wanjere,Ochieng & Odera, 2012). Therefore, Performance of companies can be a good indicator of effects of competitive strategies employed by the organizations. Thus, the key measures of success must be those of business success which include turnover, the rate of dividends, assets, share capital, number of members and number of branches (Pagura, 2008). 

The primary goals of organizational performance are to increase organizational effectiveness and efficiency to improve the ability of the organization to deliver goods and or services. Another area in organizational performance that sometimes targets continuous improvement is organizational efficiency, which involves the process of setting organizational goals and objectives in a continuous cycle. Organizational performance at the operational or individual employee level usually involves processes such as statistical quality control. At the organizational level, performance usually involves softer forms of measurement such as customer satisfaction surveys which are used to obtain qualitative information about performance from the viewpoint of customers (Robert, 2001). Even though individual firms tend to utilize firm-specific performance indicators appropriate to their needs, for many firms the main performance indicators would typically include some combination of financial; market/customer; competitor; human resource; internal business process; and environmental indicators (Camp, 2008). However, in this study organizational performance will be measured by market share and written premiums. 

Insurance Firms 
An insurance firm is a business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount (Trenerry, 2009). 

In 2012, the global insurance industry grew 4.4 percent, continuing the pattern observed in the past few years of growth in insurance lagging slightly behind nominal GDP growth (4.6 percent). Financial reports in 2013 and 2014 indicate that the industry growth was again behind GDP growth, posting 3.4 and 3.2 percent against GDP of 4.3 and 4.4 percent. The trend means that on a relative scale, insurance as an industry has been experiencing mild shrinkage (Junker, et al, 2014). 

Africa is progressively gearing itself towards a brighter future in the insurance industry. Economic growth rates remain strong in sub-Saharan African economies. For example in South Africa, after experiencing a difficult year in 2013, insurance companies improved their performance in 2014. The key ratios analyzed point to the fruition of the selective reprising and efficiency strategies implemented in prior years (Pricewaterhouse Coopers, 2014). 

The insurance industry in Kenya consists of many players which include insurance companies, insurance brokers, independent agents, banks, the regulator, member association bodies, and service providers among others players. Kenya has 46 licensed insurance companies, and 4,576 registered agents, (Anditi, 2015). According to the insurance industry report 2008 from AKI the penetration of insurance in Kenya is very low at only 2.54 percent of Gross Domestic Product (GDP) compared to 2.57 percent in 2005. Long-Term (life) insurance recorded a penetration ratio of 0.76 percent while that of general insurance was 

1.78 percent. Out of the 46 licensed insurance companies in Kenya, 42 of them have branches in Eldoret town as of 2016. 

Eldoret is a principal city in western Kenya. It also serves as the capital of Uasin Gishu County. Lying south of the Cherangani Hills, the local elevation varies from about 2100 metres above sea level at the airport to more than 2700 meters in nearby areas (7000–9000 feet). The population was 289,380 in the 2009 census and it is currently the fastest growing town in Kenya. It is also the second largest urban centre in mid-western Kenya after Nakuru and the fifth largest urban centre in the country.

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Item Type: Kenyan Topic  |  Size: 57 pages  |  Chapters: 1-5
Format: MS Word  |  Delivery: Within 30Mins.


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