| dc.description.abstract | Organizational survival is dependent on the ability of the organization to adapt to a changing
environment. For an organization to achieve its objectives, it needs to provide goods and services
that are demanded by the market. A firm unable to do this will encounter the 'strategic problem',
which is characterized by the mismatch of the output of the firm and the demands of the market
place.
The type of industry that a firm finds itself in will influence the way it competes and the strategies
it will adopt. Porter (1980) developed the five-force industry analysis model which advanced the
theory that there are five forces that determine competition in an industry and hence its
attractiveness. The 8-force model is a modification of Porter's model and made up the conceptual
framework that was used to study the funeral industry in Nairobi, Kenya.
At the time of this study there were sixteen registered funeral service providers. Data was
obtained from owners or managers of these companies usmg a semi-structured questionnaire
administered through personal interviews. Data was summarized using frequencies and
percentages and analyzed using partial correlation analysis and factor analysis.
The findings indicate that the funeral industry is very young and most companies in this sector are
less than five years old. Most are either sole proprietorships or partnerships and operate in two
countries, Kenya and Tanzania. Of the sixteen companies in Nairobi, only three have mortuaries.
Africans locally own 94% of the companies. Anticipated high profits play a key role in
motivating entry into the sector and to a small extent the desire to ease funeral transport problems.
Hearse services form-the mainstay of the industry and all companies offer this service. Other common services offered are .provision of coffins, hire of lowering gear, repatriation, hire of
public address systems, accessories and church trolley. The main entry requirement is capital to
purchase hearses. Whereas all companies indicated that a certificate of registration is required to
enter the industry, the responses for other licenses required varied among respondents. Other
licenses mentioned included a trade license, work permit from Nairobi City Council, TLB and
license for display board.
Overall, prices charged are not fixed. 75% of the companies sampled indicated that they negotiate
with customers and agree on a price. Among older companies however (over 5 years old) this
figure drops to 67% and for those companies less than five years increases to 85%. It is difficult
to compare pricing structures at present because of low levels of standardization. For example,
for hearse services, some companies base their prices on mileage, others on the type of vehicle
used and yet others charge per day. Advertising in the sector is mostly limited to word of mouth
and the reputation of the owner of the company. The three companies perceived to be the largest
are Montezuma, Umash and Lona in that order. The main entry barrier for new companies is the
high capital outlay required to enter the industry and the length of time and money, which has to
be spent so that the company can create high awareness of its services in the market. Cooperation
among competing companies is almost non-existent except for occasionally
recommending other companies to potential customers when a company was fully booked.
Similarly most said there was no code of ethics governing the operations of companies in the
sector. The three main problems facing the sector are poor roads/infrastructure which increases
costs of operations considerably due to the high costs of maintaining hearses, lack of awareness
among consumers of the funeral services offered by companies and unfair competition from
unlicensed companies.
Companies in the secto~m:ed to grow the market by educating consumers on the advantages of
using professional funeral service providers and creating increased awareness; petition the
government to address problems facing the sector and develop a code of conduct for the industry | en |
