Strategic responses of SACCOs to changing operating environment: a study of Nairobi Province KUSCO affiliated SACCOs.

Abstract

Economic and political reforms are sweeping the whole world affecting Europe, Africa, America East Africa, and Kenya. Such reforms have created a fundamental change in the environment in which firms operate. An obvious manifestation of such changes is the liberalization of trade. Such liberalization has meant that SACCOs in Nairobi have to contend with unbearable competitive pressures from the resilient global companies. The study set out to document the strategic responses adopted by Savings and Credit Cooperatives (SACCOS) to environmental turbulence. The objectives of the study were; To determine the changes that have occurred in the SACCO sub-sector with the onset of the liberalization. To determine what adjustments In products, process, promotion, distribution, costs structures, market research, staff development and market predisposition the SACCOs have adopted. Primary data was collected using open and closed-ended questionnaires distributed to senior managers in the selected SACCOs. The data was thereafter, analysed using descriptive statistics and an appropriate computer package. The analysis revealed that SACCOs have made various changes in their traditional, resource mobilization and-..lending methods in an attempt to cope with the changed operating environment. The SACCOs have also changed the basic products by adding new features such as front office services (P.oSA) among others. SACCOs require fresh and initiatives to penetrate new market niches. The SACCOs philosophies should be more specific and directed towards enhancing excellence in customer service. The marketing practice need to be more aggressive to counter competition paused by cheap bank loans and substitute micro finance funds. The strategic variables have also been adjusted either moderately or.significantly. The most adjusted strategies are those of product and promotion. The products range have been improved in delivery, features and variety. In market research the SACCO need to significantly increase information gathering on competitors and customer needs. Efforts should be directed towards satisfying the identified customer needs. In cost structure strategies, the study revealed the need to adapt significant improvement in technology and capital investment in information technology. The other strategies such as pricing and distribution have been moderately adjusted .. By undertaking various strategic responses, SACCOs are able to not only defend their market share but also to increase profitability and efficiency. The success of SACCOs in Nairobi is a learning experience for other local SACCOs in the country facing or about to face the effects of changed competitive conditions.