| dc.description.abstract | The mortgage market has in the recent past experienced exponential growth with
commercial banks and insurance companies treading on grounds hitherto the
preserve of mortgage companies. As the cost of rent pushes up with inflation,
more and more people are seeing the logic in paying a monthly mortgage fee
instead of rent. The property market has never been more 'vibrant, and so is the
competition between the mortgage companies. The bid to have more people sign
up for the mortgage schemes has seen the mortgage companies turn to
unconventional, creative ways of marketing to reach clients.
The main players in the mortgage industry namely: Housing Finance, Savings
and Loan (K) Limited and East Africa Building Society have in the past three
years found themselves being bombarded by an influx of new players in the
market. This study seeks to investigate the strategic as well as operational
responses by these companies to threats of new entrants in the industry. It is
based on a case study of Savings and Loan (K) Limited, the oldest and second
leading mortgage company in Kenya. The two objectives of the study were to
identify the challenges that faced SavLngs and Loan (K) Limited in the context of
new entrants in the mortgage industry and to determine the responses the
company adopted to counter these threats.
In order to meet these objectives pertinent primary and secondary data was
obtained through personal interviews with respondents who were responsible for
developing the strategic and operational responses to these threats. The
interviewees have been overseeing the implementation of these responses.
Secondary data was collected mainly from The Cascade, the KCB Newsletter.
The data was thereafter analysed qualitatively.
The changing competitive environment in which the mortgage industry operates
has presented some challenges to Savings and Loan. These challenges arose
from the changes in the business environment in terms of legislative changes,
liberalization, technological advancements and increasing levels of education.
The forces of threats of new entrants, bargaining power of buyers, bargaining
power of sellers, threats of substitute products have made these changes the
more difficult. Porter (1980)
Savings and Loan, according to the research findings has addressed its changing
competitive situation through restructuring, marketing, Information Technology and
culture changes among other responses. These have made Savings and Loan
more competitive and able to deal with the threats of new entrants but have not
adequately enabled the company to fully deal with these threats. It was felt that
savings and Loan should undertake a more proactive rather than reactive
responses in dealing with the intense competition in the mortgage market brought
about by new entrants into the industry. Generally, however, the findings indicate
that Savings and Loan does possess the necessary capability to adopt strategies
that can enable it to compete effectively with the new entrants into the industry. The
company, being a subsidiary of Kenya Commercial Bank has the added advantage
of a wide branch network and a large customer base. The company therefore
needs to maximize on this competitive strength by developing strategies based on
the already existing advantages. | en |
