Responses of SACCOS based in Namobi to changes in the external environment

Abstract

The dynamism of the environment implies that organizations have to constantly redesign their strategies in order to remain competitive. Failure to effectively adapt the organization to its environment leads to a mismatch between what the organization offer and what the market demands (Ansoft and Mc Donell, 1990). Environment scanning enables managers to identify potential developments that could have an important impact on industry conditions leading to emergence of opportunities and threats. This study had two objectives which are, first, to determine theresponses of Saccos operating in Kenya to cope with the changing business environment and second, to determine the challenges facing the Saccos in Kenya in responding to environmental changes. To do this a survey was conducted on 60 Saccos using structured questionnaire with a few open ended questions. The response rate was 80%. The results of this study revealed that challenges poised by competitive environment were felt by the Saccos surveyed to a very high extent. It was also clear from the study that majority of the Saccos surveyed concentrated on operational issues at the expense of strategic ones. Not much effort has been expended on exploring new products by the Saccos surveyed. The issues have very serious ramifications for the future developments and growth of the Sacco sub sector. Since the Sacco sub sector has been identified by he government of Kenya as a formidable l!lstitutional framework for resource mobilization and capital accumulation these issues must be addressed urgently. This study concludes that Sacco societies should constantly scan the environment to help them in coming up with flexible strategies for future developments. An open approach system should b-e-adopted to encourage creativity and innovation so that ' VIII new products can be introduced to take care of the changing needs of members. Sacco societies should adopt a favorable dividend policy that encourages building of capital for investments purposes from internal operations instead of over relying on the external credit facilities for the same. The study was restricted to Nairobi area due to resource and time constraint and the sample considered for the study was general. These factors are likely to be different in other provinces in Kenya and hence the conclusions might not necessarily be applicable to rural Saccos. There is an acute need for further research to focus on other areas and be sector specific in order to corne up with recommendations on responses of Saccos in public, parastatal and informal sectors. Sophisticated statistical and econometric tools be utilized to find out the minute details that might have escaped in this study due to the simple nature of the statistical method adopted for analysis.