Competitive Strategies Adopted by the Local Authorities Provident Fund (Lapfund), Kenya

Abstract

The need to have public institutions that are well managed cannot be overemphasized. Well functioning retirement benefit schemes that deliver quality services consistent with customer preferences while managing fiscal resources prudently is considered critical to the citizenry, and Kenya's and World Bank's mission of poverty alleviation and the achievement of the Millennium Development Goals. All over the world governments are realizing the important part played by retirement benefit schemes in alleviating old age poverty and are increasingly investing heavily in them. This paper explores the competitive strategies adopted by the Local Authorities Provident Fund (LAPFUND), Kenya and the challenges faced in adopting the strategies. Competitive strategy refers to creating and maintaining a competitive advantage in each and every area of business aimed at maintaining a competitive edge in the market. The case study sought to investigate the experience and an in-depth understanding of competitive strategies at LAPFUND. It had the objective of determining the competitive strategies adopted by the company and the challenges faced in adoption of the strategies. This study used primary data. The data was obtained from personal interviews guided with pre-prepared interview guide consisting of open ended questions. The primary data collected was qualitatively analysed to determine the factors that favoured the success of the strategies adopted by the company. The research findings indicate that the Local Authorities Provident Fund has not taken a blind adherence to one strategic approach, but rather consistently adopted a combination of all the three generic competitive strategies i.e. overall cost leadership, differentiation and focus. Adoption of low-cost strategy meant that LAPFUND was in a stronger position to resist all the competitive forces, outperform its rivals and erect barriers to entry that helped to protect the organization’s long term position. Other strategic choices like strategic alliances and outsourcing have also been adopted. The findings indicate that the Fund has faced various challenges in the adoption of these strategies. These include the limited opportunities of sector growth where new entrants are able to gain ground only at the expense of the Fund (zero-sum game), difficulties of sustaining the low-cost strategy in the long run, the difficulties of achieving true and meaningful differentiation, the risk of creating differences that customers don’t value, amongst others. The paper concludes that regardless of the wide variety of variables and industry situations faced by managers, there are in practice only a limited number of strategic options. The author at the end has proposed some recommendations for strategic approach in adopting the competitive strategies. There are also some suggestions made for future areas of research in this field.