Strategic Responses to the Dynamic Business Environment in Kenya by Old Mutual Kenya Limited

Abstract

Organizations are open systems, they depend on the environment for resources and also to discharge their outputs. More importantly they operate in an environment of change. This means that they have to proctively monitor the changes in their business environment which has become very competitive, volatile and more importantly unpredictable and align themselves accordingly. It is the environment in which organizations operate which shapes them and influences their choices of the strategy and determines their performance.Gone are the days when organizations used to sit and wait for customers, customers now have a choice and they value quality products and services. Companies require strategic thinking and only by evolving good business strategies can they become strategically competitive (Ansoff and McDonnell 2009).Kenya‟s insurance industry is a major player in the Financial Services Sector of the Kenyan Economy. Due to changing business environment in Kenya, insurance companies operating in the country have been compelled to develop strategies that can help them survive the turbulent business environment. This study used a case study approach to investigate the strategic responses by Old Mutual Kenya to the dynamic business environment. Data was collected using an interview guide which was administered by face to face meetings with the respondents which were the Chief Executive Officers and functional managers of Old Mutual Kenya.The functional divisions include Risk and Legal, Finance, Marketing, Operations, Human Resources and Information Technology. In total 8 face-to-face interviews were conducted. The researcher also used secondary sources of data to supplement sketchy information given by some interviewees. The qualitative data collected was analyzed using content analysis technique. The study established that Old Mutual Kenya Limited has adopted strategies similar to the other Kenyan insurance companies although it has been more aggressive in some aspects. The study revealed that Old Mutual Kenya is using various strategies to respond to changes in the Kenyan business environment. The most notable ones include diversification, good corporate governance, new products and services, products and services differentiation, market segmentation, acquisition, branch network expansion, automation of business processes, innovation, improved customer service, strategic partnerships, marketing, staff training and development, cost containment, use of mature information technology and entering new markets. This study recommends that IRA should create a flexible regulatory environment. The government should ensure that the necessary laws and policy are put in place to safeguard the interests of all the stakeholders in the insurance industry.It is recommended that in order to stay ahead of competition, Old Mutual Kenya should continuously scan the environment aggressively and speed up implementation of various strategies considering the implications of each strategy.The findings of the study indicated that firms at times are quick to come up with strategies to deal with changes in the business environment without considering the effects that those responses may have on the business. Thus strategies should be considered wisely, and an analysis of the effectiveness of those responses should be carried out before the strategies are adopted. This will ensure that the strategies suit all the employees in the organization. It will also ensure that the firm is ready to encounter any challenges that may be encountered during the implementation of those strategic responses.