INFLUENCE OF COST LEADERSHIP STRATEGY ON PERFORMANCE OF THE INSURANCE COMPANIES IN KENYA
DOI:
https://doi.org/10.47941/jbsm.695Keywords:
Cost leadership, Strategies, Performance, CompetitionAbstract
Purpose: The study sought to determine the influence of cost leadership strategy on performance of the insurance companies in Kenya. Specifically, the study aimed at establishing the influence of price of premiums, maturity period, market segment and nature of products.
Methodology: The study adopted the descriptive research design method to ascertain and describe the characteristics of the variables. A sample size of 55 insurance companies was reached, and a semi-structured questionnaire was used to collect primary data from the respondents. Data was analyzed using the SPSS software, from which appropriate findings were presented.
Findings: The study findings showed that the cost leadership strategy was largely applied in the insurance companies in Kenya, and most of them have realized great performance. Nonetheless, the study found that most insurance companies' distribution channels for products are moderately entrenched and hence firms may not have been perfectly efficient in reducing associated costs.
Unique Contribution to Theory, Practice and Policy: The study recommends that insurance firms should devote more resources to execution of cost leadership programs, adoption of effective premium pricing, and enhanced use of proprietary technology in enhancing the products' quality. The study as well recommends that insurance forms should come up with effective strategies that will help them to gain a large market segment in Kenya in order to enhance their performance, as this will effectively help them in overcoming competition in their industry.
Downloads
References
Atikiya, Rukia, Mukulu, E., Kihoro, J., & Waiganjo, E. (2015). Effect of cost leadership strategy on the performance of manufacturing firms in Kenya. The Strategic Journal of Business & Change Management, 134-143.
Baraza, D. (2017). Effects of competitive strategies on performance of manufacturing firms in Kenya, a case study of East Africa Breweries Limited. [PhD Thesis].
Basher & Tarabieh (2011). Strategic responses to increased competition in the healthcare Industry. The case of private insurance sector, Unpublished MBA project, University of Nairobi
Bayraktar, C. A., Hancerliogullari, G., Cetinguc, B., & Calisir, F. (2017). Competitive strategies, innovation, and firm performance: an empirical study in a developing economy environment. Technology Analysis & Strategic Management, 29(1), 38- 52.
Han, C., Dong, Y., & Dresner, M (2013). "Emerging Market Penetration, Inventory Supply, and Financial Performance". Production and Operations Management: 336.
Huang, K. F., Dyerson, R., Wu, L. Y., & Harindranath, G. (2015). From temporary competitive advantage to sustainable competitive advantage. British Journal of Management, 26(4), 617-636.
Jones, S. J. L., & Linderman, K. (2014). Process management, innovation and efficiency performance: The moderating effect of competitive intensity. Business Process Management Journal, 20(2), 335-358.
Kago, Z. W., Gichunge, E. M., & Baimwera, B. (2018). Relationship between competitive strategies and organizational performance of petroleum companies in Kenya. International Academic Journal of Human Resource and Business Administration, 3(2), 407-429
Kiragu, S.M. (2014). Assessment of challenges facing insurance companies in building competitive advantage in Kenya: A survey of insurance firms. International Journal of Social Sciences and Entrepreneurship, 1(11), 1-23.
Kurt, A., & Zehir, C. (2016). The relationship between cost leadership strategy, total quality management applications and financial performance. DoÄŸuÅŸ Ãœniversitesi Dergisi, 17 (1), 97-110.
Malburg, C. (2010), Competing on costs, Industry Week, 249(17), pp.31.
Mohamed, M. B., Ndinya, A., & Ogada, M. (2019). Influence of cost leadership strategy on performance of medium scale miners in Taita Taveta County, Kenya. International Journal of Development and Management Review, 14(1), 151-163.
Mosakowski, E. (2013). A resource-based perspective on the dynamic strategy- performance relationship: An empirical examination of the focus and cost leadership strategies in entrepreneurial firms. Journal of Management, 19(4), 819-839.
Mwangi, L. (2012). Strategic Decision Speed and Firm Performance of the Two Major Firms in Photography Industry in Nairobi, Kenya (Unpublished MBA Project). Nairobi: University of Nairobi.
Porter, M.E. (1980). Techniques for analyzing industries and competitors. Competitive Strategy.
Scott-Jackson, W.B. (2010). HR is business: Achieving competitive advantage through strategic talent management, Centre for Applied HR Research, Oxford Brookes University Business School, and Oxford, UK.
Tavitiyaman, P., Qiu Zhang, H., & Qu, H. (2012). The effect of competitive strategies and organizational structure on hotel performance. International Journal of Contemporary Hospitality Management, 24(1), 140-159.
Valipour, H., Birjandi, H., & Honarbakhsh, S. (2012). The effects of cost leadership strategy on the performance of firms. Journal of Asian Business strategy, 2(1), 14.
Zekiri, J., & Nedelea, A. (2011). Strategies for achieving competitive advantage. The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of the Faculty of Economics and Public Administration, 11(2), 63 - 73
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 Journal of Business and Strategic Management
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
