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EFFECT OF INDUSTRY DYNAMICS ON INSURANCE PENETRATION RATE IN NAIROBI, KENYA

Mesfin Abebe Damtew - Masters of Business Administration, United States International University, Kenya

Dr. Charity Muraguri - Lecturer, United States International University, Kenya


ABSTRACT

Kenya’s insurance penetration rate had been volatile in the last decade, with the year-on-year insurance penetration rate dropping from 2.88% in 2015 to 2.37% in 2019. This sharp drop-in insurance penetration rate presented a key challenge in the industry's growth hence is vital for more conclusive research to be conducted examining explanatory factors to this trend. The current research sought to examine the effect of industry dynamics on the insurance penetration rate in Kenya. The first objective reviewed the effect of price undercutting strategies (premium, penetration, and skimming pricing) on the insurance penetration rate. The second objective sought to establish government intervention (regulations, subsidies, and price controls) on the insurance penetration rate. each insurance firms. The sample size has determined by the Yamane formula was 144 senior managers. The study used primary research data, with a structured questionnaire being the main tool for data collection. The research relied on Google forms and physical questionnaires in the data collection. The collected research data was edited and coded for quantitative statistical analysis involving descriptive techniques, correlation analysis, and multiple regression analysis. The research indicated that premium pricing had a negative and insignificant influence on the insurance penetration rate. In contrast, penetration pricing and skimming pricing had a positive and significant effect on the insurance penetration rate in Kenya. The analysis established that government interventions had a positive and significant influence on the insurance penetration rate. The results also showed that pricing controls had no significant effect while regulations and government subsidies positively and significantly affected the insurance penetration rate. The study also recommends that insurance firms collaborate with the regulatory body to develop support programs such as an effective tax policy, subsidies, incentives, and tax reliefs that can improve the industry competitiveness. Further, insurance firms should routinely review their pricing strategies to ensure consistent regulations and the business landscape. This will ensure that pricing strategies meet the competitive goals of the firms.


Full Length Research (PDF Format)

RISK MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF INSURANCE COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE, KENYA

Janet Mongina Nyarangi - School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya

Dr. Richard Ngali - School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

The purpose of the study was to establish the influence of risk management practices on financial performance of insurance companies listed in Nairobi Securities Exchange. The study was guided by the following specific objectives; to determine the influence of risk identification on financial performance of insurance companies listed in NSE; to establish the influence of risk analysis on financial performance of insurance companies listed in NSE; to assess the influence of risk response planning on financial performance of insurance companies listed in NSE; and to evaluate the influence of risk monitoring on financial performance of insurance companies listed in NSE. The study was based on risk management theory, enterprise risk management theory, contingency planning theory and Cognitive Dissonance Theory. The study applied a descriptive research design. The target population of the study comprised of the six (6) insurance companies listed in the NSE. The study’s units of analysis constituted the listed insurance companies’ top and middle level managers in the key departments concerned with risk management and financial performance. This composition translated to a total number of 72 potential respondents. The study conducted a census study of all the 72 top and middle management staff working in the six insurance companies listed in the NSE. The researcher made use of both primary and secondary data. Primary data was collected by means of self-administered, semi-structured questionnaires whereas secondary data was collected from relevant journals. Data analysis was done by use of Statistical Package for Social Sciences (SPSS Version 25) analysis software. The study found that the insurance companies listed in the NSE have implemented risk management practices to a moderate extent. The insurance companies listed in the NSE adopted risk identification practices to a moderate extent, risk analysis practices to a moderate extent, risk response planning practices in their operations to a moderate extent and risk monitoring practices to a great extent. Risk management practices (risk identification, risk analysis, risk response planning and risk monitoring practices) explain 75.1% of financial performance of the insurance companies listed in the NSE. From the regression analysis, holding constant the predictor variables, the financial performance of the insurance companies listed in the NSE would have a coefficient of 4.778. The beta coefficient for risk identification practices was 0.862. The risk analysis practices had a beta coefficient of 0.879. A unit change in risk response planning practices would result to 0.646 change in financial performance. A unit growth in risk monitoring practices would result to 0.7120 times increase in financial performance. The study concludes that there is a moderate level of implementation of risk management practices. The insurance companies listed in the NSE are exposed to considerable amount of risks which call for them to establish, adopt and implement specific risk management practices in their operations. Risk analysis practices that influence the financial performance of the insurance companies listed at the NSE are exposure assessment, risk assessment, consequence assessment and risk estimation. Risk response planning practices like risk acceptance, risk avoidance, risk limitation and risk transference have significance influence on the financial performance of the insurance companies listed at the NSE. The study recommends that the management of the listed insurance companies should ensure they have effective risk identification practices in place. The listed insurance companies should also ensure they have risk analysis practices which consider the organizational targets, goals and strategies for ensuring that effectiveness and efficiency in their operations. There is need for aligning the risk responce planning practices to the organizational visions and missions. There is need for adoption of the most supportive risk monitoring structures to foster high returns.


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THE EFFECT OF COST LEADERSHIP STRATEGY ON PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI COUNTY, KENYA

Joan Nyambura Gitau - Jomo Kenyatta University of Agriculture and Technology, Kenya

Robert Mang’ana - Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

Performance of commercial banks is important because provision of finance is crucial for all sectors in the society comprising of companies, households and governments. However, the dynamic business environment has continued to exert a great impact on performance of all organizations globally. The purpose of this study was to determine the effect of competitive strategies on the performance of commercial banks in Nairobi County, Kenya. The specific objectives were to establish the effects of cost leadership strategy, focus strategy, differentiation strategy and innovation strategy on performance of commercial banks in Nairobi County, Kenya. The theories underpinning this study were Porter’s Generic Competitive strategies, Resource Based View (RBV) This study employed a descriptive research design and survey design. Since the listed banks are 40 in number, this study adopted a census survey where the entire population will be included in the study. The study adopted purposive sampling to select the senior managers as respondents in the study. A questionnaire consisting of both open and close-ended questions developed by the researcher in line with the objectives of the study was used to collect primary data. Quantitative data analysis was done with the help of SPSS version 25 software and included descriptive and inferential analysis. Inferential analysis involved multiple regression analysis to determine the relationship between competitive strategies on performance of commercial banks. From 120 questionnaires that were dispatched for data collection, 103 questionnaires were returned completely filled, representing a response rate of 85.8% which is very good for generalizability of the research findings to a wider population. Both descriptive and inferential statistics showed that cost leadership strategy, significantly influenced performance of commercial banks in Nairobi County, Kenya. The study concluded that one cost leadership strategy significantly influences performance of commercial banks in Nairobi County; in terms of effective use of cost leadership approaches such as low interest, low operating costs and competitive pricing can enhance performance of commercial banks. The study recommends that relevant management team of commercial banks should craft viable cost reduction strategies to reduce bank operation costs so as to enhance the banks’ financial and non-financial performance. For further research, a longitudinal study can be done, using time series data for a span of 5 years to assess commercial banks’ performance after adoption of selected competitive strategies.


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DOES PERFORMANCE OF NGO PROJECTS LEVERAGE ON RISK MANAGEMENT STRATEGIES?

Joyce Kamunya - School of Business, Kenyatta University, Nairobi, Kenya

Dr. Perris W. Chege - School of Business, Kenyatta University, Nairobi, Kenya


ABSTRACT

For many decades, Kenya's economic development has been promoted through various projects run by non-governmental organizations (NGOs). These include projects include complementary relief services, educational programmes, child welfare, and health services among others. Even though success has been experienced in many of the projects, there are several examples indicating failures thus showing that projects face many risks. Key among the touted problems leading to the poor performance has been the risks undertaken in running the projects. This article aims to link the performance of NGO projects to specific risk management strategies based in Nairobi County. Theoretical anchor focuses on the stakeholder theory, supported by the theory of resource-based view and agency theory. To accomplish the objectives, descriptive approach research design sufficed, and random stratified sampling aimed at 110 projects run by NGOs, as indicated in the 2018/2019 KNGOB report. Project officers at the NGOs acted as the key respondents while the unit of analysis was performance of the NGO projects. Data collection utilised a structured questionnaire administered mainly using online approach in the face of covid-19 health restrictions with a response rate of 84 out of the targeted 110 projects. Descriptive and inferential statistics were used in finding field results. Through regression analysis with a linear model result showed a strong relationship between risk management strategies and project performance. The resulting value of regression coefficient at .000 (p<0.05) indicated existence of relationships that were relatively strong. The article concludes that performance success of projects is dependent on the careful choice or selection of risk management strategies. It is expected the results will benefit various stakeholders, including the government policy makers, NGO sector players, and academia. These article findings additionally boost the body of knowledge of NGOs, project performance, and risk management strategies with related theories. Further studies exploring more strategies to manage risks as well as projects in other entities including urban, rural and County sectors could be undertaken by other scholars.


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INFLUENCE OF SYSTEM AUTOMATION ON SERVICE DELIVERY AT THE MINISTRY OF PUBLIC SERVICE AND GENDER IN NAIROBI- KENYA

Nancy Muthoni Muthee - Jomo Kenyatta University of Agriculture and Technology, Kenya

Robert Mang’ana - Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

Process automation is the practice in which an organization advances its system from the manual to computerized system to ease the work flow and ease of undertaking operations. Automation is important to organization as it enables easy operations by use of machines and this leads to improved productivity and increased productivity. System automation entails all that is done in order to reduce the manual operations and speed up operations by use of electronic gadgets and internet services. One of the methods of automation is having an online presence of an organization by having a website which is friendly to users. The main objective of this study was to evaluate the influence of System Automation adopted by the Ministry of Public Service and Gender and how they influence Service Delivery in the Ministry. This study used the Resource Based Theory to explain the relationship between the study variables. The study used questionnaires collect primary data. A descriptive survey design was adopted. The target population included all the 128 Senior Management Staff working at the head office in Nairobi as at December 2019. Krejcie and Morgan formula was used to calculate the sample size where a sample of 96 employees was used from the three levels of management, that is, lower level, middle level and the top level of management. Data collected was analyzed using descriptive and inferential statistics ranging from frequencies, percentages, correlation and regression. Statistical Package for Social Sciences version 23 was used for Data Analysis. Both descriptive and inferential statistics showed that system automation significantly influences service delivery at the Ministry of Public Service and Gender in Nairobi. The study concluded that system automation initiatives conceptualized by the study as having user friendly websites, customer information system and staff proficiency in computer skills significantly influences service delivery at Ministry of Public Service and Gender in Nairobi, thus service firms that regularly and timely roll out customized and user friendly automated system can realize a significant improvement in their service delivery. The study recommends that there should be regular, timely and continuous improvement activities such as introduction of new services, procedure enhancement and user support services across all cadres of employment in the Ministry of Public Service and Gender in Nairobi, so as to realize a significant improvement in service delivery, and that suitable and feasible customer focus approaches must be crafted and seamlessly implemented by employees to boost public service delivery Ministry of Public Service and Gender in Nairobi.


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