EFFECT OF COST LEADERSHIP STRATEGIES ON PERFORMANCE OF INSURANCE FIRMS IN NAIROBI COUNTY, KENYA

Abstract

The insurance uptake in Kenya is estimated to be at 6.8% of population and is served by 50 insurance companies who are members of the Association of Kenya Insurance. Evidently, the competition within the industry must be steep for any insurance firm seeking to make substantial gains in market share. Creating cost advantages and leveraging on them can significantly improve the performance prospects of the insurance firms and enable them to remain competitive in the active markets and break new ground in potential markets. However, the aspect of cost leadership has not been explored in detail in regards to the competitiveness of insurance firms in Kenya. The objective of the study, therefore, was to determine the effect of cost leadership strategy on performance of insurance companies in Nairobi, Kenya. The study was guided by the Resource Based View strategies. Descriptive survey design was adopted for the study that also targeted 1443 top, middle and lower level managers in 43 insurance companies registered in Nairobi. From these 54 managers were selected for the study using systematic random sampling. Data was collected using pretested copies of a structured questionnaire developed by the researcher. Data was analyzed using both descriptive and inferential statistical methods. The findings revealed that the cost leadership strategy employed by the insurance firms moderately affected their performance. The study recommended that insurance firms should embrace and invest in cost leadership strategies most especially forming linkages with service providers, suppliers and other supplementary institutions .  Keywords: Cost leadership Strategy, Generic Strategies, Performance ITATION: Msinga, S. M. S., Lala, F., Mohamed, M. B., Ndinya, A., & Ogada, M. (2020). Effect of cost leadership strategies on performance of insurance firms in Nairobi County, Kenya.  The Strategic Journal of Business & Change Management , 7(2), 112 – 120.