An Assessment of the Survival Strategies Adopted by Microfinance Institutions in Nakuru Town, Kenya

Abstract

Microfinance industry has emerged as a powerful avenue for poverty alleviation globally. However it has witnessed a rise in the number of micro finance institutions which are all competing for the same market in Kenya. Following the changes in the environment, micro finance institutions have been forced to come up with competitive strategies hence this study sought to establish the competitive strategies employed by microfinance institutions and their effects on survival. The specific objectives of the study included: to assess the effects of defensive market strategy on survival of microfinance institutions, to establish how dodging strategy on survival of microfinance institutions and to determine the effects of expansion strategy on survival of microfinance institutions. The key variables of the study were: defensive market strategy, dodging strategy and expansion strategy. The study thus adopted a descriptive survey design where selected micro finance institution managers and business development officers rated their institutions on the basis of the study variables to capture information the way it was without manipulation. Stratified random sampling method was used to select the elements of the study sample. The target population for the study comprised of all the sales managers, and business development officers of micro finance institutions with operations in Nakuru Town. Data was collected by use of questionnaires designed by the researcher and based on the study objectives. The data was then analyzed using descriptive statistics such as percentages, frequencies, mean and standard deviation. Multivariate regression analysis was also done to deduce statistical inferences. The study revealed that: competitive strategies applied by micro finance institutions had an impact on the survival of micro finance institutions and overreliance on defensive strategies had a negative impact on firms survival. Further offensive strategies when carefully selected had a positive impact on firms survival by helping them to venture into markets for the future and dodging strategies are the most effective in enhancing firms survival. They enhance firms market growth with minimum competition costs.