ABSTRACT

Insurance companies in Kenya are forced to cope with dynamic and competitive environment due to the increased effects of globalization and internationalization. Strategic de-merger is one strategy that aims at differentiating an organization from competitors in a way that in the future it remains competitive. The general objective of the study was to establish the relationship between strategic de-mergers and organizational performance of Madison group of companies in Kenya. Specific objectives were to establish the effect of concentration on core competency on organizational performance of Madison group of companies in Kenya, to determine the effects of operating efficiency on organizational performance of Madison group of companies in Kenya, to examine the effects of strengthening control on organizational performance of Madison group of companies in Kenya and to establish the effects of cost reductions on organizational performance of Madison group of companies in Kenya. This study was anchored on industry change theory, resource based theory, efficiency theory, corporate control theory and dynamic capabilities theory. The study adopted a descriptive research design. The target population was 161 management level employees in all the branches of Madison group of companies. Stratified random sampling technique was adopted in selecting study sample. The sample size of the study was 115 respondents. Data collection tool was questionnaire. SPSS was used in analyzing data where qualitative data was analyzed by computing descriptive statistics such as mean, SD, percentages and frequencies and displayed in tables and figures. Qualitative data was analyzed using content analysis. The relationship between the variables was determined by computing multiple regression analysis. The study found that concentration on core competency positively and significantly influenced organizational performance of Madison group of companies in Kenya; operating efficiency positively and significantly influences performance; strengthening control positively and significantly influences performance; and cost reductions positively and significantly relate with performance. The study therefore recommends management of the company to resolve to increasing performance of the organization through proper management of core competencies which include cooperation, shared vision and empowerment. Insurance company should enhance their efficiency by considering the company’s capital structure. The management of the insurance company to have a strong internal control systems which are necessary for organizations to survive, grow and utilized opportunities that arise in their environments while controlling risks.