Strategy in Action. Zurich Insurance - Essay Example

?Strategy in Action 0 Executive Summary The main objective of the study is to prepare a-five year integrated strategic plan for Zurich Insurance sothat they can perform and sustain better in emerging and competitive market. A study was adopted to identify the key issues with the company in the present context. By doing this research the in-depth knowledge on this topic can be enhanced. Marketing objectives and marketing strategies have been devised in this report based on certain findings in the external and internal situational analysis related to the organisation. From the findings, it can be depicted that Zurich Insurance can re-introduce its policies under the prospect of Zurich HelpPoint. Table of Contents 1.0 Executive Summary 2 2.0 Key Issues 5 3.1 Vision 6 3.2 Mission Statement 6 3.3 Corporate Objectives 7 4.0 Situational Analysis 7 4.1 Macroeconomic Analysis 7 4.2 Industry Analysis 9 4.3 Market Analysis 11 4.4 Internal Analysis 12 4.5 Summary of Current Situation 14 5.0 Marketing Objectives 15 6.0 Marketing Strategies 15 7.0 Implementation 17 7.1 Product 17 7.2 Price 17 7.3 Place 17 7.4 Promotion 18 7.5 Process 18 7.6 People 18 7.7 Physical Evidence 19 8.0 Budgetary Requirements 19 9.0 Control, Milestones and Corrective Action 20 References 21 Annexure 1 25 2.0 Key Issues The major issues addressed involves how effective business strategies are adopted by Zurich Insurance, and how can they improve the strategies to run the business in better and efficient way. The analysis is executed through SWOT and PESTLE analyses to identify the internal strengths and weaknesses and uncontrollable external opportunities as well as threats are identified by overall industry analysis, value chain analysis and other telescopic observation matrix. The study has revealed that through customer-centric approach Zurich Insurance can sustain and make growth in the coming years as the prospect for industry is generally found to be quite promising. The life-insurance segment can also provide further leverage for the company in the coming years as the demand for such financial product is increasing among people. Zurich HelpPoint can provide the company certain advantages in attaining their objectives in future. 3.0 Vision, Mission and Corporate Objectives 3.1 Vision Zurich Insurance is an international company that is engaged with the rendering of financial services related to insurance-based sector. The services provided by Zurich Insurance are vehicle insurance, life insurance, business insurance, building insurance along with pension and investments. The market in which Zurich operates its business is highly competitive. The vision of Zurich Insurance is to be the leader in rendering of economic safeguard as well as investment solutions in relation to customer requirements, financial performance along with employee motivation. The company’s philosophy is to focus on ‘Customer Centricity’. They emphasise on individual customers that can assist them to reinforce the brand. Moreover, the company also puts attention towards its employees as the employees work as ‘one team’ (Zurich, 2011). 3.2 Mission Statement Mission statement of any organisation can be stated to be a reflection of its core principles, identities and values. Mission statement shows the future perspective of the company. The target market segments for the company are individuals, small along with medium-sized businesses and key global corporations. The mission statement of Zurich Insurance is as follows: “We’re working to become the UK’s leading provider of financial services, giving you customer service you’ve never experienced before. We’re committed to doing the right thing, in the right way and for the right reason for you, our employees and the communities we work in” (Zurich, 2011). The aim of the company is to eradicate the obstacles that prevent people from the ultimate utilisation of their earning (Zurich, 2011). 3.3 Corporate Objectives The corporate objective of the company towards environment is aimed to decrease Carbon dioxide (CO2) emission in atmosphere that is created through electricity as well as gas energy consumption. Zurich’s aim is to provide security to all the people regarding their money. The company intends to work with customers and to scrutinise its progress, also they always prefer to acquire feedback from shareholders. Zurich is committed to its shareholders to better incorporate relevant issues and fulfil shareholders’ expectations towards its core competencies. A prime objective of the company is to distribute sustainable lucrative growth. Organisational agility is one of the key forces for utilising global strength (Zurich, 2011). 4.0 Situational Analysis 4.1 Macroeconomic Analysis Situational analysis is essential to understand internal strengths as well as weaknesses and to identify external opportunities as well as barriers for the organisation. PESTLE analysis framework refers to the Political, Economical, Social, Technological, Legal and Environmental factors which affect the business. Political: Government has a strong impact in the UK economy. Government designs the financial regulations and recently the UK economy faced financial crisis and to cope up with this adverse situation government took certain initiatives. Government’s persistent obligation is to discuss with the financial services segment throughout the legislative course of action (TheCityUK, 2011). The UK government and financial service sector is interdependent as the government acquires a huge amount from tax from the financial service sector (Wilson, 2010). Economic: Economic factor considers exchange rates, per-capita income and inflation among others. High national earnings growth may create a demand for availing financial services. Ever-rising inflation rate forces the organisation to pay high remuneration to its employees. Social: Zurich emphasises on ‘customer centricity’. They are focusing on meeting customer requirements. At present, individuals are concerned about their health and Zurich is providing life insurance. Multinational organisations are also interested to avail financial services to offer benefits to its employees. In present context, insurance is also considered as investment. Zurich motivates the customers for extensive utilisation of their earnings (Thetimes100, 2010). Technological: At present, technology can provide competitive advantage. The concept of e-commerce plays a vital role in financial service sector. Execution of advanced technology has a major impact on efficiency and effectiveness of organisation. Legal: The Financial Services Authority (FSA) has penalised Zurich Insurance over ?2m for failing to avoid the loss of secret information of customers in the UK. The data was misplaced while Zurich UK transferred certain data of general insurance to Zurich South Africa. The management of Zurich UK accepted it and is trying overcome this controversial issue (Insley, 2010). 4.2 Industry Analysis Industry analysis is considered as the reflector of external opportunities as well as threats present in the industry. Zurich functions in a tough competitive marketplace. It requires focusing on offering the best probable products for its customers with the intention of competing and developing market share. Source: (Panagiotou, 2003). The Telescopic Observations (TO) framework was introduced in mid-1999 to endow with a more organised framework which leads towards SWOT analysis. Telescopic observations assist decision makers to be more realistic and coherent with organisational objectives. It is based on SWOT analysis. For instance, financial service provider, Zurich has opportunities to expand its business in competitive market of the UK. The threats for Zurich in life insurance segment are its competitors such as e-life insurance, Liverpool Victoria and ASDA Life Insurance among others. Zurich insurance mainly targeted business enterprises, so there also they have certain competitors i.e. Howden Insurance Brokers, C J Coleman & Company and Lark Group among others. There are certain opportunities for the UK insurance industry such as insurance companies are the foremost employers in the UK, they are the key investor in the economy of the UK and Zurich Insurance has reputation for financial stability (Adlington, 2006). The basic success factors for the insurance industry are rapid claim settlement, proficient management, human capital development, advanced corporate governance, superior technology, pioneering products as well as well-organised customer service (Babalola, 2010). Industry segmentation is based on certain categories such as general insurers, life insurers and composite insurers among others. Industry threats depend on macroeconomic factors such as political, legal, social, and rapid change in business environment. The business environment is rapidly changing in the UK and there are several political issues raised at the time of financial crisis that hampers the financial service industry. The companies should monitor the results whether it is realistic with prediction or not, and they have to set up strategies in such a way so that they can minimise the threats and utilise the opportunities to the extent (Adlington, 2006) (Refer to Annexure 1). Insurance companies has faced lot of challenges due to certain reasons such as Zurich had been penalised by The Financial Services Authority (FSA) recently and in recent past HSBC, Norwich Union and other financial service provider had been penalised for similar reason as reported by FSA (Insley, 2010). The statuses of the UK financial services firms were certainly damaged by the economic crisis. The UK insurance industry leaders have faced strong challenges to recover reputation (Association of British Insurers, 2011) 4.3 Market Analysis Market analysis is conducted in order to recognise the strengths, weaknesses, opportunities and threats of the company. Strengths: Zurich Insurance is a worldwide service provider and has wide range of services. The target market comprises of individuals, small as well as mid-size enterprises along with international corporate. Zurich is concentrated on its core business by creating value for customers. Zurich also possesses strong market position and strong financial conditions (Zurich, 2011). Weaknesses: Zurich has few weaknesses such as recently they faced a controversy regarding loss of confidential documents of the customers (Insley, 2010). Zurich has faced financial weaknesses in terms of economic solvency ratio in current year (Zurich, 2010). Opportunities: Zurich takes certain initiatives to fulfil Corporate Social Responsibility (CSR). The opportunity for the company is that at present people are health conscious and therefore the company can enhance its sales in life insurance segment. Advanced economy in the UK can enhance the demand for financial service sector. For instance, if the earning of an individual is stable, he may feel interested for investment. Zurich assists to utilise better use of the financial earnings. Threats: The UK Government develops the policies for provider of financial services. Thus, this can be threat for the company. There are several competitors for Zurich in the UK market. Zurich has to constantly monitor its financial status compared with forecasted reports. If it fails to meet the criteria for consecutive years, it may face drastic fall from its position. 4.4 Internal Analysis Internal analysis consists of many aspects such as financial ratios, 7s framework, and competencies along with capabilities of the company and value chain analysis. Zurich has maintained a sustainable growth in terms of financial perspective. They have faced quite a challenge with respect to maintaining economic solvency ratio and operational value. They have delivered operational profit of US$ 4.9 billion in 2010. The insurance product has low penetration in tough competitive market. Recently, Zurich made strategically significant acquisitions in Indonesia and Lebanon to exploit its potentiality and opportunity (Zurich, 2010). Source: (Teufel & Et. Al., 2001). The value chain of insurance provider represents that there are three segments in which the organisations operate in three lines of business that is personal, commercial and reinsurance. The figure mentioned above depicts that two activities are present in value chain such as risk aggregation activities in terms of distribution channels, claims services and underwriting services along with risk spreading activities such as investment services and reinsurance services. Company agents, agency writers and internet also can be used as distribution channel. As Zurich Insurance targets multinational companies they can use associations as their distribution channel. Efficiency in claims can be obtained by offering services at lower cost. In relation to risk spreading activity, reinsurance services imply one insurance company purchasing insurances from another company so that it can divide the risk factors between both the companies. In risk management, there are few significant risks identified to be associated with the organisational operations, e.g. catastrophe risk, risks related to pricing and severity risk (individual claim). Furthermore, risk management also considers investment risks, e.g. interest risk, political risk and default risk among others (Teufel & Et. Al., 2001). Zurich Insurance has introduced a Unique Culture Proposition (UCP) which may perhaps be its Unique Selling Point (USP) as well. USP consists of 4Ps of marketing mix such as price, place, promotion and product and UCP comprises of assumptions, values, processes, incentives as well as stories (Kingl, 2010). Source: (Kingl, 2010). The figure represents that marketing mix and cultural influence both are coherent with each other. Zurich insiders observed a change in customer relationship groups by deeper communication among risk engineers and Global Relationship Leaders (GRL) (Kingl, 2010). 4.5 Summary of Current Situation Zurich Insurance is a globally recognised company. Though it faced certain challenges due to controversial issues, it has recovered its position in international market. According to the annual report of the company they have maintained their financial position till the first quarter of 2011. They have focused their efforts to better comprehend and take relevant measures to satisfy the identified customer needs along with distributors. By introducing international hubs and common centers of expertise, they operate business efficiently and get in touch with the market rapidly. They are in sustainable growth in terms of generating revenue (Zurich, 2010). 5.0 Marketing Objectives The objectives are based on SMART (Specific, Measurable, Attainable, Realistic and Timed) for Zurich Insurance (International Finance Corporation, 2003). The key objectives of the company are to earn more revenue than that of previous years, creating brand awareness in the mindset of the customers, building long-term relationship with the customers, innovative product and service that can assist them to differentiate from competitors. In the year of 2010, they acquired over US$ 100 million in terms of savings by complementing the procurement process which can in turn be an opportunity for Zurich to improve further. The mission is to be market leader of financial services and satisfying customer requirements. They took certain initiatives for fulfilling the commitments towards employees, customers and environment (Zurich, 2011). 6.0 Marketing Strategies The marketing strategies adopted by Zurich can be assessed based on Ansoff’s growth strategy matrix. As per Ansoff’s model there are four quadrants namely market penetration, product development, market development and diversification. Zurich Insurance plays in very competitive market where market penetration is low but industry has a strong growth potential. However, Zurich can develop further by generating profits. They have focused their efforts to comprehend and take action efficiently to meet the requirements of customers along with distributors. By introducing international hubs and common centers of expertise, they operate business efficiently and get in touch with the market rapidly. Ansoff’s Model Source: (Scribd, 2011). Zurich targets the market for its products and services to various segments i.e. individual, small as well as mid-sized enterprises and multinationals. According to Ansoff’s model market penetration for current market and existing product or services can be unchanged and market segmentation is pursued. However, they can reintroduce their brand by promoting it in innovative way which can help the company to generate profitability. Zurich can implement its ‘customer centric’ philosophy in effective way. Their effort should be to build the brand synonymous to ‘help’. They have already implemented the customer centric philosophy by providing customers a telephone service for all claims. The baseline of the company is to deliver at the earliest. They can look forward on the basis of their philosophy. They can introduce customer-focused services, increasing new divisions for Zurich HelpPoint that can assist them to work with insurance brokers (Thetimes100, 2010). 7.0 Implementation Zurich is a well-known financial service provider. As service provider, they have to emphasise on 7Ps of marketing mix such as product, price, place, promotion, process, people and physical evidence. 7.1 Product The insurance product provided by Zurich has low penetration in emerging markets. Thus, it has eye-catching growth potential. Zurich HelpPoint is a centre through which customer can claim their dues whenever they need it (Thetimes100, 2010). 7.2 Price Zurich can re-promote the brand by providing insurance at lower cost. However, they have to ensure that the customers will get return in time that can assist them to enhance the demand for their products. And they are committed to the customers for ultimate utilisation of customers’ earnings (Thetimes100, 2010). 7.3 Place Zurich can expand its efficiency by developing operating hubs globally that can help them to get in touch with the customers as well as the market. They can upgrade as well as re-launch existing services under HelpPoint (Thetimes100, 2010). 7.4 Promotion Zurich can re-introduce its existing service through HelpPoint as it is based on their philosophy of customer centric business strategies (Thetimes100, 2010). 7.5 Process They can promote their services under the purview of HelpPoint. They have already introduced free telephone services for the customers to make their claims. The expansion of HelpPoint can assist them to work with insurance brokers. The process will be effective for them to enhance organisational efficiency (Thetimes100, 2010). 7.6 People They have focused their efforts to better comprehend and take action to meet the requirements of customers along with distributors. Zurich has three operations in the UK market: UK General Insurance, UK Life as well as Global Corporate. Zurich Insurance already has 11000 employees in the UK along with 60000 employees all over the world. The management requests employees to contribute their ideas through regular surveys concentrated on the evaluation of employee commitment that ensures employer-employee commitment towards success for the organisation (Zurich, 2011). 7.7 Physical Evidence HelpPoint is a centre for meeting the customer requirements whenever they need. The HelpPoint can be a centre for re-promoting the existing services. They can launch innovative customer-focused services (Thetimes100, 2010). 8.0 Budgetary Requirements The promotion and re-introducing the brand as well as existing services is concerned on financial status of the company. They have to allocate certain amount for the proposed plan is presented in below table: Promotion Amount (in percentage) Social media 30% Television and other electronic media 20% Local promotions through hoardings and print media 20% Brand endorsement with celebrity 30% 9.0 Control, Milestones and Corrective Action Time Estimates (in days) Activity Predecessor Optimal (O) Normal (M) Pessimistic (P) Expected time Selecting a product .... 30 34 37 33.83 Selecting the place Selecting a product 15 17 20 17.17 Developing pricing strategy Selecting the place 25 28 32 28.17 Promotional strategy development Developing pricing strategy 40 43 47 43.17 Identifying the appropriate people to be involved in the process Promotional strategy development 10 13 15 12.83 References Adlington, P., 2006. The Insurance Market Opportunities. Ordnance Survey. Association of British Insurers, 2011. UK Insurance Industry Leaders Warn Of Tough Challenges Ahead With Improving Reputation A Priority. ABI News Release. [Online] Available at: http://www.abi.org.uk/Media/Releases/2011/06/UK_insurance_industry_leaders_warn_of_tough_challenges_ahead_with_improving_reputation_a_priority.aspx [Accessed on 21 July, 2011]. Babalola, R., 2010. Babalola Underlines 7 Critical Success Factors For Insurance Firms ...Insists On Insurance Firms’ Prompt Claim Settlement To Customers. Federal Republic of Nigeria, Ministry of Finance. [Online] Available at: http://www.fmf.gov.ng/index.php?option=com_content&view=article&id=81:babalola-underlines-7-critical-success-factors-for-insurance-firms&catid=39&Itemid=50 [Accessed July 21, 2011]. International Finance Corporation, 2003. Evaluation Of Global Corporate Governance Forum. Draft Final Report. [Online] Available at: http://www.ifc.org/ifcext/cgf.nsf/AttachmentsByTitle/Evaluation+Report+SQW/$FILE/Evaluation+Report+SQW.pdf [Accessed July 21, 2011]. Insley, J., 2010. Zurich Insurance Fined ?2m For Losing Customer Details. Guardian News and Media Limited. [Online] Available at: http://www.guardian.co.uk/money/2010/aug/24/zurich-insurance-fsa-fine [Accessed July 21, 2011]. Kingl, A., 2010. How A Unique Culture Proposition Became A USP. Business Strategy Review. pp. 52-55. Panagiotou, G., 2003. Bringing SWOT Into Focus. Business Strategy Review. Vol. 14. pp. 8-10. Scribd, 2011. Ansoff Growth Strategy Matrix. [Online] Available at: http://www.scribd.com/doc/20737924/Ansoff-Growth-Strategy-Matrix [Accessed on 21 July, 2011]. TheCityUK, 2011. Response To Government White Paper On Financial Regulation. Financial Services In The UK. [Online] Available at: http://www.thecityuk.com/financial-services-in-the-uk/why-financial-services-matter/uk-financial-services-articles/response-to-government-white-paper-on-financial-regulation/ [Accessed July 21, 2011]. Teufel, P. & Et. Al., 2001. Insurance Value Chain. American Academy of Actuaries. Thetimes100, 2010. Providing A Customer-Centric Service. Business Case Studies. [Online] Available at: http://www.thetimes100.co.uk/downloads/zurich/zurich_15_full.pdf [Accessed on 21 July, 2011]. Wilson, B., 2010. Financial Services Sector Pays Most Tax To UK Government. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8204623/Financial-services-sector-pays-most-tax-to-UK-Government.html [Accessed on 21 July, 2011]. Zurich, 2010. Annual Report 2010. Maintaining Financial Strength. [Online] Available at: http://zdownload.zurich.com/main/reports/annual_report_2010_en.pdf [Accessed on 20 July, 2011]. Zurich, 2011. Our Approach. About Us. [Online] Available at: http://www.zurich.co.uk/home/aboutus/ourapproach/ourapproach.htm [Accessed on 20 July, 2011]. Zurich, 2011. Mission. Working For Zurich. [Online] Available at: http://www.zurich.co.uk/home/careers/workingforzurich/missionandvalues.htm [Accessed on 20 July, 2011]. Zurich, 2011. About Zurich. Fact Sheet. [Online] Available at: http://www.zurich.co.uk/NR/rdonlyres/97F4F9FC-768B-4B36-8C90-2336757C499B/0/Zurich_factsheet10_A4_071031_engl.pdf [Accessed on 21 July, 2011]. Zurich, 2011. Worldwide Credentials. About Us. [Online] Available at: http://www.zurich.co.uk/home/aboutus/Worldwide/credentials.htm [Accessed on 21 July, 2011]. Annexure 1 Source: (Adlington, 2006). Read More