Zurich Insurance: Because Change Happens. Integrative Strategic Plan - Essay Example

Zurich Insurance: Because Change Happenz Outline of an Integrative Strategic Plan 0 Company profile: Zurich is a large insurance group, and leading insurance supplier of insurance and risk management all over the world. There are three key business units of Zurich: General Insurance, Global Life and Farmers. It provides insurance products and services to a wide variety of small, medium sized and large companies, individuals and multinationals. Zurich operates globally. But the 3 main regions its business is divided into are: North America, Europe and Asia. The company promises to deliver the best products and services to its customers and is truly customer centric. Its competitive advantage is that customer is placed at centre of all business activities. 2.0 Key Issues Zurich, being a large group of insurance company also has a lot of issues and challenges to face. The number one challenge that Zurich has to face is that it operates in a very competitive marketplace. Every now and then new insurance companies sprout up posing a challenge to the company. Therefore it needs to differentiate itself in some way from its competitors. Another issue for the company was shown by secondary research conducted by the organization. In this research they found out that less than 15 % of customers trusted any insurance company. Overall the reputation of insurance companies is that of a commodity and that they do not build relationships with customers. (The times 100, 2010) Zurich needs to make its company more customers centric and communicate more and more with its customers to build a relationship with them. Let’s look at the SWOT analysis of the company: Strength: The Company’s biggest strength is the fact that it operates globally in 170 countries. Its General insurance segment has been giving excellent performance that it is kept in the top tier of insurance companies. It has also managed to be the 3rd largest personal lines insurer in the US. (Zurich Insurance, 2010) It has the business operating profit of USD 5593 Million. There are 60,000 employees that work towards giving an excellent service to the customers and also helping other employees grow. The employees have great insight and help in putting up new projects and strategies for a continuous advancement. Weaknesses: The Company is overall performing very well. However according to its financial report of the year 2009, it indicated that Zurich has not generated more profit in the year 2009 as compared to the year 2008 in the business units of general insurance and global life. (Zurich Financial Services Group , 2009) Zurich has also not been successful yet in building a relationship with customers. Its website is not being used as a communication medium for HelpPoint (a service Zurich offers to help its customers, which acts as its USP) Opportunities: The greatest opportunity for Zurich is the market of farmer’s business unit. This area is a niche and catering to it will generate more profitability to the company. Also with Help Point now, it has an opportunity to now communicate to its customers more easily. New technology in the HR department is also an opportunity to have a competitive advantage over its competitors. (Donovan, 2008) Threats: The only threat to Zurich is its competitors. However, Zurich being one of the largest insurance groups does not have a lot of close competitors posing threats on it. Since Zurich is flourishing in the business segment of farmers, one threat is that some new competitors are also entering into this market. Its top competitors are Allianz SE, Aviva plc, and AXA 3.0 Vision, Mission and Corporate Objectives Zurich as mentioned above is one of the largest Insurance groups in the world. For a company like this, it needs to have a clear set Mission and Vision towards which the entire organization is working. The smart corporate objectives are also very important for achieving any goal and help in walking towards the ultimate mission and the vision of the organization. 3.1 Vision The vision of Zurich is to become the largest Insurance and Financial services corporation in the world and to deliver help to its customers. 3.2 Mission Statement The mission statement of the Zurich is providing a customer centric service. 3.3 Corporate Objectives The corporate objectives are an essential part of an organization plan. These objectives help to set goals for your corporation and then set timelines to achieve these goals and actually work for achiving these goals. Objectives should be SMART (Specific, Measurable, Achievable, Realistic and Timely). In the following section, we will discuss the corporate objectives of Zurich: 3.3.1 Meeting diverse needs through deeper customer understanding: Zurich aims to achieve to build trust among its customers through providing Help to them at any time they want. It aims to reach its customers in all 170 countries by the year 2012. 3.3.2 New Brand positioning of Zurich as a company that delivers help to the customers. Creating this positioning with the help of communicating it to customers, investors, and media through a brand promotion campaign. The campaign includes advertising through print and electronic media, online, through sponsoring events and direct mail and email marketing. (The times 100, 2010) 3.3.3 Have profitable growth in the company and increasing its profit to USD 6000 Million by the year of 2011 3.3.4 Target of USD 2.7 billion for 2009 to 2011 in total financial benefits. 4.0 Situational Analysis Before developing any strategy for developing your services, you need to do a thorough analysis of the current situation of your organization, industry and market. In this section we will look in to the Macroeconomic point of view, the industry analysis, market analysis and the internal analysis of the organization. 4.1 Macroeconomic Analysis Let’s see the Industry from a macro economical point of view. First of all there are no political influences on the insurance industry. The economy was in a downturn for last few years which made the customers of insurance companies fall and the profits to slow down. But for last one year, the economy is again rising bringing in more customers and growth options. For social point of view, it was shown in a research that more than 85% of people do not trust insurance companies. People generally believe that insurance is not a good option and in some religions it is also considered forbidden. From a technological point of view, there are more and more technologies building up to help operational activities as well as guiding the managers in taking strategic decisions. The total number of countries Zurich targets is 170, making it the target market of more than 1.5 billion people. The demand for security and insurance is increasing at a very fast pace and customers are more and more demanding help. Inflation is now lowering after the economic downturn therefore now customers are demanding more insurance plans. Also, due to the uncertain situation in the entire world, people are more and more looking for solutions to have a secure plan with them. However if we see only Zurich in Switzerland then we can see that the total population of Zurich is 7.6 million, the GDP is $ 324.6 billion, and inflation is 2.4 % 4.2 Industry Analysis For carrying out the situational analysis, It is very important to see the overall view of the industry itself. Due to the result of globalization, deregulation, and terrorist attacks, the insurance industry has seen a real downturn. (Investopedia, -) According to SwissRe, total gross insurance premiums were 4.067 trillion USD in the year 2009. 4.2.1 Competitive Forces: According to the Portor’s five forces model, lets analyse the industry for Zurich. Threat of New Entrants: Overall, there has been a new trend in the insurance industry. Instead of offering straight insurances, now insurance companies are selling more investment type products like annuities. As a result this industry is also merging with financial services companies that lead to competition between them as well. Many insurance companies are now offering tax and estate planning services as well. Therefore the threat of the new entrants lies within the industry. However there is a very low threat of an average person to start up a large insurance company. Another threat for insurance companies is that now financial services companies might enter the insurance industry Bargaining Power of Suppliers: The suppliers of capital do not pose a big threat to the industry, but suppliers luring away human capital pose a big threat. Bargaining power of Buyers: Buyers also do not pose much threat to the insurance industry. Small sized companies do not have a large bargaining power, however some really large corporate clients have a lot bargaining power with insurance companies. But these pay millions of dollars a year in premiums and prove to be profitable to the insurance companies. Availability of substitutes: In the insurance industry, there are direct substitutes available for almost every type of insurance. Mostly the competitors offer the same the services and customers cannot differentiate between the two substitutes. However, Zurich here has a differentiating USP. Competitive Rivalry: Insurance has now become like a commodity and customers only see the low cost structure, greater efficiency and great customer service while weighing between different competitors. So the industry has become really competitive where every company tries to provide something extra to lure the customers. Large companies are now trying to acquire or merge with small companies rather than spending money to market and advertise to people. 4.2.2 Telescopic Observations matrix Step1: The current situation of the industry as seen in the last section is that insurance industry is really competitive. There is a huge competition between the many companies offering. Step 2: This shows that due to the competition, individual companies need to differentiate their products and services in order to attract new customers and retain old ones. Step 3: The corporations in the industries need to : Focus on helping customers Offering a huge variety of products and services. Advertising at large through different mediums. Merging with small companies to eliminate the competition. Step 4: A regulation body of the industry, and government needs to see whether everything is going smoothly and fairly. In an Insurance firm, there is a need to be a governing body that checks whether the objectives are being fulfilled. 4.2.3 SWOT analysis: Strength: The strength of the Insurance industry is that it can now be merged with other financial services and organizations can offer more than insurance to their customers. Weaknesses: The biggest weakness is that Insurance is now becoming a commodity among consumers where there is no significant different between competitors. Opportunities: The strength of the industry is also an opportunity. Now corporations can give more to their customers than straight insurances. Now corporations can offer investments and other financial services to their customers. Threats: The biggest threat to the industry is that competitors are rising and everyday trying to improve them and giving better services to customers in every way possible. 4.3 Market Analysis Just like the industry analysis, market analysis is also very important in order to determine what strategies to adopt and how to go about them. The market of Zurich is divided into three regions: North America, Europe and Asia. Let’s look at the market analysis of Insurance industry: Zurich has proved to be having high demand among the consumers in many types of insurance offered. According to a research conducted, the market for Zurich needed help in everything. They wanted risk management and financial security and they needed an organization that would help them in every step of life. The market does not have lot of new entrants coming because there is a tough competition already and entering the market is not that easy. According to SwissRe source, the emerging markets are 2.89 per cent in insurance industry. However there is a tough competition between Zurich and other companies. In the area of casuality/property, Zurich stands to be second having 6 % market share. State Farm Mutual Automobile Insurance stands to be the first one in the ranking with 10. 6% market share. There are many other close competitors to Zurich like Allaste Corp with 5.4% market share. In the area of Homeowners insurance, Zurich stands to be the third with 7.4% market share whereas Allaste is second and Farm Mutual is first with more than 21% market share. (Institution, 2008) 4.4 Internal Analysis After analysing the entire industry and the market, one need to analyse its own organization to see what strengths it has, what competitive advantages it has, how is the cultural framework of the organization and the financial standing. 4.4.1 Cultural web: Zurich is operating in 170 countries and all the countries have different cultures. Zurich believes in having diverse culture. The vision of Zurich’s diverse culture is “Zurich is committed to creating a culture of inclusion consistent with Zurich Basics; one that attracts top talent and that promotes the development and full contribution of all employees to business goals. We achieve mutually beneficial relationships with diverse business partners, customers, and individuals in the marketplace and community.” (Zurich Insurance Company Limited) They are focusing on having a Unique Culture Proposition to give value to their customers. Therefore, in 2007, they thought of having workshops in different regions to share stories about how some activities has led to success in the organization over the past years. (London Business School, Spring 2010) 4.4.2 Competitive Advantage: The competitive advantage of Zurich is that it has a customer centric business where customer is at the centre of all business activities. In this way customer feels valued and cared for. Zurich does this by delivering help to customers with the help of HelpPoint service. 4.4.3 Financial Analysis: The operation profit of Zurich is USD 5593 Million. The general insurance combined ratio is 96.8%. Net income attributable to shareholders was USD 3,215 Million in the year 2009. The Return on shareholder’s equity was 12.6 %. A complete SWOT analysis of the company has been done in the section 2.0. 5.0 Marketing Objectives The marketing objectives for Zurich company are the following: 5.1 Develop a deep customer understanding and their businesses. 5.2 Provide insightful and tailored guidance, risk management services & global perspective. 5.3 Provide fast, fair and easy delivery to the customers and help customers to get on with their lives/businesses quickly. 5.4 Develop a customer service approach that treats customers as individuals and makes them feel we are focused on their needs. 6.0 Marketing Strategies To meet the objectives, there are certain marketing strategies that Zurich needs to develop . Lets look at the strategies: 6.1 Product development: Zurich in order to meet its objectives, need to develop a new product or service which is customer centric and caters to the individual needs of the customers. 6.2 Advertising: Advertising across globes, e.g. in billboards, newspapers, through television etc. 6.3 Online: Marketing through Zurich’s website. 6.4 Sponsoring: Sponsoring of sports and arts events. 7.0 Implementation 7.1 Product The product that Zurich should offer is an investment in bonds. These bonds will be given to customers and give 10% interest per annum. 7.2 Place The place for the product will be all over the world 7.3 Price The price of the bond will be USD 20. 7.4 Promotion The promotion of the bond will be through advertisements on print and electronic media both. The website should also advertise the product and Facebook should also be used in promotion. 7.5 People The bonds will be sold to all adults. 7.6 Processes The bonds will be issued by Zurich and adults will buy the bonds for the set price. They have to keep the bonds for 1 year after that they can sell it. 7.7 Physical Evidence Certificates for bonds will be given to the bond owners. 9.0 Control, Milestones and Corrective Action A proper governing body will be issuing the bonds and keeping the records of the bonds and their owners. Bibliography Donovan, K. (2008, February 02). Employer profile: Zurich. Retrieved December 13, 2010, from Employee Benefits: http://www.employeebenefits.co.uk/item/3932/23/305/3 Institution, I. I. (2008, january 03). Insurance Company Rankings. Retrieved December 13, 2010, from Insurance Information Institution: http://www.iii.org/facts_statistics/insurance-company-rankings.html Investopedia. (-, - -). The Industry Handbook: The Insurance Industry. Retrieved December 13, 2010, from Investopedia: http://www.investopedia.com/features/industryhandbook/insurance.asp London Business School. (Spring 2010). How a Unique Culture Proposition became USP. Business strategy review, 1-3. The times 100. (2010). Providing a customer-centric service. The times 100, p1-3. Zurich Financial Services Group . (2009). Financial Report 2009. Zurich: Zurich Insurance Company Ltd. Zurich Insurance. (2010). Zurich at a Glance. Zurich: Zurich Insurance company Limited. Zurich Insurance Company Limited. (n.d.). Diversity at Zurich. Retrieved December 13, 2010, from Zurichna: http://www.zurichna.com/internet/zna/SiteCollectionDocuments/en/careers/DiversityatZurich.pdf Read More