The Daman Insurance Company - Case Study Example

Situation Analysis Name Instructor Course Situational Analysis Executive Summary The report has focused on discussing an in-depth situational analysis for Daman Insurance Company which is located in UAE. The report has first presented a detailed discussion of the environment that Daman operates in through using the PESTEL analysis which has evaluated the Political, Economic, Social, Technological, and Legal environmental factors that impact the business. The report has then undertaken to give a general overview of the firm which has entailed the analysis of the company’s mission, vision, and history and the way it has affected their present competencies. The report has discussed Daman’s corporate social responsibilities through the utilization of the pyramid of corporate social responsibility which entails the economic, legal, ethical, and philanthropic responsibilities. After that, the report has discussed Daman’s target market which as well as its critical success factors which are their solid business strategy and financial strength. This has been followed by a detailed SWOT analysis that has identified the strengths, weaknesses, opportunities, and threats of the business as well as how weaknesses can be turned into strengths and threats to opportunities. The report has then discussed Daman’s value proposition as well as its brand positioning in comparison to its competitors. It has then been concluded with some recommendations which are to diversify its operations in other countries to protect it from various economic risks as well as to use the government reports and surveys on emerging health issues to provide health covers for these emerging issues. Table of Contents Environmental Analysis 4 PESTEL Analysis 4 Political Factors (0.1) 4 Economic Factors 0.1 4 Social Factors 0.1 5 Environmental Factors 0.1 5 Technological Factors 0.3 5 Legal 0.1 6 Organizational Overview 6 Mission and Vision statements 7 Mission Statement 7 Vision Statement 7 History 7 Firm Performance 7 Financial Performance 7 Marketing Performance 8 Marketing Goal and Objective 8 Corporate Social Responsibility 8 Economic Responsibilities 8 Legal Responsibilities 9 Ethical Responsibilities 9 Philanthropic Responsibilities 9 Target Market 9 Competition 10 Competitive Strategy 10 Critical Success Factors 10 Sound business strategy 10 SWOT Analysis 11 Value Proposition 12 Differentiation and Positioning 12 Conclusion 13 Recommendations 13 References 15 Introduction Daman is among the well-recognized health insurance companies in UAE with the Abu-Dhabi governing owning 80% of it and the remaining 20% being owned by Munich Re from Germany. This firm was started in the year 2005. The report has undertaken to discuss the situational analysis of Daman Insurance in UAE. Daman Insurance offers a wide range of health policy plans which address the various health needs of the different groups of people in UAE. The primary reason for selecting Daman Insurance for analysis is its ability to have the financial muscle to strive through the changing economic times and their marketing strategies that have made them among the most successful insurance firms in the region. The report will, therefore, seek to undertake a marketing audit and situational analysis of Daman Insurance through assessment of various aspects of their business environment, target market, competition analysis, brand positioning, value proposition, and the organizational performance. Environmental Analysis PESTEL Analysis Political Factors (0.1) The Daman Insurance Company is categorized as a joint-stock public firm where the government of Abu Dhabi possesses 80% of it, and Munich Re, which is Germany-based possesses the remaining 20% (Gillespie, 2007). This significant ownership of Daman by the government follows the fact that health insurance has been made compulsory in that country which then means that there is significant political intervention in the company (Gillespie, 2007). Since the Abu Dhabi government owns a large share of Daman, they can drive for the implementation of employer-sponsored plans especially because a large population in Abu Dhabi is expatriates and are working class. Since the Abu Dhabi government is firmly on the side of Daman in UAE, the political factor has been ranked at +3. Economic Factors 0.1 The consumer income plays a significant role in the determination of the economic factors that impact Daman Company. As the consumers earn more income, it will lead in enhanced disposable income levels where individuals will tend to spend more so ensure that their health is secured through taking up the various insurance claims (Gillespie, 2007). Daman could choose to shift towards adoption of a consumer-oriented mindset. This will enable the firm to offer different options for the consumers in both the private and public exchanges and in turn attract more clients. Given that most people in UAE are expatriates and are working, there is a tendency of economic security which will be favorable for Daman hence a rank of +2.5. Social Factors 0.1 The social environment, in this case, will primarily focus on the societal values of the individuals in UAE. Most of the people in UAE are working which means that they have a significantly elevated social value on life and health security (Gillespie, 2007). Daman could provide a wide variety of insurance claims and tap into specific health needs of different individuals across all ages to ensure that all the health requirements of all individuals are included in the range of insurance plans. The society and its values are constantly subject to change especially if the firm does not work to suit these set societal values which present a risk for Daman and consequently a rank of -2. Environmental Factors 0.1 The Daman Insurance business activities does not harm the environment significantly but only in some ways concerning waste management and the such. However, being that the government owns a large share in its operation, environmental issues need to be taken into consideration if they are to maintain and enhance their customer’s trust. Some of the environmental practices that Daman strives to uphold include abiding by the various environmental regulations, especially concerning waste management and participating in activities that address global warming and climate change which is a global environmental concern. This in turn enhances their image and goodwill in protecting the environment in which they operate in and which their customers live in as well and thus getting a rank of +1.5. Technological Factors 0.3 There is a continuous growth in the use of the internet where various insurance consumers are utilizing the internet to get access to the various insurance plans and policies. Daman has embraced technology mainly to keep close contact with their customers and in their marketing strategies (Gillespie, 2007). Daman could utilize technology in its undertakings of their corporate social responsibility especially in driving towards environmental protection which is becoming a more and more important aspect in the business world. Technology is becoming favorable for Daman because it will help it serve more customers effectively which is something that can b easily adopted with the significant help of the government hence a weight of +3.5. Legal 0.1 In Abu Dhabi, UAE, a new regulation was passed which required every citizen to have a health insurance cover. The new law on health insurance has indeed resulted in the financial discipline that has been needed substantially in the insurance sector (Gillespie, 2007). Following this, Daman can focus on enhancing the quality of their services especially because they have substantial support from the Abu Dhabi government. This can be done through adopting the methods of pay-for-performance which will enable the firm to provide insurance plans that are value-based and consequently improve the healthcare industry in the country. The government is largely on the side of Daman hence they will be accorded a lot of legal support from it which leads to the legal factor being ranked at +3.5. PESTLE: (0.1*(+3))+(0.4*(+2.5))+(0.1*(-2))+(0.3*(+3.5))+(0.1*(+3.5)) +(0.1*(+1.5))=2.65 The values have been obtained from multiplying the rank by the weight of each environmental factor. Since the result is positive, then Daman can comfortably do business in UAE. Organizational Overview Daman Health Insurance is a firm that is situated in UAE, and it was started in the year 2005. The firm has rapidly grown regarding its membership and offers a broad variety the health insurance plans in a wide geographical coverage (Hamidi, 2016). The Abu Dhabi government owns 80% of the company, and Munich Re owns 20%. With the largest share being owned by the government, Daman insurance was serving millions of members by 2016. Mission and Vision statements Mission Statement “We deliver world-class health insurance solution that facilitates the development of the UAE healthcare system and support Abu Dhabi in achieving its 2030 vision.” Daman is working towards achieving this mission as it has put up different branches in various places in UAE which has enabled it to reach a wide range of people in UAE. It has also established world-class systems across all of its branches to stabilize the healthcare levels that it intends to (Damodaran, 2013). Vision Statement “To become the most trusted partner in health for the community” Daman is among the most trusted insurance companies in UAE which is evident through the significant ownership by the Abu Dhabi government which has trusted it to serve the high number of UAE residents (Damodaran, 2013). History Since Daman was founded in 2005, it has experienced a tremendous growth over the years mostly following its effective customer service. The insurance company has also established a 24-hour system where customers can access the various medical authorizations where the clients can call the firm to receive treatment and in turn avoid the significant financial burden when visiting the healthcare facilities (Kreiser et al., 2011). It has also established different branches across UAE which has enhanced customer convenience. The membership cards that Daman has put in place for all of its members which expedite the various processes of accessing Daman’s services (Hassan et al., 2017). Firm Performance Financial Performance Although there is no sufficient financial information that was available regarding the exact financial performance of Daman, it is evident that the firm improves its financial performance over the years which they primarily attribute to the fact that it strives to offer all stakeholders a fair and transparent view of their organizational performance (Sadek et al., 2016). Additionally, their assets are exceeding their expenditures and revenue which means more profit for them. This has been the scenario since its inception in the year 2005. Marketing Performance Daman Insurance has always strived to uphold their brand name and image over the years through ensuring that their clients have a positive perception of their company (Koornneef et al., 2012). Their marketing strategy is effective and productive which is evident since the firm has been widely recognized in various parts of UAE and which in turn resulted in the Abu Dhabi government striving to oversee it is successful over the years. Daman has also strived to make their health insurance services as unique as possible through capturing a wider market and in turn enabling them to build a stronger brand image as well as customer loyalty (Gibson et al., 2013). Marketing Goal and Objective From the vision and mission of Daman, it is apparent that their marketing objective is to be unique and deliver high quality health insurance services to all its clients. The firm strives to be competitive on a global scale through attaining enhanced customer loyalty and building a strong brand image to oversee the long-term success of the firm and its expansion in different parts of the world. Corporate Social Responsibility Economic Responsibilities Among the primary requirements for their existence, businesses usually have some levels of economic responsibility to their employees and the society in general which has allowed them to be sustained there. To the employees, Daman Insurance provides its large number with competitive salaries and other economic benefits as having been stipulated in the labor regulations that protect the employees in UAE (Sharif et al., 2013). Regarding the society, it expects the insurance company to offer them adequate insurance services that will suit their desires, and in so doing, the society enabled it to make profits. As the business creates more profits, then they tend to benefit the same society and all the firm’s stakeholders in general. Legal Responsibilities Daman Insurance is compliant with all the stipulated regulations and laws that govern its operations, especially because the government is the largest shareholder of the company. Precisely, Daman undertakes its legal responsibilities through implementing their legal requirements to all the societal stakeholders and performing in ways which are in line with the law and government’s expectations (Sharif et al., 2013). Ethical Responsibilities Daman typically strives to embrace those practices, policies, standards, and activities which are expected of them by the society although not coded in the law. The company does this through undertaking its operations in a way in which is in line with the societal, ethical norms and standards and preventing compromising their ethical norms so that they can achieve their organizational goals (Sharif et al., 2013). Daman and all the parties associated with it also strive to be exemplary corporate citizens through doing what is expected of them both ethically and morally. However, Daman would also need to recognize and act according to the conventional principles regarding moral philosophy like utilitarianism, justice, and rights which will need to guide and inform the firm’s practices and decisions (Sharif et al., 2013). Philanthropic Responsibilities This is where the firm needs to give back to the community through undertaking different forms of giving like service or product donations, monetary resources, volunteerism by management or employees, or community development. Daman has engaged in non-smoking initiatives, weight loss programs, and in corporate health initiatives through the Daman Corporate Health Programme (Sharif et al., 2013). Target Market Daman Insurance has a broad target market which is inclusive of all the UAE residents. This is because the government made it mandatory for all of its residents to have health insurance cover which means that its target market is all of the UAE residents who need to take various health covers. The needs that are being sought to be fulfilled include the protection from the different health risks and general health cover which is evident from the wide range of insurance policies and plans that are made available in the company (Hajat et al., 2012). Competition There is a large number of insurance companies that are cropping up in UAE especially following the legislation that has made it mandatory for every UAE resident to obtain a health cover. Following the entry of this increasing number of insurance companies, there is an enhance price competition in the region which has in turn brought forward mispricing risks (Bekkin, 2007). However, the main weakness of these insurance companies is that they offer insurance policies for a wide range of risks which makes them less effective in the way they deliver these services as opposed to just focusing on one particular sector of insurance. Therefore, the main strength that has made Daman stand out from its competitors is the fact that it is only offering health insurance which has made it not to be exposed so much in the highly crowded insurance lines and at the same time offer quality services of the same (Bekkin, 2007). Competitive Strategy Daman’s primary competitive strategy is cost leadership where it offers its services in affordable rates primarily by the economies of scale. This has been largely beneficial to them because of the mispricing that is largely experienced by other insurance companies in UAE. Daman is selling their health plans at affordable rates and in minimum prices as compared to others and at the same time are offering a wide variety of the same which makes it stand out (Bekkin, 2007). Critical Success Factors Sound business strategy Daman’s business strategy has offered the company the stability that it requires which has, in turn, enabled it to strive through the various market instabilities and fluctuations. Precisely, Daman focuses on their specific target market and always strives to excel in their various functional skills, for example, marketing and selling their insurance plans. They are also able to plan for the various changes that are expected to occur in the industry while at the same time learning the ways of exploiting them to their advantage. SWOT Analysis This includes the analysis of the Strengths, Weaknesses, Opportunities, and Threats of Daman. Strengths Daman has a strong financial performance of the years Has an effective and practical business strategy Daman has a significant amount of support from the government with the Abu Dhabi government owning 80% of its share. Daman has a strong brand position and awareness in UAE with its presence in various countries in that region. Weaknesses The main weakness of Daman is its slow response to dealing with the increasing number of competitors for the health insurance policies. Turning Weakness to Strength Since the firm has significant support from the government, it can take advantage of this to analyze the niche that exists in the health sector through the various government surveys and reports (Al-Jenaibi, 2014). Through these reports, the government identifies emerging health issues and in turn, Daman can take advantage of this to offer health insurance plans to cushion citizens from these health issues. This fast response and uniqueness will help Daman strive through high competition. Opportunities Increasing customers are in need of health insurance ‘consultants’ which will then open new channels and methods of servicing the clients and in turn generate income. Daman could explore new ways that they can utilize the rapidly changing technology to their advantage that will enhance customer-service efficiency. Daman could also tap the opportunities of cross-selling their insurance policies and services which are an avenue that is still largely untapped. Threats As the economic environment is changing, there are high uncertainty levels where there are risks of increasing costs and expenses which may result in low-profit margins. Turning Threat into Opportunity As Daman continues to grow in its operations, it may diversify its services in other nations and regions especially those that have friendly business environments regarding taxation to cushion it from risks of economic changes in UAE. Value Proposition Daman’s value proposition is their continuous focus on the enhancement of the things that makes it different and unique from other insurance firms in the industry (Al-Jenaibi, 2014). Daman will, therefore, need to regularly train the staff members always to strive to deliver the organizational commitments that are required in supporting their value proposition which is mainly characterized by innovation. As a part of its value proposition, the Abu Dhabi government intends to enhance its health insurance services by launching an initiative called Thiqa which means ‘trust’ in Arabic. Therefore, they intend to enhance their customer loyalty through creating a system where all the UAE nationals and all those who have the same status get a health insurance cover. It plans to implement this through a wide network of partners that they are associated with. Differentiation and Positioning It is the aim of Daman for their clients to perceive them as the best and the most competitive health insurance company in the region. The perception of Daman by its clients is evidently positive following the millions of members that have subscribed to their different health insurance plans (Al-Jenaibi, 2015). Daman is widely identified for its uniqueness and strong brand image across UAE. As opposed to most of its competitors, Daman has focused primarily on offering a wide range of health insurance plans which have attracted a large number of members to it with minimal competition as most of the other insurance companies offer covers for a variety of other risks as well (Abuelkhair et al., 2012). Daman has also been able to maintain its brand over the years through the consistent high performance with strong business strategies and financial strengths even when undergoing tough economic times. Additionally, Daman has focused on offering specific and diverse insurance plans that cater to the specific needs of different UAE residents which have attracted a broad client base (Abuelkhair et al., 2012). As per the positioning map presented in the appendix, which shows the way the clients perceive the business in comparison to its competitors, Daman has an advantage regarding their service uniqueness, superiority in quality assurance, high government support, and elevated accessibility of the upper management. Conclusion Daman Insurance has a strong brand image in UAE which is evident by the millions of members who have subscribed to their services since its inception in the year 2005. Its financial performance has continued to rise over the years and has exhibited elevated levels of financial strength. As per the PESTEL analysis presented, various macro-environmental aspects impact the business, and if handled as has been recommended, it will be beneficial for the firm. Following the legislation of a mandatory health insurance policy for all UAE residents, Daman has a broad target market which includes all of these residents. It has managed to stay aloof of competition through focusing on providing only health policy plans for the residents and its financial strength. Recommendations Daman can expand its operations in other countries as well so that it can be cushioned from the changing economic risks that may result in increased expenditure and low-profit margins. It can do this through opening branches in other low-tax countries and those that have minimal threats of terrorism or other natural disasters that usually have the detrimental impact on the business. Daman may also take advantage of the large share that is owned by the government to identify new health issues that come up and tap into offering insurance covers for these issues which will also assist them in staying ahead of the competition. References Abuelkhair, M., Abdu, S., Godman, B., Fahmy, S., Malmström, R.E. and Gustafsson, L.L., 2012, Imperative to consider multiple initiatives to maximize prescribing efficiency from generic availability: case history from Abu Dhabi. Expert review of pharmacoeconomics & outcomes research, 12(1), pp.115-124. Al-Jenaibi, B 2014, Disparities between UAE and other Public Relations Professionals: Challenges, Opportunities, and Cultural Obstacles, UAE. Al-Jenaibi, B 2015, Current issues about public relations professionals: challenges and potentials of PR in UAE organisations. Middle East Journal of Management, 2(4), pp.330-351. Bekkin, R.I 2007, Islamic insurance: national features and legal regulation. Arab Law Quarterly, 21(1), pp.3-34. Damodaran, M.A 2013, Health Insurance in the United Arab Emirates: An Overview. In XVI National Seminar on Hospital & Healthcare Management, Medico Legal Systems & Clinical Research (p. 33). Gibson, J.M., Thomsen, J., Launay, F., Harder, E. and DeFelice, N 2013, Deaths and medical visits attributable to environmental pollution in the United Arab Emirates. PloS one, 8(3), p.e57536. Gillespie, A 2007, PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA. Hajat, C., Harrison, O and Al Siksek, Z 2012, Weqaya: a population-wide cardiovascular screening program in Abu Dhabi, United Arab Emirates. American journal of public health, 102(5), pp.909-914. Hamidi, S and Akinci, F 2015, Examining the health care payment reforms in Abu Dhabi. The International journal of health planning and management, 30(2), pp. 1-10. Hamidi, S., Abouallaban, Y., Alhamad, S. and Meirambayeva, A 2016, Patient cost-sharing for ambulatory neuropsychiatric services in Abu Dhabi, UAE. International journal of mental health systems, 10(1), p.34. Hassan, R., Sher, H.A., Khokhar, R. and Hussain, R 2017, Pharmaceutical Policy in the UAE. In Pharmaceutical Policy in Countries with Developing Healthcare Systems (pp. 365-379). Springer International Publishing. Koornneef, E.J., Robben, P.B., Al Seiari, M.B and Al Siksek, Z 2012, Health system reform in the emirate of Abu Dhabi, United Arab Emirates. Health Policy, 108(2), pp.115-121. Kreiser, T., Grabosch, A., Kottmair, S. and Brock, P 2011, March. Behaviour modification within a population health management programme for diabetics and obese insured in Abu Dhabi, United Arab Emirates Dhabi. In International Congress on Telehealth and Telecare (Vol. 1, p. 3). Sadek, M.M., Elnour, A.A., Al Kalbani, N.M., Bhagavathula, A.S., Baraka, M.A., Aziz, A.M.A. and Shehab, A 2016, Community pharmacy and the extended community pharmacist practice roles: The UAE experiences. Saudi Pharmaceutical Journal, 24(5), pp.563-570. Sharif, A.A., Blair, I., Taha, N.F and Tom, L 2013, Health systems in the United Arab Emirates: progression, challenges and future directions. International Journal of Behavioural and Healthcare Research, 4(3-5), pp.270-282. Appendices High Importance Service Uniqueness Leading Edge Superior quality assurance Low Performance expectations High performance expectations Service guarantees Government support Famous brands Low Importance Figure 1 Positioning Map SWOT Analysis Figure 2 SWOT Analysis Read More