Discuss about the Business Models And Technological Innovation.
The following report focuses on the preparation of the business strategy report for the chosen organization. The organization that has been chosen to complete this report is the Insurance Australia Group. In this report, the overall business strategies would be discussed after proper identification. These things are indeed very useful to discuss about the several strategies in the organization. The development and growth of the organization will have to be discussed in this paper along with the environmental analysis on the organization. The business strategies that the IAG has undertaken will be evaluated. The main opportunities for the company to grow effectively will be put into focus as well. Apart from that the organizational culture and leadership style incurred within the organization will have to be discussed as these are very essential things for the organization. The scopes for future improvement in the organizational context will have to be discussed. The different corporate strategies will be very helpful for the organization.
The Insurance Australia Group is a large multinational insurance company. The company was founded in the year 2000 (Iag.com.au, 2018). The headquarters of this organization is situated at Sydney in Australia. The CEO of the organization is Peter Harmer. The company works in various fields like general and commercial insurance, vehicle, home and contents insurance. The organization operates in Australia, New Zealand, Thailand and Malaysia (Iag.com.au, 2018). They have been very high up in the order in the sustainability index. They have been awarded with several awards as the best insurance company.
The mission of this organization is We make your world a safer place (Iag.com.au, 2018).
They have the vision of catering to the needs of the customers in all the ways. They want to protect their customers, employees, partners and all other stakeholders and the communities they serve across Australia, New Zealand, Thailand and Malaysia (Iag.com.au, 2018). They want to make their business a sustainable one in the long term so they want to deploy the best strategies that are possible.
The organization is very keen on providing the customers with better chances so they can capitalize on the best strategies indeed. One of their moist useful strategies is to focus on their core business of insurance and create the best options for growth in the future (Iag.com.au, 2018). They want to provide their customers with stronger service delivery and returning the best returns for all the shareholders. These things will be very important for the different factors of core competencies such as decision making, communication, motivation, integrity and problem solving for the comoany.
Mission and Vision of Insurance Australia Group
The organization has gone for adopting several strategies that they think would be highly beneficial for the growth of the company. The two most important strategies that they have undertaken in the past are the customer centric strategy and the simplification of their products and services. The two strategies will be described as follows:-
They want to let their customers feel the most unique experience that will be very important for them to gain the organizational benefits (Goetsch & Davis, 2014). They are keen on establishing a platform for delivery that will give the customers a very unique experience. This will probably help to connect more customers at a time through the automated processes so the IAG could provide better offers to their customers (Iag.com.au, 2018). They also want to focus on the innovation approaches that will help the organization to think in a different manner and deliver the products very quickly. They want to use the data to focus strongly on the decision making process and understanding the customers in a better way (Wolny & Charoensuksai, 2014).
They want to decrease the amount of complications in the procedures of the organization. They want to focus more on strengthening the technological platforms and building a strategy based on technology (Iag.com.au, 2018). They rely on driving the scale economies for across the value chain. They also want to increase their allocation process and utilize on the repairer network so they can decrease the claim size. They want to give the leverage to their operational partners.
The current strategies that have been the main talking points for the organization will be important to discuss.
- They want to update their service delivery process in a better way. They want to enhance the customers experiences in a better way so they will develop their cash return on equity (ROE) strategies (Iag.com.au, 2018).
- They want to update their focused strategy and cater to the needs of the Asian markets.
- They will go on to focus on their segmentation strategies to build on the business growth in the target market around 3-5% (Iag.com.au, 2018).
- They want to get the benefits from the innovation strategies from the capital management.
- They want to take up an optimization program that will cut down the gross operating costs to a large level (Cummins & Santomero, 2012).
- This optimization program initiated by IAG will help to simplify the operating model of the company.
Insurance Australia Group has partnered with the global insurance and business process experts. This will help them to simplify this operational process completely. The organization has made strategic partnership with the company named Berkshire Hathaway (Iag.com.au, 2018). There are some important issues that can be looked into with the implementation of the strategic partnership. These strategic partnerships will make the existing relationship strong and increase the capabilities of bith the companies. The two companies have signed an agreement on the initial 10 year 20% quota share (Iag.com.au, 2018). This will make the insurance business very solid one. This will surely decrease the volatile aspects of the IAG’s earnings and capital requirements. Another example is the case where Berkshire Hathaway took the 3.7% stake in IAG via a $550 million (Iag.com.au, 2018). This strategic partnership between IAG and Berkshire Hathaway will likely to increase the financial flexibility. This will enhance the growth opportunities for the organization in a large way (Wright & Stigliani, 2013).
Business Strategies of Insurance Australia Group
One of their major strategies for growth has been the expansion to the Asian market. The Asian market is considered to be a free economy where they can expand and get the most benefits. It has been seen that the commercial and regulatory conditions have been going down and the only way to save their reputation is to expand into the Asian market. Some strategies in this matter have felt so they will like to shift their focus on Australia and New Zealand. They have not been able get huge margins of profits in the countries like Thailand, Malaysia and India. They are aiming to focus on making more investments in Asia. This will enhance their potential (Penrose, 2017).
The business activities of the company Insurance Australia Group have brought upon some controversies or criticisms as well.
The use of the technology has not been that much effective in the business practices they have undertaken. This is why they have been lagging behind in applying the several strategies for upgrading their business practices (Sako, 2012). It is very important to use the upgraded technology in their business practices. Only then they would be able to cater to the needs of the various customers at the same time. The newest software applications should be used by them. The simplification process will also need to be done properly with the help of the technological innovations.
The second issue in the business practices of IAG is providing the best services to the customers. The delivery of value and trust factor among the customers has been a very integral issue. They have failed sometimes in providing their customers with the best services across the industry (Ball et al., 2012). At the beginning of their services, they were not able to connect with the customers and this had caused a problem in their business practices. The customers were not able to understand the benefits of the policy and this had been a very negative impact on the customer servicing.
Ø They are successful in implementing the Go to Market strategies of late.
Ø They provide good returns on the capital expenditure
Ø The distribution network of the company is quite a strong one
Ø The brand portfolio of the company is very high (Armstrong et al., 2015).
Ø Their missed opportunities are very high because they are not strong at meeting the product demands.
Ø The inventory cost of IAG is higher than their rivals (Bauer et al., 2012).
Ø They have invested less money on Research and Development than their rivals.
Ø The core competencies of the company can be a very important success factor for IAG.
Ø The latest trends in the consumer behavior will help the company to grow faster (Foss & Knudsen, 2013).
Ø The increase in the spending for the customers will help the company in a bug way.
Ø The local distributors are increasing and this poses a threat for IAG.
Ø The demand is increasing for high profitable products. If they do not meet the desires of the customers, it will be hard for them.
The political condiytion of Australia is quite stable. However, there are risks of military invasion. The bureaucracy has led to the corruption and interference into the insurance industry (Jurevicius, 2013). They can also get the help from the favored trading partners.
The Federal government has been interfering in the free market and insurance related matters. The economic infrastructure quality in the insurance industry is quite stable as of late. The labor costs should be reduced.
The demographics have to be analyzed by IAG and they have to take into consideration the skills of the employees (Jurevicius, 2013)
The product offering has to be improved through the use of the latest technology. They have to assess the rate of the technological diffusion (Frame & White, 2014). The impact of the value chain in the insurance industry must be assessed.
The different factors like the weather and climate change must be assessed by IAG. The laws should be obeyed that regulate the environmental pollution. The waste materials should be recycled (Jurevicius, 2013)
The employment laws should be obeyed by the authority of IAG. All unethical factors should be avoided. The ant-trust law in the insurance industry should be maintained all over the country (Jurevicius, 2013)
The organizational culture is one of the most important issues in the context of Insurance Australia Group. They are very confident of the fact that they will build their organization on the basis of the customer trust and authenticity (Alvesson, 2012). Their organizational culture is built on the fact of the formal and informal messages from the clients and how they resolve the disputes. They are very much optimistic about the role clarity and being very much transparent in their communications with their customers.
Current Strategies of Insurance Australia Group
They focus on the democratic leadership styles mostly. It is because they want the proper inputs from their employees. The employees suggest them with various ways by which they can improve their operations (Alvesson & Sveningsson, 2015). They work with people from various cultural backgrounds and ignore all the barriers of cultural diversity. They support the needs of the communities. They focus less on the company hierarchy and share the knowledge between all the employees. This works as a booster for their performance. Thus the more focus on customers will help them to get the best outcomes for the organization.
This paper can be concluded by saying that the business strategies of the chosen organization Insurance Australia Group have been discussed. The various important strategies along with their business objectives have been outlined. The environmental analysis on the organization has been discussed. The criticisms in their business practices have been highlighted as well. They have been very effective in formulating the strategies in the insurance industries. This will help them to overcome the challenges. The organizational culture and leadership styles of the organization have been discussed as well.
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