Discuss about the Strategic Management of IAG company.
Introduction of management
Strategies been deployed by IAG company
Insurance Australia Group limited (IAG) is regarded is the parent company to a chain of insurance companies which operates in different countries such Indonesia, Australia, Vietnam, New Zealand and Thailand. The purpose of the company is to make the world a safer place for human and others. This implies whether a person is a customer, a shareholder, a partner, an employee or in any case a part of the community which the company serve in the above countries, IAG subsist to make the world a safer place to stay and work on (Carr, 2014). The company believes its purpose will enable them to become more sustainable business over the long item and set free stronger and more reliable profit for its shareholders. The company’s spirit is closer, brave and faster. The closer spirit is essential in creating real connection, brave spirit will help the company see possibilities which will inspire the company and faster spirit will always help in making things happen in the long last. The company strategy is to optimize the core insurance business while also engaging in activities which will create future growth options to the company (Carr, 2010).
The company has identified many strategies to stress on. However, on its operation the company has identified only three key strategic priorities to deliver its strategy. The three key priorities are customers, simplification and agility (Oddy, 2011). The three are discussed below
The company is committed to creating a delivery platform which will be used to transform the customer’s experiences in the long run. By doing this the company creates a strong public relationship with customers in the current and future. The company has also tried to connect the customers with the company by automating its process thus enabling Insurance Australia Group to reach as many customers as possible in timely manner (Brogniez & Hall, 2013). By doing this the company have reduced the time the customers use to access the company’s service at any time. Also the company has developed an innovation which has the ability to think and deliver quickly. This has enabled the company to out-perform other companies in the market thus acting as a competitive advantage in the long run. And lastly, to save its customers well the company has been using data to power decision making, thus have enabled the Insurance Australia Group to understand its customers well and better. The primary purpose of many companies in the business environment is to make profit. In order to make enough profit the company must serve its customers well by delivering quality services to them (Hall, et al., 2010).
In order to serve customers well the company must simplify its model. The current model is simplified, modular and lower cost operating model. In order to deliver the services accordingly, the company has reduced its organizational complexity. This is done through consolidating the technology platform, executing the technology strategy, simplifying the process and system, and harmonizing the products (Jaaware, 2009). Also the company have leverage all the operational partners in order to optimize the operating model and doing so the company is driving scale economies across all the value chain in the business environment. Lastly, the company have stressed on improving the allocation and maximizing utilization of the preferred repairer network. By doing this the company is reducing the average claim size in the market and the society at large (Huang, et al., 2011).
The company works day and night to make sure it reaches agile organization which has distinguished innovation execution skills and the required speed. By reaching here the Insurance Australia Group would have created disciplined approach to Insurance Australia Group management as well as leadership in general (David & Gordon-Brown, 2016). This will include building stronger role clarity as well as introducing agile way of working in the company. The company is aspiring on building a pipeline based on skills which is key in delivering Insurance Australia Group strategy and also helping the company’s employees to transition to the future of work. Currently, the company has been recognized as a purpose leader organization which is shaping its internal and external environment (David, 2018).
Criticisms to the company
Criticism can affect the company positively or negatively. In some cases, some criticism can build or destruct the company. In the recent the company have be criticized by the stakeholder in different ways. Some of the criticism includes
The company loss
James Strong who was the company’s chairman for seven years and he recently resigned from criticism after the company recorded a loss of about $261 million. On her tenure Mr. Strong oversaw the company numerous success and growth which resulted to recording of numerous profit in many years despite the company making loss. The chairman decision to resign was welcomed with different opinion from the remaining board members. The decision was fueled by the criticism from the shareholders who recorded a loss in the company. Mr. Strong who was elected as a chairman in the year August, 2001 which was a year after IAG floated has now been criticized with falling value of the company which exacerbated by an ill-timed $2 billion British expansion over the past two years. The board accepted his resignation letter and appointed Mike Wilkins a new chief executive. Mr. Strong decision has only drain some of his vocal people who criticized him and the IAG board during the annual meeting in Sydney, although, it did not stop nearly 20% of those investors who vote to do it against him during his re-election.
An environmental analysis
In its operations different business are affected by different factors. Thos factors may be from the inside the company or they may be from outside the company. Those factors which are from within the business are known as the internal factors while those from the outside the organization is known as the external factors. Both internal and external factors affect the organization is different ways. In this analysis we are going to look on how different factors affect the IAG daily operations (Reeve, 2016).
General Environments (PESTEL) analysis
Political is a key component in company growth, for instance, it is very hard for a company to grow and be successful if it is operating in a unstable country. Take for example a company opening its branch in Somalia, the company would have few chances of growth compared to another company operating in United State of America which is stable politically. IAG is operating in political stable countries meaning it is doing okay (Eastwood, et al., 2011).
Economical factor always affect both the customers and the company at large. For instance, inflation will force the customers not to buy the company’s product in the long run. However, employment will result to increased disposal among customers who will feel the need to buy the company’s product. Economically empowered people will buy the company’s product at large. In the case of IAG, the company enjoys economically empowered customers who buy the product in large volume at any case and continuously (Eastwood, et al., 2011).
Some of the social factors which affect the product purchase include population, education, religion, lifestyle, culture and fashion. These factors affect the company differently, for example a learned person will see the need to buy the company’s product more often than a person who is not educated. Also, some religious beliefs does not recognize the usage of some products, some people like certain lifestyle more than the other. Culture and fashion is another factor which affect IAG a lot. But in simple term the above factors favors the IAG products in all the country it operates in.
First all the IAG encourages and support innovation in the market. This is because the company understands that innovation is the only guarantee of tomorrow operation. The company is able to operate in different countries due to its improved technology compared to other rival companies in the market. For example, the mother company is able to monitor all the activities on other companies through technology. Other companies from different countries are able to submit their daily sales through computers.
Porter’s five force analysis
The company and the sector understand the use of Porter’s five forces. The porters analysis include
Bargaining power of the buyers
There is no strong bargaining power of the buyers this is because there are no strong competitors in the market. Buyers are forced to buy at the rate which the company is selling at. However, there is small emerging other insurance companies offering the same products at the involved countries (Porter, 2016). But the IAG commands the market
Bargaining power of the suppliers
Like buyers also suppliers lacks strong bargaining power. This is because the company does not depend on suppliers so much. Another factor is that the company acts as the leader in the market and it lacks strong competitor.
There is no much rivalry in the market, this is caused by the fact that the company is operating as a leader in the market. However, there is a small sign of rivalry in the future with emerging small insurance company in the market.
Threat of new entrance
Some small companies is entering the market currently. Those new companies are posing possible threats in the future. However, the government has put the required requirement which acts as an entrant barrier. This will regulate the exploitation to the target market. In future the company will face so many threats which are currently entering the market.
Threat of substitutes
Currently, there are no threats of substitutes as there are small products which can replace insurance in the future. The company does not fear or get scared by the threats of substitutes in all the operating countries (Porter, 2016).
The companies enjoy different level of strengths. Some include
New products-the company have come up with different products to sell to the customers. Those new products act as strength to the company.
Business growth and rise in income-there have been an increase in business growth in the some years. The business growth resulted to increased income in the company which helped other sectors.
However, the company have some weakness in its operations. Some of the weakness includes
Limited structure-the company has limited structure which can act as a source of income through renting and leasing.
Low investment-the company operates in a low investment. This is caused by the fact that the company has limited structure to obtain the required investment from banks and other lending institutions.
Even if the company have some weakness as discussed above, it also has some opportunities in the market
Some of opportunities include
Strong future growth-due to innovation and technology improvement the company have room for future growth.
Stronger demand-currently, the company is concentrating in creating of strong demand which will help the company in the coming future.
Threats are inevitable from any operating business. Some of the threats to the IAG Company are
Increasing coast-the cost of producing goods and product has been increasing day by day. An increase in caused by increasing inflation in the current market.
Government regulation-the regulation by the government is creating threats in the long run. Some of the regulations by the government includes work permit and high health standard which every business must observe while operating in the business environment.
The organisational culture or leadership style within the organisation
Currently, the company has corporate governance structure and also it have risk management framework which is designed to provide the sustainable balance between the core business and responsibility which results in the providing fair and stable returns is expected by different shareholders in the long run (Magretta, 2012). Some of key corporate governance policies and some principles which are strictly adhered with by the company are the constitution, the board charter, the audit committee charter, the PARC charter and lastly the IAG risk committee charter. To avoid any confusion the management have provided price sensitivity information to all investors and market participants. This ensures they trust the company and continues investing in the company in the long run.
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