Contemporary business environment

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“Improve or perish” the statement sounds bit harsh but it is absolutely true for the contemporary business environment. The revolution in information technology has made it even more competitive and challenging. Almost every industry is undergoing a dramatic change due to advances and development in telecommunication and computer technology.

Inception of dot com and WWW (World Wide Web) era has brought a huge turn around of fortune in every sphere of life in general and business sector in particular. E-business is defined as an electronically mediated information exchange between parties in a business either internally or externally. Whereas E-commerce is the subset of E-business which deals with the information exchange between organisation and customer or external share holders only. Rapid improvement in internet technology has paved the path for E-business. This improvement not only has brought down the cost of internet installation and access but also stretched remarkably the network of its users.

In Pakistan adoption of internet and computer technology was little slow but it gathered the pace in mid 90's. Initiative taken by foreign donors, investors and multinational companies was eagerly and positively followed by Government of Pakistan. NADRA (National Database and Registration Authority) is an ample example of embracing the change and catching up with the technology. This resulted in availability of population data both personal and behavioural to the researchers and business community. The next in race to jump into E-arena is the financial sector and other service sectors. The increase in number of internet subscribers and users specially in urban areas has spur the usefulness and opened the doors for E-commerce.


With the dramatic rise in risk either personal or business because of deteriorating political and social environment, the insurance sector has gained enormous significance. Therefore this area of business has plenty of juice to squeeze out and the innovation in form of E-insurance is the icing on the cake. However E-commerce is not just an opportunity but a challenge. The factors listed below offers steep slope to climb:

  • Inadequate infrastructure ( frequent power failure, fewer telephone lines)

  • Sceptical mind set due to uncertain economic set up

  • Unwillingness to buy online.

  • Lack of well equipped personnel and IT experts for e-commerce.

  • Lagging of other supportive sector e.g.; e-banking and safe online payment intermediation like paypal.

  • Lack of legislation and regulations (copy right, digital signature etc.)

  • Low internet usage and fewer internet users as compared to developed countries


Interex is an imaginary company which is formed for the purpose of study of e-commerce and the strategy deployed in order to make an e-business model. Formed under insurance companies' ordinance 2000, interrex is operating in partnership with a leading private sector bank. The backing of a bank for insurance company is quite essential and unavoidable due to sensitive nature of the product and uncertainty in the economy. This injects a sense of confidence and trustworthiness into the target market to buy the product. Further more the company has following characteristic:

  • The co. is certified by ISO9001.

  • The company has branches in five big cities.


  • Deals with auto insurance only at the moment.

  • Offering fully comprehensive insurance only. This is because of lack of on the spot witness and CCTV coverage.

  • Sale promotion is done by conventional methods i.e. sales raps, media, telemarketing and word of mouth.

  • Core value proposition is all about finding the core value of target market and delivering what is really important to them. The company slogan “your security is in your hands” sums up this aim. The customer is looking for security, delivery speed, compatibility, lower cost and accuracy of information and product they want to purchase. By deploying e-commerce these targets are hit.

Market Players:

There are five big Companies in auto insurance market enjoying the lion's share of this market namely

1 EFU Insurance Co. Ltd.

2 Adamjee Insurance Co. Ltd.

3 Alfalah Insurance Co. Ltd.

4 New Jublee Insurance Co. Ltd. and

5 Takaful Insurance Co. Ltd.

None of these top companies has implemented and utilise e-commerce up to its full potential. However they are in process of constructing full transactional website to target the market. Therefore in this monopolistic market there is room to flourish if appropriate planning and research is done and the new technology is used.

A big step ahead …………

In the new economy all companies are shifting to use internet broadly to reach the customers both existing and potential. This approach required plenty of creativity, innovation and expertise but the cost is much lower than the traditional distribution channels in the long run.

This information-intensive industry has fertile ground for the play of forces that have spawned e-commerce. The application of e-commerce in the Pakistani insurance industry is in the very initial stage. The internet usage is dramatically growing up in the country in almost all companies have an internet presence on the net. A few companies provide an elementary internet services. For traditional Pakistani insurers, the need to adopt to the new e-commerce opportunity not only entails direct costs, in the form of substantial investments , in the new information and communication technologies, but also the indirect costs of having to change their existing business models. Pakistani companies have to revamp their business processes and corporate structures, which leads to many different internal conflicts. Internet marketing threatens traditional distribution channels and therefore tends to meet with strong resistance within the company.

Interrex insurance has planned to go from bricks and mortar to clicks and mortar to gain a competitive advantage over its rival to optimize its supply chain management. This is achieved because customer as well as company perceive and get greater benefit as follows:

Benefits of E-commerce

Customer view point

  • Selection and comparison of variety of product

  • Convenient, speedy, accurate exchange of customize information

  • value for money

  • Satisfaction and peace of mind.

  • 24/7 access

Company view point

  • Wider reach to the market by sending online promotional message.

  • Faster life cycle of product

  • Competitive pricing through cost reduction in handling sales inquiries, price quotes, determining product availability by using E-commerce in sale support and order taking process.

  • Repeat and cross sale

  • Online monetary transactions

  • Brand and company image

  • Desired CRM through continuous service and fast response

E-risk and obstacles

Using E-commerce is not that straight forward or piece of cake but it has its limitations and hurdles. The company who wants to go online has to forecast and overcome or at least minimize these impediments in order to excel in the hi tech virtual market. Below are the list of some problem which need to address.

  • Technical limitations: these include problem related to security, reliability, telecommunication, software, integration of internet and e-commerce software. The most serious problem is the security issue of hacking which always haunt the customer. Further bandwidth and internet traffic congestions are also issues needed to be addressed. Yet new technology has reduced this risk or otherwise their impacts overcome by suitable planning.

  • Non technical limitations: these are more difficult to solve. Like privacy issues, ID theft and people's attitude towards buying products from machines rather than from human. Inexperience of an insurance company to run business online can also result high churn out ratio of customers as the competitors are just a click away.


The concept of e-marketing is exactly the same as a traditional marketing except the addition of electronic means. Identifying, anticipating, satisfying customer requirement profitably is the core concept on which whole e-marketing plan is chalked out. For this purpose marketing research is of utmost importance. There are few companies which collect, analyse and sell market research data in Pakistan e.g. Gallop and NADRA. Moreover the company itself conduct market research to have an insight of customer need and demand. This can be done through interviews, questionnaires and opinion leaders etc.

The data must include personal information i.e., age, education, income, occupation etc. and behavioural data i.e., pattern of buying, etc.

After having a comprehensive customer data, the next stage is designing and implementing marketing plan

Product Development

Marketing and Sale


Assist Management

Claims Management