The main purpose of this report is trying to use some of tools that illustrate and analyse the current situation and identify the main problem about the C-Direct-Insurance Company, it is going to suggest some possible solutions according to the results of situation analyses of the C-Direct-Insurance Company.
The C-Direct-Insurance Company is a UK-based direct-seller who specializes in automobile insurance policies. The company currently uses call centre to access and service its customers. In recent years, many companies enter direct-sell insurance industry, and provide same product as the CD. The same client base was shared by these competitors and the market have saturated. The CD is beginning to struggle with decreasing profits. Consequently, the CD has decided to make a business strategy change to solve current issues.
By providing high-quality and high value-added insurance products, high-quality services for customers, enhance the brand value. Developing with the staff together, create new growth space for staffs. Sticks to rational operations for the purpose of sustainable development and to be a specialist and professional insurance provider in the direct-sell insurance industry,
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Implementing a successful strategic realignment and developing a new product project. By this way, make the C-Direct-Insurance Company achieve the one who is more competitive, and promoting customer services quality that is more high-efficiency and more satisfying. Accordingly, lead to steady increase in profits of stakeholders.
To draw a project that looks like a simple thing and everyone might have experience for that. Nevertheless, if it rises to the organization strategic level, then, the best way is that all objectives should follow the SMART principle. The SMART is an acronym that can help organizations to formulate their management of objectives in business development (Richards, 1986).
In order to achieve what we want to target then objectives should be SMART. However, Doran (1981) argues that not every objective should totally follow the SMART principle, which seems like guidelines. In this case, there are four objectives which should be achieved. Objectives are structured around customer services, call-centre, product and market, cost and profits four aspects. The specific quantitative criteria are shown in Figure 1.1.
Figure 1.1 Objectives for C-Direct Insurance Company
Call completing rate: 92%, keep
Services qualified rate: 90%, rising 20%
Complaint handling: 95% in 48 hours, keep
Staffs work saturation level: 80%, rising 15%
Sound insulation for workspace: 80%, new
Staff satisfaction survey: 2 times a year, new
Product & Market
New product launches: in 1 month, new
Market share: reaching 55%, rising 25%
Cost control: low 15%, new
Profits growth rate: 10%, rising 7%
Analysis of Business Strategies
The organization's strategy is a key direction. A good strategy will impact the development of enterprise. In this case, we will use business analysis tools in strategy development of the C-Direct-insurance Company, which will help C-Direct-insurance Company to understand current situation what we should do and what we should prevent, finally make a correct decision.
Firstly, we are going to analyse current situation and macro-environment around the direct-sell insurance industry, which according to PESTEL framework model to consider six factors. We also use SWOT analysis combining with it. However, macro-environment is a external factor, therefore, for most of factors we just talk about opportunities and threads.
Opportunities: Government attitudes and political decisions are advantageous for insurance industry. Race (date unknown) mentions that people who have car must buy the car insurance this is compulsory by government. From political factors to analyse, there are some beneficial factors. By policy support, is conducive to the development of the insurance industry.
Threat: Other competitor may also enjoy this political advantage.
Threat: In the economic crisis of 2008, some of industries are affected, especially automobile industry. Automobile sales falling down affect insurance industry.
Opportunities: Recently, the economic situation has become better. On the other hand, real estate investments are increasing but less competitors, which is a huge business opportunity. Therefore, the C-Direct company prepares to launch a household insurance product, which might be a very correct decision.
Always on Time
Marked to Standard
Opportunities: Social division of labor is becoming more and more specialized and professional. Insurance industry also was deepened due to social progress. So, to be a specialized and professional insurance solution provider should be noticed.
Threat: There are many competitors will affect the C-Direct-Insurance Company in social-cultural factor, such as product promotion, public opinion, malicious competition and so on.
Opportunities: The development of enterprise should be together with technology. Much technology can help Insurance industry to improve every links in the production chain and then low overall cost and promote product competition. Use technological innovation to manage information and enhance business process is a trend for insurance industry.
Threat: If no technological innovation and product upgrades, there are not future for the enterprise, and some of new technology is not stable, which still new time to examine.
Opportunities: To talk with environmental factor, it is very important for insurance industry, because insurance industry might be involved in many aspects or many other industries. For example, car insurance related to automobile, fossil oil, transport and so on, so the CD should aware that contribute to environment protection is a good way to keep long-term business operation.
Threat: Environmental factor might bring any of other issues that do not know, probably, it will affect enterprise's strategy.
Opportunities: The legal factor is key link running through the transaction of insurance industry. It is play a very important role for industrial standard and development.
Threat: If enterprises have some problem on this factor, which will bring some of negative effects.
Market and Product Strategy
The C-Direct Insurance Company has a product that is automobile insurance. The new product is called household insurance. We can use The Boston Consulting Group (BCG) analysis current market and product. It is shown in Figure 2.1.
Figure 2.1 the BCG matrix for C-Direct Insurance Company
Low MARKET SHARE High
Low MARKET GROWTH High
If the C-Direct Insurance Company successful launches new product household insurance, we can see two products from the graph above. From current situation, we could find that new product has higher market share and higher market growth, due to less competitors in this area, so that, the company should make this new product become star business. For another product automobile insurance, although, it still has market growth, but because of many competitors and any issues from product itself, and then it could be a problem area, we can call wild cat. If could not make a transform to star business then we should give it up. By the BCG matrix analysis, clear and definite the product positioning, then use limited resources effectively and insure company's profits
In recent two year, insurance industry becomes more and more promising because of consumer demand increase. Many companies have targeted this lucrative market that with acute competition. For the C-Direct-Insurance Company, to be clear about current competitive environment is extremely urgent. For competitive strategy, the emphasis will be on core competencies and core products, which may be a good individual business foundation (Schilling, 2008; Johnson and Scholes, 2008). Table 2.1 shows that use Porter's five forces model combine with three generic business strategies to analyse the competitive environment.
Table 2.1 Porter's 5 forces combine with 3 strategies
Reducing overall costs
Cultivate customer's loyalty
Build core capacity
Using low price to resist
Cultivate customer's dependency
Special product and professional services
Using low price to restrain big suppliers
Build brand image
Can provider lower price for big buyer
No choice to buyers
Strategy and Culture
The C-Direct-Insurance Company has already got five years of high-growth because of a correct direction in the beginning period. Now, with changes of internal factor and external factor, the CD Company should make a comprehensive review. The best way to do this is using the Mckinsey 7-S model to make an organization effective (Cadle and Yeates, 2008). We are going to help the CD Company find a better way on hardware and software management.
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The CD company is just specializes in car insurance are for 6 years. This orientation shows that the CD took a differentiation competition strategy. But now, 15 companies have targeted the car insurance market and they can provide more competitive product. Therefore, the CD Company should adjust current strategy.
Current organization structure is not very effective. The Operations Manager did not play a role that he should play. He should establish a perfect corporate governance structure. A horizontal organization might be simpler and more effective.
The CD call centre employs 105 staffs and they work in three shifts. The company should develop a good motivation system. For example, we can use the Balanced Scorecard to improve performance management level.
If an enterprise would like to be a perfect role in the intended market, management style and enterprise culture is extremely important. The C-Direct-Insurance Company did not build this. We should develop cohesiveness in next stage.
Other insurance companies still want to hunt top performer from competitors. The CD Company should understand human who play an important part in product developing, selling and so on. In current stage, the management was reactive, so, we should carry out some activity and communicate with each other in the regular time.
At the moment, employees are lack of business training. We should build a learning organization. To promote some of occupational skills, to do that, might improve current human resource management situation.
As an insurance enterprise, the CD should have a core shared value. From a spiritual area, we should not just care about lucrative market. There are a lot of meaningful things that a perfect enterprise should do. Focus on benefits of stakeholders. Customers chose the CD Company, it is always to be thankful for.
Up till the present moment, the situation that the C-Direct-Insurance Company has been met, this is a consequent issue with the enterprise developing. By above analysis, if the company wants to change policy, the organization, staff, product and customer all could be improved.
3.1 The probable project: CRM
When an enterprise developing to a certain stage, apply information technology to promote management level, which is a quite feasible scheme. We recommend that the company implements a customer relationship management (CRM) information system. CRM is a customer-centric business strategy that reflects an enterprise operation philosophy and culture, which support effective marketing, sales, and services processes (Turban, 2008).
The customer is an important asset for the CD Company. More attention should be paid on customer care. Its purpose is establishing a long-term and available business relationship with a customer who was chosen. Using information system manage customer, be close to them, to know them well. To excavate and implement the value of customers and make profits to be maximum.
In order to solve current issues, and also combine with analysis results above, we suggest implementing five main modules. All of these modules intended to complete strategy realignment and make profits growth. Table 3.1 shows some of main functions. For last module that called performance management. To do that, there is a strong probability that performance in the organization may be reached a better level (Armstrong, 2006). Implement as a single sub project is a best way if the CD Company has a good budget.
Table 3.1 Recommended CRM main Modules and Functions
Commission predict, offer, report and analysis
Marketing activity planning, analysis, tracing, regular pattern and report
Special insurance industry feature
Other information management, such as authority, budget and response.
Customer basic information management
Customer Level management, generic, potential, VIP
Customer care, Communication and follow-up
Call-centre operation management, for Mr. Small control all operation in the call-centre
Incoming and out call dispatch management
Management analysis tool, analyzing real-time performance and trend.
Multi-channel incoming services
Report statistical analysis
Staff information management
Planning formulate and Index management
To implement a CRM information system might need long time. The time limit of a project depends on scale of the project. Figure 3.1 just showing general steps. Each single step can be divided as particular as possible. These sketchy steps should be reviewed by Mr. Small.
Figure 3.1 Bar chart showing implementation steps activities
Establish the plan
Build CRM team
Estimate services process
Choose IS supplier
Develop & deploy
Days 5 10 15 20 25 30 35
3.2 Cost and Benefit Analysis
In order to be able to better understand the project that is chosen. We should know the costs and the benefits of carrying out the CRM project. Mr. Small should care about tangible, intangible and what benefits will come. Table 3.2 shows probable costs and benefits analysis.
Table 3.2 Probable costs and benefits analysis
The hardware will cost 40,000 pounds
Maintain fees will cost 6,000 pounds/year
Software purchase will cost 200,000 pounds at the first time
Software technical support will cost 18,000 pounds/year
Low cost 15%
Insurance policy increase 20%
Each staff will produce 200,000 pounds profits growth by implementing BSC
Data processing quickly will make profits grow 7%
Labor cost will be 510,000 pounds/year
Logistics will cost 10,000 pounds/year
Customer satisfaction increase 5%, profits increase 20%
Good customer services will bring profits grow 10%
Annual profits * 5%
Potential customer with 5% growth
Correct direction, long-term benefits
3.3 Risk analysis
There are six aspects of risk must be noted.
Unclear customer structure, The CD should have training about customer relationship common principle, and then make them have a clear customer structure.
Mr. Small as a project manager, but probably he is not involved in initial planning. Make sure Small review the project every single week.
Requirements are unclear or always change. Make sure the project pass the estimate and should review regularly. Mr. Small has responsibility for it.
This paper based on the CD Company to analyse its current situation, tried to use many tools of business analysis, to help the CD Company find a way that can complete strategy realignment. Using SWOT, PESTEL and the Boston Consulting Group matrix to analyse and develop a strategy. Using Porter's five forces model combine with three generic business strategies analyse current competitive environment. Using McKinsey 7-S model make a comprehensive review that argues cultural strategy. Finally, according to the result of analysis, the report gave a probable recommendation. To sum up, the report has try to present a comprehensive business analysis for the CD Company as much as possible. However, because ability and word is limited and not familiar with some tools, so some of issue still there. It is did not analysis in depth. Anyway, hope this report can give the CD Company some useful suggestion.
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