Overview of IAG
Discuss about the Analysis Of The Different Business Processes Of IAG.
Strategic Management is a critical domain of business which deals with the different functions that accompany carries out and tests the viability of each function. IAG is an Australian company and is used as an acronym for Insurance Australia group. The given company is based in Australia, with various divisions in New Zealand and Asian countries. The company offers both corporate and individual insurance services to its customers.
The given report will be discussing the various dimensions of the company and analyze the motive of the firm (Lasserre, 2017). The first section of the report will be discussing the mission and vision of the company along with the present and past strategies. The second part of the report will be discussing the different business practices of the firm which have faced criticism. The third part of the will be a critical analysis of the business environment and the last part will be discussing the leadership and structure in the firm.
The IAG s one of the largest Insurance Retailers around the globe and engages in successful business with different customer types like individuals and businesses alike. The primary objective of the company is given as follows:
To make the world a safer place.
By this the company means that it aims to make the life of all the stakeholders, employees and other shareholders safer for their general well being (Iag.com.au., 2018). With its operations spread out in various countries and a major focus towards Australia and New Zealand, the company, wants to practice sustainable business practices in order to ensure that they can gather timely and guaranteed returns for its different stakeholders (Morschett, Schramm-Klein and Zentes, 2015).Their strategy is to promote the key insurance products while creating growth opportunities for the different businesses which is engaged in a relationship with.
The company has a simple goal in mind with its Financial Targets well set for the long term of the company:
- They want a payout of around 75% of the cash earnings
- They want a stable ROE.
- Top shareholder return
Hence, it could be witnessed that the given company has various objectives in mind and follows the given strategy to ensure it is able to perform well:
Creation of top consumer solutions
In the given aspect, the company aims to create platforms which will go a long way in fulfilling customer satisfactions and also ensure that the different customer needs are identified in an advance manner, helps to reach out to the customers in a timely manner, using data to ensure decision making and other relevant aspects (Hill, Jones and Schilling, 2014).
Mission and Vision of IAG
Simplification
The business seeks to bring about simplified and module business models which will be a los cost operating model. In the given model IAG will aim to reduce the complexity that exists in an organization, simplify the processes, execute the technological strategy, improve allocation and maximize the utilization which takes place from the given system.
Agility
The company IAG, seeks to practice agility in its procedures by driving the organization by speed, innovation and execution skills.
Through the given aspect the company aims to create a disciplined approach towards management which is only aimed at building stronger role clarity and introduce agile ways of performing. In the given step, the company also aims to build a talented workforce who clearly aims to understand the requirements of the customers and provides services to them accordingly (Iag.com.au., 2018). The company aims to become independent and possess the ability of assessing the external as well as the internal environment of the business and take decisions accordingly.
If the Porter`s strategies are to be taken into consideration then it can be stated that the company follows a differentiation strategy. The Porter strategies state down three basic generic strategies that are adopted by the business and tend to ensure the kind of approach a company aims to follow in the business environment. The different strategies which can be adopted are strategies which include, differentiation strategy whereby a given company aims to create its market in the business by offering unique services. The second strategy is the cost leadership strategy whereby the company aims to create its mark by offering the cheapest product as available and lastly the focus strategy is adopted. Based on this, the strategy adopted by IAG is the differentiation strategy. The company aims to offer various goods and services which are not available amongst its competitors (Iag.com.au., 2018).
Secondly the company also adopts a Go to Marketing strategy. In a Go-to marketing strategy, the company forms a specific action plan which tends to determine the extent to which a given company tends to ensure that it is able to revise its operations and reach out to the customers effectively. Hence, recently in the year 2015, the company has changed its structure and plans and focused on customer satisfaction.
In the past the company aimed to use a cost leadership strategy but was not as successful as its competitors and hence a differentiation strategy was adopted by IAG.
Business Practices of IAG
A business is run by different individuals and this is the reason why there can be certain instances where the business might face certain problems related to the functioning of the business enterprise and there may be certain practices which may not be liked by the society or the business critics in general (Vogel and Güttel, 2013). Given below are two issues whereby the business faced certain problems and issues .
In 2017 the company faced certain level of controversy with respect to the issue of a spirit bonus of $2.55 million. The various soft executive bonuses which comprise of people and community bonus suggested by the Common wealth bank has witnessed companies like QBE, Telstra, Wesfarmers, AMP and Perpetual have simplified their pay structures and combined various short term and long term incentives together
The company IAG had sanctioned a grant of $2.55 million for the CEO Peter Harmer if he will be able to reflect IAG Spirit because he was with the company for certain number of years. The given spirit is based on the behaviour of the employees and executives based on the firm`s core values which are being closer, braver and faster (Moutinho and Vargas-Sanchez, 2018).However, the investors were not happy about it and they mentioned that although a bonus was an appreciation, however, one of this large amount was absolutely unnecessary.
The second controversy as faced by the given company was in the year 2016, relating o the diversity bonus. The diversity bonus is a figure which s generally given out to a head or an executive of an organization who portrays the best skills and is able to manage diversity easily in the given organizational realm. Various companies announced the given bonus and gave out a reasonable amount to the different executives in a firm with respect to the management of diversity in the given firm (Wheelen, et al., 2017).
IAG was one of those companies which announced the given bonus and the investors were not pleased about it. The customers and the investors felt that although the diversity management in the organization was appreciated a large amount of funds need not be paid to the executives at the expense of the investor`s interest (Hahn, 2013). The CBA and various organizations had opposed against the passing of the bonus because it was unfair to the different investors.
The PESTLE analysis is an external environmental tool which goes a long way in assisting a company to face the external environmental factors which exist in the business. Through this tool, a firm would easily be able to analyze the effectiveness of the different business operations.
Leadership and Organizational Structure of IAG
Political
The political factors have a major role to play in the functioning of the business as the various policies of the government may have an impact on the long term profitability of the business. Although the Insurance Australia group is operating in the Insurance sector in more than 12 countries, it is exposed to the political environment of all the given countries, collectively. Hence, for the company the given factors may impact the operations. The political stability of the government and the condition of the insurance sector in the country where it is present is a major factor that has an impact on the business (Johnson, 2016). The legal framework with respect to contract enforcement, favored trading partners, trust laws in relation to insurance, pricing regulations and the minimum pricing regulation in relation to insurance. Other factors include safety regulations with respect to the Insurance sector.
Economic
The macro environmental factors like the savings rate, interest rate, foreign exchange rate and the economic cycle of the industry are a major determinant of the business operations. The Insurance Australia Group Limited utilizes a country`s economic factors which comprise of the inflation, growth and the economic industry special to the given sector lie the growth rate, spending and forecast related issues (Harrison and John, 2013). The exchange rate, currency values, infrastructure quality, labor costs , education level and interest rate tend to have an impact on the business.
Social
The way in which a society functions is a major determinant of the kind of influence it tends to have on a business operation. The shared beliefs and attitudes of the population determines the way in which the Insurance Australia Group Limited will understand the customers in the given market and the way the message will be portrayed to the customers (Wood, Wrigley and Coe, 2016). The different social factors that tend to have an impact on the company are as follows:
Demographics of the population, the class structure and educational level of the people in the given industry, the gender roles, leisure interests of the people, their perspective towards the savings and others parameters are required to be considered (Jarzabkowsk and Kaplan, 2015).
Technological factors
The technological factors are required to be analyzed to figure out the way in which technology disrupts the industry. If the rate of change is slow, the economy will be affected in a slow manner, however, if the rate of change is quite high then, the company will not get much time to adapt to the given change and might suffer (Grant, 2016). The factors include factors like Rate of technological diffusion, impact on the value chain , impact on the cost structure among others.
PESTLE Analysis of Business Environment of IAG
Environmental
The environmental standards tend to have an impact in the profitability of a firm. Different companies tend to have different impacts on the operations (Iag.com.au., 2018). These factors include various factors like the weather, climate change, recycling, air and water pollution regulations relevant to the given industry, attitudes towards the green products and attitude towards renewable energy.
Legal
The legal factors are factors like the discrimination law, employment laws, healthy and safety laws along with data protection and others.
Recently in 2015, the organizational structure and leadership of the organization has been changed. The primary purpose of the change in the leadership and organizational structure has been done to drive and thereby increase the company`s profitability and growth. The structure came into effect from 9th December, 2015 (NZ Herald., 2018). With effect of the new leadership structure , the primary objective of the company is now to become a consumer led and organization which is based on dat. When the company will become this, then it will be able to quickly adapt to the rapidly changing business environment.
The new structure aims to increase the future profitability prospects by completely changing the core business of the customers and establishing the three primary functions so that the insights, products and customer facing divisions are used to create world class solutions. Their primary purpose is to provide the customers a world leading customer experience (Slack, 2015).
The consumer Division of the company will be focusing on the individuals and families. They will be given the responsibility of managing and devising new plans for those customers who can buy the given product or the service. Secondly the Business division will be responsible for looking after the business company insurances.
They will be focusing on businesses of all sizes (Iag.com.au., 2018). The customer labs are responsible for managing the customer experience strategy and lead to driving the organization`s goals and motives. They will also be concentrating on bringing about innovation through the different insights and data, bring about brand architecture across the group so that they can venture into new business areas.
The digital lab section will concentrate on working on what the IAG Labs already work on. They will be responsible for looking into the identification of disruptive technology and accountable for formation of digital applications of the product. They will be given the responsibilities of managing the core platform of the applications (Hubbard, Rice and Galvin, 2014).The Operations department will be looking after the different functions and claims. Alongside they will also be looking after the procurement and supply chain management.
The given job was earlier carried out by the Enterprise section. The Asian and New Zealand businesses will be moved into a new division known as the International division which will then concentrate on the growing of business in areas like Malaysia, India, Thailand and Vietnam. They will also engage in maintaining the market presence of New Zealand which is a considerably good market for the firm.
Conclusion
Therefore, from the given analysis, it could be stated that IAG has been doing well and learning from the different mistakes t has made in the past in order to ensure that it performs well and does not repeat the same in future. The company has its operations in various countries and hence, it needs to ensure that it is being able to abide by the limitations of all the countries. The given analysis identified the main vision and strategies of the firm followed by the external environmental analysis. The external environmental analysis identified that the organization has been doing well but needs to ensure it is following the various rules and regulations of different economies. Lastly, the organizational structure of the company was analyzed.
From the given analysis, the present environment was analyzed and the given recommendations have been made:
- Improve service quality: IAG needs to ensure that the service quality that it others to see to it that the vision and mission of the organization is upheld and the company are able to perform better than its competitors. It can hire a separate service section to supervise the services being provided.
- Expand operations- The Company has a good reputation and a brand name. For this reason, the company needs to ensure, that it is successfully being able to implement and carry out its plans successfully (Rothaermel, 2015). Through this the company will be able to cater to a larger market. It has been suggested that the company expands its operations to other emerging markets like Brazil and Africa to gain crowd.
- Uplift consumer interest-Lastly consumer interest must be updated at all costs and the company needs to see to it that they do not engage in any activity which may harm the interest of the customers (Williamson et al., 2013). This also includes looking after its stakeholders.
References
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