MANULIFE FINANCIAL 37
STRATEGICMANAGEMENT: MANULIFE FINANCIAL
Strategicmanagement is an important aspect for any organization to consider inforeseeing the achievement of corporate goals. Strategic managementcan be defined as the comprehensive assembly of all the ongoingprocesses and activities that an organization utilizes in aligningand coordinating the actions and resources to its vision and missionstatements, as well as its long term strategy. Strategic managementis of paramount importance since it makes the strategic plan to moveon, towards the achievement of corporate goals and objectives. Itfacilitates feedback that, subsequently, enhances the decision makingprocess enabling changes to be effected accordingly to serve thedynamics of doing business. Strategic management has become one ofthe most tricky and complex components of management. It is giventhat a company without a strategic plan is on its way to failure. Theneed for strategic planning is inevitable on the verge of theattainment of objectives. It is important for managers and all otherstakeholders to understand the strategic plan and be able tointerpret it as a tool that leads to success of the venture.
Astrategic plan can be defined as the document that is used for thepurpose of communicating with an organization about itsorganizational goals. It relays the actions that are required to inthe achievement of these goals to the relevant stakeholders andguides them into understanding all the elements and aspects of theplanning activity. It, therefore, follows that strategic planning isan activity that sets out all the priorities, strengthens operations,focuses resources and energies and mobilizes the employees and allother stakeholders in working towards common goals. Strategicplanning establishes the necessary agreement of intended results andoutcomes and goes ahead to assess, and subsequently, adjust thedirection to which the organization is headed, with respect tochanges in the business environment. Strategic planning focuses onthe future, producing fundamental actions and decisions to shape itsintended purpose. A strategic plan clearly defines what theorganization is, what it does, its current position, why it does whatit does, and where it is headed. It is also keen to note thatstrategic planning does not only define the course that anorganization should follow, but also ways in which progress orfailure can be identified and measured.
Owingto the changes in the global business environment, it is important toanalyze how managers are maneuvering their way around the hurdlesrelated to strategic planning and management. With the tussle inmind, this paper explores the various components of strategicplanning and management, with a case study. The paper pays keenattention to Manulife Financial as the reputable company it is today.A look into its objectives and its achievements of them is determinedwith regard to the various aspects and components of strategicmanagement.
ManulifeFinancial is a multinational company whose base is in Canada, but hasits operations spread in various parts of the world (Manulife.com,2014). Manulife Financial provides financial services to its clientsin Canada, the United States and Asia (Manulife.com, 2014). Theservices that are mainly offered by Manulife Financial are to do withmanagement of wealth as well as financial protection these areproducts such as life insurance, group health and life insurance,pension products, mutual funds, long term care services, annuitiesand banking products (Manulife.com, 2014). In Canada and Asia, thecompany operates under the brand “Manulife Financial” while inthe United States it is branded “John Hancock (Manulife.com,2014).” The company offers services in asset management to itsinstitutional customers around the globe this is with the inclusionof specialized casualty and property retrocession, and variousreinsurance solutions (Manulife.com, 2014). The company considers theworld’s population as to comprise of its consumer base. The companyhas been under the leadership of able managers in their variousbranches. It is notable that the company has excelled in terms ofmarket capitalization. The good performance can be attributed tovarious factors including the formulation and execution of a goodstrategic plan as well as efficient management to facilitate thesame. It is important to embark on the organization’s vision andcorporate values, as well as its strategic plan as at present.
Mission, Vision and values
Thedefinition of a mission statement could be viewed as the expressionof what a business is about and how it intends to achieve itsobjectives. A vision statement, on the other hand, is formulated tostipulate the company’s purpose of operation and defining valuesthat the organization intends to uphold towards the realization oflong term goals and objectives. Mission and vision statements areformulated by the leaders in the organization for the purpose of,concisely and clearly, conveying the direction into which theorganization is headed. The management is able to communicatepowerfully the motivations and intentions of the management teamtowards the realization of an attractive future for the business.Manulife’s management sought to combine the mission and vision inone winning statement. It reads, “To be the most professionalfinancial services organization in the world, providing strong,reliable, trustworthy and forward-thinking solutions for our clients’most significant financial decisions (Manulife.com, 2014).” Themission/vision statement for the organization is clear and easy tocomprehend. It does not employ tough vocabulary or jargon. Thestatements are brief and are, therefore, easily memorable.
Themission statement is also adequate in that it addresses thecompetencies. The last part of the statement states, “…providingstrong, reliable, trustworthy and forward-thinking solutions for ourclients’ most significant financial decisions (Manulife.com,2014).” These statements are used by the organization to show theircompetence by paying attention to every detail there is about anyconcern. The clause presents are a stern expression about what thebusiness is ought to be remembered for doing. The specific objectivesare outlined clearly and concisely.
Bythe use of the word “strong,” the management insinuates that theorganization will gear all it efforts towards the production ofeffective solutions and products that will be availed to customersproduct that are comprehensive to cover for all the consumer needs.“Reliable” represents the management s intention to ensure thatit creates confidence in their consumers by ensuring theirsatisfaction, hence, creating consumer loyalty. Trustworthyunderlines the good intentions of the management to ensure that theydeliver quality to their consumers. “Forward-thinking” expressesthe intent by the management to ensure that they customers progressby according them the necessary support. It could also be construedto explain the management’s objective to advance and growbusiness-wise. The mission statement is also adequate as it isinspiring. The images formed in the minds of employees and otherstakeholders prompt them to focus on organizational goal achievement.The mission statement is, therefore, appropriate and efficient.
Thefirst part represents the vision statement stating the long termprospects for the organization as well as defining the purpose of thebusiness. It states, “To be the most professional financialservices organization in the world … (Manulife.com, 2014).”Byaspiring to be the most professional in the provision of financialservices, the management seeks to communicate the direction thecompany is facing as well as setting a benchmark to fuel thecoordination of activities to uphold corporate values towards theattainment of the position. Currently, the company has not been ableto reach potential customers in the whole world, but the visionstatement specifies its intention.
Thevision statement is sufficient in the sense that it is focused oncustomer satisfaction. This part evince that the organization iscommitted to ensuring the customer is satisfied and even exceed theirexpectations it is all it takes to be the best. The statement alsoinsinuates that the management will employ better strategies tobecome better than the other players in the industry it is becauseit has to be in possession of competitive advantage. This missionstatement is effective as it is audacious. The organization not onlywants to provide high quality services for customers, but alsopossesses views of being outstanding against competitors.
Everyvision is guided by values. These values are the guiding principlesin the attainment of the long term corporate goals and objectives.The values are set out for the purpose of guiding the character andattitude of the business’s stakeholders they ought to be guided onhow to conduct their activities with the aim of always marryingindividual interests with the corporate goals. Manulife’s valuesare summarized in an acronym: “PRIDE (Manulife.com, 2014).”
Thecompany’s management aims at earning recognition for practicing thebest quality professional standards (Manulife.com, 2014). The valueacts as a pillar that guides the organization’s stakeholders to themaintenance of professionalism and the execution of such activitiesas would promote high professional standards. If professionalism isto be achieved, then the company’s agent and its employees shouldbe adequately trained so as to be in possession of superior skillsand knowledge. The customers will then receive quality services,hence professionalism.
Real value to Our customers
Thecompany’s vision of customer satisfaction is guided by this value(Manulife.com, 2014). Through the communication of these intentionsto the organization, the company aims at ensuring that its agents andemployees are able to deliver quality products to its customers. Realvalue alludes to nothing less than the best of quality that thecustomers ought to receive. The delivery of products and servicesdoes not end it that, it transcends to the provision of financialadvice to customers. This enhances the consumer satisfaction, andhence, winning their loyalty. When the company is able to deliverquality assurance and reliability to the customers, the latter areable to meet their individual obligations and needs.
Fairnessand honesty are important virtues in the conducting of businessactivities. Manulife stipulates that it is dedicated to ensure thatsuch virtues are upheld in its discourse (Manulife.com, 2014).Integrity incorporates an important aspect of the organization’sculture. It is important for the company not to breach the integrityvalue as it would translate to the breach of professional ethics, anuncouth practice that hampers success.
Demonstrated Financial Strength
Thecompany observes that its customers depend on it to fulfill itfinancial obligations as they fall due (Manulife.com, 2014). Thecompany, therefore, establishes a strong financial managementphilosophy to guide the operations in the achievement of customersatisfaction (Manulife.com, 2014). The company has set out variousmeasures to ensure that it does not fail its clients it aims atensuring that claims are paid accordingly, maintaining a constantflow of earnings and ensuring that it taps a concrete investmentbase.
Employer of choice
Themanagement identifies that the employees’ efforts are the ones thattranslate into the future success of the company (Manulife.com,2014). Owing to this, the management sets out to provide theemployees with the best rates and healthy working environment. Thisway, the company is able to attract the brightest brain that in turnaid in the achievement of Manulife’s long term objectives (PCMAG,2014). The company expresses its intentions to enhance the humanresource department and facilitate appraisals and rewards forexemplary performing by its employees.
Inits strategic plan, Manulife Financial highlights its coreobjectives. They include:
Developing and venturing into the Asian opportunity the best way possible (Manulife.com, 2014). The company has identified the potential market in the Asian countries. There are a lot of unexploited possibilities as opposed to the Western markets that are, somewhat, saturated.
Growing its non-guarantee-dependent asset and wealth management businesses in Canada, the U.S. and the Asian market (Manulife.com, 2014). This serves as an objective that is aimed at enhancing the relationship between the company and its customers. Additionally, it will also help in increasing the company’ customer base as this product is unique from others in the market.
Continuing the growth of its Canadian franchise (Manulife.com, 2014). The company aims at expanding its operations by selling its brand as well as introducing it to new markets. This way, the company will diversify risks by expanding its pool of income and investments.
Improving its Return On Equity and ensuring they are at lower risks in the U.S (Manulife.com, 2014). An increase in the ROE encourages investor to increase their shareholding capacity and hence assuring the availability of finances to cater for the company’s operations.
Theseobjectives are married to the mission, vision and values of thecompany to define the direction of the firm. In a bid to understandthe position of the company there is need to analyze it internalenvironment.
Thissection attempts to decode factors that influence the activities ofManulife Financial as a company. The external factors are animportant consideration as failure to understand they would causeconflict, and, subsequent failure (Olsen, 2014). External analysis isof paramount importance in strategic planning. It aids in definingthe company’s current position with respect to what it wants to do(Olsen, 2014).
3.1EXTERNAL ENVIRONMENTAL SCAN
Thecompany does not operate in isolation there are other determinantsthat are brought about by the external environment. This sectionanalyzes the external forces that influence the company’s businessactivities. The factors involved are summarized by the acronym“PESTEL.” PESTEL stands for Political, Economic, Socio-cultural,Environmental and Legal variables that a company needs to put intoperspective to ensure that there is coherence and compliance withfactors beyond the jurisdiction of the organization (Olsen, 2014).
Thissection comprises of the factors that are influenced by thegovernment or the political environment (Olsen, 2014). These includeboth formal and informal influences of government to economicconditions or business activities. The degree of governmentinvolvement in business activities varies from country to country.For instance, the U.S. economy is fully capitalist. This implies thatthere is little government involvement in business. In such aneconomy, there is freedom of creation of wealth as long as it doesnot involve illegal transactions. Such freedom is favorable for thecompany to venture in since economic factors are controlled by theforces of demand and supply. As so, John Hancock does exemplary wellin the United States than it does in parts of Asia (Manulife.com,2014).
Apartfrom government direct involvement in business activities, there areother considerations such as the tax policies in place, traderestrictions and tariffs, labor laws, legislations on the environmentand political stability (Olsen, 2014). Manulife has less traderestrictions in the U.S. and Canada than in Asia (Manulife.com,2014). This explains why the company does well in these countries. Itcould also be explained that the political environment is calmer inthe west than it is in Asia. Parts of Asia are prone to governmentcoups, not to mention insurgencies and strikes by rebels andterrorists. It is also factual that the labor force in the westerncountries is more educated and is well aware of their rights asopposed to their colleagues in the east. In turn, the governments inthe west have more stringent measures regarding the treatment ofemployees and their remuneration (Olsen, 2014). This, however, doesnot provide a loophole for the company to exploit the ignorantemployees, as it is in its corporate values to become the employer ofchoice. It is, however important to note that the company has more tocomply with in the west than in the east. In order to curb the gapsin the levels of expertise in both regions, the company has sought toexport some of its best employees to boost its operations in Asia.They have also put in place training exercises to ensure that all ofits employees meet to its requirements and standards. Manulife hasmade most of its decisions with a great consideration of variablesthat are influenced by the political environment, hence achievingstrategic positioning.
Theseare factors such as the rate of economic growth, foreign exchangerates, rates of inflation and interest rates (Dineshbakshi.com 2014).These are pertinent issues as no company would succeed in theiroblivion. An economy that has progressive steady economic growthfavors the success of companies (Olsen, 2014). Manulife, in its,strategy, measures the viability of various economies before decidingto venture into them (Manulife.com, 2014). For instance, the UnitedStates and Japan are among the world’s leading economies.Manulife’s decision to venture in these countries is an informedone and would not disappoint them, vis-a-vis other impediments(Manulife.com, 2014). In such countries, the number of investorswilling to provide the company with finances, in exchange fordividends and capital gains, is higher than that in developingcountries. Economic growth also translates into the establishment oflarge business organizations as well as the accumulation of wealth,which are Manulife’s main target (Olsen, 2014).
Highinterest rates discourage investments as investors are afraid to losea lot towards the payment of such, either to their annuities orprofits (Olsen, 2014). Manulife’s investment in such countriesought to be diversified by the franchising of its brand to variousparts of the world. Similarly, high inflationary rates or indicationsof inflation should be something to watch out for. Even withManulife’s move into Asia, the management has done litmus tests toensure that the economies into which they want to venture in havestrong measures to curb excess inflation.
Theseare the factors that capture the cultural essence of the community inwhich a company is or will be based (Dineshbakshi.com 2014). Thesefactors are important determinants of the business’s success orfailure and most importantly, how it will execute its strategicoperational plan (Olsen, 2014). The social factors comprise of sizeof population and its growth rate, health consciousness, attitudestoward careers, age distribution of the populace and the people’semphasis on safety (Olsen, 2014). Manulife’s move to Asia could behampered by the age distribution in the various countries’populations (Manulife.com, 2014). This is because most of thepopulace is characterized by ageing people. This could be detrimentalin the process of acquisition of labor. However, Manulife hasadjusted to this by recruiting members from the west and exportingtheir expertise to Asia. The company identifies the population,though ageing, as potential subscribers to their health and lifeinsurance products. The population growth rate in Asia is alsoprogressive, translating to increase in demand for Manulife’sproducts and services. The health consciousness is also growing bythe day and hence the need for Manulife to tap the market before itis encroached into by others, and later complicating the process ofentry into the market. Manulife also enjoys the loyalty of a largepopulation of Canada, as John Hancock does in the United States(Manulife.com, 2014). The populations in these two countries aredeveloped and issues like health awareness are not complicated tomake the people understand.
Thisinvolves issues related to the ecology and some environmentalcomponents such as technological incentives, the R &D activityand technological change (Dineshbakshi.com 2014). These are importantaspects that any organization, including Manulife Financial, out toput into consideration. Unresponsiveness to the adoption oftechnological advancements pushes a company to a losing edge againstits prompt competitors (Olsen, 2014). On its part, ManulifeFinancial, in its strategic plan, highlights that it is in possessionof the leading technology (Manulife.com, 2014). It is therefore at acompetitive advantage against it competitors. The management is keento assure its clients and investors that they would enjoy thefeatures and functionality of premium technological systems. Themanagement states that the company’s technology is designed to suitcustomer needs by ensuring that the least time is spent in thedelivery of quality products and services (Manulife.com, 2014).Manulife’s technology is designed to accommodate changes andinnovation for better quality delivery. This is a wise strategy asrigidity would be expensive and time consuming, bearing in mind thattechnology is rapidly evolving (Olsen, 2014).
Theseare factors associated with the weather, climate and climatic changes(Olsen, 2014). Manulife Financial Company has to study the weatherand climatic changes other areas that it invests in and also those itintends to move on to. This because, as insurer, weather and climateare potential perils that could alter the company’s strategic plan.Unpredicted changes such as occurrence of Tsunamis and Tornados wouldtranslate to the payment of claims whose real value was not reflectedin the payment of premiums. This implies that the company could bemaking losses from just a few occurrences of sudden weather changes. Climatic changes could also have adverse effects on the health oflife assurance policy holders. The increase of the probability ofoccurrence of risk puts the company at a losing end (Olsen, 2014).
Thesesection includes the legislations that a company ought to complywith, to avoid being into loggerheads with the law (Dineshbakshi.com2014). Some of the legislations include consumer laws, discriminationlaws, health and safety laws, antitrust laws, employment laws amongothers (Olsen, 2014). These factors influence a company’s employeecomposition, the costs incurred in hiring, remuneration and overallproduction, as well as the way in which the company runs itsactivities. In its strategic plan, Manulife financial outlines thevarious legal considerations that are required of the company tofulfill and how much it will cost the company in the achievement ofthat.
3.2 MACRO ENVIRONMENTAL TRENDS
Themacro-economic environmental factors vary from time to time. Thesechanges are beyond the company’s jurisdiction and control (Olsen,2014). In some instances it becomes very hard for managers to predicthow these factors will occur and their possible impacts. The rate ofchange does not match in all industries such that managers cannot useparameters in other industries to predict possible outcomes intheirs. However, managers have the ability to critically studyindicators to such environmental trends and be prepared for them.Managers who have good skills in the study of macroeconomic trendshave a competitive advantage against those who have little knowledgeabout the same (Olsen, 2014). In Manulife’s macroeconomicenvironment, there are various emerging trends that are worth lookingat.
Therehas been increased global agitation for the inclusion of male andfemale employees in equal measure in the workforce (Olsen, 2014).Manulife has moved forward to boost the number of female in theirorganizations (Manulife.com, 2014). With this compliance, the companyearns the confidence of the community hence building a wider consumerbase.
Therates of temporary employment have increased in the years (Olsen,2014). There are many people willing to work on pat time terms.Manulife has observed the trend and has adjusted its system toaccommodate the trend. This way, the company has been able to tapmore talent and skills in its human resource department.
Anothertrend that greatly affects Manulife Financial is the fact that theloyalty of people from the urban areas is reducing their loyalty tothe company (Olsen, 2014). Manulife is not the only victim as peopleget educated they are aware of other products in the market and wouldwish to try a variety of them. In a bid to curb this, Manulife’smanagement has enhanced the quality of its products and that ofcustomer service.
Theregulations onincrementof wages for employees are on the rise (Olsen, 2014). It is inManulife’s values to ensure that it becomes the employer of choiceit, therefore, has subsequently adjusted its financials to ensurethat it does not lose employees to competitors. It also achievessafety from lawsuits that would tarnish its reputation.
Thealterations in the rates of tax are a key issue (Olsen, 2014). Owingto the variations in the economic environment, governments vary taxesas part of the fiscal policy to control inflation. Manulife is wellaware of this trend and has accommodated it in its strategy.
Technologyis the most dynamic aspect of a business’s external environment(Olsen, 2014). Technological advancements emerge with every passingday. Manulife Financial has a flexible technological structure thatfavors changes. The internet is one very volatile aspects it comeswith a myriad of threats and opportunities. Manulife has an intactresearch team to study these changes and advising on which ones toinvest in.
3.3PORTER’S 5 FORCES ANALYSIS
Manulife’ssupplier power is low owing to the fact that its suppliers havehomogenous products to offer to customers (Manulife.com, 2014). It isdifficult for the suppliers to alter the design of products so as tosuit a customer’s needs. The products in the hands of suppliers aredependent on forces beyond the control of the suppliers (Natasha,2014). In order to solve this problem, Manulife may focus morefranchising and branching, so as to reduce the distribution chain(Natasha, 2014). They should consider enabling suppliers to tailorsome products to cater for specific customers’ needs.
Manulife’sattempt to enter into a new market or try to diversify its productscould be a very expensive option. The new market requires a lot ofcapital invested in, before it can start reaping from the marketNatasha, H. J. (2014). The task of convincing new customers topurchase their products and services may be an uphill climb. This isbecause clients in the insurance industry tend to remain loyal totheir current providers than shifting to a new entrant in the market(Natasha, 2014). The other reason is that the markets are saturatedby other companies offering similar products.
ManulifeFinancial has a high level of buyer power (Manulife.com, 2014). Itscustomers are always offered substitutes for their products. Such amove entices the buyers to encourage them to purchase more. Thepresence of substitutes enables consumers to build confidence in thecompany (Natasha, 2014). It is a medium of expressing how willing thecompany is in its bid to satisfy the consumers.
Thethreats offered by competitors in the market, to Manulife Financial,are of large magnitude (Manulife.com, 2014). As the company offersfinancial management and insurance services, there other competitorsin the same market who offer the substitutes. The products in themarket are almost homogenous the, one, company that disentanglesitself from the knot of homogeneity gains the most customers(Natasha, 2014). Manulife financial ought to install measures toassist in designing of products, to make them unique. This ispossible through research and encouraging innovation. The companyshould also be keen not to lose it customers to other firms that areselling similar products.
Themarket is saturated with a lot of companies trying to establishthemselves in the same market as Manulife Financial. Competition inthis kind of market can be termed as fierce as all the companies arestruggling to take a piece of the pie(Natasha, 2014). The strategyemployed and the hastiness could define winners and losers. In thismarkets, their scramble for information and unnecessary price wars.These could be dangerous to the success of the industry as thecompanies will wear themselves off in the tussle for customers andthe reduction of prices in the market (Natasha, 2014). Manulife hasto be on the lookout, to get as much information as possible anddesign ways in which they will improve their operations.
ManulifeFinancial Company is faced with a great challenge as it does notscore very well. It is subjected to non-ending rivalry rival whooffer substitutes of Manulife’s products, poor supplier powers, aswell as the many barriers there are in the entry into new markets.However, it is commendable that the company envisages high buyerpower. The management ought to adjust its strategic plan to cater forthe improvement on the various weaknesses.
ManulifeFinancial ought to be conscious of consumer preferences with regardto prices. They will hence adjust necessary area to foster success inits sales strategy. The perceived value pricing strategy refers tothe consumers subjective benefits acquired from using a product orservice. It measures the difference between acquired benefits lessthe incurred cost. It involves a lot of comparison between variousproducts offered by various players in the market. The consumer endsup choosing the product with perceived highest value in the market.The perceived value may also be measured by calculating the ratiobetween the expected benefits as a fraction of cost to be incurredthat represents the sacrifice borne by the consumer. The perceivedgains are both measured by value judgment and also via monetaryvalues that includes percentages and ratios. The higher the expectedgain the more the consumer is willing to pay to acquire the good orservice.
Forvalue based pricing a number of factors ought to be considered .Thefirst thing the management should do is to conduct a survey on thecustomers to know their perceived gain from the good. It shouldinclude identifying the various features and associated benefitsconsumers cite for choosing the product .This could act to help inunderstanding whether the company is under valuing its products oroverpricing them hence could act as a pointer to making more profit.Through identifying the key factors the company can be able tocompete more favorably against other service providers in the sameindustry. The firm could work towards increasing the efficiency ofthe feature mentioned by the customers during the survey. This willend up increasing the uniqueness of product hence more sales thusprofits. Through suchdifferentiation of the products in the marketthe firm sets itself up to gain customer loyalty and also retainsthem. Since any increase in prices is associated with increase inquality thus the relationship with the customers is not destroyed.
Theother factor to be considered while pricing goods on perceivedacquired gain is the prices charged by the competing firms in thesame industry. This enables the firm to assign value relative toother competitor’s charges and associated gains by the consumers.The firm may conduct a survey a survey in the market to clearlyidentify what customers value in the competing products. Themanagement can then be able to judge favorably the associated valueof its products compared to the competitors. This could act as leadto avoiding overpricing or under pricing of goods and services. As aresult fair prices based on almost the same value assigned to theproduct could be charged. The management may also considersanctioning of changes to be made to the product to surpass the valueapportioned to products of competing firms. Among the modificationsthat could be taken would be installing of features previously absentfrom the products to match the rivals. Later a promotional campaignmay be launched to make the consumers aware of new additions to theproduct. That way the firm may be able to charge higher prices.
Thefirm could also estimate whether it helps making customer feel greatby being on higher societal class that could act as lead to charginghigher prices thus more profit margins. If it is the case the firmcould embark on promotional campaign showing photographs of consumersusing the products. The firm should calculate it perceived gains bythe customers and compare with the values got from the market surveyto accurately determine on the best possible prices. Through such anaction the management is able to take full advantage of the consumersurplus. That refer to the maximum price the consumer is willing topart with to acquire a specific good or service. As a result higherprices can be charged. The management could also launch a promotionalcampaign to make consumers aware of aware of various key benefitsthey stand to acquire for usage of a good or a service. This is wellguided by the statistics collected during the market survey. As thefirm is able to promote features of the products were previouslyunknown to the consumer thus a better chance to charge higher pricesand still make more sales. Firm that charges
4.2Value Chain Analysis
5.0 CORPORATE DIRECTION
5.1 SWOT ANALYSIS
SWOTanalysis is a tool used to assess the position of the firm and itfuture prospects. The SWOT analysis is important in strategicplanning as it aids in a specific are broader view of factors in thebusiness environment. Strengths and weaknesses can be classified asaspects if the company’s internal environment, while theopportunities and threats are to be viewed in the broader picture ofthe external environment (Chapman, 2013). Manulife’s SWOT analysisshows what position the company is in, and highlights the specificareas that need to be worked on. An opportunity is defined asfavorable condition that brings about further benefits. Businessexternal environment analysis is useful as it reveals variousopportunities that the firm may exploit to increase profit and fostercorporate growth. Threats refer to the unfavorable conditions whosepresence is hazards to business success. A company should identifythreats and install adequate measures to handle their possibleoccurrence or to avoid them. Manulife is faced by various threatsduring its operations and expansion. The strengths of a company arethe factors that rate the company as to be ahead of its competitorsin specific areas. Strengths are components of the business’sinternal environment (Chapman, 2013). Companies ought to uphold theirstrengths and make the best use out of them. Manulife has variousstrengths. Weaknesses refer to a company’s internal loopholes thatcould translate to failure or losses. Manulife Financial is notexceptional it has several outstanding weaknesses.
Manulife Financial enjoys large market shares in most of the economies it has invested in. This good positioning places the company ahead of its competitors since Manulife enjoys more brand loyalty. It is, therefore, difficult for competitors to wipe out Manulife from the market. In Asia too, the company has a good reputation owing to its international standard and good ranking worldwide. These strengths would aid the firm in the entry into new markets or the expansion of operations to other new regions. The target customer base would not need as much effort to convince them as a new and no-reputable company would do.
Manulife also possesses a very firm and strong ability of distribution of its products. Its sales strategy is efficient and effective as it translates to good returns. The company’s sales department employs good strategic tactics to ensure that all the company’s clients are reached by the products they are in need of. By having numerous distribution channels, it becomes easy for the company to move into new markets or improve products as per the wide variety of feedback received from the consumers(Mbaskool.com, 2014).
Manulife Financial also has a strong financial base. In Canada, it is estimated that the company’s capital is about 200% of the required amount by regulators. This is a good indicator that the firm has enough finances to handle its operations with comfort and the urgency that they deserve. The company is also able to pay for its financial obligations as they fall due hence avoiding conflicts with all the stakeholders.
The company’s investment mix leads to the realization of enough capital and subsequent profits (Chapman, 2013). Manulife Financial is ranked as the richest insurance company in terms of market capitalization. Manulife Financial incorporates an elaborate investment plan in various securities exchange markets around the world. With this portfolio, the company is able to diversify risks as well as increasing the financial pool that serves as capital. Manulife’s stocks and securities are performing exemplary well.
Over subscription to commercial loans. Manulife purchases it assets from commercial loans from banks. This could be viewed as a poor move as there exists the risk of delinquency and the subsequent freezing and auction of such assets to pay for the loan. The company should consider purchasing assets on credit, rather than having them at the exposal of commercial banks. The delinquency rates are uncertain for the company in each financial year. When the delinquency rates rapidly increases, it may result to the company making abnormal losses and hence pushing the company’s net income to a point below zero. This would greatly discourage investors in the company.
Manulife Financial has also been in the limelight severally for making negative net incomes. As a public limited (Mbaskool.com, 2014).
The Increase of the rate of globalization is a great opportunity for Manulife to explore new markets. Globalization means that the world is able to easily trade and communicate. Such conditions favor development and growth of the customer base.
Manulife Financial is keen on the acquisition of other firms. This is an important move since the opportunity for solely trying to capture a new market is a tough one(Mbaskool.com, 2014). However, with acquisitions, the company’s management has a better ground to make more customers.
Emerging economies in Asia. Manulife has a advantage over new entrants in the Asian market. This is because Manulife already has its roots there, and has gathered its loyal customers close to itself. A new company will struggle to take away such customers from Manulife Financial, but seconded by its reputation and products, Manulife could be enjoying oligopolistic powers with some other few companies with likeminded ideologies. With this as a fact, Manulife Financial has an edge against its competitors in relation to reaping from emerging economies in Asia like China’s.
Flight to safety during economical crisis. Manulife financial has a strong financial structure. During economic distress, such as times of hyper inflation, the company is safe from dilution. The management is able to reschedule its finances appropriately to suit various economic conditions. It is also with the strong financial strength that Manulife is able to make cheap acquisitions as soon as they are announced, and if they are viable. The company also takes advantage of the acquisition of distressed assets hence saving a lot in its inventory (Chapman, 2013).
Changes in tax policies could be detrimental as customers in the wealth management industry are very sensitive to the rates of taxes they are supposed to pay for their wealth. The governments’ move to increased taxes for multinational companies such as Manulife would be reflected in the charges to customers. The higher the cost of the services they get, the less they will be enticed to purchase from the company they will resort to relatively cheaper substitutes.
The industry that Manulife Financial ventures in is very volatile in nature. The whole industry is founded on grounds of speculation and expectations in different criteria. There is always the risk that a huge loss can sink the company(Mbaskool.com, 2014). Manulife Financial is selling its brand in various parts of the world in a bid to diversify risks by having a larger portfolio. Re-Insurance and Co-insurance are also among other trends that Manulife has explored so as to reduce the risks associated with the occurrence of one big loss.
Manulife Financial is also faced with the threat of vigorous competition. The market in Canada and United States is saturated as there are other players in the market who are all competing for a share o the market. There is stiff competition and hence it is difficult to expand the company’s activities in the same markets. In the same way, Manulife’s move into Asia could be viewed as an informed decision as it expresses the management’s agility in the acquisition of prospective markets before its customers. However, this does not eliminate the possibility of future competition that could become wasteful and profits will consequently diminish.
5.2 CORE COMPETENCY ASSESSMENT
VRIOanalysis is a tool used to measure a company’s competency in theindustry (ManagementMania.com, 2014). There are four valuables thatare put into perspective.
Thisrefers to the monetary and non-monetary worth of products offered bya company the intrinsic value of products. In this section thecompany should question itself on how much it offers the products forand how well the products have been tailored to meet consumers’needs. Low value could translate to the customers seeking substitutesfrom other producers in the market.
ManulifeFinancial scores well in the valuation of its products. The companyis able to offer a variety of products that are comprehensive interms of consumer needs coverage (Manulife.com, 2014). This explainswhy the company still enjoys a large market share despite the toughcompetition.
TheVRIO analysis model proposes that a company’s products ought to berare to avoid competitive parity (ManagementMania.com, 2014). Thedesign of the products should be unique than others in the market.Manulife Financial scores averagely in this section. The companymakes enough effort to differentiate its products and make them rare,but the products in the industry are far much identical.
Acompany should ensure that its products are not easily imitated bycompetitors (ManagementMania.com, 2014). This is so as to enable thecompany to enjoy competitive advantage. Manulife’s products areexpensive to imitate for new entrants into the market (Manulife.com,2014). This is because Manulife is a big company that enjoyseconomies of scale, hence can offer products at discounted prices,while new entrants cannot. However, the company’s products havebeen successfully imitated by the other prominent competitors in theindustry.
Thiscomponent evaluates how much a company is organized in its course ofacquisition of an efficient market (ManagementMania.com, 2014). Itlooks at the requisite arrangement of operations adequate planning(ManagementMania.com, 2014). It also enquires into the ability of thecompany to apply its plans to earn competitive advantage against itscompetitors. Manulife Financial has a well formulated strategic plan(Manulife.com, 2014). The plan stipulates how each organizationobjective is to be achieved. The company then has put in place thenecessary measures, including finances and a good taskforce, toparticipate in the achievement of those objectives (Manulife.com,2014).
5.3 KEYSUCCESS FACTORS
5.3.1Ethical and Effective Marketing and Advertising
Businessactivities come along with lots of advantages to the society butalong with them, are disadvantages that have great negative impact tothe same people in the society. Unethical behaviour by thestakeholders in business is the greatest contributor to theoccurrence of negative activities in the society. Advertising, asamong the components of business activities, is not exceptional.Advertising activities have undergone endless criticism andconsequential legislation to regulate activities in the field.Manulife Financial ought to be vigilant to the compliance with suchregulations and meet up to the standards. For instance, there islegislation in Quebec, Canada that prohibits advertisement tochildren. The management should identify such other rules to avoidcollisions with the law and societal ethics.
Despiteall the criticism leveled against ads, they play a vital role in thebusiness world. Advertising, therefore, is an important activity. Itprovides information to the consumers who are interested in it, butwould not get it through any other means .Consumers could, again,have the knowledge of the existence of products but would not knowwhere from and how to obtain them. Advertising chips in to avail suchinformation. Ads, therefore, play a vital role in economics that ofbalancing between supply and demand. It is important that ManulifeFinancial critically analyzes its marketing plan a good one wouldaid it greatly in its aim of obtaining new markets.
5.3.2Furnishing the taskforce
Thesuccess of a business is significantly determined by theeffectiveness and efficiency of its taskforce. In this note, ManulifeFinancial is not exceptional. There is the need for the company tohave employees who are conversant with duties and share the visionand the mission guiding the firm(Alrichs, 2008). When expanding its business ventures, there is thus the need to havea precise hiring plan and strategy (Ashby& Pell, 2006).This will ensure that, new employees have these fine qualities whichwill ensure the sustainability of the company(Alrichs, 2008).
5.3.3Integration of the Information System
Theintegration of Information Systems in health care has changed themethods in which these organizations carry out their activities. Information systems have made it possible for company owners toposses improved links due to changes in rigid structures whichexisted earlier on. Manulife Financial should not be left behind inthe trend it should integrate its information system to meet theindustrial standards (PCMAG, 2014).
Communicationhas been improved in the industry. Information systems offer easy aswell as fast media transmitting information. The hierarchicalcommunication ought to be demarcated, thus enabling officials toexchange ideas and information with the employees. This is secondedby the efficient storage as well as easy retrieval of data pertainingthe company’s stakeholders.
InformationSystems have witnessed changes in the process of decision makingwithin the business line. The adoption of DSS (Decision SupportSystems) like Group Decision Support Systems (GDSS) as well as EIS(Executive Information systems), has significantly changed the methodof decision making,as decision making is fast as compared with the past methods.Manulifeshould adopt the same in its strategy to foresee the success of itsplan for the future.
6.0 DISCUSSIONAND ANALYSIS OF STRATEGIC DIRECTION AND RECOMMENDATIONS
6.1Application of DSS
ADecision Support System is a computer based combination of proceduresthat are formulated to facilitate the decision making process inbusiness organizations or other firms.Managerialdecision making activities are enhanced by the use of DSSs. This is,especially, for the top management and a little in the middle levelmanagement.
Themost profound difference that exists between MIS and DSS is that MISlays focus on the efficiency of operations in an organization whileDSS focuses on enabling the corporate managers to make the bestdecisions that will be in the best way possible conform with goalsand objectives.MISprovides an enabling environment for effective communication and flowof ideas throughout the organization. On the other hand, DSS ismostly for high level managers for the purpose of decision making.
TheDSS architecture comprises of three fundamental components: thedatabase, the model and the user interface.Thedatabase, which is also known as the knowledge base, harbors andstores information that is retrieved upon, accordingly, command tosuit the various instances.Itstores data for later use. The model is the feature of the programthat defines the procedures in which decisions are analyzed andgenerated.Theuser interface is the feature that allows users to interact with thedecision making program.Itpresents options from which the user is able to choose in issuingcommands.
Manyorganizations employ the use of DSS. For instance, the managers inthe marketing department would want to analyze the best promotiontechnique to use in their newly found potential market. The use ofDSS would provide them with in-depth analysis with information easilypresented in graphs and charts.Thiswould enable them make the most viable, and informed, choice.Manulife would benefit greatly from the employment of these aspectsof technology.
Ina bid to ensure that compliance is enhanced. It is important ManulifeFinancial ought to be conscious enough on the importance ofcompliance with regulations regarding different areas in their field.There requires to be commitment from the company. For long termaction plans, there has to be behavioral and educational strategiesin place. The strategies should be considerate of social, political,economic and cultural factors.
Noregulation is important than the others given that all are gearedtowards the achievement of quality and efficiency in the sector. Aregulation may be looked down upon on the basis that itsconsequential effects does not have a great adverse impact, however,this should not be used as an argument to sideline some regulationsas there are important in their own way, towards Manulife Financial’ssuccess .
Inorder to effectively prioritize its efforts towards compliance toregulations, Manulife Financial should indulge in research. At thesame time, it is also important to consult with experts in the field.Compliance should also be facilitated by full implementation ofprograms, as a way of enhancing skills and knowledge.
ManulifeFinancial has a working strategic plan. However, as much as it isoperational, it has hurdles that the management should be on thelookout for. Its external environment analysis indicates variouschallenges and considerations. The unforeseen challenges should beincorporated into the strategic plan. At the same time, Manulife’smanagement should major on their strengths and exploit theiropportunities to yield the best returns. The SWOT analysis alsoidentifies various weaknesses as well as threats that the company isfaced with. The management should aim at eliminating them so as notto be on the losing end against its competitors in the industry.Manulife has various prospects which the management should explorefully with the aim of acquiring new markets for the purposes ofincreased returns and diversification of risks.
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