Strategic Management of Aviva

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Strategic Management of Aviva

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Competition Analysis of Aviva Insurance.................................................................................3
2.1 Application of Theoretical Framework: Porter’s Five Forces Analysis................................3
2.1.1 Limitations of Porter’s Five Forces Model.....................................................................5
3.0 Present Business Strategy of Aviva PLC...................................................................................5
4.0 Implementation of Strategic Business Choices: Joint Venture..................................................6
4.1 Internal Business Environment: SWOT Analysis (Strengths and Weaknesses)...................7
4.1.1 Benefits (Strengths)........................................................................................................8
4.1.2 Challenges (Weaknesses)...............................................................................................8
4.2 External Business Environment: SWOT Analysis (Opportunities and Threats)...................8
4.2.1 Benefits (Opportunities).................................................................................................8
4.2.2 Challenges (Threats).......................................................................................................9
4.3 Potential Impact on Customers..............................................................................................9
4.4 Minimising the Impact of Organisational Strategic Planning.............................................10
4.4.1 Internal Environment (Weaknesses).............................................................................10
4.4.2 External Environment (Threats)...................................................................................10
5.0 Future Strategic Business Plan: Cost Leadership Business Model.........................................10
5.1 Implementation....................................................................................................................11
5.2 Monitoring...........................................................................................................................11
6.0 Conclusion...............................................................................................................................12
Reference List................................................................................................................................13

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1.0 Introduction
The strategic planning of an organisation comprises of a series of activities that tends to identify
and develop suitable business operational gaols within its present resource capability (Smith,
2013). It also ensures that each and every individual involved with the organisational operations
are taken into consideration before going ahead with developing the strategic business goals. The
process is very important as the future operational scope of an organisation is largely dependent
on its strategic business planning.
The following paper provides a detailed strategic planning of the British organisation Aviva PLC
operating in the insurance marketplace of the country. It tends to perform a detailed analysis of
the strategic choices made by the organisation with the help of strategic management theoretical
frameworks. Furthermore, the competitive business landscape of the organisation is identified in
the UK followed by recommending a suitable strategic action plan to implemented by Aviva
PLC in the near future. The recommendations have been provided in accordance to the
information successfully gained from the entire analysis thereby made in relation to Aviva PLC
and its implemented strategic options.
2.0 Competition Analysis of Aviva Insurance
A detailed analysis of competitors looks forward to help organisations in gaining a detailed
knowledge on the operational marketplace in which it is presently operating along with others
(Wu and Zhnag, 2014). The results obtained from competition analysis is critical to developing
suitable business strategies in the near future. A detailed analysis of the competitive business
environment of Aviva PLC in the UK marketplace is done using a strategic theoretical
framework.
2.1 Application of Theoretical Framework: Porter’s Five Forces Analysis
A holistic strategic management framework, Porter’s Five Forces tool is largely used for the
purpose of analysing the degree of competitive forces existing in the marketplace (E. Dobbs,
2014). The tool is being largely used for the purpose of identifying how Aviva PLC deals with
the competitive forces widely prevalent in its operational marketplace of the UK as well as
further look forward to gaining high degree of competitive advantage.

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Threat of New Entrants: The entry of new firms in the insurance marketplace of the UK exposes
Aviva PLC to the threats associated with bringing in innovation as well as incorporation of new
and advanced ways of operating. In such a situation, the organisation is left with no other option
rather than develop a low pricing strategy, reduce the presents cost as well as look forward to
delivering new and innovative value proposition to its customers (Lee, Kim and Park, 2012).
Each of these aspects are critical for Aviva PLC to successfully retain its position amidst the
competitive forces and enjoy high degree of competitive advantage. Thus, it can be said, that the
competitive force exhibited by new firms entering the insurance sector of the UK exhibits
moderate threat on the operational activities of Aviva PLC.
Bargaining Power of Customers: The threat imposed by customers of insurance sector seems to
be very high due to the low switching costs associated with shifting from one brand another.
Customers are always found to look forward to the most cost-effective business operations, as a
result of which they continuously switch brands. This results in Aviva PLC to experience
immense difficulty in its profit earning capacity as well as capability. The small and powerful
customer base of the organisation is likely to impose greater bargaining power on the
organisational operational activities (Berry‐Stölzle, Hoyt and Wende, 2013). In such a situation,
the customers are found to exhibit interest towards brands that offers huge discounts and offers
on insurance. Therefore, it can be said that the high bargaining power of customers is found to
impose immense difficulty and threat to its smooth functioning in the insurance marketplace of
the UK.
Potential Forces Created by Rivalry: The small and medium scale insurance market place of
Aviva PLC is highly competitive in the UK with the presence of a large number of organisations
trying to gain competitive advantage over others. The relative position of one brand varies from
another in the competitive marketplace, in terms of their operational scope and number of
customers varying across the micro as well as small and medium scale enterprises. The
competitive force experienced by Aviva PLC is largely determined which of the organisations
are able to win over its brokers and which one of the organisations establishing themselves with
the small and medium scale operational activities with high degree of force and effectiveness.
The closest competitor of Aviva PLC comes from AXA in the UK insurance sector along with