Competitive Environment of Marsh Company

This article discusses the competitive environment of Marsh Company using Porter's Five Force Model. It also explores the regulatory requirements and ethical considerations for acquiring new business by Marsh.

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Marsh: Brief Overview
Insurance broking firm named Marsh was founded 140 years back. Henry W. Marsh and
Donald R. McLennan founded this company. Their aim is to help various businesses to cope
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up with the changing and innovative environment. A major step changed the course of
insurance broking throughout the world1.
Marsh with a large network has its branches spread out in all over world. It is assisting
millions of customers in almost 130 countries all around. It also has a very big labor of
around 35000 employees. They are working hard in order to provide risk management
portfolios to the clients of the company2.
As the network of marsh is very large, that is why it is considered one of the top players of
insurance broking industry. The main objective of the company is to look into the portfolios of
its insurance clients and make a balanced portfolio to manage their risk certainty and provide
them solutions to overcome any drawback or uncertain condition. This allows the company
to have competitive advantage over other companies of their industry.
Marsh is one of the four subsidiaries of Marsh and McLennan Company. It is a very
productive and profitable company, which work at providing risk management, strategic
solutions to its clients. It is working from around 140 years and still a global leader of its
kind3.
In this assignment, the competitive environment of Marsh is going to be discussed. The
ethical consideration and regulatory requirements that one should take into consideration will
be going to discussed and analyzed in terms of Marsh4. Based on that, some
recommendations will be suggested.
1 Marsh, ‘Diversity and Inclusion’ (Marsh, 2019a) https://www.marsh.com/uk/about-marsh/diversity-
and-inclusion-marsh.html accessed on 25th April 2019
2 Marsh, ‘Leadership’ (Marsh, 2019b) https://www.marsh.com/uk/about-marsh/leadership.html
accessed on 25th April 2019
3 Marsh, ‘You are changing. We are too’ (Marsh, 2019f) https://www.marsh.com/us/home.html
accessed on 25th April 2019
4 Marsh, ‘Leading the Way in Transparency’ (Marsh, 2019c)
https://www.marsh.com/uk/about-marsh/leading-the-way-in-transparency.html accessed on 25th April
2019
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Competitive environment of the Marsh Company
Source: Porter’s Five Force Model5
The competitive environment of Marsh Company is going to be analyzed by using porter’s
five-force model. Competitive environment is the environment in which a company works
and get affected by factors present around it competitively. In order to analyze the
competitive environment of any company or in particular of Marsh, the porter’s five-force
model is the best choice.
In porter’s five-force model, it denotes five force of rivalry among competitors, which can
affect company so much. The five forces and their reference with Marsh Company are
discussed in following lines:
Rivalry among existing competitors
An industry is combination of many organizations, which are serving with a same objective.
In an industry, there exists rivalry of competition among them. It is so because they want to
be top player of their market.
Marsh is considered one of the top players of this insurance and insurance broking industry.
They have high profit margins as compared to their competitors and its financial statements
are showing amazing and competitive results.
Bargaining power of suppliers
An industry it effected by its supplier’s bargaining powers also. They have much potential to
influence the prevailing prices of supply of goods or services to the respective company.
In case of Marsh there is no existence of suppliers, however they need suppliers for fixed
assets and for some miscellaneous tasks related to their company. Marsh needs a strong
5 Michael E,Dobbs, ‘Guidelines for applying Porter's five forces framework: a set of industry
analysis templates’ [2014] 24 Competitive Review 32
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base of its supplier, so that some irrelevant things cannot hamper the core functions of the
company.
Bargaining power of buyers
Bargaining power of buyer is related with buyer’s power to bargain the price of the goods or
services and in turn can bring the prices down. This is the power, which is in the hands of
buyers. They can bring prices down with their loyalty to other firms.
Marsh is a company, which has a very strong base of its buyers or clients. The clients of
marsh are from different industries. They are themselves established insurance firms and
get attracted towards marsh from getting affected by its pricing and product qualities.
Threat of new entrants
It refers to threats that can be posed by new competitors on the organizations, which are
already in industry. New entrants are usually towards that industry which is making profit.
Hence existing organizations of that industry faces big threat from new entrants.
In case of Marsh, this insurance broking industry is in today’s world is getting a large amount
of threat from new entrants. It is so because this industry is growing rapidly and attracting
more competition then before.
Threat of substitute products or services
Threat of substitute products or services is one of the biggest threats of markets now a days.
It is so because a product usually becomes obsolete when new product takes its place. this
causes loss to the companies and force them to go for a new and more innovative product.
In this way cycle continues6.
Marsh is a service providing company and it have to deal with every aspect of servicing
process. They need to maintain their service quality efficient and effective in order to reduce
the threat of substitution of more innovative service by other companies.
Competition and New Business Acquisition
In order to acquire a new business in this competitive world, companies have to take some
regulatory requirements and ethical considerations in mind7. With this view, current study is
focused on identifying these requirements and considerations required in acquisition of new
business by Marsh Company or some other company in UK or world. These considerations
are going to be discussed in following paragraphs.
Regulatory Requirements
It is also known as regulatory compliance, which means obeying the rules irrespective of
your conditions and requirements. Respective regulating body assesses regulatory
requirements8. In case when the organization is not following its regulatory requirements
properly, the respective authority can take some serious or minimal corrective actions9.
6Flemming, Poulfelt and Thomas H, Olson, Perspectives and Advice from Leading Experts (2nd
Edition, Routledge, 2017)
7Edward E, Lawler III, Talent: Making People Your Competitive Advantage (John Wiley & Sons, 2010)
8Jr, Niskanen, Bureaucracy and Representative Government (1st Edition Routledge, 2017)
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In this project some significant regulatory requirements necessary for acquiring new
businesses by companies in UK is discussed10. The focus is given on the acquisition made
by Marsh Company recently and based on that regulatory requirements, are discussed in
following lines:
Transfer of Shares
In order to acquisition of new business by Marsh, the first and foremost regulation is to take
care the way through which the shares of other company will be transferred in custody of
Marsh. The transferred share can be partial or complete; it depends on contact between the
two companies. With this transfer, there will be drag and tag along rights for shareholders. It
is referenced according to the Enterprise Act 2002 and from Competition and Markets
authority (CMA).
Preliminary Agreements Needed Before the Actual Contract
The actual contract of merger or acquisition between companies or by Marsh needed some
basic agreements between seller and buyer. These are as follows:
a) Letter of Intent: This letter discloses the main intension and contractual terms
behind the acquisition. It includes terms related to pricing, objectives, etc.
b) Exclusivity provisions: In order to acquiring the company, this agreement allows
buyer (in this case Marsh) to negotiate with seller (in this case JLT) regarding the
price of the sale in a particular period.
c) Non- disclosure provisions: This agreement is for the sake of seller (JLT), in order
to get surety for confidential elements of its business. After disclosing confidential
details of its business with buyer, the seller needs guaranty of its confidentiality. This
agreement provides so.
Regulatory Authority
In order to acquire new business in UK or world, various companies need consent from
some regulatory bodies that are functioning for the same. The consent should be taken from
the respective government, CMA, tax authority, licensing authority organizations working
worldwide for the benefit of the businesses like WTO, etc.
Ethical Considerations
These are the considerations, which are considered morally right. Ethical considerations in
general are the principles and right values that one has to take care while living in this world
and doing business or any job.
From the point of view of merger and acquisitions of two businesses some ethical measures
should be taken into consideration. For this purpose, two basic approaches of ethics that are
utilitarian and rights approach are discussed with reference to recent acquisition of JLT done
by Marsh company.
9Shazia, Sadiq, and Guido, Governatori, Managing Regulatory Compliance in Business Processes
(Springer, Berlin, Heidelberg, 2015)
10Andrew, von, Nordenflyct, ‘What Is a Professional Service Firm? Toward a Theory and Taxonomy of
Knowledge-Intensive Firms’ [2017] 35 AMR
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Utilitarian Ethical Approach
This approach of ethics is all about accessing or analyzing an event in terms of the
outcomes or consequences generated by the event and that will increase or decrease the
organizational efficiency. It focuses on achieving good for a large number of people without
creating harm to any people. It deals with harm to less or no people. With this view while
mergers and acquisitions companies need to take care of this aspect of utilitarian approach.
The following ethics must be involved in acquisition process:
 Right to take necessary decision for betterment of business
 No discrimination of any party in the process of merger or acquisition
Rights Ethical Theory
This theory of ethics deals with the individual ethical rights. The ethical rights of persons
involved in merger and acquisition of businesses are of two types that are positive and
negative. Positive right is of being free to do anything one want and negative right is to have
freedom of speech and privacy. In terms of acquisition of JLT by Marsh Company, the
company follows the ethics according to the right theory. The following ethics must be
involved in acquisition process:
 Right of privacy and security of confidential documents
 Right of discloser of all-important documents and prevailing conditions about the
company, by both the parties
 Right to negotiate
Marsh: Acquisition Ethical Considerations and Regulatory requirements
The ethical consideration and regulatory requirements of acquiring new business by Marsh
organization is going to be done in this report by taking into consideration the recent
acquisition made by the parent company of Marsh. The parent company of Marsh is MMC
that is Marsh & McLennan. It has acquired a famous company named as Jardine Lloyd
Thompson (JLT)11.
JLT Company is a UK based company and provide insurance, employee benefit,
reinsurance and broking services to its client. Last year, on September 2018, a deal between
Marsh and JLT was made. Recently in April 2019, an acquisition of $ 5.6 million is complete
by Marsh by completely acquiring the Jardine Lloyd Thompson company.
The focus of this acquisition is to combine strength with strength. Primarily focusing is on the
growth of capabilities, profit, earnings and talent. This acquisition increases leadership of
Marsh in insurance broking industry. With the acquisition of this company, Marsh’s presence
in small commercial segments and in capital market expanded significantly12.
11Laurence, Levy and others, ‘Private mergers and acquisitions in the UK (England and Wales)’
(Thomson Reuters practical law, 2017) https://uk.practicallaw.thomsonreuters.com/3-552-5708?
transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1 accessed on
25th April 2019
12 Frank T, Rothaermel, Strategic Management (2nd Edition, McGrawHill, 2015)
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The impact and analysis of ethical considerations and regulatory requirements on acquisition
of JLT done by Marsh is going to be analyzed in this section. This analysis is done in order
to identify the effectiveness and efficiency of the merger between the two companies and its
impact on the working of Marsh Company.
Regulatory Requirements
It is the compliance by the business that in order to achieve their business goals, appropriate
laws, rules and regulations will be followed properly without taking any advantage. From UK
and world’s point of view, some regulatory requirements necessary for acquiring new
business by companies in this case Marsh are explained in detail. Now in this section their
impact on acquisition of JLT by Marsh is going to be analyzed.
In the acquisition, the first regulatory requirement that should be taken into consideration is
the transfer of shares. Marsh acquired JLT by fully diluted value of equity. It means that it’s
not a partial merger in fact it’s a complete merger of JLT into Marsh Company with transfer
of their 100% share in the name of Marsh.
For the acquisition of JLT by Marsh, all preliminary agreements that must be made before
actual contract are duly fulfilled. The letter of intent discloses the main intention of the
companies behind this acquisition. In exclusivity and non-discloser provisions, no breach of
confidential information related to JLT Company and Marsh Company was made.
Ethical considerations
These considerations are taken care at the time of mergers and acquisitions. In this
competitive world in order to expand business worldwide, a company should consider some
ethical considerations. Recently when Marsh acquired the JLT Company, it also took care of
ethics related with acquisition and mergers. Their impact on the business is going to be
analyzed in following lines13.
According to utilitarian approach of ethics, Marsh’s focus is to increase the profit margin of
its company without harming the interest of the society and its employees. They are working
towards the betterment of their clients.
By analyzing rights approach of ethics with relation to acquisition done by Marsh, the interest
and rights of its people must be focused not to be harmed. With this point of view Marsh take
care of rights of its employees and clients on the other hand take care of the rights related
with the elements of JLT Company also.
Conclusion and Recommendations
Marsh is a very big organization and considered a global leader. It is serving in around 130
countries in all over the world. It approximately has a work force of 35000 employees and
with complete merging of Jardine Lloyd Thompson into Marsh, the current work force of the
company gets increased by 1000014. Marsh is a subsidiary of a most famous organization of
13Karppinen, Pasi and Kukkonen, HarriOinas, ‘Three Approaches to Ethical Considerations in the
Design of Behavior Change Support Systems’ [2013] 7822 ICPT 87
14Marsh, ‘Who We Are’ (Marsh, 2019e) https://www.marsh.com/uk/about-marsh/who-we-are.html
accessed on 25th April 2019
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insurance sector that is (Marsh & McLennan) MMC. As MMC is the parent company of
Marsh so some measures in this project are taken from the point of view of MMC also
instead of marsh. It is so because as the subsidiary of MMC, some details of Marsh get
contradict with MMC.
In order to acquire new business in this competitive world some ethical considerations and
regulatory requirements must be taken into consideration15. In the project, these
considerations are explained in detail then their impact on acquisition done by Marsh is
analyzed briefly. Mainly the acquisition is beneficial for both the companies still there are
some shortcomings16. Recommendations for overcoming those shortcomings are discussed
as follows:
 When one business acquires the other one, in this case acquisition done by Marsh, it
needs to take care of the interest of clients, customers, and any other entity or
individual involved with the JLT company in past.
 After getting the whole business of other company (JLT in this case), Marsh should
aim at increasing the profitability and image of other business as well as his
business. It should make profits by putting image of JLT on stake.
 Marsh acquired the shares of JLT Company completely. Therefore, it is the
responsibility of Marsh Company to make an ethical and friendly environment for the
employees, which came from JLT Company.
 It is the responsibility of Marsh Company to take full responsibility of general and
ethical issues, which are happing or happened in JLT Company. It is so because the
company and its operations are now under Marsh17.
 In general point of view, after acquiring the complete shares of Jardine Lloyd
Thompson company, it’s the sole responsibility of Marsh and McLennan company to
follow every aspects of ethics and consider all required regulations for the sake of
their own company and Jardine Lloyd Thompson company18.
Referencing must be completed before submission
All sources must be referenced in the body of your answer as well as in your reference list. See
the 930Specimen coursework assignment and answer for examples of how to reference
correctly in text and in your reference list.
References
15Flemming, Poulfelt and Thomas H, Olson, Management Consulting Today and Tomorrow (2019)
16 Mayur, Taneja and Noopur, Saxena, ‘Mergers and Acquisitions with a reference to Ethical, Social
and Human Resource’ [2014] 16 IOSR- JBM 69
17CH, Waddington, ‘The Ethical Animal’ (1st Edition, Routledge, 2017)
18 Sammy M, Kiragu, ‘Assessment of Challenges Facing Insurance Companies in Building
Competitive Advantage in Kenya: A Survey of Insurance Firms’ [2014] 1 IJSSE 1
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Bibliography
Secondary Sources
Books
Lawler III, Edward E, Talent: Making People Your Competitive Advantage (John Wiley & Sons,
2010)
Niskanen, Jr, Bureaucracy and Representative Government (1st Edition Routledge, 2017)
Poulfelt, Flemming and Olson, Thomas H, Perspectives and Advice from Leading Experts (2nd
Edition, Routledge, 2017)
Rothaermel, Frank T, Strategic Management (2nd Edition, McGrawHill, 2015)
Sadiq, Shazia and Governatori, Guido, Managing Regulatory Compliance in Business
Processes (Springer, Berlin, Heidelberg, 2015)
Waddington, CH, ‘The Ethical Animal’ (1st Edition, Routledge, 2017)
Articles
Dobbs, Michael E, ‘Guidelines for applying Porter's five forces framework: a set of industry
analysis templates’ [2014] 24 Competitive Review 32
Karppinen, Pasi and Kukkonen, HarriOinas, ‘Three Approaches to Ethical Considerations in the
Design of Behaviour Change Support Systems’ [2013] 7822 ICPT 87
Kiragu, Sammy M, ‘Assessment of Challenges Facing Insurance Companies in Building
Competitive Advantage in Kenya: A Survey of Insurance Firms’ [2014] 1 IJSSE 1
Nordenflyct, Andrew von, ‘What Is a Professional Service Firm? Toward a Theory and
Taxonomy of Knowledge-Intensive Firms’ [2017] 35 AMR
Taneja, Mayur and Saxena, Noopur, ‘Mergers and Acquisitions with a reference to Ethical,
Social and Human Resource’ [2014] 16 IOSR- JBM 69
Websites
Levy, Laurence and others, ‘Private mergers and acquisitions in the UK (England and Wales)’
(Thomson Reuters practical law, 2017) https://uk.practicallaw.thomsonreuters.com/3-552-
5708?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1
accessed on 25th April 2019
Marsh, ‘Diversity and Inclusion’ (Marsh,
2019a)https://www.marsh.com/uk/about-marsh/diversity-and-inclusion-marsh.html accessed on
25th April 2019
Marsh, ‘Leadership’ (Marsh, 2019b) https://www.marsh.com/uk/about-marsh/leadership.html
accessed on 25th April 2019
Marsh, ‘Leading the Way in Transparency’ (Marsh, 2019c) https://www.marsh.com/uk/about-
marsh/leading-the-way-in-transparency.html accessed on 25th April 2019
Marsh, ‘Marsh & McLennan Welcomes Jardine Lloyd Thompson’ (Marsh, 2019d)
https://www.marsh.com/uk/about-marsh/marsh-and-jlt-together.html accessed on 25th April
2019
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Marsh, ‘Who We Are’ (Marsh, 2019e) https://www.marsh.com/uk/about-marsh/who-we-are.html
accessed on 25th April 2019
Marsh, ‘You are changing. We are too’ (Marsh, 2019f) https://www.marsh.com/us/home.html
accessed on 25th April 2019
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Glossary of key words
Analyse
Find the relevant facts and examine these in depth. Examine the relationship between
various facts and make conclusions or recommendations.
Construct
To build or make something; construct a table.
Describe
Give an account in words (someone or something) including all relevant characteristics,
qualities or events.
Devise
To plan or create a method, procedure or system.
Discuss
To consider something in detail; examining the different ideas and opinions about
something, for example to weigh up alternative views.
Explain
To make something clear and easy to understand with reasoning and/or justification.
Identify
Recognise and name.
Justify
Support an argument or conclusion. Prove or show grounds for a decision.
Outline
Give a general description briefly showing the essential features.
Recommend with reasons
Provide reasons in favour.
State
Express main points in brief, clear form.
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