Business Strategy Analysis for the Global Funeral Service Industry

The funeral service industry is undergoing a total change with new trends such as life celebration funerals, live streaming of funeral events, and customized caskets. InvoCare has a monopoly in the Australian market due to its competitive advantage, strategic marketing, and mergers and acquisitions. However, expansion to the US may pose risks due to different consumer preferences. The accounting system of the brand is flexible and has quality disclosure with no distortion identified by auditors.

Business valuation and financial
analysis

Business strategy analysis
The global Funeral service industry:
The funeral service industry is a part of the consumer service industry and the global funeral service
industry is going under total change as reflected by the following trends. Any business operating in
this industry has to take into consideration the following trends while developing the business
strategy.
A relative of the deceased person like to focus on positivity rather than grief and likes to celebrate the
memory and legacy of their deceased near and dear once. Thus today’s funeral events are full of
positivity which is being termed as Life Celebration Funerals.
In today’s busy world the relatives are often forced to stay away from the near and dear ones and at
the event of a funeral to fulfil their need the live streaming of funeral events are often being done by
taking the help of the different Video sharing platforms such as YouTube, Skype and some others by
the different service providers
In today’s world the practical people of the world prefers to think and plan well in advance regarding
their funeral even the thinking is depressive
The people around the world are looking for Customized caskets and themed funerals for their near
and dear once so that they can say a final goodbye to their near and dear once in style
Finally there is a high demand for green burial service as the environment conscious people are
looking to add sustainability to the living world while saying the final goodbye to their near and dear
ones
The above trend of funeral service has increased the cost of funeral and a funeral cost is currently
ranging from $7000-$15000 pound.
So it can be said that with global growth of World GDP the demand for costly funeral events and
corresponding cost will increase across the world (Funeral.com, 2018).
Funeral Industry Australia:
The Australian crematoria and Cemeteries industry is very much deaths in Australia each year.
Medical advances, higher living standards and improved attitudes to health have helped lift the
average life expectancy, slowing death-rate growth. However, rising costs for burials due to space
restrictions over the past five years have prompted industry revenue to grow at a faster rate than the
number of deaths, as well as encouraging a shift towards cremation. The increasing popularity of

cremations has stifled industry revenue growth, as cremations typically generate less revenue per
service.
The main advantages of the business:
Access to the necessary amount of land/type of property
Having a good reputation
Membership of an industry organisation
Industry size:
Overall, industry revenue is projected to rise at an annualised 1.6% over the five years through 2017-
18, to $1.1 billion. This includes a 1.7% increase in 2017-18 as the death rate rises close to its long-
term average and greater numbers of cremation funerals constrain revenue growth
(Ashtonmanufacturing.com.au, 2017).
Global economic analysis
Looking at the growth of the world economy as demonstrated by the global GDP or world Gross
domestic product (WGP) of the transition economies (that contains the emerging markets or the new
opportunities of growth) it can be noted that the plunged down by around (-3%) in 2015 and only a
modest improvement is being projected for 2016/17 as there will be number of cyclical and structural
push and pull forces that will operate in near future. As a whole the Global GDP is estimated to grow
at a rate of mere 2.5 % in 2016 (Development Policy & Analysis Division | Dept of Economic &
Social Affairs | United Nations, 2016).
Key success factors
Key success factors are the factors that determine the success of a business in a particular industry or
market. These factors are the main strategies and initiatives undertaken by the company to run a
business successfully to ensure large market share of the company in the market. The key success
factors for InvoCare are as follows (Ashtonmanufacturing.com.au, 2017):
Competitive advantage
The competitive advantages that the brand has due to its business strategies are by classifying its
market, targeting its audience and then positioning itself appropriately in the market.
Segmentation, Targeting and positioning

Segmentation of the customers is done demographically through age, education level and income
level. The company offers funeral home services in a country where cremation prices are raising day
by day therefore its customers are going to come from average income groups who can afford to avail
these services. The targeted consumers of the company are families that will want to avail quality
funeral services for the deceased members of their families. The people want to give quality funeral
services to pay their condolences and therefore it is a very sensitive business where the company
cannot afford to make mistakes. The company has positioned itself in the market in a very social way.
The brand has monopoly in the sector in Australia. While people go through such vulnerable
situations in life they are not in state to arrange proper funeral services and therefore InvoCare acts as
their best choice to give the best quality funeral services to the deceased with no compromise on the
dedication and sensitivity.
Strategic marketing
There are certain practices that have been undertaken by the company to ensure successful operation
and sustainability of the brand value in the Australian market.
Brand image
The brand has created an excellent image for itself for its delivery of top most quality of services in all
the needs and requirements of running a funeral services business. There funeral homes are well
equipped with a number of employees looking after all the needs of the customers and their guests.
Therefore the brand has been able to create recognition not only in the domestic markets but also in
the international market. The brand image of the company has to be maintained to improving the
service quality of the company. It has been found that the employees in the company often do not
understand the sensitivity of the business as the industry is very feelings oriented and vulnerable
therefore the social issues and respect to other’s emotions have to be kept by the company. The
company takes the special care of the requirements of the different clients that avail the services of the
brand and therefore maintains and customizes the services according to their needs. This creates a
better brand value for the company in the market which creates scope for market monopoly which is
strength of the company. Customers choose InvoCare for the funeral services in Australia and New
Zealand due to the quality of services offered and the dedication that the company puts into the work
and treats it the like pious work that is.
Pricing
The cost of cremation and other funeral services are rising day by day and therefore huge numbers of
families below the middle income group are not able to afford proper funeral services for the loved
ones and that is why InvoCare acts as a source to help them in these situations. InvoCare has kept

competitive pricing for all its funeral homes which helps the company to cater to needs of its
customers from segments of the society (Funeral.com, 2018). The pricing point of the company plays
a great role in combating competition in the market that comes from the main competitor of the
business that is Propel Funeral Partners. By keeping the prices competitive they ensure that more
consumers avail the services of InvoCare rather than going to the competitor that have a higher price.
Prices of funeral services are anyway very high and therefore it is easier to attract consumers with the
lower prices which is the strategy that InvoCare follows for its business growth.
Distribution
300 funeral homes have been made across Australia and New Zealand to offer the best quality funeral
services to people and the company has employed over 1800 staff members in all the funeral homes
across both the countries to ensure the perfection and piousness of the activities. Distribution of the
funeral homes helps the brand heavily in terms of getting customers as most funeral homes such as
Propel Funeral Partners do not have such an extended like InvoCare through its distribution strategy.
The strategy of the brand is one of its main key success factors. This is the competitive planning used
by the brand to locate its funeral homes in the main areas as well as areas where the population is low.
Due to the need of consumers everywhere they have used this strategy to establish monopoly before
the competitor does.
Mergers and Acquisitions
Merging with local businesses helps the company to attain success at ground level therefore creating a
better scope of operation for the business. The brand has acquired three national brands and therefore
is in the process of not only creating monopoly but also maintaining it in the market. The company
takes care of any chances of competition arising from the local funeral homes by making sure that
they acquire the ones that are getting popular therefore erasing competition strategically. It helps the
company to not only overcome competition but also expand the overall business by having the hold
over the local operators as the company becomes their parent. This is a proven strategy that works in
removing market completion like no other strategy and the management of InvoCare has successfully
adopted it in their operations.
Risks
There are certain risks associated with these business strategies as:
The risk of business that is while developing the business and trying to operate in other markets it can
result in the business to lose customers as the service quality of their business may get affected. The
company has constant monopoly in the market and therefore if it increases its prices then it may result
in harm to its brand image as people may get offended (Focus-economics, 2018). Other risks include

international expansion may come with risks of people not choosing the brand to avail its services and
may have better choices in those countries outside Australia and New Zealand.
Sustainable performance
The company has followed a sustainable approach towards growth and expansion within the
Australian and the New Zealand’s market is looking forward to do so in other countries but it can turn
to be risky. This is because of the unfavourable customer preferences of the customers that can arise
in the company’s operations in other countries. This will further lead the company to adopt new
strategies that may be fruitful in those countries but it is not guaranteed that it will be successful.
Therefore there is a huge risk associated with this approach when operating in a new country.
Expansion to the USA
Expansion to the US means new consumer base which may have new requirements and it may
become hard for the company to cater to the new needs and requirements of new consumers. The
demands of the consumers in different continent may differ from the requirements of consumers in
Australia and New Zealand hugely. This will reflect in their expectations from the business which is
not habitual of dealing with these consumers. This may create a numbers of misunderstandings
between the management the consumers which will be a risk factor for the business.
Accounting analysis
The accounting strategies that are undertaken by the company to manage its financial stability in the
market and determine the profit and revenue generation of the company are as follows:
Accounting flexibility
The accounting system of the brand has scope for adapting to new policies and the changes in the
country’s economy. The business takes care of the different conditions of the market and the industry
in terms of domestic as well as international economy. Therefore the accounting policy of the
company is very flexible and therefore eligible to adapt to all the changes that are required to take
care of the business profits and finance management net of the business better (Deegan, 2012). This
also creates the opportunity for accounts manipulations that may not always be profitable for the
organisation.
Quality of disclosure
As found in the business report by auditors the company has cleared all its accounts and disclosed all
the funds that have been ethically transferred by the company. The company only undertakes ethical
means of managing its finances and therefore have a clean audit report. This proves that its disclosure

by the company’s management is adequate (InvoCare, 2018). The risk calculation by the management
is also appropriate.
Accounting Distortion
There are no distortion identified by the auditors of the company and hence the company have a clear
distortion report (Fridson and Alvarez, 2011).
Accounting policy
The business measure the Revenue at the fair value of the consideration received or receivable and the
revenue is reduced for discounts, estimated customer returns, and promotional and other rebates.
Revenue from the services sold is recognised only when the company has enabled the consumer to
avail the services at the funeral home and when the amount of revenue can be measured in a reliable
way and when the potential economic benefit going to be realised can be associated with the
transaction that will create inflow of money within the company. Revenue from the services sold is
recognised when the services are availed by the consumer and legal transaction is made. Revenue
from the services sold on consignment is recognised upon the customer availing the services
(Invocare.com.au, 2018). The ownership of the funeral home services return to InvoCare after the
consumer has availed the services and has left the premises after proper transaction of funds to the
management.

References
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https://www.invocare.com.au/content/dam/invocare/invocare-corp/pdfs/investor-relations/annual-
reports/annual-report-2017.pdf [Accessed 12 Dec. 2018].
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https://www.focus-economics.com/data/charts_summary/Australia-Inflation.gif [Accessed 12 Dec.
2018].
Ashtonmanufacturing.com.au. (2017). The latest findings on the state of the Australian funeral
industry | Ashton Manufacturing. [online] Available at: https://ashtonmanufacturing.com.au/the-
latest-findings-on-the-state-of-the-australian-funeral-industry/ [Accessed 11 Dec. 2018].
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Appendix
Figure 1: Growth of world GDP
(Source: Development Policy & Analysis Division | Dept of Economic & Social Affairs | United
Nations, 2016)
Figure 2: Australia GDP

(Source: Scutt, D., 2018)
Figure 3: Revenue generation
(Source: Financial times, 2018)
Figure 4: Remuneration rate
(Source: Invocare.com.au, 2018)

Figure 5: Cash Flow of InvoCare
(Source: Invocare.com.au, 2018)
Figure 6: Profit breakdown of InvoCare

(Source: Invocare.com.au, 2018)
Figure 7: Australian inflation rate
(Source: Focus-economics, 2018)
Figure 8: Key success factors for InvoCare
(Source: InvoCare, 2018)