Mission and Vision of Insurance Australia Group

It is also discussed that Insurance Australia Group follows number of organizational strategies in order to enhance their business potentiality. The internal factors and the competitive environment are also evaluated in this report along with discussing the role of organizational culture in gaining competitive advantages for Insurance Australia Group. Introduction 3 Mission and objective 3 Vision 3 Organizational strategies 3 Criticisms of the business strategies 4 Determination of the internal factors 4 Porter five forces model 6 Organizational culture of Insurance Australia Group 7 Conclusion 7 Reference 8 Introduction The current business scenario demand

Running head: INTRODUCTION TO MANAGEMENT
Introduction to management
Name of the student
Name of the university
Author note

1INTRODUCTION TO MANAGEMENT
Executive summary
The aim of this report is to discuss about the mission and vision of Insurance Australia Group. It
is also discussed that Insurance Australia Group follows number of organizational strategies in
order to enhance their business potentiality. On the other hand, some of the major criticisms
faced by Insurance Australia Group are discussed in this report. There are two major criticisms
being identified in this report. The internal factors and the competitive environment are also
evaluated in this report along with discussing the role of organizational culture in gaining
competitive advantages for Insurance Australia Group. This report concludes that there are
number of issues being faced by them but the effective internal management of them will help in
overcoming the challenges and enhance their future growth.

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Table of Contents
Introduction......................................................................................................................................3
Mission and objective..................................................................................................................3
Vision...........................................................................................................................................3
Organizational strategies.................................................................................................................3
Criticisms of the business strategies................................................................................................4
Determination of the internal factors...............................................................................................4
Porter five forces model...................................................................................................................6
Organizational culture of Insurance Australia Group......................................................................7
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

3INTRODUCTION TO MANAGEMENT
Introduction
The current business scenario demand diverse and effective business strategies in order to
stay competitive in the market. Moreover, with the rapid increase in the competition in the
certain industries, it is becoming for important for the business organizations to adopt the most
effective organizational approach (Somerville, 2013). However, on the other hand, there are
number of controversies also get emerged in order to do so. One of the major organizations in the
Australian market that went through various ups and downs in the recent past is Insurance
Australia Group. They are the leading brand in the Australian insurance sector.
Mission and objective
According to the information in their official website, Insurance Australia Group aims to
provide all round or holistic financial protection and stability to their stakeholders. According to
them, they provide different types of insurance services and it helps them to cover the diversified
needs and requirements of the stakeholders especially the customers (www.iag.com.au, 2018).
One of their major core competencies is huge geographical coverage. Currently, Insurance
Australia Group has their operation in Australia, New Zealand, Indonesia, Thailand and
Vietnam. Thus, they able to cater to huge number of customers along with having the
opportunities to tap the international market also. Another major core competency for them is the
diverse workforce and the concept of shared value in the organization. This helps them to gain
competitiveness from the internal management of the organization.
Vision
The vision of Insurance Australia Group states that they want to be a sustainable business
in the insurance sector by providing more valued return to their stakeholders. Moreover, it is also
stated in their official website that they want to enhance their business potentiality along with
developing their core insurance business (www.iag.com.au, 2018. Thus, it can be concluded that
the vision statement of Insurance Australia Group denotes that sustainability is one of their core
business area that they aim to develop in future.
Organizational strategies
There are number of strategies being initiated by Insurance Australia Group in the recent
past according to the originated situation. One of the major strategies initiated by them in the
recent time is the strategic alliances. According to the reports, Insurance Australia Group went
for strategic relationship with Berkshire Hathaway (www.iag.com.au, 2018). In 2015, both these
companies went in to strategic partnership for the 10 years agreement. According to the
agreement, Berkshire Hathaway invested US$ 500 million for 3.7 percent of stake in Insurance
Australia Group. This extra capital helped Insurance Australia Group to invest in newer business
sectors and ensure their future growth.
In addition, it is also reported that Insurance Australia Group acquired the insurance
underwriting business of Wesfarmers Limited for US$ 1.845 billion. It helped them to grow
horizontally in the Australian and New Zealand market. Horizontal growth of them also ensured
that the home markets for Insurance Australia Group are more stable and largely penetrated
(www.iag.com.au, 2018). On the other hand, they also follow some of the Porter generic
strategies such as cost leadership and product differentiation. According to the official report,

4INTRODUCTION TO MANAGEMENT
Insurance Australia Group follows the strategy of cost leadership by offering their services at
most competitive prices. According to their strategy, they aim to target maximum number of
customers and thus they price their offerings accordingly (www.iag.co.nz, 2018). This is helping
them to cater to most number of potential customers. Furthermore, the also follow differentiation
strategy in order to create the distinctive position in the market. It is reported that Insurance
Australia Group differentiates themselves from their competitors by providing added services
and benefits. Thus, it also helps them in having competitive advantages in the market by
providing unique services to the customers.
Criticisms of the business strategies
In majority of the cases, Insurance Australia Group had succeeded in their business
operation except for some incidents. In the recent past, there are some criticisms and
controversies being faced by them regarding their business strategies and internal management.
One of the major criticisms being faced by them is came from their former chairman, Nicholas
Whitlam. He chaired the organization till 2001 and according to him, expanding their business in
Britain is the worst example of ineffective business strategies (Johnston, 2018). This is due to the
reason that Insurance Australia Group incurred a huge loss in operating their business in Britain.
Thus, according to their former chairman, the upper level management should have effectively
determined the market trend and potential prior to entering in the British market. This is also a
major example for improper business strategies by Insurance Australia Group.
However, it is stated by the current management of Insurance Australia Group that
expanding the business in British market was taken after determining the entire required
criterion. Thus, the decision was not wrong but the emergence of the economic recession caused
the loss in the business and it cannot be determined in advance (www.ft.com, 2018).
Another major criticism faced by Insurance Australia Group is from the employees
regarding the providence of spirit bonuses. It is reported that Insurance Australia Group decided
to provide spirit bonus of US$ 2.55 million, which caused huge backlash for them (Martin,
2018). This got emerged due to the fact that Insurance Australia Group failed to connect their
business approach with that of the requirement of the employees. Employee union also criticized
Insurance Australia Group in relation to their decision of outsourcing their partial operation to
foreign countries. It is reported that Insurance Australia Group is insisting to outsource their
partial operation to the foreign countries in order to reduce the cost of operation and maintain the
affordable price of their offerings (www.nzherald.co.nz, 2018). This decision is criticized by the
employee union due to the fact that it will cause unemployment. Moreover, it is also criticized by
the employee union that outsourcing of the service will also lead to the vulnerability of the
secured data of the customers along with affecting the service quality.
Determination of the internal factors
The above sections discussed about the past criticisms faced by Insurance Australia
Group in their business operation. Therefore, it is important to determine their internal
effectiveness in order to measure their current scenario. SWOT analysis will be used to
determine their internal factors.
Strengths  Huge brand value and exposure helps Insurance Australia Group to

5INTRODUCTION TO MANAGEMENT
effectively operate in their home markets.
 Insurance Australia Group is having their market presence in different
countries. This helps them to cater to larger and diverse section of
potential customers.
 Initiation of the cost leadership strategy also helps them to cater to larger
section of the market. This is due to the reason that offering affordable
services helps them to have larger market share. This also acts as their
competitive advantage (kaliappen & Hilman, 2013).
 They have effectively integrated latest technologies in their business
operation, which is further enhancing the customer convenience and
their business effectiveness.
Weaknesses  The proportion of the stocked inventory for Insurance Australia Group is
more compared to their major competitors. Thus, it is leading to more
investment in channel for them. It leads to the increase in the cost of
operation for Insurance Australia Group.
 It is reported that Insurance Australia Group is trailing behind their
major competitors in terms of the innovation. This is mainly due to the
fact that rate of investment in research and development for Insurance
Australia Group is lower compared to some of their competitors
(Matzler et al., 2015).
 Insurance Australia Group is currently having number of products in
their portfolio but they are having gaps between the two offerings. Thus,
it poses the challenge of facing new competition for them.
 More global firms are entering in their home markets. These global
organizations are having huge access to finance. On the other hand,
Insurance Australia Group failed in their foreign business such as in
Britain. Thus, they are losing their competiveness to the global brands.
Opportunities  The operating markets for Insurance Australia Group are slowly
regaining from the scenario of economic recession. Thus, the market for
the insurances is again showing positive trend. This will help Insurance
Australia Group to increase their market share and revenue.
 Offering differentiated services is helping Insurance Australia Group to
maintain their competitiveness in the market. Thus, having differentiated
approach will further help them to target more customers over their
competitors (Davcik & Sharma, 2015).
 As discussed earlier, Insurance Australia Group is having positive and
huge brand value in the market. Thus, this will help them in diversify
their business in other sectors. This will in turn increase the market
value for Insurance Australia Group.
 They can also leverage their positive brand value and differentiated
approach in entering in the new foreign markets. This will help them to
enhance their market share as well as global brand value.
Threats  Entry of more number of competitors in the market will further increase
the threat of competition. This is due to the fact that the more will be the
competition; the less will be the profitability of the players in the
market.

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 There are uncertainties regarding the reemergence of economic crisis in
future. Thus, the threat of economic crisis will always be there with
Insurance Australia Group.
 Introduction of the stringent rules and regulations regarding the
employee management along with the demand of increase in basic
payment will lead to reduction in the profitability of Insurance Australia
Group (Geistfeld, 2015).
Porter five forces model
Threat of new entrants  Threat of new entrants for Insurance Australia Group is
moderate.
 Huge capital investment s required for the new entrants in
the insurance sector.
 There are number of rules and regulations to be followed
by the entrants that further reduce the chances of entering
in the market (E. Dobbs, 2014).
 However, the global brands along with the established
brands in some other countries can enter the market at any
point of time.
Threat of substitutes  Threat of substitutes is high for Insurance Australia
Group.
 This is due to the fact that there are number of players
operating in the Australian insurance sector.
 All the competitors are offering same level of services to
the customers.
 Lack of differentiation among the core product levels of
the offerings (Holahan, Sullivan & Markham, 2014).
Bargaining power of the
buyers
 Bargaining power of the buyers is moderate.
 Number of options is available for the buyers to choose
from.
 However, customers have higher switching cost in
changing their insurance brand (Ting, 2014).
 Moreover, the brand value and image also matters in
choosing the preferred insurance company.
Bargaining power of the
suppliers
 Bargaining power of the suppliers is lower.
 Insurance Australia Group is having less dependence on
the external suppliers.
 They directly deals with the customers except the agents
 These agents do not have upper hand and the branding for
them is also important.
Competitive rivalry  Competitive rivalry is evident in the industry.
 Insurance companies are initiating newer strategies to
target more customers.
 More benefits are being provided in insurances for the
customers in order to stay ahead in the competition.

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Organizational culture of Insurance Australia Group
In the current time, organizational culture and leadership style determines the
effectiveness of the organizations. It also acts as their competitive advantages. In case of
Insurance Australia Group, three basic principles are being followed by them, closer, faster and
braver. According to closer principle, they promote cooperation and coordination among the
internal stakeholders and across the hierarchical level. According to this principle, teamwork is
encouraged in the organization in order to have coordinated approach in success. On the other
hand, the second principle of braver states that all the employees are encouraged to think big and
out of the box. Moreover, they are also promoted to be more curious and open to new thinking
and ideas. This helps Insurance Australia Group, to generate more innovative ideas from the
internal stakeholders.
The last principle is faster. It states that employees in Insurance Australia Group should
be positive and assertive in the organization. Moreover, they are also motivated to be more
efficient in their job profile and celebrate their respective job profiles. According to their
strategy, the more will be the efficiency of the employees, the faster they will be able to
complete their job properly (www.iag.com.au, 2018). In the case of Insurance Australia Group,
these principles are given more valuation and concentration on these principles rather than on
any other aspects such as leadership. Upper level management selected in the organization is also
included in these principles and thus, the leadership roles automatically get matched with the
organizational approaches.
This positive vibe in the internal management of Insurance Australia Group helps in
having competitive advantages of others. This is due to the reason that it helps them to motivate
the employees in generating new and innovative ideas. Thus, this is leading to the innovative
approach of the entire organization.
Conclusion
Thus it can be concluded that Insurance Australia Group is having number of challenges
and opportunities to be faced by them. This report discussed about the internal factors and
competitive environment of Insurance Australia Group in their home markets. In addition, this
report also discussed about the criticisms faced by Insurance Australia Group in their recent past
regarding their business strategies. Major two criticisms are identified and it denotes that there
are gaps in the business strategies of Insurance Australia Group. However, on the other hand it is
also discussed in this report that Insurance Australia Group is having favorable and positive
organizational culture that is helping them in having motivated and engaged employees in place.

8INTRODUCTION TO MANAGEMENT
Reference
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and brand equity on pricing strategies: A brand level investigation. European Journal of
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E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Geistfeld, M. A. (2015). Interpreting the Rules of Insurance Contract Interpretation. Rutgers UL
Rev., 68, 371.
Holahan, P. J., Sullivan, Z. Z., & Markham, S. K. (2014). Product development as core
competence: How formal product development practices differ for radical, more
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Management, 31(2), 329-345.
Johnston, E. (2018). James Strong slammed for time at IAG. Retrieved from
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Kaliappen, N., & Hilman, H. (2013). Enhancing organizational performance through strategic
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Scientific Research, 18(10), 1411-1416.
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over-spirit-bonus-82318.aspx
Matzler, K., Veider, V., Hautz, J., & Stadler, C. (2015). The impact of family ownership,
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berkshire-hathaway

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