Organizational Theory and Design Report 2022

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Organizational Theory and Design 1
Executive Summary
The below mentioned report analysed the business functioning of a private organization present
health insurance industry of Australia. Medibank is private organization that is formed to
increase the customer satisfaction in the marketplace and regulate the functions of the
competitors as well. The company has a differentiated business structure as initially it was a
government organization that later got converted into private company. Further, the impact of
this type of structure on the performance of the business and management innovation is
discussed below. Lastly, recommendations given will help the organization to increase its
effectiveness in the business environment

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Contents
Introduction......................................................................................................................................2
About Medibank..............................................................................................................................2
Organisational Structure and Strategies of MediBank....................................................................3
Impact of the company’s structure on management innovation......................................................4
Impact of the company’s structure on overall business performance..............................................4
Recommendations............................................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
The purpose of this report is to provide details about the MediBank Australia. The company is
Australia’s second largest organization that deals in providing health insurance services to the
people. The organization is a part of Bupa that serve to 3.8 million. The organization has owned
the market share of 29.1% people of the country. Further, the below mentioned paper evaluate
details about the organizational structure and strategies implemented by the bank (Abbott 2018).
Impact of structure on innovation of the organization and its overall business performance has
been discussed in the report. Additional details about the bank and its organizational structure is
discussed below:
About Medibank
Medibank is an organization that is present in private health insurance and disease management
industry. The organization provide healthcare industry service to the people present in Australia.
The organization was found in the year 1975 as an arm of the Health Insurance Commission in
Melbourne, Australia. The company is a public organization that works with more than 2700
employees in the business setting. The company started working as an Australian government-
owned private health insurer that was established by the Whitlam Government in the year 1975
through the Health Insurance Commission that is also called Medicare Australia (Aulich, and
Wettenhall 2019).
The organization is a leading health insurance corporate that provides its services to more than
3.8 million members and provides cover under two brands that are Medibank and ahm. The
organization was setup to provide competition to private profit making health funds. Further, it
should be noted that although the company is government owned but it pay tax and dividends to
the government just like other private owned health funds. This fund is made to increase the
pressure on the other health funds present in the environment so that they would keep the
premiums at such prices that can be afforded by the people in the environment. Thus, the
business structure of the company is differentiated in the environment (Backhouse, and
Wickham 2017). First IPO of the company was released in the year 2015 and the sale was
completed with 100% of stocks sold in the environment. The company started trading with

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440000 people owning the stake and the market capitalization of the company was A$5.921
billion at that time.
Organisational Structure and Strategies of MediBank
The company Medibank has a differentiated organizational structure. The organization was
initially run as a not for profit organization and later the management converted the business into
for profit company. The organization was still recalled as government business enterprise that
paid dividends to the federal government. After becoming a for profit organization, the
organization started performing actions just any other health insurance organization present in
the Australian business environment like paying taxes etc. The company was completely
converted into for profit organization in the year 2009 after the approval of the regulator that is
Private Health Insurance Administration Council (PHIAC). PHIAC is an independent statutory
body that regulates the functions and activities occurring in the private health insurance industry
until 2014 (Aulich, Jones, and Head 2018).
The private health insurance policy is now set down by the Federal Department of Health. The
Howard Liberal government showed the interest in privatising the Medibank Private after the re-
election in the year 2007. With the changing government, the ownership of the organization also
changes leading to change the internal management system. The sale of IPO of Medibank
allowed the government to be market regulator rather than the participant as it helped them to
flow the authority and benefits directly to the customers present in the industry. This
organization holds more than 29% shares of the overall health insurance industry (Rankin 2019).
Thus, it should be noted that the organization possess power and ownership in the industry. The
organization Medibank Private Limited also owns Medibank Health Solutions Pty Ltd (formerly
Health Services Australia Pty Ltd) and Australian Health Management Group Pty Ltd. Further,
the Medibank Health Solutions Telehealth Pty Ltd and Integrated Care Services Pty Ltd are
wholly-owned subsidiaries of Medibank Health Solutions Pty Ltd. It should also be noted that
the company does not make use of any differentiated strategy in the environment, as the only
focus of their strategy is to increase the satisfaction of the people present in this industry. The
company broaden the offerings so as to deliver the best combination of products and services to

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the people along with trustable advices as well. The strategies of the organization is implemented
in such a way so as to increase control over the industry (Donato, and Onur 2018).
Impact of the company’s structure on management innovation
Introduction of Medibank company services in the health insurance industry has increased the
level of effectiveness of the whole environment. The structure of the organization helped the
government to monitor the activities of the industry and initiate integrity as well. Now the private
organizations need to implement effective strategies in the environment that can also attract the
customers in the environment. The concept of management innovation is now being highly
focused upon by the companies because they need to be competent enough to compete with
Medibank in the environment. With an aim to increase the level of trust of the customers,
management innovation in the industry is used by the companies to increase the effectiveness
and grow as well. The structure of the company also affected the overall performance of the
business (Nguyen, and Worthington 2018).
This structure works in both positive as well as negative ways for the organization. Talking about
positive impact, it should be noted that this process helps the organization introduce innovation
that can help the business to increase the benefits of the customers in the business environment.
At the same time, this type of business structure restricts the management to perform several
managerial actions in the business environment. The management need to take permission and
report the actions to the regulatory body because their activities can majorly affect the complete
industry. Thus, this type of business structure is both positive and negative for management
innovation concept the business environment.
Impact of the company’s structure on overall business performance
As the company always focused on group profits instead of individual profits due to which the
overall performance of the organization is not efficient enough as it can be. The performance of
the organization is governed by several differentiated factors due to which the organization face
difficulty in implementing an effective decision. However, till the extent decision of the
management does not harm the interest of the customer, the structure easily allows the
organization to perform their activities in the environment. The company has a lot of pressure

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from the industry as well, due to which they face difficulty in initiating innovation in the
business. The innovation can either lead to great success or failure for the organization, resulting
in which, the business does not take part in vigorous decision in the environment. However, the
overall performance of the organization is stable and the customers are attaining optimum profits
in the environment because of safe actions of the company. The focus of the company is to
increase the customer interest and that objective is fulfilled in the environment. Thus, it can be
said that the overall performance of the organization is competitive due to which other market
players are following such activities in the environment (Parliament of Australia 2019).
Recommendations
It is recommended to the organization to increase the level of innovation in the business so that
the organization can also level up their managerial activities in order to remain competent. The
organization should circulate all the materialistic information about their business activities to
the customers so as to let them have an idea about their actions as well. Lastly, the regulatory
bodies should eliminate few regulation in the environment so as to increase the effectiveness of
business functions.
Conclusion
Thus, concluding the above mentioned facts, it should be noted that the paper represented details
about the Medibank, Australia. The organization is a private organization present in the field
health insurance. The objective behind the formation of this organization was to increase the
effectiveness, integrity and customer benefits in the environment. The government wanted all the
organization to create covers that increase the benefits of customers in the environment. The
report detailed about the structure of the company along with the impact its organizational
structure on the overall business performance. Thus, it should be noted that little freedom in the
regulations of the organization would help the management to increase the level of satisfaction of
the customers present in the industry.

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References
Abbott, M., 2018. Markets and the State: Microeconomic Policy in Australia. UK: Routledge.
Aulich, C. and Wettenhall, R., 2019. The evolution of public enterprise in Australia: disillusion
and dissolution. Asia Pacific Journal of Public Administration, 41(1), pp.19-32.
Aulich, C., Jones, S. and Head, B., 2018. DIVESTMENT OF COMMONWEALTH PUBLIC
ENTERPRISES IN AUSTRALIA: THE CUPBOARD IS BARE 1. Annals of Public and
Cooperative Economics, 89(3), pp.475-490.
Backhouse, K. and Wickham, M., 2017. 1.4. a. CORPORATE GOVERNANCE IN
AUSTRALIA. Alexander N. Kostyuk Udo Braendle Vincenzo Capizzi, p.70.
Donato, R. and Onur, I., 2018. Private health insurance in Australia: policy reform approaches
towards greater competition and efficiency to improve health system performance.
Nguyen, L. and Worthington, A.C., 2018. Efficiency and Productivity of Australian Private
Health Insurers.
Parliament of Australia., (2019) The proposed sale of Medibank Private: historical, legal and
policy perspectives [online]. Available from
<https://www.aph.gov.au/binaries/library/pubs/rb/2006-07/07rb02.pdf> [Accessed on 25
September].
Rankin, D., 2019. Private Health and Insurance. In Textbook of Medical Administration and
Leadership (pp. 127-152). Springer, Singapore.