Business Strategy Report: Analyzing Insurance Australia Group (IAG)

This report provides a comprehensive analysis of the business strategies employed by Insurance Australia Group (IAG), a prominent multinational insurance company. It begins with an overview of IAG, including its mission, vision, and core competencies. The report then delves into the successful strategies adopted by the organization, such as customer-centric approaches and simplification processes. Current strategies, including strategic partnerships and growth initiatives, are also discussed. The analysis extends to controversies in business practices, specifically the limited use of technology and customer servicing issues. An environmental analysis, encompassing both internal and external factors, is presented, followed by an examination of IAG's organizational culture and leadership styles. The report concludes with an overview of the company's performance and future prospects, offering valuable insights into IAG's strategic approach within the insurance industry.

Running head: INTRODUCTION TO MANAGEMENT
Introduction to Management
Name of the Student
Name of the University
Author Note

1INTRODUCTION TO MANAGEMENT
Executive summary
The purpose of the following report is to demonstrate the business strategies of the chosen
business organization Insurance Australia Group. They have been one of the leading companies
in the insurance industry in Australia. The mission, vision and core competencies of the
organization have been discussed in short. Next the focus has been on the implementation of the
business strategies. The business strategies of the past and the present have been discussed. The
controversies in the business practices have been discussed in this paper. The internal and
external business environments have been discussed for this company. Apart from that the
organizational culture and leadership styles of the company have been focused as well.

2INTRODUCTION TO MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Overview of the organization..........................................................................................................3
Mission........................................................................................................................................4
Vision...........................................................................................................................................4
Core competencies.......................................................................................................................4
Successful strategies adopted by the organization...........................................................................4
The world leading customer experiences....................................................................................5
Simplification process.................................................................................................................5
Current strategies.............................................................................................................................5
Strategic partnership........................................................................................................................6
Growth strategies.............................................................................................................................7
Controversies on business practices................................................................................................7
Limited use of technology...........................................................................................................7
Customer servicing......................................................................................................................8
Environmental analysis....................................................................................................................8
Internal environment analysis......................................................................................................8
External environment analysis.....................................................................................................9
Organizational culture and leadership styles.................................................................................10
Conclusion.....................................................................................................................................11

3INTRODUCTION TO MANAGEMENT
References......................................................................................................................................12

4INTRODUCTION TO MANAGEMENT
Introduction
The following report focuses on the preparation of the business strategy report for the
chosen organization. The organization that has been chosen to complete this report is the
Insurance Australia Group. In this report, the overall business strategies would be discussed
after proper identification. These things are indeed very useful to discuss about the several
strategies in the organization. The development and growth of the organization will have to be
discussed in this paper along with the environmental analysis on the organization. The business
strategies that the IAG has undertaken will be evaluated. The main opportunities for the
company to grow effectively will be put into focus as well. Apart from that the organizational
culture and leadership style incurred within the organization will have to be discussed as these
are very essential things for the organization. The scopes for future improvement in the
organizational context will have to be discussed. The different corporate strategies will be very
helpful for the organization.
Overview of the organization
The Insurance Australia Group is a large multinational insurance company. The
company was founded in the year 2000 (Iag.com.au, 2018). The headquarters of this
organization is situated at Sydney in Australia. The CEO of the organization is Peter Harmer.
The company works in various fields like general and commercial insurance, vehicle, home and
contents insurance. The organization operates in Australia, New Zealand, Thailand and Malaysia
(Iag.com.au, 2018). They have been very high up in the order in the sustainability index. They
have been awarded with several awards as the best insurance company.

5INTRODUCTION TO MANAGEMENT
Mission
The mission of this organization is We make your world a safer place (Iag.com.au, 2018).
Vision
They have the vision of catering to the needs of the customers in all the ways. They want
to protect their customers, employees, partners and all other stakeholders and the communities
they serve across Australia, New Zealand, Thailand and Malaysia (Iag.com.au, 2018). They want
to make their business a sustainable one in the long term so they want to deploy the best
strategies that are possible.
Core competencies
The organization is very keen on providing the customers with better chances so they can
capitalize on the best strategies indeed. One of their moist useful strategies is to focus on their
core business of insurance and create the best options for growth in the future (Iag.com.au,
2018). They want to provide their customers with stronger service delivery and returning the best
returns for all the shareholders. These things will be very important for the different factors of
core competencies such as decision making, communication, motivation, integrity and problem
solving for the comoany.
Successful strategies adopted by the organization
The organization has gone for adopting several strategies that they think would be highly
beneficial for the growth of the company. The two most important strategies that they have
undertaken in the past are the customer centric strategy and the simplification of their products
and services. The two strategies will be described as follows:-

6INTRODUCTION TO MANAGEMENT
The world leading customer experiences
They want to let their customers feel the most unique experience that will be very
important for them to gain the organizational benefits (Goetsch & Davis, 2014). They are keen
on establishing a platform for delivery that will give the customers a very unique experience.
This will probably help to connect more customers at a time through the automated processes so
the IAG could provide better offers to their customers (Iag.com.au, 2018). They also want to
focus on the innovation approaches that will help the organization to think in a different manner
and deliver the products very quickly. They want to use the data to focus strongly on the decision
making process and understanding the customers in a better way (Wolny & Charoensuksai,
2014).
Simplification process
They want to decrease the amount of complications in the procedures of the organization.
They want to focus more on strengthening the technological platforms and building a strategy
based on technology (Iag.com.au, 2018). They rely on driving the scale economies for across the
value chain. They also want to increase their allocation process and utilize on the repairer
network so they can decrease the claim size. They want to give the leverage to their operational
partners.
Current strategies
The current strategies that have been the main talking points for the organization will be
important to discuss.

7INTRODUCTION TO MANAGEMENT
 They want to update their service delivery process in a better way. They want to enhance
the customers experiences in a better way so they will develop their cash return on equity
(ROE) strategies (Iag.com.au, 2018).
 They want to update their focused strategy and cater to the needs of the Asian markets.
 They will go on to focus on their segmentation strategies to build on the business growth
in the target market around 3-5% (Iag.com.au, 2018).
 They want to get the benefits from the innovation strategies from the capital
management.
 They want to take up an optimization program that will cut down the gross operating
costs to a large level (Cummins & Santomero, 2012).
 This optimization program initiated by IAG will help to simplify the operating model of
the company.
Strategic partnership
Insurance Australia Group has partnered with the global insurance and business process
experts. This will help them to simplify this operational process completely. The organization
has made strategic partnership with the company named Berkshire Hathaway (Iag.com.au,
2018). There are some important issues that can be looked into with the implementation of the
strategic partnership. These strategic partnerships will make the existing relationship strong and
increase the capabilities of bith the companies. The two companies have signed an agreement on
the initial 10 year 20% quota share (Iag.com.au, 2018). This will make the insurance business
very solid one. This will surely decrease the volatile aspects of the IAG’s earnings and capital
requirements. Another example is the case where Berkshire Hathaway took the 3.7% stake in
IAG via a $550 million (Iag.com.au, 2018). This strategic partnership between IAG and

8INTRODUCTION TO MANAGEMENT
Berkshire Hathaway will likely to increase the financial flexibility. This will enhance the growth
opportunities for the organization in a large way (Wright & Stigliani, 2013).
Growth strategies
One of their major strategies for growth has been the expansion to the Asian market. The
Asian market is considered to be a free economy where they can expand and get the most
benefits. It has been seen that the commercial and regulatory conditions have been going down
and the only way to save their reputation is to expand into the Asian market. Some strategies in
this matter have felt so they will like to shift their focus on Australia and New Zealand. They
have not been able get huge margins of profits in the countries like Thailand, Malaysia and India.
They are aiming to focus on making more investments in Asia. This will enhance their potential
(Penrose, 2017).
Controversies on business practices
The business activities of the company Insurance Australia Group have brought upon
some controversies or criticisms as well.
Limited use of technology
The use of the technology has not been that much effective in the business practices they
have undertaken. This is why they have been lagging behind in applying the several strategies for
upgrading their business practices (Sako, 2012). It is very important to use the upgraded
technology in their business practices. Only then they would be able to cater to the needs of the
various customers at the same time. The newest software applications should be used by them.

9INTRODUCTION TO MANAGEMENT
The simplification process will also need to be done properly with the help of the technological
innovations.
Customer servicing
The second issue in the business practices of IAG is providing the best services to the
customers. The delivery of value and trust factor among the customers has been a very integral
issue. They have failed sometimes in providing their customers with the best services across the
industry (Ball et al., 2012). At the beginning of their services, they were not able to connect with
the customers and this had caused a problem in their business practices. The customers were not
able to understand the benefits of the policy and this had been a very negative impact on the
customer servicing.
Environmental analysis
Internal environment analysis
Strengths
 They are successful in implementing
the Go to Market strategies of late.
 They provide good returns on the
capital expenditure
 The distribution network of the
company is quite a strong one
 The brand portfolio of the company is
very high (Armstrong et al., 2015).
Weaknesses
 Their missed opportunities are very
high because they are not strong at
meeting the product demands.
 The inventory cost of IAG is higher
than their rivals (Bauer et al., 2012).
 They have invested less money on
Research and Development than their
rivals.
Opportunities Threats

10INTRODUCTION TO MANAGEMENT
 The core competencies of the company
can be a very important success factor
for IAG.
 The latest trends in the consumer
behavior will help the company to grow
faster (Foss & Knudsen, 2013).
 The increase in the spending for the
customers will help the company in a
bug way.
 The local distributors are increasing
and this poses a threat for IAG.
 The demand is increasing for high
profitable products. If they do not meet
the desires of the customers, it will be
hard for them.
External environment analysis
Political Economic Social Technological Environmental Legal
The political
condiytion of
Australia is
quite stable.
However, there
are risks of
military
invasion. The
bureaucracy
has led to the
corruption and
interference
The Federal
government
has been
interfering in
the free market
and insurance
related matters.
The economic
infrastructure
quality in the
insurance
industry is
The
demographics
have to be
analyzed by
IAG and they
have to take
into
consideration
the skills of the
employees
(Jurevicius,
2013)
The product
offering has to
be improved
through the use
of the latest
technology.
They have to
assess the rate
of the
technological
diffusion
(Frame &
The different
factors like the
weather and
climate change
must be
assessed by
IAG. The laws
should be
obeyed that
regulate the
environmental
pollution. The
The
employment
laws should be
obeyed by the
authority of
IAG. All
unethical
factors should
be avoided.
The ant-trust
law in the
insurance

11INTRODUCTION TO MANAGEMENT
into the
insurance
industry
(Jurevicius,
2013). They
can also get the
help from the
favored trading
partners.
quite stable as
of late. The
labor costs
should be
reduced.
White, 2014).
The impact of
the value chain
in the
insurance
industry must
be assessed.
waste materials
should be
recycled
(Jurevicius,
2013)
industry should
be maintained
all over the
country
(Jurevicius,
2013)
Organizational culture and leadership styles
The organizational culture is one of the most important issues in the context of Insurance
Australia Group. They are very confident of the fact that they will build their organization on the
basis of the customer trust and authenticity (Alvesson, 2012). Their organizational culture is
built on the fact of the formal and informal messages from the clients and how they resolve the
disputes. They are very much optimistic about the role clarity and being very much transparent in
their communications with their customers.
They focus on the democratic leadership styles mostly. It is because they want the proper
inputs from their employees. The employees suggest them with various ways by which they can
improve their operations (Alvesson & Sveningsson, 2015). They work with people from various
cultural backgrounds and ignore all the barriers of cultural diversity. They support the needs of
the communities. They focus less on the company hierarchy and share the knowledge between