Business Environment Analysis of Lloyd's Insurance Market Report

This report provides a comprehensive analysis of the business environment impacting Lloyd's of London, a prominent insurance market. It begins by defining the business environment and its components, both internal and external. The report then delves into the different types of organizations, focusing on the statutory nature of Lloyd's. It examines how Lloyd's meets the objectives of its various stakeholders, including customers, employees, and government agencies. The responsibilities of Lloyd's are explored, using Carroll's pyramid to assess economic, legal, ethical, philanthropic, and environmental dimensions. The report also investigates economic systems, fiscal and monetary policies, and market structures and conditions, and how they affect Lloyd's operations. Finally, it addresses the significance of international trade and global factors on Lloyd's business, including the impact of European Union policies. The report concludes with criticisms of international trade in the context of Lloyd's business.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The purposes of different types of organizations.................................................................1
1.2 The extent to which LLOYD’S as an organization meets the objectives of different
stakeholders.................................................................................................................................3
1.3 The responsibilities of LLOYD’S and the strategies employed to meet the expectations of
different stakeholder groups........................................................................................................4
TASK 2............................................................................................................................................6
2.1 Economic systems attempt to allocate resources effectively...............................................6
2.2 The impact of fiscal and monetary policy of UK on LLOYD’S and its activities................7
2.3 The impact of competition policy and other regulatory mechanisms on the activities of
LLOYD’S....................................................................................................................................8
M1 Strategies employed to meet responsibilities........................................................................9
D1 Critical reflection...................................................................................................................9
M2 Factors impact economy of UK ...........................................................................................9
D3 Economic indicators of UK.................................................................................................10
TASK 3..........................................................................................................................................10
3.1 Market structures and market conditions determining the pricing strategies of LLOYD’S
business.....................................................................................................................................10
3.2 The way in which market forces shape organizational responses in setting prices within
operating environment..............................................................................................................12
3.3 The business and cultural environment in the UK can shape the behavior of LLOYD’S as
an organization..........................................................................................................................12
TASK 4..........................................................................................................................................14
4.1 The significance of international trade to LLOYD’S business...........................................14
4.2 Impact of global factors on LLOYD’S business.................................................................15
4.3 European Union policies and the impact of these policies on LLOYD’S business............16
D3 criticisms of getting involved in international trade in the context of LLOYD’S business.
...................................................................................................................................................16

CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Business environment is the sum total of all the factors influencing activities undertaken
by the organizations operating in it including both external and internal factors. External factors
refers to the major determinants such as political influences, economic situation prevailing,
technological advancement that directly affects the efficiency of the organization, impact of legal
aspects, social factors that is people's choices and preferences and also the environmental factors
that have significant impact on organizations (Cantwell, Dunning and Lundan, 2010). On the
other hand, internal factors are the those who are directly linked to the concerned organization
such as its customers employees, efficiency of strategy formulation, operational management,
research and development conducted and others related. Present report is prepared to elucidate
different components of business environment with respect to the selected organization Lloyd's
of London. It is the insurance market located in London. It is the place where financial brokers
come to pool and spread their risk. This report throws light on the impact of Business
Environment on Lloyd's from different dimensions such as analyzing the influence of its key
stakeholders, the way in which different economic system imparts affects Lloyd's working and
relevance of fiscal and monetary policy in its decision making. Further, decreased boundaries
between business entities due to the spread of globalization has the considerable effect on
Lloyd's working domain. Report outlines the significance of international trade and impact of
global factors on Lloyd's.
TASK 1
1.1 The purposes of different types of organizations
Legal entity is categorized in different ways on the basis of the ownership of the factors
of production and other characteristics (Teece, 2010). Fundamentally there are four types of
organization function in an economy.
Sole proprietorship
A form of organization which is controlled by the single person. Whole working is
managed by the owner with the support and assistance of its subordinates. Along with being
responsible for the operation of organization, he is entitled for all the profits and losses incurred.
There are some specific features which differentiate it from other forms of organization.
 Control and management: Sole proprietor is responsible for all the functions undertaken
in the organization.
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 Government regulations: There is minimum interference of Government in this form of
organization. Sole proprietor has the right and power to undertake all the decisions along
with abiding with certain laws and regulations laid down by Government.
 Entitlement to profit: Sole proprietor is the sole beneficiary of all the profits earned by
the organization.
 Risk bearing: Along with the entitlement to all the profits, owner is responsible for all the
losses faced by the organization in all respect (Welford, 2013). Secrecy: There is high degree of secrecy maintained here.
Partnerships
With the combination of both the managerial abilities and all the resources endowed by
them, it is the association of two or more than two people aiming to expand their ventures and
ear profitability.
Characteristics
 Formal agreement is the prerequisite fr any partnership between two or more persons to
conduct any business.
 Profits and losses are shared among all the partners as decided in the agreement with the
mutual consent. There is the existence of unlimited liabilities among all the partners in the partnerships
Voluntary organizations
Aim accomplished through mutual benefits and self help, it is the organization that
function for the upliftment of different sections of the society with the specific targets and goals.
Characteristics
 Voluntary organization as based on the service motive objectives not maximizing profits.
 Its profits and dividend are distributed among its members in-spite of its concentration
towards a particular person or group (Carroll and Shabana, 2010). Management of organization is democratic in nature.
Statutory organizational
Organizations that are formed under the act of parliament are referred as the statutory
organizations. These organizations run under the ownership of and control Government. The
mentioned organization Lloyd's insurance market falls in the category of statutory organization
governed by the act of Lloyd's act of 1871.
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There are certain features that describes statutory organization in the very specific manner.
 Statutory organization are established under the special act laid by the parliament of the
country or state legislature.
 Administration of the organization is undertaken by the board of directors which is
decided or nominated by the controlling body (Nickels, McHugh and McHugh, 2010).
 Objective of the organization is to earn maximum profits in the field it is engaged.
Lloyd's insurance market's objective is to expand the working.
 Capital of the organization is owned by the government itself.
 With respect to the administrative decisions and other policy making procedures,
autonomy of decision making lies in the hands of organization itself.
1.2 The extent to which LLOYD’S as an organization meets the objectives of different
stakeholders
Stakeholders of the organization are the entities that directly affects the policies, strategy
formulations and actions taken in that regard. They are crucial part of the organizations whose
functioning decides the growth and development of the organization. In general context key
stakeholders of the organization are their customers, employees, creditors, directors, government
agencies, shareholders and suppliers who in different ways affects the working of concerned
organization. These elements are directly or indirectly linked to the working of organization. Key
stakeholder's of the mentioned organization Lloyd's insurance market are sponsoring broker,
direct dealing management agents, Lloyd's delegated authority team and overseas
representatives. Customers: Customers are the central part of the insurance market in which clients
discuss their risk needs (Wild, Wild and Han, 2014). They are interested to seek
insurance cover for their company. There are many organizations associated with the
group sue to its first class security level. With the high track of payment of valid claims
strong groups are affiliated to it including airlines, banking group ships and aircraft
owners and many others. Employees: As mentioned above key stakeholders of the cited organization are brokers.
Brokers are the person who facilitate their clients with the risk management and provide
precise and resourceful advice with respect to the safety and security of the finances.
Next is the direct dealing management agent who is entitled to undertake dealings with
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their clients in the formal manner which is ratified after deciding all the clauses with
mutual consent. Lloyd's overseas representatives are the group of people who offer the
companies working in different corner of the world. Delegated authority of Lloyd derives
an initiative to coordinate the audits with different lead underwriters.
 Government agencies: Insurance company is the risk submerged sector hence in that
regard to secure the finances and interest of the customers there are certain laws framed
by Government and other legislative bodies. Functioning of Lloyd abides the prescribed
norms to protect policy holders (Cavusgil and et.al., 2014). Few of them are
standardization of policies and products offered in the market, preserve and monitor the
financial solvency, prevent unfair trade practices and control market conduct along with
controlling other aspects.
1.3 The responsibilities of LLOYD’S and the strategies employed to meet the expectations of
different stakeholder groups
Stakeholders of the organization are closely linked to it in different aspects. The
mentioned organization comply with all the responsibilities it holds with respect to its
stakeholders in different dimensions. To measure the extent to which organization comply with
its responsibility, Carrol's pyramid is used. It is measured in economic, legal, ethical and
philanthropic dimensions.
Economic responsibility
Financially strong and secure Lloyd's is the world's leading insurance specialists market.
It is conducting its business at many corners of the world in different territories. Recognized
groups are associated with it to secure its finances and manage its risk such as listed companies
of FTSE and Dow Jones are among those who are endowed with Lloyd's policies. It provides
optimum level of security to its clients having the rating of best and excellent by the international
rating agencies. It provides insurance cover to private enterprises and business at the time of
need such as natural hazards, calamities, financial downturn and other related (Solomon, 2014).
Its key components that are brokers, underwrites and Syndicates who by proving their efficient
services helps their clients to manage their risks and channelize their resources in the form of
giving advice and suggestions to their clients.
Legal responsibility
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Managing finances and risk of client's resources comes with great responsibility. Various
laws and regulations are laid with respect to the process of maintaining legality and authenticity
of financial services provided by the organization. Lloyd's abides the wide range of policies in
insurance. It has several subsections in which a country is engaged such as aviation, casualty
cover, property and marine risk, accidents, terror attacks and many others. With the
specialization in some business such as fine art, blood-stuck, kidnap and ransom, it follows the
prescribed rules and regulations (Wheelen and Hunger, 2011).
Ethical responsibility
It is recognized as the responsible organization which has the prescribed way of
conducting business in the ethical manner. There is the specific code of conduct followed in the
organization to provide the efficient and reliable services. It is the member of the institute of
Business Ethics which enables he organization to uphold high standards.
Philanthropic responsibility
World's leading insurance market is also engaged in charitable activities. There are
different funds made by the organization Lloyd's I different areas such as tercentenary research
foundation is prepared to encourage research and development in academic areas such as
engineering, finance, medicine, business and environment to bring up-gradation in it, patriotic
Fund to support armed forces community. It referred as the oldest charity fund of its kind.
Environmental responsibility
Along with all the other responsibilities, organization also understands its responsibility
towards environment. In that regard it always caters to work towards the climate change and
hence, six core principle for the initiative (Trkman, 2010). It has the comprehensive recycling
system which is made to minimize the loss of resources, supporting climate awareness,
incorporating climate change in its investment strategies and steps adopted to reduce the impact
of fluctuations in environment.
TASK 2
2.1 Economic systems attempt to allocate resources effectively
Economic systems is categorized on the basis of the difference in the allocation of
resources and distribution of goods and services. Each economic system have different features
and categories in which the organizations operating in it functions. Fundamentally there are three
types of economic systems that are command economy, free market economy and mixed
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economy. Structure of economic system have significant impact on the working of insurance
market. Hence, Lloyd's working in any specific economic system results in the different manner.
Policies and laws framed in it affect its working and operations conducted by it.
Command economy
An economy in which the goods and services of the country are publicly owned or are in
the full control of the government (Andersson, Forsgren and Holm, 2015). Government has the
complete commanding over the factors of production. Such a kind of economy is governed
centrally with the emphasis on the production and investment factor instead of consumption.
Central planners are entitled for the decision making process with respect to the improvement in
the situation of market. Organizations operating in has no control over pricing and output making
decisions, all the decisions are taken by government such as for surpluses o any deficits in the
resources.
Free market economy
The economy in which the output and prices are decided by the forces of demand and
supply. They are decided with the minimum intervention of the government in decision making
process. If any organization shapes into the free market economy it experiences the unrestricted
competition from the government regulation. With no government intervention, prices are
decided between the consumers and producers with the mutual consent. Organization working in
free market economy has the power to decide its process and output of the goods and services it
is offering to the market and consumers (Bughin, Chui and Manyika, 2010). Loyd's operating in
this industry will experiences freedom to regulate the insurance market with the working of
several components in it. Without any boundation organization has the freedom to decide the
policies and framework to offer the services for the risk management and syndicating services to
manage finances.
Mixed economy
It is the combination of both the above mentioned economic systems. It has the features
of both the free market economy and command economy which states the existence of mixture
of features and characteristics of both the markets with respect to the economic planning,
ownership and intervention of government and other authorities. Organization working in this
economic system empowered with the decision making process with respect to pricing and
output but with certain obligations. Lloyd's working in this type of economy has power to
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conduct its business as decided b the board of directors but simultaneously with the laws and
regulations prescribed by the Government and other legislative bodies.
2.2 The impact of fiscal and monetary policy of UK on LLOYD’S and its activities
One of the most Globalized economy of the World, UK is the fifth largest national
economy of the world. It has the second largest stock of inward foreign direct investment making
it the fastest growing economy among all the members of G7 (Werther and Chandler, 2010).
London, the prominent city of UK is he financial center and is among the three command centers
with the other two are New York and Tokyo. This is the service sector economy having the share
of around 78% of GDP. There has been significant fluctuations occurring in the world economy
whose effect trickles down to the economy of countries as well. Government and other central
bodies adopt different methods to resolve and channelize the process. Two such crucial tools
adopted are fiscal policy and monetary policy.
Fiscal policy
Methods adopted by government to stabilize the economy bu adopting certain measures
such as changes in taxation and government spending. Through this government changes in
economic situation that further affects the operations and strategy building of organizations
functioning in different fields. Insurance market get affected significantly by the tools adopted by
government for instance, with the increase in tax rate, people's disposable income get reduced for
which insurance coverage is offered.
Monetary policy
Bank of England, central bank of UK is responsible to regulate the money supply in the
economy by bringing suitable changes such as in interest rates, bank rates, open market
operations and others (Tayur, Ganeshan and Magazine, 2012). There is high degree of
correlation between monetary policy and functioning of financial and insurance market. For
instance, when interest rates increases, provision of risk insurance get increased on the other
hand fall in interest rates makes the people to seek risk assurance more in quantum that is
provided in normal time.
2.3 The impact of competition policy and other regulatory mechanisms on the activities of
LLOYD’S
Along with government and other legislative bodies there are some other organization
who function in order to regulate the working of economy of the country. Business and trade is
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the important section of the economy that enhances its growth and development by impacting
GDP and foreign exchange reserves. In that respect there are some organization that function to
regulate the trade practices and promote healthy competition among traders and business entities.
Further, there are some laws and regulations laid to enforce legal practices. One such policy is
Competition policy. It caters to make markets work better by aiming different targets such as
encouraging technological innovation, effective price competition and safeguarding the interest
of consumers by rationalizing prices and choices. It affects the strategy formulation of the
organization as it makes it abide all the laws framed with respect to the protection of consumer
protection in the area of providing risk assurance (Al-Debei and Avison, 2010). Lloyd's
syndicates by spreading the risks of the investment done by creditors and other people along with
providing advice to manage their finances in the proper manner. In-spite of being world's leading
insurance market, with the steps adopted in competition policy, market is prevented from its
monopoly. Further, Lloyd's has experienced various mergers and evolution going through
different stages, hence it undergoes several investigations and maintains fair practices among
them. There are significant impact of the competition policy incurred on the working of Llyod's.
It includes both the positive and negative impact. It imparts positive impact in the form of
regulating the market condition making it favorable for all the organization working in it,
resolving all the issues related to the unfair trade practices and other related. Further, it is
affecting it negatively as well such as there are certain methods adopted by it that affect large
organization working in it such as unlimited number of investigations done on the organization,
enforcing laws like to share information and data in-spite of unwillingness of organizations such
as Lloyd's. Further, strict laws of the anti-competitive behavior of the hinders the growth of
organization in other countries and different parts of the world.
M1 Strategies employed to meet responsibilities
 Economic responsibilities are fulfilled by providing research based and authentic advice
to their clients and securing their money (Hall, 2011).
 Legal responsibilities are fulfilled by abiing all the laws and regulation with respect to
providing risk insurance in different areas such as housing, nannycare, avaitaion, terror
attacks, property etc.
 Ethical responsibilities are fulfilled following code of conduct for the working of
employees and customers.
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 Creating funds to create the source of money for the specific cause is the prime concern
of the organization that enables it to fulfill its philanthropic responsibility.
D1 Critical reflection
Going through the carrol's model that describes the responsibilities fulfilled by Lloyd's in
different dimensions, it can be stated that it successfully achieve all the targets set by it. While
the process, it also faces some challenges such as:
 Economic fluctuations led the organization to change its strategies and methods adopted
to deploy the resources (Moutinho, 2011). Such as increased or decreased disposable
income demands changes in rates offered.
 Domain of risk is increasing significantly in each sector, in that regard it requires the
Lloyd's to come up with plans and policies in unconventional areas to like Nannycare and
others.
 Changes in political scenario in either way is the great challenge for it such as sudden
unrest also fluctuates Lloyd's working.
M2 Factors impact economy of UK
 Degree of capital formation is the key determinant of growth of economy. It determines
the level of production and investment.
 Globalization is the important factor that has led the growth of UK in all the sectors
specially in financial market. London is the center of global banking, insurance market,
stock exchange and related areas (Dahan and et.al., 2010).
 Pioneer in many areas, UK is the most technologically advanced country with its effect
trickle down to the increment of efficiency and productivity of all operations.
D3 Economic indicators of UK
Among many economic indicators used by the Government of UK, two of them are
inflation rate and Halifax house price Index. Constant rise in prose is referred as the inflation rate
which is the key determinant in deciding the economic situation of the country. Office of
National statistics has measured UK's inflation rate as 0.1%. Halifax house price index
determines the standard house prices on monthly basis. It is named after Lloyd's banking group
which is the largest mortgage lender of UK.
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TASK 3
3.1 Market structures and market conditions determining the pricing strategies of LLOYD’S
business
Businesses operating in the economy experiences the significant impact of the market
structure prevailing. Market structure is referred as the system in which number of companies
producing homogeneous and identical products with identical methodology and procedures.
There are fundamentally four types of market structures exist in the economies such as perfect
competition, monopoly, monopolistic market and oligopolistic market (Osterwalder and Pigneur,
2013). These divisions are made on the basis of certain features that makes them different such
as number of sellers and buyers, interdependence of firms for decision making with respect to
prices and output, competition level l and other related.
Perfect competition
In this type of market structure there are large number of sellers and buyers with no
barrier in entry and exit of firms. In this type of organization prices are decided by market fierce
that is demand and supply of goods and services. In this type of market structure, firms are
considered as the price taker. Goods and services are homogeneous in nature with no difference
in price level. There is the existence of fierce competition in the market due to similar prices with
no dominance of any firm. Further, firms and organization operating in this type of market are
endowed with the perfect knowledge about the all the different components that enable them to
take rational decisions. Along with all the above factors there is the existence of minimal risk
taking feature hence, the mentioned organization Lloyd's do not exist in this market structure.
Because insurance market is all about risk and its management (Wirtz, Schilke and Ullrich,
2010).
Monopoly
With the exclusive ownership of factors of production and other resources there is single
ownership in the market structure referred as monopoly. Market structure in which a company
has the market share of more than 25% of the market share. Organization operating in has the
dominance over the market in the decision making power with respect to prices and supply
quantity. It has the feature of attaining super-normal profits by rationalizing the price level of
goods and services provided by them. Lloyd's operating in the market structure Monopoly has
the supreme power to decide its terms and conditions in the field of risk management. Because of
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the lack of competition, Lloyd will charge high amount for providing the financial services. In
order to insure risk it is imperative to be customer centric which is far away from the
characteristics of market structure monopoly (Boons and Lüdeke-Freund, 2013).
Monopolistic structure
The highly competitive market structure have few sellers and large number of buyers. In
this type of structure each organization operating in it caters to establish its prominent position in
the market place by offering distinguished features t the consumers and at the suitable prices that
attract consumers. With the moderate barriers to the entry and exit of the firms there is the
existence of product differentiation. Further, there is high degree of risk associated with the
decision making process of the organization hence there is large probability of existence of
Llyod's in this type of market structure.
Oligopolistic structure
The market structure with the existence of few sellers and buyers. There is
interdependence of decision making process between different firms associated with it. There is
the presence of fierce competition in the market structure with the high degree of changes in
decisions taken by the organization with respect to the prices and output of the products and
services produced by the organization. Differing from other market structure, organizations
existing in it has the significant impact on the market conditions such as minor changes occurred
in it trickles down strong impact on other functioning. In reality Loyd's is present is this type of
market structure with few competitors having high degree of correlation with it. Such as each
firm is very large and its working affects considerably (Weske, 2012).
3.2 The way in which market forces shape organizational responses in setting prices within
operating environment.
Market forces is the sum total of all the factors that affect the availability, demand and
prices of goods and services provided by different organizations operating in the economy.
Basically it is the process of maintaining equilibrium between demand and supply of the
respective entity. There are many market forces that regulate the working of the economy in
different aspects and dimensions such as demand and supply; regulatory pressures, technological
advancement; business model used in the economy and other related. Two of them are which
significantly impact the regulation are:
Demand and supply
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Demand refers to the quantity of product and services that the customer seek to have.
Any changes in demand and supply of the products and services also fluctuates the operation of
the concerned business entity. Such at the time of Inflation when there is high amount of money
in circulation, demand for investment plans and insurances are is high (Scheer, 2012). Lloyd's
working expands at that due to increase in people's activity towards investments in different
areas. On the contrary when there is decline in the money supply in the economy or is the
situation of recession or depression, people go away from taking any risk and demands the
assurances hence Lloyd's caters to provide the plans related to that to provide the optimum level
of services and help them to spread their risk at the time of need.
Technological investment
Level of technological advancement and investment done it considerably affects the
working of Lloyd's working as when there is the high investment done for the improvement of
the services, employees of Lloyd's are able to communicate with their customer on frequent basis
providing them precise and authentic advice to insure their risk.
3.3 The business and cultural environment in the UK can shape the behavior of LLOYD’S as an
organization
No organization works in isolation, it has he significant impact of the environment I
which it is working. When there comes some fluctuations in the market it also affects nature of
functions along with the strategies framed by it. Mentioned organization works to insure risk to
the organization connected to it and manages their risk. Volatility in any of the factor has the
direct impact on its operations at the emerging markets. Impact of fluctuations in market is
explained in the following manner.
Political factors
It is the macro factor that has the impact on the working of the organization such as it
there are favorable condition in the country it enables the cited organization to work smoothly on
the other hand political unrest deviates the working away from it. Such as various incidents
occurred on the large scale affects challenges the process of providing comprehensive insurance
to the affected party but it was well managed by the organization Lloyd's insurance market that
was teamed up to provide insurance claim to the MNC and other institutions that are affected by
the attacks or any tragedy (Zsambok and Klein, 2014).
Economic factors
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This is the vital factor that affects the working of the organization in the lucrative
manner. Any changes occurring in the macro economic figures also brings changes in the
decisions taken by the organization Lloyd's. Such as when country is experiencing financial
downturn in the economy (Gharajedaghi, 2011). It has the direct impact on the regulation and
preserving of financial solvency. When disposable income of people and prices of property
increases, ratio of income spent by people increases hence the cited organization caters to
provide the insurances in the respective manner to protect their investment such as through
Home protection policy.
Social factors
Social factors that is the choices and preferences of the people have the significant impact
on the purchasing and opting of insurance options to insure their risk. For the different needs
varied policies are provided such as for energy and motor; aviation; property; causalities and
other related. Apart from that Llyod's is providing risk coverage at non conventional areas as
well such as fine art, satellites, others such as NANNYCARE is launched by the cited
organization to provide the protection against the liability claims such as if there is any property
loss or any injury occur to the child and other matters related to the child care (Hill, Cronk and
Wickramasekera, 2013).
Technological factors
With the advancement of technology, reliability on the computer and its use has been
increased to the significant extent. This has led to the increase in the threat of loss of privacy and
security of data. In that respect risk insurance is provided by the company Lloyd's.
Legal factors
Changes in laws and regulation with respect to the insurance market, insurance coverage
offered by the organization also experience fluctuations. Such as growth in compensation culture
in the economy makes the process of provision of risk insurances expensive for the companies in
the very considerable manner. Lloyd's also experiences the trickle down effect of the changes in
litigation. Further, countering the effect is beyond the scope of working of the organization
operating in this industry (Elliot, 2011). But Llyod's holding the prominent position in the market
with the considerable amount of share adopt the process of lobbying to address this.
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TASK 4
4.1 The significance of international trade to LLOYD’S business.
With the increase in the competition and volatility in market each organization working
in different field caters to expand its business in wider geographical domain. Hence,
globalization has led to the dwindling of the boundaries between different business entities by
making them closure. International trade refers to the movement of goods and services moving
across border (Olawale and Garwe, 2010). This brings many benefits to both the countries in
different dimensions.
Market Expansion
Insurance market is the management of risk or the prevention of financial loss. It has the
wide domain of working indifferent to boundaries of region of any sector. Lloyd's has expanded
it operation by providing risk management solutions in different areas in many corners of the
world. It is considered as the world's leading insurance market providing its services and advice
to the wide stream of clients and organizations. International trade has the option of market
expansion to Lloyd's (York and Venkataraman, 2010). It enables the origination to consolidate
large number of clients with it.
Global competitiveness
In leads to the enhancement of global competitiveness among the countries by bringing
together all the resources together and utilizing them in the efficient manner. In international
trade there is the liberalization of tariffs and taxes for the movement of resources from one
country to the other. Hence, in insurance market as well when an organization engage in the
international trade, there is the liberalization of policies and laws offered in the process of
providing risk insurance in different sectors which was the operations of Lloyd's.
Enhancement in efficiency
Through global License market, Llyod's is accessing overseas territories including all the
emerging and developed economies to seek large market. It is specialized in the broking and
bespoke underwriting. Further, supported by central fund has made it capital efficient to take its
working across the borders and further enhance its capabilities.
4.2 Impact of global factors on LLOYD’S business
When an organization enters into the international trade it undergoes the impact of many
global factors that affects its working (Hair and et.al., 2015).
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Protectionism
There are many international organization runs to regulate the market on international
grounds. These organizations protect the interest of consumers and enables the fair trade
practices. For insurance market, institutes associated with it monitor the financial situation of the
markets operating in different countries and analysis and predict the consequences of changing
parameters. One such organization working in the area is International Association of Insurance
Supervisors(IAIS) having regulators over 140 countries contribute to global financial stability by
using three pillars such as standard setting, implementation and financial stability (Bryman and
Bell, 2015).
Technological advancement
Consolidation with large number of people around the world led to the inculcation of
advancement of technology in the organization working in that area. Enhancement in the
communication technology has improved the level of coordination between several business
entities around the world. There are many centers of Lloyd's around the world with many
management agents in different countries. These agents are seeing overseas business to provide
risk management solutions to their syndicates. Better information technology has led the
managers of different segments to hold meeting on virtual platforms and resolve problems faced
by it different dimensions. Further, conferencing and summits on internet connect with clients to
seek their needs and requirements and also provide them optimum level of solutions.
Emerging markets
Lloyd's experiences the fierce competition from the organization operating in emerging
economies such as India, China and Brazil (Zott, Amit and Massa, 2011). The fast pace growth
and development of these countries has induced the high degree of competition in the global
market which threatens the existence and upliftment of other organizations.
4.3 European Union policies and the impact of these policies on LLOYD’S business
A political-Economic union European Union of 28 members caters to develop the
condition of all the member states in different aspects such as economic, social, judicial,
technological, political and business. It has framed several laws and regulations to ensure the free
movement of factors of production and people, services and capital with the pooling among
member countries (Aula, 2010). It also enacts legislation in justice and home affairs. Further by
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maiantaing common policies for trade, agriculture and other areas of working. Two policies are
explained below:
Insurance
There are certain rules framed by European union to ensure the risk management process.
It has launched the commission in 2005 to detect possible distortation in competetion and focus
on provision on insurance products and services to business.
Consumer protection
It is associated with the laws made to protect the interest of consumers. It states that
organizations such as Llyods that are providing services to the consumers in any area are
accountable for it. They are supposed to provide authentic advice and content in relevance to the
services (Becker, Kugeler and Rosemann, 2013).
D3 criticisms of getting involved in international trade in the context of LLOYD’S business.
Along with experiencing certain benefits from the international trade, there are some
negative consequences as well faced by it.
 Entering in different market increases the risk of failure.
 Lack of knowledge about the target market in different country deviates away from the
success.
 There are many factors such as existence of competitors, technological differences,
changes in economic condition and other related challenges the working of Lloyd's
insurance market (Cavalcante, Kesting and Ulhøi, 2011).
CONCLUSION
Organization operating in the influence of several factors and the working of stakeholders
that has direct impact on its working prepares the effectual strategies and framework to deal with
it in the effective manner. Present report prepared is in reference to the insurance market Lloyd's
that is located at the center of financial market London. It is the world's leading insurance market
operating around the globe. From the above study it can be elucidated that insurance market has
the significant impact of political scenario, technological advancements, legal aspects and many
others. Cited organization effectively deal with it adopting suitable measures to face the
challenges.
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