Medibank Insurance Company: Strategic Management Accounting Analysis

This report provides a comprehensive strategic management accounting analysis of Medibank Insurance Company, focusing on value creation, strategic management, and performance management. The report begins by examining Medibank's value chain, vision, mission, goals, and objectives. It then delves into a Porter's Five Forces analysis to assess the competitive landscape and identifies external stakeholders. The report also explores Medibank's performance measures, including growing enterprise value, consumer-focused healthcare, and health cost leadership. The analysis highlights how Medibank aims to provide better health outcomes and consumer-focused healthcare by leveraging its scale, reputation, and health service offerings. The report concludes with a discussion of key performance indicators and reward systems, offering insights into Medibank's strategic approach to the healthcare industry. The report is designed to provide a thorough understanding of Medibank's strategic position and its approach to achieving sustainable value creation.

Running head: STRATEGIC MANAGEMENT ACCOUNTING
Strategic Management Accounting
Name of the University:
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Authors Note:

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Table of Contents
1. Introduction..................................................................................................................................2
2. Part A: Value Creation.................................................................................................................2
2.1. Value:....................................................................................................................................2
2.2. Vision/Mission:.....................................................................................................................5
2.3. Goals and Objectives:...........................................................................................................5
3. Part B: Strategic Management.....................................................................................................6
3.1. Porters Five Forces Model Analysis.....................................................................................6
3.2. External Stakeholders of Medibank Insurance Company....................................................8
4. Part C: Performance Management.............................................................................................10
4.1. Performance Measures of Medibank Insurance Company.................................................10
4.2. Reward System for Top Executives...................................................................................11
5. Conclusion.................................................................................................................................12
Reference List................................................................................................................................13

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Introduction
Medibank Insurance Company has positioned itself as a leader in private health insurance
and related services within Australia. The company is listed in Australian Securities Exchange
and offers healthcare in ways to address changing societal needs. The objective of the current
paper is to take the example of Medibank Insurance Company and explain that strategic
management accounting facilitates an organization to develop a long term sustainable value that
is great advantage to all the company’s stakeholders (Australia 2014). The paper is intended to
discuss the vision, goals and objectives of the selected company and conduct an external
environment as well as stakeholder analysis of Medibank Insurance Company.
Part A: Value Creation
1.1. Value:
The value chain of Medibank Insurance Company is focused on offering high value care
through:
 Improving health outcomes that will be safe, suitable and evidence-based.
 Enhancing patient experience of care through being patient-centric and informed
 Reducing healthcare expenses by being highly economical and efficient

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Figure 1: Value Chain
(Source: Bohnert, Gatzert and Jørgensen 2015)
With time, Medibank Insurance Company is observed to evolve from being a traditional
health insurer to a larger health services company impacting several aspects of the healthcare
value chain. Value chain of the company has developed with time with the growth of health
insurance business by means of Medibank and ahm brands and through developing its wider
health services offering through Median health. Moreover the company focuses on increasing all
its shareholders value through profitably developing its consumer base through attaining
consistent, affordable and superior quality health survives for all its consumers (Boothe 2015).
All the business conducts of Median Insurance Companyis focused on offering superior
health services to its consumers and through offering better health services for all its Australian
consumers. Moreover, the company has developed its value chain through its provision of health

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services, effective health system advocacy along with work within the community. The value
chain of Medibank Insurance Company is supported with four major values that are focused on
informing all its business actions (Cain 2016). The company’s value chain is focused on offering
better health for better lives and having a highly effective role in supporting the consumers to
take control on their health and wellbeing.
The company is focused on offering great values to all its consumers for driving better
health results by means of offering superior health services, advocacy on health systems along
with maintaining effective work within the community. The company has four effective values
that can influence it in interacting with all its employees and consumers along with facilitating
the company in taking decisions regardingservices best to the consumers. Certain values those
are present in the company that can facilitate Medibank Insurance Company in attaining it
business objectivesis explained below:
 Consumer first- Consumers of Medibank Insurance Company are deemed to be the
major focus based on which all the business activities of the company are developed
(Chiarini and Vagnoni 2015).
 Own and does it-Medibank Insurance Company is responsible towards its consumers
and focus on delivering its promises and make the same happen in any difficult situation.
 Show heart-Medibank Insurance Companyshows compassion for all its employees and
consumers for the people associated with the company cares for one another, for
consumers and for the community.
 One team-People at Medibank Insurance Company focuses on working in a better and
smarter way through taking care of employees as well as its consumers.

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1.2. Vision/Mission:
Vision/Mission of Median Insurance Company is to offer services through focusing on
“Better health for better lives” (Diacon 2016). Mission of the company is to focus on prevention
through maintaining proper health management and treatment. Moreover, the company intends
to drive better health results through developing a culture that fosters and include diversity and
inclusion. The company has a mission to ensure that all its employees are offered with equal
opportunities so that they can serve disadvantaged groups.
Medibank Insurance Company tends to have an active role in order to facilitate all its
consumers to attain control on their wellbeing and health through:
 Offering support to people to realize and attain control on consumer health and wellbeing
in order to monitor their health system
 Providing choice of right wellbeing and health options that includes where and how
healthcare is offered
 Providing support to people in order to prevent illness along with chronic diseases
facilitating people to maintain their wellbeing
1.3. Goals and Objectives:
Medibank Insurance Company has set several goals and objectives that can help the company
in delivering best value to all its consumers. These objectives facilitate the company in offering
better health for better lives for its consumers (Fanner 2015). Such goals are explained under:
 Develop market leading health services through offering best value to the consumers
 Widen the offering of the company along with ham brands in order to deliver highly
efficient combination of services, products and advices to the consumers

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 To remain motivated through improving health conditions for all its consumers.
Moreover, the company also has an objective to remain passionate about developing
effective health system that is highly focused on people and is sustainable over long
duration.
Part B: Strategic Management
2.1. Porters Five Forces Model Analysis
Porter’sfiveforces analysis centers on the way in which Medibank Insurance Company
can develop a sustainable competitive edge within the insurance industry. Based on such analysis
the company will be able to maintain its strategic position and explore several profitable
opportunities within the insurance industry (Fincher and Nieuwenhuysen 2016).
Figure 2: Porters Five Forces Analysis
(Source: Galliers and Leidner 2014)

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 Threat of New Entrants:New entrants within health insurance derive innovation and
unique ways of carrying out business and exerting pressure on Medibank Insurance
Company. This is done through setting lower pricing strategy, decreasing costs along
with offering new value propositions to its consumers. Considering the same, the
company has to deal with such challenges and develop efficient barriers in order to
maintain its competitive edge.
 Bargaining Power of Suppliers:Almost all the organizations within the insurance
industry purchase their raw materials from several suppliers. Suppliers within the
dominant situation might decrease the marginsthat can be earned by Medibank Private
Limited within the market (Höglund et al.2016). Efficient suppliers within the insurance
sector employ their power of negotiation to attain increased prices from companies within
the insurance field. Total impact of incased supplier bargaining power is that it decreases
overall insurance profitability.
 Bargaining Power of Buyers:Buyers are observed to become highly demanding. They
desire to purchase company’s best offerings available through paying as minimum price
as possible. This exerts pressure on the profitability of MedibankPrivate Limited in the
long duration. The smaller and powerful the company’s consumer base will be, the more
increased will be the bargaining power of the consumers along with their increased
capability to look for increasing offers and discounts (Jannesson, Nilsson and Rapp2016).
 Threat of Substitute Products:When new products and services developed by
Medibank Private Limited addresses specific needs of the consumers in distinct ways,
overall profitability of the industry gets affected. For instance, certain services including
Google Drive and Drop box serves as substitutes to the storage hardware drives. The

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threat associated with a substitute product or product is observed to be high if it provides
with a value proposition that is exceptionally distinct from the industry’s current
offerings.
 Rivalry among Existing Competitors:If rivalry among the present competitors within
the industry is observed to be high that can decrease the prices along with the industry’s
overall profitability (Khoury 2015). Medibank Private Limited is observed to operate
within an extremely competitive insurance sector. This competition has a great effect on
the total long term profitability of the company.
Through analyzing all the Porters competitive forces for Medibank Private Limited, it can be
gathered that the strategists can attain a clear view of the external factors that can affect the
profitability of the company within insurance industry (Fanner 2015). They can recognize
strategy changing trends quite early and can immediately respond to attain the available
opportunity. Through realizing the external factors affecting the company in a detailed manner, it
can help managers to attain increased opportunities from such forces.
2.2. External Stakeholders of Medibank Insurance Company
The external stakeholders of Medibank Insurance Company and the power attained by them
in the company are explained below:
 Legal stakeholder:Medibank Insurance Company has legal shareholders those are
people who has the possession of valuable things such as documents, money and property
till the time the correct owner is found (Medhekar, Wong and Hall 2014).
 Individuals:The stakeholder of the Medibank Insurance Company includes individual
investor’s consumers, residents as well as shareholders of the company for they have

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monetary along with non-monetaryinterest within the company. Shareholders of the
company can be observed as monetary stakeholders in the organization for whom it
purchases shares of stock. Residents can be understood as the stakeholders within the
neighborhood company to which thry belong (Montgomery 2017). Both of the
stakeholders are observed to have bilateral relationships as the stakeholders has an
increased interest in continued sustenance of the company and the organization offers its
stakeholders with something of increased value.
 Customers and Community:Consumers and the community are deemed to be important
stakeholders of Medibank Insurance Company. This stakeholder group has the power of
offering cash flow and revenue so that the business can operate and attain increased profit
(Peppard and Ward 2016). Community leaders holders the company accountable for
actingresponsibly with social and environmental concerns.
 Employees:This stakeholders group has increased contribution within Medibank
Insurance Company’s business. For this reason, motivating employees through offering
fair compensation, empowerment and suitable training can help them ensure better
consumer experience.
 Business Partners: This group of stakeholders can significantly impact the business
of Medibank Insurance Company. It is important for the company to maintain string
relationship with them as with having a trusting relationship with key suppliers, the
company will be able to negotiate highly reasonable costs and attain effective
replenishment if its inventory remains low (Podger 2013).

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Part C: Performance Management
3.1. Performance Measures of Medibank Insurance Company
The key performance measures that are observed in case of Median Insurance
Companyareexplained under:
 Growing enterprise value:The Company is focused on developing the capability to
leverage its scale, reputation along with dual arms of the business will facilitate to
maximize the company value, differentiate from the consumers and attain market
leadership (Skaal2015). Considering such priority all through the company, it intends to
enhance focus on initiatives that needs cross-divisional association and consumer
knowledge. Offering care co-ordination along with portfolio of health management will
need to leverage capabilities of the company with exceptional mix of health services to
have a key role.
 Consumer focused healthcare:The Company intends to be a leader in consumer focused
healthcare through making its consumers a priority. To offer consumer focused
healthcare, the company is shifting from having product driven approach to being
consumer focused approach. Through using private health insurance consumer
knowledge along with clinical and operational knowledge from Medibank health
solutions along with integrated care segments (Medhekar, Wong and Hall 2014). The
company intends to enhance its connection with consumers through developing and
offering valued services and products that can finally enhance health outcomes of
consumers. The company makes sure that the consumers feel cared through obtaining
effective consumer service and easy business with experiences.

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 Health cost leadership:The Company is focused on striving to decrease operational
costs through being highly efficient in its service delivery and this strategic priority is
centered on managing the increasing cost of healthcare (Medhekar, Wong and Hall
2014). To enhance performance of the company, Medibank Insurance Company tries to
develop new care models that can offer superior health outcomes in a cost efficient
manner.
 Operational excellence:The company is focuses on addressing consumer expectations
for all its convenient offerings that can be obtained through re-engineering the support
surrounding, presenting better consumer analytics along with simplifying processes.
3.2. Reward System for Top Executives
Reward system for top executives of Medibank Insurance Company is explained under:
 Taking care of the families: For rewarding the executives, the company makes sure that
it offers outdoor sports facilities, free food and there is another way in which the families
of top five executives are offered with the chance of free vacations all through the world.
 Offering free vacations:Medibank Insurance Company has legal shareholders those are
people who has the possession of valuable things such as documents, money and property
till the time the correct owner is found. It was gathered that the company offers is top five
executives with family care facilities and packages.
 Increased incentives:Top five executives of the company can be observed as monetary
stakeholders in the organization for whom it purchases shares of stock. Residents can be
understood as the stakeholders within the neighborhood company to which they
belong,theexecutives of the company are rewarded for their efficient work. Executives in

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the company are provided with rewards through attaining a chance of special;
recognition.
 Keeping all the executives healthy:At Medibank Insurance Company offers all its top
five executives with al year free facilities from health and wellness centers.
 Reloadable gift cards: The executives of the company are offered with rewards to
refresh the safety program and gift cards. At the tome an executive takes action trough
offering them reloadable gift cards as an incentive. Moreover, as the executive work in
the company is highly stressful, in such case these individuals are provided with the
reward such as “stress free zone” that offers resources to make them deal with their
anxieties.
Conclusion
The objective of the current paper was to take the example of Medibank Insurance
Company and explain that strategic management accounting facilitates an organization to
develop a long term sustainable value that is great advantage to all the company’s stakeholders.
It was gathered from the paper that if rivalry among the present competitors within the industry
is observed to be high that can decrease the prices along with the industry’s overall profitability.
Medibank Private Limited is observed to operate within an extremely competitive insurance
sector. This competition has a great effect on the total long term profitability of the company. It
was gathered that the Company intends to be a leader in consumer focused healthcare through
making its consumers a priority. To offer consumer focused healthcare, the company is shifting
from having product driven approach to being consumer focused approach.

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