STRATEGIC ALTERNATIVES FOR SUN LIFE FINANCIAL
Table of Contents


 


 


I.      Introduction.. 3


II.     Current Strategy.. 3


III.        Strategy Options.. 4


IV.       Select Strategy.. 6


V.    Resources Requirements.. 7


VI.       Compare with another organization.. 7


VII.      Positioning Techniques.. 8


A.    Strengths. 8


B.    Weaknesses. 8


C.    Opportunities. 8


D.    Threats. 9


VIII.     Implementation Timetable & targets.. 9



 


I.      Introduction

Trade and commerce has developed increasingly in the recent years. Competition has become more intense and the need for flexibility has become indispensable. At some point, there are some elements of operations that appear to be constant and unyielding: the need for dynamism. This idea points to the need of a company to have a culture of innovation. The changes in the external environment inevitably demands for not only a continuing drive towards innovation, but also a sustainable one. This is apparent in the case of Sun Life Financial, a leading player in the insurance domain in the global market. Currently, it covers millions of customers all over the world. However, it recognizes the need to constantly improve and take on steps to expand their market share and take control of the global insurance domain. This paper shall look into the current strategy of Sun Life Financial and consider the strategic alternatives which it could acquire to ensure that it sustains its development.


II.    Current Strategy

Sun Life Financial’s current strategy is apparently focused on the expansion of their market share. It seeks to establish a global presence by establishing alliances in strategic world markets. With its headquarters in Canada, the Asian market is slowly being acquired with alliances with influential corporations in the financial industry of Mainland China and Hong Kong. With this stated fact, it appears that the company prefers to enter into alliances with established local companies to penetrate a market rather than totally acquiring the said company. However, there are signs that the company would slowly take over the operations of Sun Life in either China or Hong Kong through eventual mergers with the said companies. Engaging in such a strategy allows Sun Life to minimize its costs in penetrating the Asian market. (Reuer 2000, ) In the same manner, it allows them access to the top personnel in the land who are adept with the business environment in Mainland China and Hong Kong.  In the end, the risks of the company are reduced with the acquired strategy of Sun Life Financial in the Asian market. With alliances and joint ventures, equity and management of the operations in the said markets are shared by both the foreign and the local company.


However, seeing that Sun Life has established these types of market entry strategies, they must be aware and vigilantly avert any of the adverse effects of such a strategy. These adverse effects may include conflicts of interest arising from the overall differences of both the foreign and local companies. (Hennart and Zeng 2002, 699) Consequent events may display disagreements in the sharing of profits and investments which may eventually lead to the withdrawal of another partner in the venture. If the company makes it a point to establish care with reference to the relationship with the local partners in the alliances and joint ventures, then the risk of such adverse events from arising will be forestalled.


III.   Strategy Options

Based on the current strategy of the company and the existing status that it experience, there are several strategic options that the company could undertake. First, it should keep improving its product-market mix. This means that Sun Life Financial should continue securing its ascendancy in the insurance industry by continuously taking care of its market share. This is done through active advertising and aggressive marketing. (Fuller 1999, 309)


 Another alternative that the company could take into consideration is to diversify their operations. Specifically, Sun Life Financial could establish related diversification on their operations. They have the option to horizontally integrate. (Tapking and Yang 2006, 1765) This means that the company may take on activities which are expressly complementary of their current strategy and consequent activities. In this case, the company could offer other financial instruments in their operations. These include credit and debit cards along with loans that would cater to the common wage earner in both China and Hong Kong. Specifically, the expansion of the platform of the company should be considered so as to improve the current situation of Sun Life Financial’s operations in Asia.


The third strategic option available for the company is to maintain status quo in their operations. This means that the company should do nothing to change their operations as it is currently working and complementing the external environment. In the same manner, the company is similarly experiencing some level of flexibility as seen in the current strategies above. This means that Sun Life Financial is currently taking on demands of the environment and meeting them satisfactorily.


All in all, the company has three strategic options that totally complement their existing strategy and the initiatives taken in the market. Sun Life Financial could maintain improvement in their product-market mix hence focusing their attention on their market share. They could diversify their operations through horizontal integrations hence introducing new activities in their operations. And lastly, they could maintain the status quo and keep their operations the way that they are with the risk of non-development or lack of improvement in the company.


 


IV.  Select Strategy

Based on the alternatives above, Sun Life Financial shall find more potential if it apply the second strategy indicated above: diversify through horizontal integration. (Pursche 1996, 10) In this regard, the company should consider lines which are relevant to the financial industry. As stated above, they could take on initiative towards imposing both credit and debit cards to their clients. They could also introduce more loans for their core customers. They could also emulate the endeavors of other financial institutions in the market by offering consulting services regarding the financial standing and financial research as maintained by their clients both in Asia and the rest of the world.   


With regards to expertise, the company could order a seasoned high ranking employee from the headquarters in Canada to spearhead these developments. Though the leadership is held by an expatriate, the company has to make sure that the overall members of the project shall constitute local employees. This is to provide the expatriate a clear and direct advise on the actual culture of the market, in this case Mainland China and Hong Kong. (Kee 2002, 8) In the same manner, the company must make sure that the leadership of the said departments (i.e. other financial measures like credit card, debit card, and loans) are eventually given by the expatriate to his local counterpart in order to boost the morale of the employees and allow the company to establish tighter bonds with the personnel as well as the local partners in Mainland China and Hong Kong.   


V.   Resources Requirements

Like any other organizational endeavor, the intention to diversify shall need funding to actually make some things done. The project shall require capital approved by the headquarters in Canada. The company should come up with a budget that would allow the project to operate for a whole fiscal year and eventually re-examine whether it is a viable investment or not.


As intimated in the discussions above, the project leaders in this regard should come from the headquarters in Canada. This is necessary as the brand name of the company shall be used in the operation. These expatriates will then place the local employees under their wing by training them on the job. Later on, the task of heading this part of the company shall be vested on the local employees.


VI.  Compare with another organization

With reference to this diversification initiative held by Sun Life Financial, another player in the financial industry has taken the same steps. This other global player is the Standard Chartered Bank which opened subsidiary operations of Scope International. Scope International is a subsidiary of the Standard Chartered Group that provides consultancy services as well as other financial advice to the core customers of SCB in all over the world. (Scope International 2008) Basically, this complements the operations of the said financial institution as it gives the clients of the company sufficient knowledge and some form of informed consent on how their finances should develop given a particular course of action. Compared to Sun Life Financial, the orientation of the companies is rather different as Sun Life focuses more on the insurance industry while Standard Chartered Bank is more on banking and financing. However, it is important to point out that SCB is able to diversify its operations and eventually create its own group of companies that operates complementary with each other. This model should be emulated by the Sun Life Financial.


VII. Positioning Techniques

In order to establish the positioning techniques appropriate for the diversification initiatives of the company, it should be acquainted with its macroeconomic and microeconomic environment.


A.   Strengths

The company has a good name recall because of the strong brand name of Sun Life Financials. Moreover, the company is an established and credible financial institution. This could add up to consumer confidence and possibly attract more clients.


B.   Weaknesses

The competition in the financial market is intense. This means that as a relatively new entrant in the industry, Sun Life would find some barriers in its development.


C.   Opportunities

The economies of Hong Kong and China are constantly developing making it’s a very appealing market for the financial industry. Sun Life Financial should exploit this opportunity before the market matures.


D.   Threats

The attractiveness of the markets indicates that more companies from different strings of the financial industry shall seek entry in to the market. Hence, the already intense competition existing in the market is expected to become more intense as more players means that companies will have to compete deeply for their market share.    


 


VIII.  Implementation Timetable & targets

 


1st Month


2nd


3rd


4th


5th


6th


7th


8th


9th


10th


11th 


12th


Pre-operation Stage


 


 


 


 


 


 


 


 


 


 


 


 


Budgeting


 


 


 


 


 


 


 


 


 


 


 


 


Planning


 


 


 


 


 


 


 


 


 


 


 


 


Forecasting


 


 


 


 


 


 


 


 


 


 


 


 


Operation Stage


 


 


 


 


 


 


 


 


 


 


 


 


Quarterly Review


 


 


 


 


 


 


 


 


 


 


 


 


Annual Review


 


 


 


 


 


 


 


 


 


 


 


 


 


 


IX.  Bibliography

 


Fuller, D. (1999) “Marketing Mix Design-for-Environment (Dfe): A Systems Approach.” Journal of Business Administration and Policy Analysis. pp309.


Hennart, J. Zeng, M. (2002) “Cross-Cultural Differences and Joint Venture Longevity.” Journal of International Business Studies. 33(4), 699.


Kee, J. (2002) “Inertia Reels: Mobility in Hong Kong Video.” Afterimage. 29(4), 8.


Pursche, W. (1996) “Pharmaceuticals – the Consolidation Isn’t Over.” The McKinsey Quarterly. Issue 2. pp110.


Reuer, J. (2000) “Parent Firm Performance across International Joint Venture Life-Cycle Stages.” Journal of International Business Studies. 31(1), 1.


Scope International. (2008) About us. Available in: http://www.scopeinternational.com/ab_overview.aspx [Accessed  28 August 2008]


Tapking, J. and Yang, J. (2006) “Horizontal and Vertical Integration in Securities Trading and Settlement.” Journal of Money, Credit & Banking. 38(7)1765.


 


 



Credit:ivythesis.typepad.com


0 comments:

Post a Comment

 
Top