Category: Insurance

Introduction

It is not a secret that health insurance is one of the most sensitive topics in the workplace, as employees are insured with the help of employer-sponsored medical insurance every year. Thus, employer-sponsored health insurance is an integral part of the American health care landscape and is the main component when it comes to employee compensation. It is vital in offering employees reliable care, making sure that their families can afford it. When it comes to the relations between the employer and the employees concerning health insurance, all actions should be agreed upon and coordinated. No matter what authority the employer has in making decisions, the company should know the opinion of the workers in controversial situations, especially when it comes to medical insurance.

Medicaids responsibilities

Medicaid is a public insurance program created to provide health coverage to low-income individuals, elders, pregnant women, persons with disabilities. It is jointly funded by the states and the federal government to assist states in providing proper medical care to qualified individuals. Thus, Medicaid programs vary from one state to another, offering modified programs that were formed by the state over time. Medicaid-managed care is an integral part of the program that provides individuals with comprehensive health care plans at a particular cost. Moreover, Medicaid beneficiaries are also involved in the primary care case management plans, which means that each individual involved in the program is eligible to a primary health care provider which is paid by the individuals managed care contract (Green & Rowell, 2015, p. 542).

Case Study: Request to change the insurance plan

The company was made known that the medical insurance costs would be increasing by 40 percent per month, thus, the companys president was not sure whether the company could afford it. Instead, a reasonable decision was finding a new insurance company that would provide the same services at a lower cost. Thus, a meeting occurred to explain the main difference between the two insurance plans, and the only difference was the prescription drug benefit (Holley, Jennings & Wolters, 2012, p. 335). A question arises: is such change in the insurance carrier reasonable? On one hand, this decision is practical, as it solves the issue with the companys funding (the bank loan was to expire and was to be fully paid). Moreover, the new plan was compliant with the contractual language that stated that the company should provide the workers with medical insurance.

On the other hand, the decision about changing the insurance carrier is unreasonable. The main concern of the employees was a questionable prescription card that required a deductible payment before the new plan covered any expenses (Holley, Jennings & Wolters, 2012, p. 335). Nevertheless, this deductible is usually a significant determinant of the health plan richness (the cost-sharing relationship between the health plan and its enrollees). However, employers tend to enroll the high-deductible health care plans, which often result in low premiums. In the majority of states, employees choose not to enroll in them (The Pew Charitable Trusts, 2014, p. 2). Thus, the employee union was not content with the new plan and rejected it completely. The union had the right to decline the decision proposed by the management as it represents the interests of all employees in the most vital questions, and health insurance is one of them.

When it comes to the question of whether or not the employers decision was legal, in the absence of a labor union contract (collective bargaining agreement) or an employee benefits agreement, the employer has the complete right to change the insurance policy at any necessary time. However, the employers should give as much advance notice about the change in the insurance policy as possible, although it can sometimes be impossible due to a lack of time for negotiations with insurance companies. Thus, an employer has the right to change the insurance plans for any specific reason without the employees notice, although in case of a labor union existing, the employer has to abide by the rules stated in the collective bargaining agreement (Employee Benefits Security Administration, 2014, p. 12).

Conclusion

To sum up the case study, the examined situation is common, as many employers tend to make decisions in favor of the companys prosperity rather than the employees health. Nevertheless, the real change in the insurance plan was not drastic, as the deductible paid by the employees is instrumental in the plans richness. However, the decision of the employer to change the medical insurance carrier knowing that the labor union was opposed to it and was expecting further negotiations was unreasonable. When it comes to the relations between the employer and employees concerning any vital question, especially medical insurance, all actions should be coordinated to avoid lawsuits. Thus, no matter what power is assigned to the employer in making decisions, the union and the rights of the employees should be put first.

References

Employee Benefits Security Administration. (2014). Retirement and Health Care Coverage. Questions and Answers for Dislocated Workers. Web.

Green M. A., & Rowell J. C. (2015). Health Insurance: A Guide to Billing and Reimbursement (12^th ed.). Stanford, CT: Cengage Learning.

Holley, W. H., Jennings. K. M., & Wolters, R. S. (2012). The Labor Relations Process (10^th ed.). Mason, OH: South-Western Cengage Learning.

The Pew Charitable Trusts. (2014). State Employee Health Plan Spending: An examination of premiums, cost drivers, and policy approaches.Web.

The insurance sector in Australia plays an important role in the countrys financial service market (Kellam, 2011, p.1). This sector depends on insurance agents and brokers to plan, market and distribute their products and services in the Australian market (Anne, 2010, p.332). However, numerous cases abound where insurance brokers have failed to discharge their duties in a proper way. This paper will focus on one particular case illustrated below.

Con-Stan Industries of Australia Pty Ltd (Con-Stan) solicited services of an insurance broker to advice it on suitable insurance products for a variety of risks. Norwich was selected by the insurance broker to underwrite Con-Stan. The latter that insurance premiums submitted to the brokerage firm failed to submit payment to Norwich. Later on, the brokerage firm went into bankruptcy and Con-Stan was sued for unpaid insurance premiums by Norwich. However, Con-Stan disputed that there was an oblique term in the insurance agreement, as it was obligated only to remit insurance premiums to the broker (Doyle, 2007, p.1). However, the court discovered later that the implied term, contained in the contract, was neither agreed upon by all parties, nor was a standard in the insurance sector. Hence, the failure by the brokerage firm to remit insurance premiums to Norwich did not release Con-Stans from its obligations (Doyle, 2007, p.2).

The custom used to draft the contract was not acknowledged by all parties. As a matter of fact, there was no evidence to prove that the inclusion of the implied term in the contract was a professional custom in the insurance sector (Jackman and Faulkner, 2010, p.18). Consequently, there were no indirect terms to satisfy business efficiency, as the assumed implied term was not apparent to the parties and that it could not assume that both parties would have acknowledged the inclusion of the implied term in the agreement (Byrne, 1998, p.18). The court ruled that a term can only be implied in the agreement if the prevailing custom was acknowledged and accepted in the contract by all parties. The contracting parties should not make assumptions that oblique or obscure terms to be implied into contracts. In case they have doubts regarding implications of the implied term, it must be clearly expressed in the contract (Doyle, 2007, p.1).

The obligation for good faith in insurance agreements is not restricted to the obligation of full disclosure of material facts, but is enforced by all relevant parties. This phenomenon has been acknowledged and adopted legislatively as a professional practice in Australias insurance industry (Meagher, 2006, p.2). The requirement of good faith in contractual agreements does not require that a party considers the welfare of the other party. However, having given the opportunity costs of the contract, the party is prevented from using contractual powers to recover them. The court deals with the matter by assessing the basis upon which the contract was executed (Meagher, 2006, p.3).

The Australian common law makes it clear that, in a case where an insured party remits payments for premiums to an insurance broker, who becomes bankrupt before the premium is transmitted to the insurer, the insured party is legally responsible to the insurer for the unpaid premiums. In the Con-Stan Industries of Australia Pty Ltd vs. Norwich Winterthur Insurance (Aust), the court ruled that Con-Stan was legally responsible for unpaid premiums to Norwich in spite of the fact that the last one had paid the insurance broker (Anne, 2010, p.347).

Reference List

Anne, T.J. (2010) The regulation of insurance intermediaries in the Australian financial services market. Australian Business Law Review, 38, 332-350.

Byrne, J. (1998) Implied terms in building contracts: Inference or imputation? Web.

Doyle, J. (2007) Con-Stan Industries of Australia vs. Norwich Winterthur (Aust) Limited[1986] 64 ALR 481. Web.

Jackman, I. M. and Faulkner, T. M. (2010) The High Court of Australia: Sydney Office of the Registry on Appeal from the New South Wales Court of Appeal. Sydney: High Court of Australia.

Kellam, J. (2011) Market trends and regulatory framework. Web.

Meagher, D. (2006) Will good faith falter in the High court? Proceedings of the 2006 LxisNexis Professional Development Conference held in Melbourne. Melbourne: Owen Dixon Chambers West.

As a future practicing nurse, I will need to purchase malpractice insurance, and I have several concerns and questions about it. First of all, it is hard to estimate the exact amount of insurance that I may require since the amounts of money paid to different patients may vary widely (Buppert, 2008). Therefore, the question How much malpractice insurance is enough? remains open. Moreover, by acquiring a more significant number of responsibilities, nurse practitioners will have to pay higher premiums, which is also a concern (Gardenier et al., 2016). Furthermore, I need to consider when thinking about malpractice insurance whether it is mandatory in my state. Some healthcare employers provide malpractice insurance for their workers (Heuer et al., 2019). Therefore, I should clarify whether I need to have insurance if the hospital where I work already has it.

When purchasing insurance, I will need to ask the company whether its rates have remained stable over the years. Furthermore, I should be aware of whether my premium will increase if I receive a claim from a patient. Most importantly, I need to know what services exactly are covered under the insurance policy and what is not. Some policies cover prior acts, but some may not. It is also essential to know whether the company provides advice for a claim. I may require someone to consult with in case of an emergency, so I should have the contact numbers of insurance agents. Knowing whether I can choose my lawyers in case of a lawsuit is also crucial. The process of reporting a claim must be clearly stated in the insurance policy. Finally, I should be aware of how quickly I can receive coverage for a lawsuit from the company.

References

Buppert, C. (2008). Frequently asked questions and answers about malpractice insurance. Dermatology Nursing, 20(5), 405-406. Web.

Gardenier, D., Thomas, S. L., & ORourke, N. C. (2016). Will full practice authority mean higher malpractice premiums for nurse practitioners? Point/Counterpoint, 12(2), 78-79. Web.

Heuer, B., Cavender, J. D., Lofgren, M., & Dihigo, S. (2019). NAPNAP position statement on malpractice insurance for nurse practitioners. Journal of Pediatric Health Care, 33(4), A11-A13. Web.

Introduction

There is no doubt that advertising is one of the most powerful driving forces behind the growth of the 21st centurys global economy given that, most international media and internet firms are dependent on it for their revenues. Consequently, advertisers are under a lot of pressure to ensure they exert as much influence as possible on their target audiences. Media advertisements, more so digital ones, are primarily designed to convince audiences to develop a positive attitude towards a given product, concept, or even individual. The insurance advertisement analyzed in this paper is a classic example of creatively blending the factors mentioned above to bring about what many people have described as an overly emotional and compelling advert. While its informational value is practically non-existent, the advert is, however, remarkably successful in appealing to the pathos of a universal audience. It achieves this by establishing an intense emotional connection between the positive emotions it evokes and the insurance company sponsoring it.

Synopsis

In summary, the advert shows a young man who goes through his day doing random acts of charity and selflessness for people that the narrator makes clear can never afford to repay him. He consistently gives money to a beggar and her child, hangs bananas on his elderly neighbors doorknob, and even cares for a stray dog and abandoned plant. The conclusion of the advert is that all he gets in return are emotions and the satisfaction of knowing he brings happiness to people (Chrystina). The insurance company then indicates that just like him, they are only interested in doing good for their clients.

Context

The advert is contextualized in the backdrop of Thailand, a country where life insurance has been experiencing a boom, with market analysis showing it to be on a consistent growth trajectory (Norchoovech and Leekitwattana). The target market for insurance companies is mostly the young emerging urbanized middle class, although many advertisers tend to focus on the entire audience spectrum. The protagonist is evidently part of this emerging working class, while those he shows kindness are primarily from the lower end of the poverty bracket. Although the ending appears to be an anticlimax, from a critical reading of the context and actions, there is a moral lesson about the selflessness of buying insurance for ones family with the knowledge they can never live to enjoy it (Be repaid). That is the same good contextualized in the young mans actions, but this theme is so deeply hidden, it is mostly lost in the shadow of euphoric emotion generated by the overt acts of altruism.

Visual effects

The advert has used several visual elements to create different impressions, with the most notable ones being color and light effects. Most parts of the advert are shot in daylight and made to appear as if the events are recorded under natural light. However, the lighting has been enhanced such that, even in the outdoor scenes, the actors almost never cast shadows. Consequently, in the darker scenes portraying night, there is a sharp contrast, although the location is only slightly dimmer and softer. In the harsh and bright daylight, the antagonist is depicted doing acts of charity, and at night, the light is softened. As a result, when the narrator is asking the viewer to introspect about his life, the scene has been set using dim, soft lighting that viewers are likely to associate with meditation or deep thought. Color is relatively neutral in most of the film, but in the end, the insurance firms name, printed on a blue background, blots out everything else. The centrality of the word, as well as the uniformity of the blue background, forces the viewer to notice it and probably remember it for a long time, given the jolt of transition.

Analysis

A critical examination of the advert reveals overt the use of pathos as it is targeting the universal sense of charity and human goodwill. Given the nature of life insurance adverts, it is unsurprising that they should focus on the pathos appeal. However, in most cases, the emotional appeals are negative, surreptitiously impressing upon audiences the reality of death and sudden illness and reminding them of the need to be prepared for these eventualities. However, this advert strikes a positive note by focusing on the good qualities of the company providing insurance rather than the necessity of the product. It generates powerful feelings of happiness, sorrow, inspiration, and love, which the company hopes can be transferred to viewers to bring about a positive attitude towards their product.

What does the advert want to want to achieve?

The overriding objective of many adverts is to generate positive emotions and then, by association, relate them to a specific product (Stewart, David, Jon and Aditi 122). In this sense, the advert can be used to promote practically anything since it capitalizes on the positive emotions by presenting the companys name at the end, and the narrator implies that the company is also out to do good. Despite the vague nature of the relationship between the product and advert, it is nevertheless immensely successful. The success is embodied by the adverts online popularity with over 5 million views on YouTube, as well as the fact that viewing the clip is an overly emotional experience. It primarily succeeds because the emotions it appeals to are universal, and as a result, most people watching the film empathize with the characters and can relate to them at some level. However, therein lies the risk of emotive adverts as customers may emotionally pick the company without exploring the alternatives in the market even if they are probably more cost-effective and better. Therefore, while conceding that the advert was remarkably successful, this may not be a good thing for prospective customers as they may end up buying products they do not need or understand well enough.

Whom does the advert target?

As mentioned above, the protagonist is most likely a member of the emerging middle class, and the advert, therefore, assumes that his peers in this category will relate to his actions and envision themselves doing or witnessing them. It sharply contrasts with most insurance adverts, which appeal to upper-middle-class tastes and ideals such as a secure home for ones family and the comfort of living a stress-free life. On the contrary, the advert embraces the fundamental challenges of life and confronts realities that society would rather ignore. These include extreme poverty and starvation, lack of proper housing, clothes, and even physical human weakness. However, the advert does not target only those who suffer from such problems. By appealing to the fundamental human emotions, it manages to reach out and transcend social-cultural and economic barriers making it relevant to a universal audience.

Conclusion

It is worth noting that in the advert discussed in this paper, there is no information at all about the insurance firms product, but as aforementioned, its success is unequivocal. Therefore, one is compelled to ask if an advert by a competing firm demonstrating the advantages and cost of their premiums would appeal to customers more. Probably not; while the answer is not a validation of the superiority of emotional advertising, it is proof that in this particular case, it has been applied with exceptional success.

Works Cited

Chrystina, Ng. Creative ads touching heartwarming thai life insurance commercial. Online video clip. YouTube. YouTube. 2014. Web.

Norchoovech, Phuwin, and Leekitwattana, Anothai. The Future of the Thai Life Insurance Market. Bangkok Post 2014. Web.

Stewart, David W., Jon Morris, and Aditi Grover. Emotions in advertising. The Sage Handbook of Advertising. London, Thousand Oaks, New Delhi, Singapore: Sage (2007): 120-134. Print.

RAC Inc. considers South Korea to be the most suitable for international expansion due to the previous examination of technology in the country. Brief analysis of South Korea potential is necessary to define what subsequent preparation stages and measures should be taken to proceed with the international expansion.

Statement of Problem

The success of establishing strong market segment in the United States has become the major reason for expanding it to other regions. In order to define whether South Korea is the most suitable variant for expansion in terms of technological capabilities, specific emphasis should placed on evaluating the country as a possible alternative for producing slate tablets.

Background of Problem

In order to define the success of the proposed venture, attention should be given to the research and analysis of scientific and technological development in South Korea. In particular, the country has received a competitive advantage due to low-cost labor, as well as increased access to technical skills that are necessary for advancing technological equipment (Technological Landscape 60). Moreover, the government has created a great number of scientific institutions and has developed indigenous technology.

In addition, the South Korean authorizes have reformed the tax system to promote research and development in the country (Technological Landscape 60; Manyin 1). Strong governmental influence is also revealed through adopting new mechanism of technology advancement and innovation.

In particular, Kim and Jung assert, the national government started technopark project to generate regional self-sustaining growth in 1997 (273). In fact, the technological growth and economic sustainability of South Korea is largely supported by further governmental investments.

Telecoms and Technology Report also focuses on the fact that South Korea has one of the worlds highest broadband penetration rates, with optical-fibre connections accounting for almost all household connections (3). Such a perspective contributes greatly to the analysis of technological potential of South Korea.

The evidence of strong economic recovery is also represented in Webers research. In particular, the scholar argues that the infrastructural investments and governments engagement is indispensible for economic growth and development, as well as for promoting industrial profitability (Weber 610). Hence, the South Korea has a greater advantage over the economic policy in the United States.

Audiences

Gatekeeper: professor Toth is in charge of solving and investigating the problem.

Primary: managerial staff of RAC Inc. should evaluate the problem, as well as define the validity and reliability of research. They will also decide whether technological potential of South Korea is sufficient for introducing slate tablets to the market.

Secondary: consumer demand of South Korea is also an important dimension to be addressed. RAC Inc. should be aware of this component before expanding the market.

Auxiliary: employees of RAC should also be concerned with the market potential to be able to adjust to the new circumstance and introduce alternative decisions to the emerged challenges.

Watchdog: stakeholders of RAC, including environmental organizations and government should also be concerned with the oncoming changes.

Questions to Investigate

Governmental involvement

What information should RAC know about the economic peculiarities, as well as the extent to which government is involved into the economic activities?

What are other political, social, and cultural circumstance identifying the success of the venture?

Competition

How can RAC successfully integrate their new products to sustain advantage over other products and prevent the market resistant to the technology expansion?

What factors may prevent RAC Inc to benefit from introducing slate tablets?

Are there any other products that can become serious competitors to the proposed product?

Methods and References

In order to gather more information about the issue, it is highly important to address official websites, reports, and scientific articles dedicated to the analysis of economic and political landscape in South Korea. This is of particular concern to South Korea governmental sites.

The following list of sources should be useful for investigating the topic:

Lee, Ho-Chul. Koreas Information and Communication Technology Boom, and Cultural Transition after the Crisis. Ministry of Finance and Economy. 2002: 1-40.

Science and Technology Policy. Ministry of Science and Technology in Korea. 2012. Web. https://park.org/Korea/Pavilions/PublicPavilions/Government/most/policye1.html

The resources used to examine the background of the problems can also be used to support the research and collect the necessary data. It can also serve for analyzing the technological landscape in the country.

Qualifications

In order to support the research and provide answers to the research problems, profound knowledge in technology, finance, economy, accounting, and marketing are essential. Exploring all these dimensions will allow to define the extent to which South Korea is ready for international expansion. Awareness of global environment problems is also necessary and, therefore, international relations is another important discipline to be learnt.

Work Schedule

Call to Action

Scanning the environment is South Korea will allow the company to acquire a better idea of how the South Korean market differs from that represented in the United States. We are confident that the problem is worth further consideration because it influences significantly to economic and financial issues.

Works Cited

Kim, Ha-Young, and Chang Mu Jung. Does A Technology Incubator Work In The Regional Economy? Evidence From South Korea. Journal Of Urban Planning & Development 136.3 (2010): 273-284. Print.

Manyin, Mark E., Emma Chanlett-Avery, and Mary Beth Nikitin. U.S.-South Korea Relations. Congressional Research Service: Report (2012): 1. Print.

Technological Landscape. South Korea Country Profile (2012): 60-63. Print.

Telecoms and Technology Report. Telecoms Industry Report: South Korea 1 (2012): 3-11. Business Source Complete. Web.

Weber, Eric T. Learning From Others: What South Korean Technology Policy Can Teach The U.S. Review of Policy Research 25.6 (2008): 608-618. Print.

Role of Consumer Behavior in Insurance Positioning

Consumer behavior is a broad concept that critically analyzes consumer purchases with the aim of predicting future purchases. It explains why a consumer settles on a certain product or service as opposed to another. Positioning refers to the view and opinion a customer places on a product in relation to competition.

A positioning strategy should take into consideration a number of factors. One such factor is the effect of consumer behavior. The role of a positioning strategy is to prepare the mind of a consumer. The basis should be differentiating a companys product from competitors. In a market where the insurance service is the same, this is tricky. However, the service provider should strive to meet the basic requirements of a service before engaging in secondary requirements.

In United States, it is a legal requirement for any individual who owns or drives a vehicle to buy Auto Insurance. This provides a vast target market encompassing virtually all segments. Since this is not an essential product, a number of factors influence a customers decision to buy insurance from a particular provider.

Most customers might look for comfort, value addition and innovativeness since prices are almost the same. Hence, it is imperative for Nationwide Auto Insurance to employ a strategy that puts it in that position (Usunier 2000). Creating long-term bonds requires creating new ways that meet the sophistication and unpredictability of customers. Nationwide Insurance does not compete on prices. Rather, it employs a value addition policy that ensures brand loyalty.

Consumers perceive non-basic items as unnecessary costs. They do not enjoy purchasing auto insurance. This means that Nationwide should use creative ways to make this a good experience. From the above, it is important to note that Nationwide can combine a service whose requirements are bound to possession of yet another product. For example, Nationwide can package Car Insurance and Life Insurance together.

Unlike luxury products, which customers may quit using once they fulfill their urges, this service (insurance) is a requirement. Hence, the principle of diminishing returns does not apply. Income and budget constraints on consumers inform their every day purchases. However, in the case of Auto Insurance, this may not affect their decision, as it is mandatory. Hence, customers base purchase decisions on reliability, reputation, similar services and innovativeness. Nationwide should strive to compete from these angles (Usunier 2000).

Impact of Purchasing Trends on Consumer Behavior

Technology

Technology is closely associated to globalization. Nationwide insurance uses technology at various levels of its operations. For example, it allows online payments of premiums and uses customized customer service solutions such as face book and Twitter to handle enquiries (Suri et al 2003).

Technological improvements have introduced advances in software and hardware, which have created a shift in information power from marketers to consumers. The insurance industry has registered tremendous gains from the recent information technology waves in terms of automation. Consumers in this environment have continued to expect more from insurance providers. For example, a mobile application that reminds them to pay premiums when they fall due may be pleasant (Castells 2011).

Globalization

Consumer behavior is not a static concept. Apart from the fact that majority of customers tend to act in different ways and react differently to the various strategies, global purchasing trends equally affect their behavior. First, globalization has exposed customers to volumes of easily available information from which they can make decisions. In the context of insurance industry, customers can easily compare different providers, gauge other consumers reactions and make a reliable decision.

It is, therefore, incumbent upon Nationwide to maintain an impeccable reputation (Nationwide 2012). This is especially true in a world where consumers discuss brands at readily available forums such as blogs and social networking sites. An adverse move may easily sway a prospective customers opinion and may even dislodge a customer from a company (Suri et al 2003).

Hence, companies need to be globally alert on the hot issues that consumers are discussing concerning their operations and make instantaneous corrections and clarifications to avoid negative opinions, which have the capability of spiraling to dangerous levels (Castells 2011).

Cultural Changes

Nationwide communicates it corporate culture well to suppliers, customers and prospective clients. The company engages in social responsibility activities to enhance its culture. It touts diversity and inclusion, respect, integrity and honesty as its main pillars. It is paramount to project a clear organizational structure in an industry whose business threatens a companys morality and integrity.

Additionally, consumers are quite alert and dynamic making articulate profiling a challenge. Customers critically look into organizational ethics before making purchases. Hence, Nationwide should strive to align strategies with values and competencies to attract this unpredictable market.

Product, Pricing, Promotional and Place Distribution Strategies Recommendations

Product Strategy

Nationwide offers a variety of products spread across its five main areas of operation (property and casualty, life insurance and retirement savings, health, mortgage and banking and asset management). It should use the already existing multi-policy offers to drive sales of Auto Insurance. Nationwide can also personalize its vanishing deductible and I am on your side programs through use of podcasts to enhance lower premiums on Auto Insurance.

Nationwide can also reposition by offering specialized car maintenance solutions through use of past accident data simulations. Nationwide can redefine policies to cut premium payments for selected groups, such as students, who willingly and proportionately adhere to programs such as smart ride. Lastly, nationwide can reposition the claims process by having mobile units that only respond to an accident scene if the customer does not have a mobile application that processes the claims instantaneously.

Place Distribution Strategies

Nationwide employs the services of exclusive agents, individual brokers and banks as part of an intricate distribution strategy. Lately, Nationwide has widely used the internet to bolster this strategy. Through its I am on Your Side customer experience slogan, the company seeks to leverage social media exhaustively. Though Insurance is mostly a face-to-face service, Nationwide should revolutionize this by selling Auto insurance online as part of a repositioning strategy. The company will spend less on agent commissions and save customers insurance shopping costs.

Promotional Strategy

Auto insurance industrys promotional spending has recorded an upward trend since 2006. Major competitors, however, constantly outspend Nationwide. In 2009, Nationwide changed its slogan from Life Comes at You Fast to I am on your Side. Since then its promotional strategy centers on this slogan.

The company uses broadcast television, print, web and radio to reach out to its market. It also uses public relations and sponsorship programs. However, Nationwide should use personalized strategies more often as part of I am on Your Side slogan. This will initiate direct buzz marketing, which is an effective tool in the internet. Additionally, Nationwide should leverage social media avenues (e.g. You Tube, Face book and Twitter) as part of a repositioning strategy.

These are increasingly becoming powerful brand discussion forums and Nationwide can use this valuable information to improve its Auto Insurance service. This would be a smart move to counter the disadvantage where competition outspends it in mainstream advertising. Additionally, Nationwide can reposition through continued roll out of its smart ride program in every state. Currently, Nationwide runs tests in only one state and its success may drastically reduce premium payments on Auto Insurance and save customer costs.

Pricing Strategy

Nationwide does not compete on price. Instead, it places emphasis on value and creating innovative and fresh ideas. For example, in 2009 Nationwide created an iPhone application that allows customers to initiate a claims process when an accident occurs. This application is open source and it was new in the insurance industry. The customer can take photos of the accident scene, inform the authorities and fill claims forms online, which saves time.

To reposition, Nationwide can insist further on value addition. Nationwide can refrain from spending too much on advertising compared to competitors (e.g. Progressive, Allstate and GEICO) to attract customers, which has been the trend since 2006. Additionally, since customers can easily obtain price comparisons, it would be prudent to continue offering excellent customer services (e.g. claims handling).

Nationwide should also continue using the I am on Your Side slogan to influence customer purchases through hands-on community engagements. Lastly, it should continue with its policy where it differentiates its Auto Insurance service on value addition as opposed to price.

References

Castells, M. (2011). The Rise of the Network Society: The Information Age: Economy, Society and Culture. New York, NY: John Wiley & Sons.

Nationwide (2012). Nationwide Car Insurance.

Suri, R. et al (2003). The Impact of the Internet and Consumer Motivation on Evaluation of Price. Journal of Business Research, 56.1: 379-390.

Usunier, J. (2000). Marketing across Cultures. New York, NY: Prentice Hall.

Consumer behavior has strong implications when determining and formulating a marketing strategy to capture and create value for the Nationwide Auto insurance product in the market in the automotive industry.

A successful marketing strategy driven and influenced by internal elements such as attitude, lifestyle, and motivation provide the marketer with the best components to formulate the right marketing strategy to address the marketing needs of the consumer and to achieve measureable marketing objectives (Petty & Cacioppo, 1981).

These components influence the potential points of entry into the market, the mode of entry, the marketing models, and the product positioning matrix to adopt when formulating a strategy to enter the motor vehicle insurance industry. The marketing strategy formulated must reflect how the underlying elements of attitude, lifestyle, and motivation affect consumer behavior.

Attitude

According to Petty and Cacioppo (1981), attitude is strongly influenced by a persons experience with a product or service and is strongly related to the buyer or consumer behavior and the beliefs customers about the product. Belief is a crucial component that influences learned attitude which could be important when formulating a marketing strategy. On the other hand, experience can create a negative or positive attitude toward a product and influence consumer behavior (Petty & Cacioppo, 1981).

The negative or positive attitude customers experience with the Nationwide Auto Insurance product underlies its influence on acceptability in the market, an attitude which can be deep seated and influential to the psychology of the customer. In that case, the positive attitude contributes positively to creating product loyalty, strong brand engagement, positive buyer behavior, and influence on others to buy the Nationwide Auto Insurance product.

Attitude influences the levels of involvement in the Nationwide Auto Insurance and the experiential perceptions on the marketing strategies which influence positive customer behavior. That enables the marketer to create a marketing model that ultimately leads to positive buyer behavior, strong brand engagement, positive customer experience, and positive perceptions about the Nationwide Auto Insurance product. That ultimately influences positively or negatively influences exposure stimuli and interpretations (Petty & Cacioppo, 1981).

Lifestyle

Lifestyle has strong influence on the marketing strategy developed for the Nationwide Auto Insurance product based on product considerations. That is because consumer lives have strong influence based on their background incuding where they live, income levels, and education (Petty & Cacioppo, 1981).

The impact of lifestyle factors on the marketing strategy include identifying the best approach to segment people according to their values and beliefs, their level and rate of expenditure, and any lifestyle attribute related to the frequency with which people interact with and use the motor vehicle (Marketing Teacher, 20102). Other factors that impact on the marketing strategy include income levels, education levels, culture, buyer power, and social groups.

Motivation

When formulating a marketing strategy with the aim of achieving marketing goals, motivation influences need, desire, need based segmentation, provides better understanding of motivation, and customer identify with a product.

Analytically, the strategy should therefore include approaches that include identifying and integrating components that affect individual consumer behavior based on psychological motivational elements which include self-expression need for assertion, consistency and other theoretical components that affect consumer behavior. The marketing strategy should include psychological factors to create consumer involvement in the marketing of insurance products to achieve marketing goals (Marketing Teacher, 20102).

References

Marketing Teacher: Consumer Behavior Internal Influences  Motivation. (2012).

Petty, R. E., & Cacioppo, J. T. (1981). Attitudes and persuasion: Classic and contemporary approaches. Dubuque, IA: William C. Brown.

Introduction

BP has always been in the news sometimes for the wrong reasons and sometimes for good reasons. Its size is the most fascinating feature. BP was the largest company in the UK in the 1980s and 1990s (Doherty & Smith 2003, 410). It was also the second largest in Europe and since then the situation has not changed. It still occupies its respective positions. It operates throughout the world and has stations in many countries. Most of its production licenses as well as facilities are in Alaska and the North Sea. Its equity capital was approximated at $35 billion. On the other hand, its debt was estimated to be about $15 billion. Its after-tax profit had averaged at around $1.9 billion between 1988 and 1992 (Doherty & Smith 2003, 410).

It consists of four operating companies. The first one is BP Exploration which is in charge of exploration as well as the development of gas plus new oil resources. The second one is the BP Oil which is responsible for refining, distribution as well as selling of petroleum products. The third is the BP Chemicals which deals with petrochemicals, nitrates as well as acetyl.

Finally, there is the BP Nutrition which operates the animal-feed business. Its assets include exploration as well as extraction licenses. It also includes technical as well as scientific capital particularly in the oil industry which is in the form of filling stations, refineries, rigs, road tankers, pipelines as well as ships. The concentration of value of its business and its limited range of activities means that it faces significantly undiversified business risk (Doherty & Smith 2003, 410).

BPs risk exposure

According to Doherty and Smith (2003, 403), insurable events which include product liability suits as well as physical damage on the assets of the company; and toxic torts raises the cost of production for these industrial corporations. Most large companies usually buy insurance against their large potential losses as they practice self-insuring against smaller potential losses.

BP is exposed to a range of small routine losses to multi-billion-dollar potential losses. Its small scale potential losses include industrial injuries and even minor shipping or vehicle accidents. It also includes equipment failures as well as small fires. On a larger scale, there are refinery explosions and fires as well as oil spills that cause minor environmental damage.

There is also the possible loss of oil tankers. BPS very large losses are likely to be caused by huge clean-up costs that result from major oil spills; defective fuel may also result into liability due to major disasters such as airline disaster, and may also result from tort claims arising from widespread injuries which result from the release of noxious gases. Loss of lives due to an offshore rig could also result in a major loss to the company. The worst of all to happen could be the cancellation of the operating license as a result of political backlash on claims of environmental damage. To the extent of such potential losses, BP has to buy insurance in exchange for loss settlements should the risks occur (Doherty & Smith 2003, 411).

To have the real statistics of its potential loss distribution for decision making, BP retained independent actuarial consultants. The actuarial consultants were presented with every industry as well as BP loss data. They estimated BPS whole distribution of expected annual loss to be about $157 million. In the past, BP had insured its property as well as liability exposures. However, it was not very keen on ensuring its business-interruption exposures although insurance coverage for the same had been available. It had only insured it to a very limited extent.

Its liability insurance, as well as business-interruption insurance, was acquired through external insurers; however, some insurance was purchased through O.I.L. which was an oil-industrial mutual and where BP was a joint partner. It, therefore, purchased its upper tail insurance coverage from O.I.L. Some of its property had been insured directly through independent insurers while others had been insured by a captive insurer. All of this external coverage had covered the first two losses which were; those below $10 million; and $10-$500 million. Most of the insurance coverage had been in the range of $10-$500 million. However, there was no insurance coverage available for above $500 million potential risks and therefore it had self-insured this range. The cost-benefit framework that was presented by the actuarial consultants made BP undertake a comprehensive re-examination of its insurance coverage plan (Doherty &Smith 2003, 411).

Coverage for losses under $10 million

In its new approach, the managers of the local operating units were now in charge of losses under $10 million. In cases where there was a provable need for insurance, the local managers could purchase it from BPs captive insurer. They were also allowed to look for competitive quotations in the local markets. The main reason was that uninsured losses in this category are minimal and therefore could only cause small changes in the firm value. According to Doherty and Smith (2003, 412), the standard deviation for BPs after-tax earnings was above $1 billion. Thus, self-insuring of BPs losses below $10 million could only raise the standard deviation of its after-tax earnings by about $12 million. This meant that the expected insurance benefits gained through controlling of financial-distress were insignificant at this level.

The resolution that now gave local managers the authority to ensure small losses were made after making other considerations. BP had seen that since markets for losses had become very competitive at this level, it meant that market forces would effectively eliminate the anticipated insurer rents. Market forces usually force insurance companies to hold only highly liquid as well as safe assets to eliminate the problem. Since such assets may have lower predictable returns, insurers may be forced to increase capital to reduce competition. According to Danielsson and Keating (2011) insurers have often been forced by the market forces to increase their illiquid asset holdings.

They also felt that insurers usually have a competitive advantage especially in terms of service-provision activities in areas like claims administration. Since losses that occur in this range are many and also routine, insurers usually provide informational advantage particularly in loss assessment as well as control. Besides, their contract enforcement is also reliable.

BP also felt that insurance coverage would satisfy their local financial-responsibility requirements. For example, the insurers set a minimum amount which they provide for injury liability in case of an employee gets in an accident within the company, they pay for property damage during accidents and they also pay for costs incurred during lawsuits. They would, therefore, be better placed to recover from costs of environmental clean-ups that occur as a result of spills, overfills as well as failures in the piping system; and third-party compensations.

According to the amendments that were made in the Federal Financial Responsibility Regulations in 1991, owners or operators of the underground storage tank, majorly oil industrial companies have to demonstrate financial responsibility that they can cater for the costs of carrying out corrective actions as well as thirdparty compensations that arise from discharge of petroleum from their underground storage tanks (United States Environmental Protection Agency 2000, 3).

According to BPs management, insurance coverage was seen to minimize the noise in the performance benchmarks that are put in place for the local managers. This, in turn, would provide stronger incentives for local managers to perform. According to Schnedler (2006, 1-4) when crafting incentives for a manager, identification of trade-off in insurance as well as the excellent allocation of effort in a variety of tasks need to be done concerning trade-off involving the responsiveness such as signal-noise ratio, precision and many more; of the performance benchmarks as well as similarity in terms of congruence to the benefit of the organization.

Insurance coverage takes into account the difficulty of the task thereby making responsiveness and similarity informative on trade-offs involving insurance and allocations. This, in turn, provides information on best performance measures that the employer could use and how well each measure reflects the employers benefit from the particular activity. Insurance coverage is therefore used to provide cover for downside risks of employees subjective pay. According to Gibbs, Merchant, Van der Stede and Vargus (2003, 2), subjective bonuses are paid to employees to complement perceived weaknesses realized during quantitative performance measurements.

Subjective bonuses are highly related to the extent to which achieving the bonus target could be difficult and besides, could lead to considerable consequences should the organization fail to meet the target. They are also positively related to an operating loss. Subjective bonuses also contribute positively towards productivity, profitability as well as pay satisfaction. Its benefits are greater than the managers tenure since it improves incentive contracting. This implies that insurance coverage would help improve the performance of managers within the company.

The localized nature of certain BPs tax liabilities has some potential tax-related benefits that come from insurance. According to Andrews (2006) insurance coverage may cause royalty relief meant to motivate the production of more oil and gas. Tax-related benefits are usually determined by laws and regulations. Captive insurance firms also offer tax planning via captive tax-planning tools.

By using these instruments they shift the profits from high-tax areas to low-tax. This profit Shift to a high-tax jurisdiction could as well be as a consequence of tax advantages. In the high-tax jurisdiction, deductibility is not allowed since payments are not considered as expenses for tax. The expense is considered extremely high while transfer pricing becomes paramount. Tax authorities usually reason that insurance premiums normally paid to insurance companies are per nondeductible since inter-company transfers are not included in expenses in a fiscal sense.

Coverage for $10-$500 million losses

The new approach required that losses which are over $10 million be insured through external markets only in specific circumstances such as in situations where the needed insurance is under joint-venture provisions or in cases where the insurance coverage is under current bond indentures. According to the new insurance policy, this range would no longer be insured through external insurance markets. This had reflected a major policy change as most of BPs losses ranging from $10 million to $500 million had been previously insured. In making these changes, BP had made several considerations.

First, they acknowledged that in this range, there is limited effective competition within insurance markets. Doherty & Smith (2003, 409) agreed that there were few markets for pollution as well as other non-familiar lines of insurance, especially for high-risk lines. It meant that it was even more difficult to find insurance coverage for potential losses of more than $500 million. According to Mayers (1981, 391), effective competition in the insurance industry helps limit the divergence involving premium as well as the capital markets valuation of company assets. Insurance contracts, therefore, create a separation between asset control and risk-bearing.

In this case, payoffs dependent on designated events are paid. Limits in effective competition in the insurance markets affect the pricing and variety insurance policy available. The markets for large losses of this level particularly in certain specialized risks had less competition, therefore providing services such as environmental audits as well as risk assessment for BPs case; alone, would require large investments since there were only few insurance companies that offered coverage for extremely large exposures. BP would therefore only purchase insurance coverage in this level in certain situations where insurance contracts can contain complex provisions while stipulating exclusions as well as insurability requirements. It also stipulates settlement procedures for handling the problems.

Secondly, the costs of implementing insurance contracts at this level were seen to be high. There are usually taxes levied on insurance companies by the government which makes insurance companies increase their pricing. It meant that BP would have been forced to pay premiums which exceed the expected specified amount to cover for the tax levied on the insurance companies. The threshold of insurance premiums would now range between certain amounts. It also meant that BP would also have to pay for increases that arise due to inflation. According to Doherty and Smith (2003, 407), the charges of enforcing contracts at this level usually include legal costs of actions often with huge insurance policies which were normally much higher than the same costs. Since contracts have to be self-enforcing as the enforcement costs are too high, the employers have to pay for the costs to avoid a repeat of the same (Thomas 1988, 541-542).

Thirdly, the company also felt that in this level of losses, insurance companies do not have relative advantages for delivering safety as well as other services which have been left with financial indemnification. According to Doherty and Smith (2003, 412), BP paid a premium of up to $1.15 billion and only managed to recover $250 million through claims. Insurers do not provide distribution systems which have a comparative advantage especially in predicting risks. They also do not provide adequate customer information on coverage since they do not evaluate potential risks to make the customer more informed of the potential risks and the estimated costs of potential risks.

Finally, BPs management concluded that the impacts of losses within this range have limited effect on the corporate value. According to the results the actuarial consultants that BP had retained, self-insuring losses which are in this range increases the standard deviation of the companys annual earnings by just $98 million (Doherty & Smith 2003, 412).

Conclusion

BP which is one of the largest industrial companies in Europe and the world had applied various strategies for its insurance coverage. However, due to the increasing potential exposure to business risks as well as the impacts of insurance coverage costs on operating costs, it reviewed its insurance strategy. The policies that were adopted by the company are logical and have greater cost-benefits. The insurance strategies that were adopted by BP depended significantly on supply considerations within a range of sizes of possible claims.

After undertaking a supply-sided study of the insurance industry and other distinct features of business demand for insurance, BP concluded that it had a significant comparative advantage over insurers in terms of bearing the risks of the companys largest exposures. Thus, it now purchased insurance for coverage below $10 million while undertaking most self-insuring to losses which are in the range of $10-$500 million as well as self-insuring coverage to losses above $500 million. This was a wise decision considering that the company used to pay more premiums and recovered less from claims.

Reference List

Andrews, E., L., February 14, 2006, US royalty plan to give a windfall to oil companies. New York: New York Times. Web.

Danielsson, J., & Keating C., 2011, valuing insurers liabilities during crises: What EU policy markers should not do. Web.

Doherty, N., A., & Smith, C., W., 2003, Corporate insurance strategy: The case of British Petroleum. In Chew, D., H., & Stern, J., M., 2003, The revolution of corporate finance, 4^th ed. New Jersey: Wiley-Blackwell Publishers. pp. 403  413.

Gibbs, M., Merchant, K., A., Van der Stede, W., & Vargus, M., E.,2003, Determinants and effects of subjectivity in incentives. Los Angeles: University of Southern California.

Mayers, D., & Smith, C. W., 1981, Contractual provisions, organizational structure, and conflict control in insurance markets. The Journal of Business, 54(3). Chicago: University of Chicago Press. p. 1.

Schnedler, W., 2006. Task difficulty, performance measure characteristics, and the trade-off between insurance and well-allocated effort. Heidelberg: University of Heidelberg.

Thomas, J., 1988. Self-enforcing contracts. The Review of Economic Studies, 55 (4). New York: The Review of Economic Studies Ltd. p. 541-542.

United States Environmental Protection Agency, 2000, Financial responsibility for underground storage tanks: A reference manual. Washington DC: EPA. p. 3. Web.

Abstract

Pearl and Mutual Benefit Insurance Company (PMIC) has been experiencing a high turnover of graduate trainees. For the last five years, the company has invested in 15 to 20 graduate trainees each year. The turnover is approximately 60% of the recruits. The current report investigated the reasons for such a high rate of turnover. It was found that the recruitment model, which used the General Mental Ability, was faulty. The senior managers were manipulating the process. The current report is a search for an alternative model. The Personality and Emotional Intelligence model was recommended for the PMBICI recruitment process. The model will help the company select the graduate trainees suitable for the firm and who can be retained.

Report

Introduction and Background Information

Over the past five years, Pearl and Mutual Benefit Insurance Company (PMIC) has recruited between 15 and 20 graduate trainees per year. However, retention analyses indicate that 60% of the recruits have left the organization for careers in different industries that are not related to the financial service sector. The trend is worrying considering the investment made by PMIC to develop each of these graduate trainees.

The organizations selection method adopts the General Mental Ability as the initial screening instrument. After the screening, the candidates are interviewed by senior line managers trained on the competency framework interview process. The process is designed to rate and elicit six behavioral competencies. The skills include those related to selling, drive to achieve and interpersonal relationship. The process is rated as effective.

However, it allows the senior managers to impose their conclusions on the final decisions regarding the suitability of the applicants. The result is the recruitment of individuals that may not fit in the organization, leading to a high rate of turnover. It is recommended that PMIC should find an alternative graduate recruitment method to net the right graduate trainees that can work and be retained in the organization.

Discussion

General Mental Ability

General Mental Ability represents individuals capacity to learn, solve problems, and demonstrate reasoning skills (Samson & Daft 2012). The psychometric assessment tools used in this model include scales that involve measures of verbal, spatial, and mathematical constructs. According to Muchinsky (2011), GMA is an effective indicator of job performance. However, senior managers can manipulate the assessment and impose their conclusions on the final selection decisions. Pearl and Mutual are advised to consider an alternative recruitment process.

Recruitment and Selection Overview

Many organizations have recognized the significance of managing their human resources more effectively. The strategic management of the human resource is all about adaption and integration. Recruitment and selection determine how a business perceives its human resource requirements with regards to its competitive advantage (Samson & Daft 2012). The recruitment process involves sourcing for potential employees and interviewing them. The selection process, on the other hand, involves staffing and training the recruits into their job roles (Samson and Daft 2012).

The adoption of best practices in human resource management helps an organization to meet its goals and objectives. It is important to analyze the strengths and weaknesses of the recruitment process. The company should also carry out an analysis of its human resource requirements. Thirdly, the firm should also evaluate the sources of the candidates. The above are significant factors that should be taken into consideration in the planning stages of recruitment and selection. When a recruitment program is well planned, it attracts more candidates. Consequently, the company has more choices.

Recruitment

There are four major stages in recruitment and selection:

Define requirement

The process starts with the definition of the organizations human resource requirements. It involves the preparation of job descriptions and specifications. The terms and conditions of the job should be made clear and specific. The definition of the organizations human resource requirements is based on the job description (Podsakoff et al. 2011). A job description is the detailed specification of the requirements that inform the compilation of an internal announcement for specific recruitment. The definition of requirements may also include such decisions as to whether the job is permanent or not.

Attracting candidates

The second stage involves reviewing the alternative sources for candidates. The sources can be inside or outside the company. It involves advertising and using consultants and recruitment agencies. The information given in the advertisement should allow potential candidates to decide on their suitability for the job (Nikolaou & Oostrom 2015).

Selecting candidates

Selection involves sifting through the applications. It also entails testing, interviewing, and assessing the candidates. Successful candidates sign the employment contracts at this stage (Nikolaou & Oostrom 2015).

Induction-introduction

Once the candidates are identified and the employment contracts are signed, the employees are then introduced to the organization (Nikolaou & Oostrom 2015). The candidates are also introduced to the terms of employment.

Graduate Recruitment Programs

High-potential management programs

In this approach, the organization may target a small sample of highly qualified candidates with opportunities to fast-track their career progression. Such candidates expect to be included in strategic decision-making processes after a short stint in the organization (Nikolaou & Oostrom 2015).

Cross-department programs

The strategy is useful to organizations that may not have defined the roles the recruited graduates are to perform. As such, the graduates are expected to work in each department for a few months. The program allows the employer to evaluate the roles that best fit the skills of the graduate (Gilmore & Williams 2012).

Hold on to the graduate recruits

After the recruitment, the company is most likely to invest in the new employees time and resources to develop a skilled team. As such, the management should avoid losing the employees to other institutions. There are a few things that the company can do to retain graduate employees. It is essential to implement the set checkpoints for the graduates salary progression, give regular feedback, and gradually increase their responsibilities (Gilmore & Williams 2012).

Employment Selection: Personality Tests

General Mental Ability is one of the most suitable selection methods. Many employers are using the model to recruit and select employees. The personality test seeks to identify individuals possessing the skills and knowledge needed to succeed in the job (Banks & McDaniel 2014). The reason why Pearl & Mutual may be having a high graduate trainee turnover may personality mismatch between the employees and the positions they are assigned to. As such, it is recommended that the company should adopt the Personality Test in the selection process.

Like the General Mental Ability, Personality Test is a product of psychology (Richardson & Norgate 2015). Psychology can help to assess the personality and emotional intelligence of employees. Personality refers to each individuals behavioral traits, which are constant. On its part, emotional intelligence is the ability to express emotion, as well as understand and regulate emotions. By utilizing a scientific approach in the recruitment of graduate trainees, Pearl & Mutual can hire and retain successful employees.

Theory and Practice: Personality and Emotional Intelligence

The association between personality and emotional intelligence and an employees performance is compelling. The cognitive measurement instruments are successful predictors of performance. However, the tools do not measure human personality, which determines the success of employees (Banks & McDaniel 2014). Personality is the total of an individuals reaction and interaction with other people. The behaviors are measurable traits exhibited by an individual. One of the popular models using in measuring personality is the Big Five Model. The model is made up of five dimensions used to capture the variations that abound in human personality (Ashton 2013).

There are a few tests used in the selection process about the Big Five theory of recruitment and selection. They include the NEO-Personality Inventory. The test comprises of 150 questions that test extraversion, conscientiousness, and other variables (Ashton 2013). The second is the Personality Characteristics Inventory (PCI). There is also the Hogan Personality Inventory (Thomas & Scroggins 2006). The test focuses on normal personality traits.

Emotional intelligence is not a trait. However, its tests are viewed as reliable even though their measure is limited to abstract reasoning and verbal fluency. The emotional intelligence test comprises of several elements. The first component suggests that individuals should have the ability to perceive emotions within themselves and in others (Kaplan & Saccuzzo 2017).

The individual should also be able to express their emotions. Secondly, the subject should be aware that their emotions shape their thoughts and coping mechanisms. Thirdly, individuals should be able to understand and analyze their emotions. Fourthly, it is important to regulate emotions and chose positive ones to improve communication. It should be understood that it is not possible to change emotional intelligence (Banks & McDaniel 2014). It remains constant throughout ones life. To this end, it is recommended that Pearl & Mutual should adopt the Personality and Emotional Intelligence Tests as a replacement of the current General Mental Ability.

Pros and Cons of the Personality and Emotional Intelligence Test

The approach is an effective indicator of job success. Consequently, it helps in the retain-ability of Pearl & Mutuals student trainees. The success factors are dependent on its ability to identify the characteristic behavior of individual graduate recruits (Ashton 2013). Compared to the General Mental Ability, the test offers a wider and more inclusive method of measurement. However, some people believe that personality tests are invalid and can be faked. The strength of the measurement lies in the structure of the questions raised by the reviewers. To find the right graduate trainee assessment tests, this report recommends the Personality and Emotional Intelligence tests.

Organizational Examples

Google, Apple Inc., and McDonalds are forgoing traditional recruitment methods in favor of personality and emotional intelligence models. They aim to avoid recruiting the wrong people (Cote 2014). The companies are using personality and emotional intelligence as measures of performance because the approaches involve self-awareness, motivation, self-regulation, empathy, and social skills (Drasgow 2012). The individuals with such skills are viewed as good performers who can work in teams.

Conclusion and Recommendations

The General Mental Ability assessment test has been used by Pearl & Mutual for a long time. The approach is ineffective and senior managers have abused it, leading to the excessive turnover among graduate trainees. It is recommended that the organization should adopt Personality and Emotional Intelligence tests as alternatives to the GMA. The effectiveness of these models is validated by blue-chip companies, such as Google and Apple, who rely on these tests to recruit and select employees. The revised Graduate Selection Process will take five months to implement. The process will cost Pearl & Mutual $15,000.

Reflective Commentary

Personal Reflection on the Learning and Experience of the Module

The analysis of the recruitment and selection process at Pearl & Mutual was an interesting exercise. It was undertaken under the instructions of the human resource manager after it was discovered that the results from the GMA tests and interviews were being influenced by the opinions of senior managers. As a consequence, the company had invested in graduate trainees who left for other firms. The interesting finding was that the graduate trainees did not go to work for financial institutions like Pearl & Mutual.

The finding was intriguing because the training they received entailed exposure to finance. It can be deduced that the recruitment and selection process was flawed. The company was recruiting graduate trainees who did not fit in a financial institution. As such, it was necessary to remedy the situation by changing the recruitment approach. I was assigned the task of reviewing the mode of selection and compiling a report with recommendations regarding alternative methods.

I believed that the GMA approach, which is still used by many organizations as the initial sifting process, was the best approach to recruitment. However, it turned out that there are other methods used by some of the most successful companies, such as Google and Apple Inc. To this end, the search for an alternative model involved the perusal of books and periodicals. It also involved personal visits and interviews with other human resource practitioners.

I discovered that many successful organizations have moved from GMA to personality and emotional intelligence as indicators of employees who can perform and be retained within the firm. I had heard about the personality model, but I had not anticipated how widely it was used in the industry. According to the literature that was perused, the evaluation of an individuals personality can reveal a lot about the candidate, especially on how they relate with other people in a group setting.

Emotional intelligence buttresses the personality attributes of the employee. It achieves this by offering the emotional stability that an employee requires to operate in demanding working conditions. Pearl & Mutual could benefit by overhauling the current recruitment process and adopting the Personality and Emotional intelligence model. My report recommends that the organization should consider adopting this model. Its adoption is not expensive and can be done within six months. The period is adequate and can accommodate the training of the managers with regards to administering the tests.

I found the exercise an interesting learning process. I have gained a lot of insight into how to conduct graduate trainee recruitment. I have also learned that not all highly qualified graduate trainees are interested in working for one company. Many have ambitions that drive them from one organization to another as they pursue their dream career. I hope that the proposed model will help Pearl & Mutual to recruit the right graduate trainees and retain them. I intend to be part of the recruitment process and help in implementing the new human resource policies at Pearl & Mutual.

References

Ashton, M 2013, Individual differences and personality, 2nd edn, Academic Press, London, UK.

Banks, G & McDaniel, M 2014, Meta-analysis as a validity summary tool, in N Schmitt (ed), The Oxford handbook of personnel assessment and selection, Oxford University Press, Oxford, UK, pp. 156-178.

Cote, S 2014, Emotional intelligence in organisations, Annual Review of Organisational Psychology and Organisational Behaviour, vol. 1, pp. 459-488.

Drasgow, F 2012, Intelligence and the workplace, in IB Weiner, NW Schmitt & S Highhouse (eds), Handbook of psychology, industrial, and organisational psychology, 2nd edn, New York, NY, Wiley, pp. 184-210.

Gilmore, S & Williams, S (eds) 2012, Human resource management, 2nd edn, Oxford University Press, Oxford, UK.

Kaplan, R & Saccuzzo, D 2017, Psychological testing: principles, applications, and issues, 9th edn, Cengage Learning, New York, NY.

Muchinsky, P 2011, Psychology applied to work, 10th edn, Hypergraphic Press, Summerfield.

Nikolaou, I & Oostrom, J (eds) 2015, Employee recruitment, selection, and assessment: contemporary issues for theory and practice, Psychology Press, Abingdon.

Podsakoff, N, Whiting, S, Podsakoff, P & Mishra, P 2011, Effects of organisational citizenship behaviours on selection decisions in employment interviews, Journal of Applied Psychology, vol. 96, no. 2, pp. 310-326.

Richardson, K & Norgate, S 2015, Does IQ really predict job performance?, Applied Developmental Science, vol. 19, no. 3, pp. 153-169.

Samson, D & Daft, R 2012, Management, Cengage Learning Australia, Sydney.

Thomas, S & Scroggins, W 2006, Psychological testing in personnel selection: contemporary issues in cognitive ability and personality testing, Journal of Business Inquiry: Research, Education, & Research, vol. 5, no. 1, pp. 28-38.

Introduction

Saudi Arabia is an attractive market for Allianz group to invest, firstly due to the fact that it has huge amount financial resources which can bring up huge profits. In addition to this if attention is given to chalk out such marketing campaigns which focus on increasing the per capita consumption, it could result in even more profits. Allianz group followed joint venture strategy which it pursued in many markets; the firm made alliances with the company to enter into the market. Since Allianz group was not at all short on funds, thus serious thoughts was given to invest directly into the market by setting up offices but this had its own challenges. But, before investing Allianz group considered a number of options of making alliances and distributing just to gauge the response of the target audience; and then if it is encouraging direct investments should be made. It should be observed that most of the firms coming from the other half of the world, commit the blunder of imposing the same marketing ploys and campaigns to the Saudi Arabia market; Allianz group should keep this under consideration and must outsource their marketing activities to some local advertising company.

Brief Company general history

Allianz Fransi was found in 2007 by two companies, Banque Saudi Fransi and Allianz Group as a joint venture. Since then through sound management and nimbleness at seizing opportunities, the Allianz Fransi has grown to a major industry player in Saudi Arabia. Allianz Fransi is involved in offering and has become the leading integrated financial services company in Saudi Arabia.

The Allianz SF and its activities in Saudi Arabia

In Saudi Arabia, the company is involved banking, asset management, and insurance. Its core businesses focus on property and casualty insurance, life and health insurance, and asset management for both corporate and private clients. The company engages insurances for property and casualty insurance for individuals and corporations and this includes motor vehicle, losses to any property, and travel and assistance. Meanwhile, corporate clients are provided with property insurance; motor fleet insurance; directors and officers liabilities; corporate credit; and insurance for the marine, transport, aviation industries. In terms health and life insurance, the Allianz Fransi provides private clients with endowments; annuities; term insurance; disability insurance; investment-oriented products; and private health insurance. Consequently, for corporate clients, the company offers group life products and pension product for employees. Through the years, the company had grown by adhering to several management priorities that focus on operating profitability, financial strength, and reduction of complexity and sustainable improvement of its competitive positioning (Allianz SF, 2). These management priorities are discussed as follows (Allianz SF 1):

1. Operating Profitability  continually strengthen operating profitability by pursuing operational excellence and continuous improvement in operational processes and effective implementation of distribution and market management functions;
2. Financial strength  strengthening capital management and group reinsurance program;
3. Reducing complexity  introducing the target operational model which espouses a uniform organization capable of delivering effective and responsive leadership across global organizational platforms;
4. Sustainable improvement of competitive position  strengthen customer and consumer orientation, as well as maintaining the highest possible level of service quality.

From the table below, the company enjoyed strong sales and net income growth from 2008 to 2009, increasing 5.2 percent. Furthermore, the company posted a positive net income of 4.34 billion, thereby erasing the deficit incurred the previous year. Subsequently, despite the continued global crisis, the companys retained earnings and soared by 36.3 percent by end of 2009. Previously the company had also suffered from the global financial crisis which weakened its sales and net income during that year. Consequently, the company incurred a negative net income in 2008, while its assets, liabilities, cash resources, retained earnings and total equity also declined.

The Allianz Group Financial Performance,

Source: The Allianz Group Annual Reports 2008 to 2009.

Mode of entry to Saudi Arabia

Expansion in a saturated market is a feat in itself. And an expansion in market that is filled with competitors, this is an even greater feat. Allianzs expansion into international markets may be described by some as a result of its brilliant marketing strategies, but the fact of the matter is that the brilliant expansion is more of a result of strategic partnerships with local businesses. While others in this regard may have chosen to compete with the experienced and established businesses in new markets, through heavy investment in marketing campaigns and product development; Allianz group sought to make alliance with the Banque Saudi Fransi that is making a joint venture. Allianz SF understood the strategic importance Banque Saudi Fransi had and the manner in which they could allow Allianzs products and services to infiltrate the market. Allianz SF knew that competing with local companies would be impossible without having the ability to reach the markets with relative speed and cost effectiveness, Allianz made strategic partnerships with Banque Saudi Fransi. The joint venture was designed to provide more profit than the competitors at significantly reduced costs did. Without these agreements with the Banque Saudi Fransi, Allianz Group would not have been able to expand throughout the international market at such a rapid pace.

Saudi Arabia Financial Services Industry

The Saudi Arabia financial sector is considered to be well developed according and is composed commercial banks, finance companies, investment fund companies, insurance companies, and companies trading in the equities markets. The banking sector was dominated by a few commercial banks, one of which is state-owned and one is foreign-owned. The banking sector in Saudi Arabia has been largely concentrated, with two of the largest bank controlling half of the sectors assets, loans and the deposits. Subsequently, a growing niche segment in the Saudi Arabia financial sector is the leasing business. Non-bank financial investment companies typically invested most of their resources in foreign markets, although domestic investments have been increasing in recent years.

The Saudi Arabia Insurance industry is dominated by several large, local insurance firms. These companies are linked with some of the others through complex ownership structures and arrangements. As far as the insurance sector was concerned, the value of insurance premiums generated by insurance companies in the country has been growing. However, the insurance industry in Saudi Arabia has been ascribed as the least active of all the financial sectors existing in the emirate. Essentially, the Saudi Arabia insurance industry has not kept pace with the growth of the insurance industries of other Middle East countries for several reasons and these are:

• The religious views against insurance; and
• The lack of enforcement to require the public to purchase health and life insurance

In the long term, financial experts predict that the Saudi Arabia insurance industry, as well as the other sectors in the financial services industry, will rebound and grow in 2011 due to the following reasons:

• Oil prices are expected to increase, thus expanding the countrys economy and stimulating the insurance, banking, and investment sectors;
• The Saudi Arabia government has a budget surplus. This was a welcome outcome considering that the Saudi Arabia government feared a budget deficit during this period;
• The government is gearing to implement more laws to reform the insurance sector and improve the regulatory structure;

Furthermore, the Saudi Arabia government is committed to promote the tenets of investment which allows investors to invest in:

• Industries except for those related to oil and gas exploration or production;
• Construction, operation, and management of infrastructure enterprises in the field of water, power, drainage, and communications;
• Banks, investment corporations, and foreign exchange companies which the Central Bank of Saudi Arabia agrees to consider incorporating;
• Insurance companies which the Ministry of Commerce and industry agree to incorporate;
• Information technology and software development;
• Hospitals and the pharmaceutical industry;
• Land, sea and transport;
• Tourism, hotels, and entertainment;
• Culture, information, and marketing except for issuance of newspapers and magazines and opening of publishing houses;
• Integrated housing projects and zone developments except for real estate speculation;
• Real estate investment through foreign investor subscription to the Saudi Arabia shareholding companies.

Indeed, since 2008, the Saudi Arabia government had implemented laws that aimed to make the county a more business receptive place to do business.

Problems Faced

Labor

One of the main concerns for a company entering the Saudi market can be seen through the issue of labor. The Saudization policy can be seen as one of the most important that can be mentioned in the light of such policy. In that regard, such policy was actually implemented to decrease the high unemployment rate in the Kingdom of Saudi Arabia.

Job creation was a major problem in the Saudi Arabia, in which the heavy dependency on foreign workers was one of the main characteristic of labor in the country. Accordingly, such characteristic led to that the unemployment rate among Saudis might have reached as high as 32 percent among young workers (Looney). The basis of the Saudization policy was in governing reforms according to which the employment for Saudi nationals would increase, while reducing the reliance on foreign workers. The initiatives governed by such policy included such aspects as banning the employment of foreigners, increasing the employment of Saudi nationals in companies by five percent each year, and increasing the fees on recruiting expatriates (Looney).

The challenges that can be seen from the perspective of Allianz Saudi Fransi Cooperative Insurance Company are mainly related to staffing issues, and the negative impact that such policy might have on FDI. On the one hand, the policy has goals favorable to the Saudi economy, decreasing unemployment rate of Saudi nationals. On the other hand, the side effects of such policy might have a negative impact on the decision of firms to enter the Saudi market. One impact can be seen through the disadvantage such policy puts the foreign company entering the market against foreign competitors, as well as the local ones (Ramady 370). The disadvantages might include the differences in the costs of hiring expatriates and Saudi nationals by foreign firms. Accordingly, tracing the initiatives governed by such policies and their changes, it can be stated that those policies are largely unpredictable with rules and quotas changing without warning (Ramady 370).

The Local Regional Characteristic of the Insurance Market

The nature of the insurance market in Saudi Arabia can be seen among the main challenges before Allianz. First of all, the market itself is characterized by low penetrations rates, where for many Saudis are still not aware of the benefits of insurance and its real nature (Oxford Business Group). The religious views on the insurance is another major aspect that should be considered in terms of the insurance market, for which the compliance with sharia  Islamic laws governing the Saudi society is among the main factors that foreign companies should consider. Accordingly, one of the main notions that should be defined in the context of foreign insurance companies is takaful  sharia compliant insurance. The characteristic of such type of insurance is cooperation and risk sharing. Such cooperative concept is important and emphasized in Saudi insurance, for which the compliance with Islamic precepts is crucial (Oxford Business Group 100). It should be noted that according to such precepts, conventional insurance is considered haram, i.e. against Islamic laws and running contrary to sharia.

The main problem faced by market entrants can be seen in the absence of single sharia oversight board (Oxford Business Group), and the rapid transformations in the regulatory framework related to such market can be pose a challenge for foreign companies entering the market, requiring a cautious approach toward the changing regulations (Kuwait Times). The accompanying challenges derived from such peculiarities of the insurance market can be seen in such aspect as the lack of qualified staff who understands all the difficulties and the technical principles of takaful. However, the main problem for entry can be seen in the lack of awareness with many consumers being not aware of the fact that takaful is religiously acceptable and not haram (Ahmad, Masood and Khan), especially when such service is provided from a foreign company. Such fact can be seen significant to the Muslim world in general, rather than Saudi Arabia. Accordingly, such facts put a foreign entrant to the Saudi insurance market at a disadvantage to local competitors, who already had the first mover advantage. While foreign entrants analyze the results of the changes in the regulatory framework regarding the sharia compliant insurance, local and regional competitors built dominant positions.

Competition

The environment in insurance market can be characterized with rapid growth. Accordingly, entering the market Allianz already faced competition with dominant position and knowledge of all aspects of sharia compliant insurance. The insurance sector was opened for foreign direct investment in 2003. Considering the fact that conventional insurance was available for over 50 years in the kingdom, with the first national insurance company being approved in 1986, it can be seen that competition was one of the main challenges before Allianz (Jaffer 97). The competition includes major companies with entirely local shareholding participation such as Tawuniya, Malath Insurance, and Wiqayah (Oxford Business Group 100). Additionally, there are other international major players in the market HSBC, as SABB Takaful  Medgulf, AIG, Ace and Bupa (Oxford Business Group).

In 2008, licenses were issued to nearly 2008 insurance companies, with 20 companies being listed on Saudi Arabias Stock exchange. Thus, it can be stated that the insurance market was and still competitive at the time of entrance. One of the main competitors in the market can be seen through Tawuniya, previously known as the National Company for Cooperative Insurance (NCCI), which was the only officially licenses insurance company prior to opening the gate for foreign direct investments. Having the first mover advantage, Tawuniya had the time to set up in the kingdom and adjust to the requirements of compliance with the sharia, and having the necessary expertise to operate within such environment. Considering the lack of expertise and the human resources crunch in such field, along with the Saudization policy, it can be stated that the competition posed a challenge to Allianz.

Management Style and Workplace Environment

Aside from the specifics of the insurance market, it can be stated that there are challenges of managerial and workplace environment nature. One aspect can be seen through the cultural characteristic of managers in Saudi Arabia. Considering the fact that the Saudization policy obliges foreign companies to employ Saudi nationals, Allianz should expect dealing with the cultural aspects, characteristic of Saudi management. Such aspects might include power distance, which implies the fact that Saudi managers typically would make decisions auto critically and paternalistically, instead of making them after consulting with subordinates (Baumann 52).

Other differences can be seen through the distinctions between individualism and the collectivism, characteristic to western and Eastern cultures respectively. Additionally, Islam and the Beduin tradition are stated to be influencing the business culture in Saudi Arabia. One of the aspects can be seen the challenge in both employing women and dealing with them as customers. The segregation in genders that lie within the cultural and religious tradition in Saudi Arabia poses a dilemma for foreign firms. The latter is especially significant considering the fact that Saudi women have an estimated wealth of $11 billion in bank, which makes them potential customers (Power). At the same time, the strict laws in the Kingdom put restrictions on being in women either as customers, women-only are good examples in that matter, and through the employment relations between men and women in the workplace.

Solutions

Pre-entrance Initiatives

One of the main solutions to the aforementioned identified problems can be seen in the formation of a joint venture between Allianz and Banque Saudi Fransi. In order to adapt to the market, it can be stated that the formation of a joint venture can be seen as a suitable solution. First of all, the creation of joint ventures can be seen from the perspective of complying with specific local requirements. Joint ventures in general are viewed as a methods of entry that creating greater synergies which are said to reduce the barriers to entry, bringing about faster access to areas such as consumer awareness, marker penetration, product design and customer service (Jaffer 94).

The choice of the partner in the joint venture can be seen of strategic importance, where choosing Banque Saudi Fransi (BSF) is one of the ways the company targeted the challenges identified in entry. Banque Saudi Fransi in itself is a joint stock company affiliated with Credit Agricole Corporate and Investment Bank. The use of the distribution channels of the bank, providing opportunities for the group to penetrate the market. Accordingly, Allianz was following successful examples implemented previously by the same company in other regions as well as successful examples in Saudi Arabia as well. The example in Saudi Arabia can be seen through the formation of the joint ventures between Saudi British Bank and the International Banking Group HSBC. The support of the choice of joint ventures, as a solution applicable specifically to the insurance market, can be seen through the statement of Amine Bentaleb, associate director and portfolio manager at Arqaam Capital. Citing the differences between conventional insurance and takaful, Bentaleb stated that (Given) the fundamental differences between the two models, there is need for joint ventures and collaboration in a nascent segment where even the regulation is not up to date, (Kuwait Times).

Another solution can be seen through the way Allianz planned the entrance to the Middle East market, as well as the Muslim market in general. Allianz started targeting the takaful market in Indonesia and Malaysia, obtaining an expertise in countries with large Muslim population, namely Malaysia which began working through takaful operators in other parts of the world. The justification for Indonesia as a choice can be seen through the large Muslim population and the size of the market. Accordingly, among Arab countries, Allianz started from Bahrain. The choice of Bahrain can be justified through the fact that it has similar market conditions, while at the same time functioning as a regional financial centre since 1976, being open to open banks. Saudi Arabia, on the other hand, was opened to foreign direct investments only recently, licensing only majority locally owned institutions. The latter can be added to the fact that Bahrain has more Islamic financial institutions than any other centre, with twenty-four Islamic banks and eleven Islamic takaful insurance companies, most of which serve the regional rather than the local market (Wilson 26). Thus, prior to entering the market which was estimated to grow to $ billion, Allianz gained an expertise in takaful and Islamic financial services. In that regard, it should be mentioned that despite voicing the intentions of having a presence in the Middle East the company was already present in the region since 1978, through representative offices (Allianz Allianz in Middle East: Dubai).

Post-entrance Initiatives

In order to maintain compliance with sharia standards prior to establishing a unified board in the country, Allianz established a sharia board, headed by Abdullah Bin Suleiman Al Manea, a member of the Supreme Judiciary Committee of Saudi Arabia. Sheikh Abdullah is a chair member of many financial institutions in Saudi Arabia, where his interpretive opinions serve the company in establishing the legal framework for the insurance operations.

The HR problem can be seen solved through the compliance with the Saudization policy, while at the same time providing training initiatives that invest into the companys human resources. In that regard, among the companys goals in the first years of entry, heavy investment in human resources was prioritized, in addition to distribution networks and IT systems (Saudi Fransi Cooperative Insurance Company). The investments into human resources can be seen in supporting training efforts through a wide spectrum of customer service and technical training courses, backed by Banque Saudi Fransi and Assurances Generales de France -, plus Allianz Group experts (Allianz Exciting Entry Opportunities  Big Challenges). It should be noted that through not only following the Saudization policy, but also through making the majority of the company owned and or operated by Saudi employees, the company improved its position through allying itself with Saudi interests (Rice). The latter can be seen through the way the company increased the proportion of Saudis in the company as well as including more Saudis in the companys organizational chart.

Alternatives

One of the alternatives available before the company is conducting coaching as a way of developing managerial skills and attributes compatible between the Western and the Saudi staff. Building the expertise in the Islamic insurance filed is as important as building managerial and leadership skills. The latter includes the collaborative decision making as an important point of cultural contention. One of the ways the company can overcome the labor crunch, in addition to the training courses is the cooperation with educational institutions in order to develop the skills necessary in the field of Islamic financial services. It can be assumed that the Saudization policy will follow with more quotas along with increasing the number of Saudi nationals in the working force. Thus, the company might consider preparing specialists in the insurance field through educational institutions, as a part of the HR investment considered by the company. Additionally, training seminars in and insurance workshops and summits, can be beneficial for the exchange of expertise and the development of a unified legal and framework for Islamic insurance.

In what concerns competition, it can be stated that one of the alternative can be seen through increasing the market share of the company through forming alliances with other insurance market participants. In that regard, despite the favorability of the government to the majority owned Saudi companies, there are no restrictions in terms of the foreign investments share in a company. At the same time, the alliance can be formed with fully owned Saudi companies. The list of potential market participants for mergers and acquisitions might include Weqaya Takaful, Malath Insurance, and others. The outlook for the insurance market states that small companies will find it difficult to compete with the major players. Accordingly, considering the fact that the majority of products and services in the insurance market were already established, one of the solutions can be seen through increasing the market share and consolidation.

The focus on the provision of services in the health and the motor insurance, which are considered as fields having growth potential, is a perspective direction. With the company receiving the license for motor coverage, the need for good local knowledge and a good geographical spread can be seen as one of the suggestions that support the consolidation alternative (Oxford Business Group). Although mergers and acquisitions are still uncommon the Saudi Arabia (Ramady), they can be viewed as an option with the legal and operating framework, concerning labor, company, and bankruptcy laws develops.

One of the alternatives that will enable larger market penetration and increasing the awareness of the customer can be seen through adapting some of the aspects of the business model of the company according to the cultural concerns of the Saudi citizens. Developing the trust of the consumer the company might consider rebranding the company in accordance to the established cultural and religious traditions. In that, regard the company can utilize the increase in the female workforce in the kingdom, and segregates workforce to provide services and products to other females in the country. A segregated workforce can be seen among the advantages of local insurance companies, and considering the challenges involved in the gender mix in the work force, such alternative might be seen as a good option for the building trust with consumers.

Analyzing the alternatives, it can be stated that the solutions that company used to tackle the challenges and the problems faced might be seen through the perspective of the time of their implementation. Accordingly, many of the solutions was taken prior to entering the market, considering the fact the company already had an experience in a similar environments, i.e., gulf countries such as Bahrain and United Arab Emirates. Similarly, the same can be said about the expertise in takaful insurance, with the company having already entering Malaysian and Indonesian markets. Nevertheless, some of the problems can be attributed to the dynamic nature of business and changes in policies, trends, etc. Thus, the proposed alternatives shall not be perceived as mutually exclusive to the solutions already implemented by the company.

Main players of the industry

The operational scale of Allianz SF can be compared to a regional player such as Aayan Leasing and Investment Co. is clearly evident in the huge disparity in revenues, income, and overall financial resources. The Allianz SF may surpass the Aayan Leasing and Investment Company in terms of financial resources and product diversity; the latter still have several distinct advantages. The company has become well-versed in the political and economic dynamics of the country, as well as the other Arab states. This has proved advantageous particularly in dealing with the Saudi Arabia bureaucracy. Another aspect lies in its strong real insurance capability, which allows the company to seize opportunities in this sector. The Allianz SF is primarily insurance company, and as well do have knowledge in real estate development and construction through asset management activities. Thus the main strengths of the Allianz SF lies in their global, diversified product portfolios, which allow them to spread operating financial risk. Of course, their massive financial resources allow them to invest in lucrative, growing financial markets in anywhere in the world.

Future plans of the company in Saudi Arabia

The above case clearly shows why organizations which seek to merge, acquire, or enter into joint ventures or partnerships, in Saudi Arabia. Saudi Arabia is thus, a country which attracts foreign direct investment because of their receptiveness and their cultural, social, and attitudinal behavior, which is very different from western countries. This just goes to show that culture plays an important role when organizations switch over their operations or merge with local companies abroad. This example also clearly illustrates which country would ideally suit organizations seeking partnership, merger, acquisition, or joint ventures. This study also helps the management understand how important decisions are to be taken (Leontiades, 231).

In addition to this, there are also the sentiments of the organizations involved in the merger, acquisition, joint venture, or partnership to be considered. When an organization makes adjustments to its existing cultural, workers tend to interpret this as being provocative. No organization would like to be looked at as the inferior one to the other, and this could cause friction among the working group in domestic mergers. Efforts may be on to acquire new ideas and machinery to enhance production and quality. The import of such technology or idea may not find favor with the working class of one of the mergers, and this cause considerable damage to production and alliance. Such cultural invasion may be seen as a provocation into their privacy or existing practices which they may seem more productive and operational. In such situations, workers take a rigid stance to block entry of technology or idea that make them insecure and go on the defensive. Therefore, when such decisions have to be made, decision maker(s) must take into consideration these two vital aspects (Dickinson and Ramaseshan, 29).

Implications for future use in Saudi Arabia

There is no doubt that the backbone to any successful business is the attitude and efforts of its workforce. Essentially, all decision-makers will pay a lot of attention to this, and the better the perks are the better will be the performance.

Many organizations, faced with the prospect of global competition have had to downsize their workforce and decentralize their operations to cut production and operational costs. Will this suffice or would the decision-maker think out of his/her hat and propose an alternative to this? As a critical thinker, one should evaluate his/her environment in which the decision-making is mandated and so, if the decision-maker s planning on establishing an effective and supportive workforce, they would obviously focus their attention on answering the following question; what kind of arrangement would help the organization compete in the highly competitive global market? A lot has been read into the advantages of team work and today, just about every organization practices this theory. However, not all teams are equal. There are teams that irritates, the team that one would be reluctant to approach, or that special team that one is excited to associate with. Obviously decision-makers would opt for the third option as this team would be able to support any initiative the management throws at them as a challenge. Shared responsibilities and accomplishments among them bond them together and this is the kind of team that excites the management.

Because of the changing global business environment and challenges associated with this, many organizations have changed the face of their earlier HR practices to accommodate a highly flexible system of work ethics, where employees enjoy a healthy and enjoyable work environment. New employees, more often females than males, are offered the option to work part-time and at home as subcontractors, or consultants, temps and interims.

Pay and rewards are good practices to improve employee performance and increase productivity. The welfare of the employees is also another aspect of healthy factor in motivating personnel to perform.

With so much at stake at their workplace and with so much pressure on the home front, a large number of employees find their frenetic lifestyle far too demanding and seek greater flexibility in their roles and responsibilities. Offering flexible working hours for both men and women is a great idea in this direction. It is estimated that seventy per cent of companies, of which ninety per cent in the public sector, have begun schemes to support their staff balance their work at home and office. This reduces unnecessary burden on their shoulder leading to lack of interest and below par performance at work.

HR policies should promote and inspire confidence, and so any policy that motivates employees would be favorable. Motivation comes from cordial employer-employee relationship, a supportive and encouraging manager-worker relationship, and recognition. Recognition in the form of rewards and promotions will go a long way to instigate hard and dedicated work. This way, employees will strive to support the managements initiative to achieve their goal. This is another area where decision-makers would have to use their critical thinking. Thus, in order to manage uncertainties, the future of management and organizations would be by taking correct decision-making by engaging in critical thinking and challenging key management assumptions.

Conclusion and recommendation

The company should utilize it strengths to take advantage of economic opportunities in the Saudi Arabia. However, they should also be mindful of their weaknesses and the threats in the environment. The opportunities can be found in tapping promising markets in the recovering real estate and construction sector, and increasing popularity of leasing activities not only in Saudi Arabia, but also in other Gulf states as well. The companys Arab heritage and strategic partnerships in Islamic financial institutions allow it to better maneuver in bureaucratic circles and customize financial products and services to clients in the entire region. In the medium to long-term, the company can intensify its activities in the equities market since they have already established a credible track record in fund management. However, it is suggested that the company should diversify quickly into other business segments in the Saudi Arabia financial sector such as banking since its financial resources are ample compared to most its competitors. As an influential regional player, the Companys main strategy should be to strengthen its hold in its core business areas and secure vital market share growth.

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