세무와회계저널 | Case Study of Building Competitive Strategy for “A” Insurance Company …

“A” Insurance Company based in Korea (hereafter “A” INSURANCE) had been suffering from its poor business performance, the worsened negative growth after 2008 global economic crisis. Though “A” INSURANCE management is struggling to overcome the adversity, its business has been even deteriorated. Thus, through this study, we aim at discovering how “A” INSURANCE makes use of its competitive advantages to explore the business opportunities and strengthen its market position based mainly on PERL(Performance, Efficiency, Risk and Liquidity ratios) framework analysis. Ultimately, this case study of business strategy development through financial ratio analysis will be used for English－based lecture for student studying financial accounting, which can give student better understanding on how to analyze financial ratio and to apply the analysis results in developing strategic initiatives under the real business environment.

To determine how “A” INSURANCE reinforce its competitiveness in the industry, we firstly identify key success factors (“KSFs”) within its market that determines the firm’s ability to survive and prosper through analysing a macro－business and micro－business environment via PESTEL(Political, Economic, Social, Technological, Environmental and Legal) and Porter’s Five Forces of Competition Framework, respectively. Followed by KSF identification, financial ratio analysis using PERL framework is performed to figure out the areas which “A” INSURANCE has not satisfied what customer wants and cannot deliver key success factors. SWOT analysis and resources and capabilities review that KSFs are based on are performed for proper strategic initiatives development.

The outcomes from the above analyses contribute to sorting out strategic management agenda for “A” INSURANCE, such as (1) Boost insurance sales, (2) Build up strong product portfolio, (3) Achieve price efficiency at optimum level and (4) Maintain financial soundness in terms of risk management. The strategic initiatives will be achieved as per detailed action plans, which will improve financial ratio and ultimately enhance firm’s value.