Currently, the distribution of life and investment products is very expensive and therefore an alternative method of distribution was investigated. Life insurance and investment products in South Africa and elsewhere in the world are sold by agents employed by the life insurance and investment companies.
INTRODUCTION
INTRODUCTION
- VALUE OF THE RESEARCH
- THE OBJECTIVE OF THE RESEARCH
- LIMITATIONS OF THE STUDY
- RESEARCH METHODOLOGY
- STRUCTURE OF THE RESEARCH
- SUMMARY
- INTRODUCTION
The proposed model as envisioned on page (5) will be considered to use Porters Five Forces Model in the Life and Investment Industry in relation to the objectives of the 1.3 THE OBJECTIVE OF THE RESEARCH. The proposed model as envisioned on page (5) will be considered to use Porters Five Forces Model in the Life and Investment Industry in relation to the objectives of the.
LITERATURE REVIEW
OVERVIEW OF THE FIVE FORCES MODEL
For example, it will be clear that the prices of the firm's offerings will be influenced by power or limited by the threat of substitutes. While it is true that the collective power of the five forces model determines the profit potential of an industry (Porter, 1985; Pearce and Robinson, 1997), this suggests that different forces matter to different degrees in different industries (Porter, 1985; Pearce and Robinson, 1997). 1985) and therefore "the strongest competitive force or forces determine the profitability of an industry and are therefore of paramount importance in formulating strategy" (Pearce and Robinson, 1985).
THE FIVE FORCES FRAMEWORK
- THREAT OF ENTRY
- POWER OF SUPPLIERS
- POWER OF BUYERS
- THREAT OF SUBSTITUTES
- COMPETITIVE RIVALRY
From the above, it is evident that the relationship with suppliers is mainly viewed as adversarial, with firms in the industry generally seeking to minimize the power of suppliers in order to earn more profit (Dyer et al., 2002). . Chan et al., (1999) also believe that "challenging the industry's conventional wisdom about which customer group to focus on can lead to the discovery of a new market space.
SUMMARY
INTRODUCTION
RESEARCH PROCESS
Some respondents were contacted and interviewed by telephone or e-mail, while others were met by the researcher based on a specific appointment. It was an industry experience where the researcher was able to structure the discussion in a way that provided answers to the questions.
PILOT STUDY
By selecting qualified individuals, it was hoped that these individuals would be more informed and thus contribute better quality input to the study. Another issue of concern was the role that brokerage consultants from the various companies would play in the proposed model.
INTERVIEWS
The respondent was chosen randomly from a list of members of the Financial Planning Institute of South Africa and it was decided to target brokers in Cape Town, Johannesburg and KwaZulu-Natal. This was done to establish whether such a business would appeal to the wider market of professional life and investment professionals.
ETIDCAL ISSUES
PROBLEMS EXPERIENCED
In two to three cases, an alternative date and time suitable for conducting the interview that was originally set could not be obtained. There was a small percentage of people who had agreed to an interview who could not make the interview due to unforeseen circumstances and who canceled it.
POSITIVE EXPERIENCES
CONCLUSION
INTRODUCTION
INDUSTRY BOUNDARIES
- SOURCE OF NEW ENTRANT
- RELATED PRODUCT MARKETS
- FIRMS UP AND DOWN THE VALUE CHAIN
- FIRMS WITH RELATED COMPETENCIES
- ECONOMIES OF SCALE
- SWITCHING COSTS
- ACCESS TO DISTRIBUTION
- EXPECTED RETALIATION
The current study, conducted by the researcher, provides insight into the distribution of the products in the life and investment sectors in South Africa. Distribution is one of the areas where economies of scale apply and prevail in the life and investment sectors.
THREAT OF SUBSTITUTES
- TYPES OF SUBSTITUTION
- PRODUCT -FOR-PRODUCT SUBSTITUTION
- SUBSTITUTION OF THE NEED BY A NEW PRODUCT OR SERVICE
- GENERIC SUBSTITUTION
- DEFENDING AGAINST THE THREAT
- RELATIVE PRICE - PERFORMANCEOF SUBSTITUTES
- SWITCHING COSTS
- BUYERS PROPENSITY TO SUBSTITUTE
- ASSESSING THE EXTENT OF THE THREAT OF SUBSTITUTES
This also refers to the fact that the prices remain competitive with the alternative offer. Furthermore, given that the top reason given by independent brokers for referring their business to certain companies was a better product, and that an independent third-party distributor would essentially provide access to the products of most life and investment companies, it would immediately offer higher detected.
SUMMARY
It is not likely that traditional brokerage contracts would render the franchise distribution method obsolete; the threat actually appears to be the reverse, ie. Although defenses were identified that firms could use to defend against the threat of substitution, e.g.
POWER OF SUPPLIERS
- CHARACTERISTICS OF SUPPLIER POWER
- PRODUCT DIFFERENTIATION
- PRESENCE OF SUBSTITUTES
- SUPPLIER CONCENTRATION
- IMPORTANCE OF VOLUME TO SUPPLIERS
- IMP ACT OF INPUTS
- THREAT OF FORWARD INTEGRATION
- POTENTIAL FOR STRATEGIC COLLABORATION
It can be concluded that life and investment companies pose both major entry and substitution threats to the industry. Broker consultants and broker managers in the life and investment industry also confirmed this view.
POWER OF BUYERS
- VALUE CREATION
- CHARACTERISTICS OF BUYER POWER
- BUYER CONCENTRATION VS FIRM CONCENTRATION
- BUYER VOLUME
- BUYER SWITCHING COSTS
- THREAT OF BACKWARD INTEGRATION
- PRESENCE OF SUBSTITUTE PRODUCTS
- PRODUCT DIFFERENTIATION
- IMPACT ON QUALITY OF PERFORMANCE
- IMPACT ON BUYER PROFIT
As discussed in this chapter, common or traditional brokerage contracts offered by life and investment company brokers remain the main substitute for the firm's claim that the presence of switching costs can help reduce buyers' bargaining power. As discussed in this chapter, common or traditional brokerage contracts offered by life and investment company brokers remain the main substitute for the firm's.
SUMMARY
In this way, the company would put itself in a strong negotiating position with its intermediaries or customers. This chapter then went on to assess the extent of the bargaining power of buyers, who are essentially independent intermediaries served by the firm.
CHARACTERISTICS OF COMPETITIVE RIVALRY
- INDUSTRY GROWTH
- FIXED COSTS
- PRODUCT DIFFERENCES
- DIVERSITY OF COMPETITORS
- EXIT BARRIER
Given all of the above, it would therefore seem fair to conclude that the level of rivalry between firms providing traditional brokerage contracts, as these are lifetime and relatively low fixed costs, would suggest that competitive rivalry would be low. Therefore, given all of the above, it would be fair to conclude that there is a degree of rivalry between companies that provide traditional brokerage contracts that are life and.
SUMMARY
In view of the foregoing, it can be concluded that the level of rivalry of the life insurance and investment companies due to their high exit barriers is likely to be high, while that of other third party distributors is likely to be low.
INTRODUCTION
This savings, which will be earned by the life and investment businesses, can be plowed back into customer-focused product development. Chapter 4 examined the competencies required by the brokerage fraternity and found that brokers need skilled advisors to help scale up. This savings, which will be earned by the life and investment companies, can be plowed back into customer-focused product development.
INDUSTRY BOUNDARIES
- RESEARCH ISSUE
The study also aimed as its objective that the distribution of life and investment products could be outsourced with little or no impact on the companies' brand being affected in any way. The study envisages a separation of functions with life and investment companies focusing on client-focused development and the distribution of these products to independent agents would be better handled by a specialist.
THE THREAT OF ENTRY
- FINDINGS
Overall, it can be concluded that while the various defenses that the firm can raise are likely to have a significant impact on reducing the threat of entry posed by firms in related product markets, the threat posed by firms in the value chain in life. and investment companies remain very high. Overall, it can be concluded that while the various defenses that the firm can raise are likely to have a significant impact on reducing the threat of entry posed by firms in related product markets, the threat posed by firms in the value chain in life. and investment companies remain very high.
THE THREAT OF SUBSTITUTES
- FINDING
In summary, the most important substitution threat is that posed by traditional brokerage contracts offered directly to brokers by insurance and investment companies. While the presence of a better trade-off between price performance and switching costs may help to some extent, it is concluded that this has not reduced the threat enough, so the threat of switching traditional brokerage contracts remains high.
POWER OF SUPPILERS
- FINDING
But given the stage of maturity of the life insurance and investment industries that it currently finds itself in, and the intensity of competition among the firms in these industries, it is likely that even among the five most competitive companies, the third-party distributors will be able to obtain the required input, thus reducing the power of suppliers in this regard to no longer the average. But given the stage of maturity of the life insurance and investment industries that it currently finds itself in, and the intensity of competition among the firms in these industries, it is likely that even among the five most competitive companies, the third-party distributors will be able to obtain the required input, thus reducing the power of suppliers in this regard to no longer the average.
POWER OF BUYERS
- FINDINGS
Buyer switching costs, as discussed earlier, were found to be high and the firm is also encouraged to introduce other switching costs where appropriate, and this also serves to keep the bargaining power of buyers low. The other significant factor that increases the bargaining power of brokers is found to be the presence of substitute products viz.
COMPETITIVE RIVALRY
There appeared to be little or no diversity among competitors, further contributing to a very low level of rivalry within the industry. Therefore, the intensity of rivalry increases as the growth stage of the industry matures, otherwise it remains relatively low.
CONCLUSION
It is suggested that the successful implementation of these recommendations will strengthen the position of the new company, making its operations more attractive and increasing its chances of success. It is suggested that the successful implementation of these recommendations will strengthen the position of the new company, making its operations more attractive and increasing its chances of success.
SHORTCOMING OF THE STUDY
This work has been completed and it is argued that if the proposed model is to be implemented by the players in the industry, there should be fewer problems and companies would have better customer retention strategies without the problems of concentrating on distribution. This work has been completed and it is argued that if the proposed model is to be implemented by the players in the industry, there should be fewer problems and companies would have better customer retention strategies without the problems of concentrating on distribution.
CLOSING COMMENTS
Your participation will help determine whether such a model will have the impact of changing the way life and investment products will be distributed. Do you benefit from achieving the objectives of the various life and investment companies?
UNIVERSITY OF
KWAZULU- NATAL
