Five competitive forces in the insuranc

Purchases large volumes Switching to another competitive product is simple The product is not extremely important to buyers; they can do without the product for a period of time Customers are price sensitive Availability of Substitutes - What is the likelihood that someone will switch to a competitive product or service?

By building economies of scale so that it can lower the fixed cost per unit. Well, given the high barrier to entry coupled with the high threat of substitutes, this may not be the most attractive industry to begin Five competitive forces in the insuranc in obviously!

This is because there is a low barrier to entry with potential to yield high profitable returns high margins on unit prices. Here are a few factors that can affect the threat of substitutes: Bargaining Power of Suppliers All most all the companies in the Life Insurance industry buy their raw material from numerous suppliers.

By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another. This is a direct substitute.

In contrast, within the Canadian Life Insurance Industry, the absolute cost as well as the capital requirement for entry is quite high, which serves as a deterrent for new entrants, however, works in favor of the current suppliers.

If the cost of switching is low, then this poses a serious threat.

Industry Handbook: Porter's 5 Forces Analysis

The most common example of substitutes would be Coke and Pepsi. The smaller and more powerful the customer base is of China Life Insurance Company Limited the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.

Essentially, how much bargaining power does one specific life insurance carrier have over another? In the case of the Canadian landscape as we know it, there are only about major life insurance carriers i.

For Insurance Carriers, important to note would be, how many competitors have the same or similar product offering? Highly competitive industries generally earn low returns because the cost of competition is high. By rapidly innovating new products. Bargaining Power of Buyers Buyers are often a demanding lot.

In regards to Canadian Life Insurance If substitutes are similar, it can be viewed in the same light as a new entrant. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.

This framework illustrated below has been studied in business cases, used in real-life scenarios and helped many companies map out their biggest competitors. Threats of Substitute Products or Services When a new product or service meets a similar customer needs in different ways, industry profitability suffers.

The Five Competitive Forces That Shape Strategy – Insurance industry

New entrants are less likely to enter a dynamic industry where the established players such as China Life Insurance Company Limited keep defining the standards regularly. How China Life Insurance Company Limited can tackle Intense Rivalry among the Existing Competitors in Life Insurance industry By building a sustainable differentiation By building scale so that it can compete better Collaborating with competitors to increase the market size rather than just competing for small market.

I hope that this post has brought insight to you and your particular business and competitive analysis. Managers at China Life Insurance Company Limited can not only use Porter Five Forces to develop a strategic position with in Life Insurance industry but also can explore profitable opportunities in whole Financial sector.

China Life Insurance Company Limited Porter Five Forces Analysis

New products will also reduce the defection of existing customers of China Life Insurance Company Limited to its competitors. Rivalry among the Existing Competitors If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry.

Competitive Rivalry - This describes the intensity of competition between existing firms in an industry. In Canada, as mentioned above, there are really only about nine or ten life insurance providers, which may seem like a lot to choose from, but in terms of ratio, comparing the number of buyers to suppliers, the bargaining power of buyers is LOW.

Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Customers often seek discounts and offerings on established products so if China Life Insurance Company Limited keep on coming up with new products then it can limit the bargaining power of buyers. Porter’s Five forces Porter’s five forces tool will assist in analysing the competitive nature of the airline industry in order to assess the position of Flyafrica.

This will enable FlyAfrica to make strategic decisions in order to increase geographical presence and profitability. 2 The Five Competitive Forces The Five Competitive Forces are typically described as follows: Bargaining Power of Suppliers The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services.

competitive strategies and porter’s five forces model by the insurance companies in kenya sanifa hassan shao a research project submitted in partial fulfilment of the.

China Life Insurance Company Limited managers can use Porter Five Forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing China Life Insurance Company Limited competitive advantage and long term profitability in Life Insurance industry.

The five competitive forces that shape strategies Editor’s Note: InHarvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E.

Porter. [How To] Competitive Analysis using Porter's Five Forces Framework Mar 19, PM / by Nick Joly You may be familiar with Michael Porter's renowned Five Forces Framework which analyzes the level of competition in any given industry.

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Five competitive forces in the insuranc
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