vietnam national university, HANOI school of business Do Thi Mai IMPROVING COMPETITIVENESS of PETROLIMEX JOINT- STOCK INSURANCE COMPANY Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisor: Dr. Tran Phuong Lan Hanoi - 2011 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENT ACKNOWLEDGMENTS. iv TABLE OF CONTENT. vi LIST OF TABLES.
vii LIST OF FIGURES. ix LIST OF ABRREVIATION. Scope of work. Methodology and data sources.
Significance and expected results .3 CHAPTER 1: THEORETICAL FOUNDATIONS .1 Definition of competitiveness .2 Sources of competitiveness .3 Models to assess and analyze industrial competitive environment. Models to analyze firm competitiveness .14 CHAPTER 2: RESEARCH AND ANALYSIS APPLICATION OF MODELS TO ANALYZE PJICO’s COMPETITIVENESS .1 Overview of non-life insurance industry in general and in Vietnam. Non-life insurance industry in recent years .2 Non-life insurance industry in Vietnam .3 Key success factors in non-life insurance industry. Factors affecting non-life insurance enterprise’s competitiveness.
Overview of PJICO .29 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Introduction of PJICO. PJICO’s business activities .33 Unit: VND billion. Application of models to analyze PJICO’s competitiveness.
Application of PEST & Five Forces models to analyze factors affecting PJICO’s competitiveness. Application of Value Chain model to analyze and evaluate PJICO’s competitiveness. PJICO’s competitive position in comparison with its main competitors 76 CHAPTER 3: CONCLUSIONS AND RECOMMENDATIONS. Conclusion of PJICO’s Competitiveness.
Summary from internal analysis and competitiveness comparison. Assess to the real PJICO’s strengths & weaknesses – the core compentencies. Solutions for PJICO to strengthen its competitiveness & to achieve its objectives. PJICO’s strategic vision and objectives.
Solutions for improving PJICO’s competitiveness until 2017. Recommendations to Government. Recommendations to Association of Vietnamese Insurers. Recommendations to PJICO .111 LIST OF TABLES Table 1.1: Selected connotations of firm level competitiveness: .2: The five forces that shape industry competition of Michael Porter.
9 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1: Real growth rate of Industrialized and Emerging markets (1980 – 2009) .2: Real growth rate of insurance market of developing countries (1980 - 2010).3: Asia Pacific Non-life markets at a glance, 2008 - 2010 .4: Vietnam’s top 10 non-life insurance market share 2005-2010 .5: Non-life insurance premium income and premium growth 2004-2010 .6: Premium and Loss by class in 2010.7: Gross Premium Income by Type of Insurance 2007-2010 .8: Vietnam’s non-life insurance market shares 2005- 2010 .9: Conclusion of Environment analysis – Chances and Challenges .10: Labor Force of PJICO 2006-2010 .11: Statistics of Training Courses 2007-2010 .12: Some financial criteria of PJICO 2007-2010 .1: Identification of Sustainable Competitive Advantages - Strengths .2: Identification of Sustainable Competitive Advantages – Weaknesses .3: The real PJICO’s strengths and weaknesses – Core competencies .4: Possible solutions and actions. 91 viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1.1: Market premium and loss 2006-2010 .2: Non-life insurance premiums by business lines .3: Market share of Non-life Insruance Companies 2010 .4: Insurance Premium Income 2005-2010.5: PJICO’s Product Portfolio in 2010 .7: Vietnam’s savings and current account balance (in % of GDP) .8: Vietnam’s inflation and exchange rate .9: Some Vietnam’s economic figures .10: Value chain of PJICO ……………………………………………….11: Process of new product design .13: PJICO’s process of reinsurance .14: Survey process for non-life insurance products of PJICO .15: Claims handling process for non-life insurance products of PJICO. 65 ix LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABRREVIATION PJICO Petrolimex joint-stock insurance company SWOT Strengths, Weaknesses, Opportunities, Threat PEST Political, Economic, Social, Technological R&D Research & Development SCIC State Capital Investment Corporation CEO Chief Executive Officer GDP Gross Domestic Price IT Informatics Technology x LUAN VAN CHAT LUONG download : add luanvanchat@agmail. The problem Vietnamese non-life insurance market has been experiencing a challenging, struggling as well as fast-developing stage.
Going along with this context, each and every participant in this market needs to focus more on their real competitiveness to achieve further growth and sustainability; and PJICO is one of these players. Moreover, until now, there has not been a complete and thorough analysis on PJICO’s competitiveness and the ways to improve the real competitiveness. Therefore, the thesis is born to conduct analyses on PJICO’s competitiveness and suggest possible solutions to strengthen its competitiveness in order to stand and develop in Vietnamese non-life insurance market in the future. Objectives The objectives of this study can be listed as follows: Give the overview on concept of competitiveness Provide some analyses on macro and industry environment of insurance market Conduct a thorough study on PJICO’s competitiveness Recommend the possible ways to improve the current competitiveness so as to help PJICO be stable and progressive in the insurance market.
Research Questions Based on the problem and objectives listed above, some research questions are given and discussed: a. What is competitiveness? b. Method and process to analyze competitiveness of a firm? c. The way to conduct macro and industry environment analysis of insurance market? 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
The way to conduct internal environment analysis of an insurance company? e. What are suggestive solutions to improve the competitiveness of PJICO to the year 2017? Answering these above questions shall help the author fulfill and reach the objectives which the thesis are required to achieve. Scope of work In terms of theory, the thesis focuses on the concept of competitiveness, macro and industry environment analysis, and internal environment analysis of an enterprise. In terms of practice, the thesis focuses on reviewing the current insurance market in Vietnam, analyzing the external and internal environment of insurance market in order to assess the competitiveness of PJICO, and giving recommendations on possible solutions to improve its competitiveness to the year 2017.
Methodology and data sources This study uses the descriptive method for analysis through a specific case study of PJICO in the context of present Vietnam insurance market. The data are sourced through two ways: a. Secondary data are collected from research of books, websites, teaching notes, reports, magazines and newspaper, and other available documents. The primary data are collected chiefly through deep interviews with PJICO’s as well as partners’, other players’ managers, key staffs, and their customers.
The details of primary data are shown in analyses in Chapter 2 and Chapter 3; the list of interviewees and the list of questionnaires are shown in the Appendix 1 and 2. Significance and expected results By scanning the specific theory on competitiveness and analyzing the impacts of business environment of non-life insurance market, the study helps PJICO in giving suggestive solutions to improve its competitiveness to the year 2017. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Therefore, this methodology, information and analysis can be applied for other companies or other insurance companies or for the PJICO itself in other stages of development. Limitations This thesis is conducted in narrowed scope of insurance market and the applications to PJICO in certain period to the near future until 2017.
Thus, it may not wholly express and reflect the business environment as the whole and in other periods. Thesis Structure The study includes four parts as below: a. Chapter 1: Literature review and overview of non-life insurance market c. Chapter 2: Research and applications of models to analyze PJICO’s competitiveness d.
Chapter 3: Conclusions and recommendations 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: THEORETICAL FOUNDATIONS Day by day, firms have been facing increasing numbers of challenges, changes and competitors. Indeed, being successful is requiring new perspective and practice on competitiveness.1 Definition of competitiveness In spite of its significance, the concept and definition of competitiveness is widely controversial. Up till now, there has been no generally accepted definition of competitiveness as well as no mutually accepted definition to explain it. In the simplest terms, competitiveness is the ability to compete.
It has become the name of the game where economic strength of a country or an industry or a firm is described with respect to its rivals in the global market economy, in which goods and resources can move freely throughout territorial borders. In other terms, competitiveness is a broad concept. According to Beckley, “A firm is competitive if it can produce and services of superior quality and lower costs than its domestic and international competitors. Competitive is synonymous with a firm’s long run profit performance and its ability to compensate its employees and provide superior returns to its owners”.
The Organization of Economic Cooperation and Development (OECD) defines competitiveness as “the ability of companies, industries, regions, nations and supranational regions to generate, while being and remaining exposed to international competition, relatively high factor income and factor employment levels on a sustainable basis.” Whereas, under Fischer and Schornberg’s analysis, profitability is obviously a significant variable for assessing sector competitiveness and value added as a percentage of turnovers is a kind of profit margin that entity usually relies. “Market shares are often defined as the proportion of the total available market segment or sales that is produced or sold by a company. They also rationed that market share is a necessary competitive indicator at the firm level even when analyzing aggregates, market share may be of trouble” (InternationalJournal. Simply speaking, it can be said that 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com “competitiveness is how effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services” (Operations Management - MD021 www2.
Normally, three competitive levels are focused: country, industry, and firm level. Originated from a Latin word – Competer – involvement in a business competition for markets, competitiveness is now broadly used across different fields. This study is focused on firm-level competitiveness. It can be defined as the ability of firms to design, produce or create markets products/ services superior to those offered by rivals.
Among the three competitiveness levels, firm level is of greatest interest in practitioners and has attracted the maximum attention of researchers. Michael Porter says “it is the firms, not nations, which compete in international markets”. The firms actually compete in the global stage and cope with the direct competition. Some competitive dimensions that firms should focus as below: Cost Product Quality and Reliability Delivery Speed Delivery Reliability Sales and after sales service Coping with Changes in Demand Flexibility and New Product Introduction Speed Other Product-Specific Criteria 1.2 Sources of competitiveness The identification of sources of competitiveness has been supported by known perspectives on competitiveness.
According to Dr Ajitabh Ambastha and Dr. Momaya, select connotations of firm level competitiveness from literature review provide richer and comprehensive views on sources of competitiveness.1: Selected connotations of firm level competitiveness: No. Source 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 1 Brand and reputation 2 Culture and system 3 Human resources 4 Technology & IT applications 5 Value creation 6 Customer satisfaction 7 Market share 8 Productivity and new product development 9 Price, expenses 10 Marketing 11 Relationships 12 Others… Competitiveness can be viewed via competency and environment approach. The role of external factors (economic, legal, technological… factors) and internal factors (firm’s strategy, structures, human resources, competencies, and other tangible and intangible resources for their competitive success) should be emphasized.
In today’s turbulent business environment, dynamic capabilities, flexibility, speed and adaptability are becoming more significant sources of competitiveness. These kinds of sources will be clarified more through analysis models in the part 1.3 Models to assess and analyze industrial competitive environment In essence, the duty of leading manager is to understand and cope with competition, or in other words, work with competitiveness. However, they often define so-called rivalry too narrowly, as if it happened only among direct competitors. Yet the matter of competitiveness goes beyond direct competitors certainly.
In order to 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.