Internal Environment Analysis
Internal Environment Analysis
CUP Corporation was one of the largest insurance firms based in Europe with world wide operations selling various forms of insurance; health, life, causality, property, and automotive insurance. Another major insurance company recently acquired CUP Corp.
Company growth boasted more than 25 percent each year over the past 10 years. And despite slowing market conditions, CUP Corp. has often been able to gain market share.
The CUP Corporation is facing a significant internal strategy shift in response to the increasing defection of customers due to their dissatisfaction with the firm’s services.
External Environment/Industry Analysis
Intensity of Rivalry among Competitors (Strong)
CUP Corp. is under the pressure of increasing competition and consumer price sensitivity as a result of the deregulation of the European market
Industry growth has slowed considerably; by 1996 industry growth was flat. As a result, competition to gain greater market share within the current market is intensified.
Product Differentiability is minimal, therefore, the competition between insurance companies are to gain customers is fierce.
Bargaining Power of Customers (Strong)
Increasing competition suggests that there is a rising number of insurance suppliers, thus increasing the bargaining power of customers
Threat from Substitutes (Strong)
Relative price/performance of substitutes isn’t very different; therefore threat of substitutes is strong.
Buyers switching costs are minimal, thus increasing threat of substitution.
Buyer’s propensity to substitute is strong and clients aren’t bound by long contracts so clients can easily terminate existing contracts and sign with competitors.
CUP/Southern focused on a less price sensitive portion of the market, thus, I increasingly difficult economic times the threat of substitution is less than some of their competitors.
Threat of new entry (minimal)
Factors affecting entry barriers are:
Capital requirements are significant enough to provide a certain barrier to entry in this market.
Business Strategy Identification
Corporate Level Strategy
Extent of diversification:
Cup Corp offers a variety of different insurance products such as health, life, causality, property, and automotive