Sun Life Financial – Case ReportEssay Preview: Sun Life Financial – Case ReportReport this essaySUN LIFE FINANCIAL – CASE REPORTteacher XCorporate strategySйbastienYounesTable of contentTable of contentExecutive SummaryIntroductionCompany backgroundSun Life Financial Involvement in ChinaDefinition of the problemDescription of the procedure to solve the problemThe researchThe main implications of the resource-based viewThe competence based perspective of strategic managementThe strategic logicThe business and the organization conceptThe business conceptThe organization conceptThe core processEnvironmental analysisThe swotStrengthsWeaknessesOpportunitiesThreatsThe PESTPolitical factorsEconomic factorsSocial factorsTechnological factors (information gathered from internet dating 2005)The attractiveness of the Chinese marketThe MarketThe peopleInternal Strategies VS Operation ChinaResults and Conclusions(Dis)Advantages Entry Strategies +City ChoicesEntry StrategiesCity ChoiceGovernmental Relations & Joint Venture ManagementRecommendationsBibliographyExecutive SummaryFor the course of corporate strategy we had to make a report dealing with the problem of Sub Life Financial entry into the Chinese market.In this report we will deal with several topics related to the corporate strategy course and we based our theory upon the literature of this course. The book that was taken to base our theory is “the new strategic management” of Ron Sanchez and Aimй Heene.
After a long analysis of the case we came up with a recommendation of having a full speed approach and choosing Shanghai as city to enter the Chinese market.
IntroductionCompany backgroundSun Life Financial of Canada began in 1865, Montreal, selling insurance policies to Canadians in the process of the countrys creation. By the 1890s, Sun Life Financial had begun an internationalization process, by expanding into Nicaragua, Ecuador, Peru and Chile and later into Asia, including Japan, India and China; at the turn of the century, Sun Life Financial looked to diversify its investment and began expanding trough growing industries, such as electric utilities and gas, telephone and transport. Sun Life Financial maintained private ownership and staved off a take-over attempt by U.S firm in the 1950s, allowing it to strengthen its roots in Canada.
Sun Life Financial had a six pronged approach to its strategyAggressively expand the wealth management businessStrategically grow higher return protection business linesAchieve superior shareholder returns while maintaining Financial disciplineLeverage strong brands across multiple product offeringsCapitalize on distribution strengthsPursue expansion in key strategic marketsNowadays the majority of their sales were generated by sales in Canada and United states.Sun Life Financial Involvement in ChinaIn 1992, China opened two geographical market areas in the country to foreign investmenent, Shanghai and Guangzhou. Sun Life already had a presence in China in the 1920s but as the communist party took the power in 1949 they were asked to leave the country. The purpose of Sun Life was to be present in Asia and to provide information to the Canadian headquarters.
In 1999, the Chinese government granted the right for the company to apply for a license. And later on they signed a memorandum of understanding for a joint venture with china Everbright Group. These agreements were required by the Chinese government to maintain domestic involvement in business expansion within the country.
Its strategy was to partner with a respected and prestigious firm that had clout with the national and local authorities.The company wanted to create an entity that was “Chinese in operation in spirit with western business practices, management and technology.” Sun Life aimed to enter into the “strategically higher return protection business lines followed by plans to enter the wealth management business. This plan would mean creating a mutual fund and starting a fee based asset management business; in the future, Sun Life financial felt that the pensions business would be attractive. However, both wealth management and pensions domains were not open to foreign companies.
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Source: BK Investment Management, U.S., 2014 (as of 1/18/12);
Source: BK Investment Management, U.S., 2014 (as of 1/18/12); Sun Life’s first investment was a “Chinese property & property real estate; the company also went public for $42 million in March 2014, making it the most expensive venture since the U.S.; In 2014, Sun Life made another $40 million to $50 million in capital expenditures. It also has spent $20 million on public infrastructure. Sun Life’s venture capital allocation grew from $500,000 to $1 million with the company’s own investment arm.
For comparison, most of Sun Life’s investments and investment projects in China were in the U.S.: $3 million for $20 million; $900,000 for $40 million; $150,000 for $40 million; $250,000 for $10 million; and $250,000 for $10 million to $40 million. According to the Chinese government’s State Administration for the Development of National Asset Management Funds, in August 2014 Sun Life issued up to $10 billion in capital loans for its private investment portfolio, $150 million of which involved public