Aviva Plc is one of a leading multinational company in British. The company is operating in insurance industry and headquartered in London. It has more than 33 million consumers across the globe. the company is currently present in over 16 countries. It is known to be leading the market in the general insurer, pension provider and leading life in United Kingdom. The company focuses on the Asian and European markets in particular. It is also expanding itself in South east Asia and China because of the growth rate. It is known to be second biggest general insurer across Canada. The strategy of the group is to make it easier for customers the international saving, insurance business, and retirement fields (Aviva, 2019).
The company is successfully achieving its milestones in the presence of many competitors in the industry. It is necessary for the company to have industrial analysis which helps in identifying the strategic position of the company. Porter five forces model helps the company in this analysis. It also determines the new opportunities and threats for the company. The company finds it useful in decision making process. Here is the detailed Porter five forces analysis of Aviva Plc;
Bargaining Power of Buyers
The bargaining power of the consumers in the insurance industry is high. This is mainly because of the wide choices available to them. There are many companies operating in the industry and providing the same services. Moreover, the switching cost to the consumers are low. This makes it easier for the customers to switch to any other company if getting low prices. However, it is necessary for Aviva to handle the situation strategically. It is necessary for the company to offer more differentiated services and products to attract more consumers. Offering discounts and packages helps in attracting more consumers. The company should also expand in other geographical regions to mitigate the risk (Harvard case study, 2019).
Bargaining Power of Suppliers
The bargaining power of the supplier is moderate for the Aviva Plc. The company provides insurance, pension and other services to the consumers. The major supplier of it can be network and software providers. The other suppliers can be of raw materials, and labour force. The bargaining power of the labour force can be high. This is because of the fact that human capital is getting expensive across the globe. However, Aviva plc deals the situation carefully. It lowers its dependency on few suppliers and manages efficient supply chain. It maintains good relationship with its suppliers and develop long term agreements and contractual relationship in different regions (Henry, 2018).
Threats of New Entrants
Threats of the new entrants are high in the insurance industry. The main reason for this is, there are many financial service providers who also offers the insurance facility. This gives the insight to other financing firms to expand themselves in this area. However, for the completely new entrant, the start-up cost will be too high. They have to follow strict rules and regulations in the industry. It is difficult and expensive to develop strong brand name and increase the customer base. Mainly, because of the presence of big companies in the industry. It is necessary for the Aviva plc to increase its own consumer base. The company should work in different areas to retain the market position (Murphy, 2018).
Threats from the Substitute Products
Threats of the substitute products are very limited in the insurance industry. There are many companies offering the same services in lowest prices. hence chances are high of consumers switching to them. The direct substitute of these services does not exist, but the competitors are becoming the substitute for the companies. There are financing firms who are also offering the insurance services and consumers might switch to them, because of getting all financial services from one place. Aviva plc can increase its geographical consumer base and promotional techniques to avoid such threats (Henry, 2018).
Rivalry of Existing Players
There are many competitors of Aviva in the industry. For example, AXA, Allianz, Bupa, etc. The company is facing competition from both local and international companies in the industry and in regions it is operating. The competition is intense in the industry, not only from the insurance companies but also from the financing firms involve in insurance business. It is necessary for the industry to offer more differentiated services in order to maintain its leading position in the industry (Craft, 2019).
References
Aviva, 2019. Who we are? What we do? [Online], Available at: https://www.aviva.com/about-us/who-we-are-and-what-we-do/, [Accessed on: 31st December, 2019].
Craft, 2019. Competitors of Aviva plc. [Online], Available at: https://craft.co/aviva/competitors, [Accessed on: 31st December, 2019].
Harvard case study, 2019. Aviva Investors Harvard Case Study Solution & Online Case Analysis. [Online], Available at: https://caserighted.com/aviva-investors/, [Accessed on: 31st December, 2019].
Henry, Z. 2018. Aviva Plc Porter five forces analysis. [Online], Available at: https://www.case48.com/porter-analysis/9218-Aviva-Plc, [Accessed on: 31st December, 2019].
Murphy, E. 2018. Aviva Plc Porter Five Forces Analysis. [Online], Available at: https://www.essay48.com/term-paper/9218-Aviva-Plc-Porter-Five-Forces, [Accessed on: 31st December, 2019].