Generali is one of the major players in the international insurance industry. It is an Italian multinational company. It is the leading company in Italy and third-biggest insurance company across the globe. The company considers industry as one of the important and strategic sectors for development, welfare, and growth of modern societies. The company is present in almost 50 countries, and employees 70,000 people. The company develops the integrated, competitive, customized and simple Property, casualty and life insurance solutions for customers. The company offers broad range of savings policies, MTPL, health policies and several other services (Generali, 2019).
The insurance industry is highly competitive. It is necessary for the companies to analyze the industrial competition. The Porter five forces analysis will help the companies in determining the industrial competition level. There are five forces for industrial analysis; threats from new entrants and substitute products, competition from existing rivals, bargaining power of suppliers and buyers. Here is the detailed Porter five forces analysis of Generali Group;
Bargaining Power of Buyers
For the big insurance companies like Generali Group, individual consumers bargaining power is weak. This is due to the low influence of them on company. However, distributors and brokers have strong bargaining power, because they deal in bulk quantity. There are many substitutes available in the industry, and the switching cost is moderate. This opens the more choices offers for them. Prudential, Met Life, Generali etc. provides almost same services, hence, less product differentiation increases the consumers bargaining power. It is necessary for the Generali to increase its consumer base across the globe to maintain its market position in the industry (McGraw, 2019).
Bargaining Power of Suppliers
Bargaining power of the suppliers are medium to high, because of many insurance companies operating in the industry. For suppliers, consumers are more, which gives them control over prices. Suppliers who provide capital like reinsurers, mostly control the price structure of the external capital. This causes the difficulties with the insurers for writing businesses. Generali takes good care of its suppliers across the globe and maintain efficient supply chain. Suppliers greatly effect profitability of company, and in highly fragmented industry, maintaining healthy relationship with them is necessary for Generali (Harvard case studies, 2019).
Threats of New Entrants
The threats from the new entrants in the insurance industry are limited, mainly for Generali. As the company is leading insurance company in Italy, it has set the service standards high, which are difficult for the new entrants to achieve. Moreover, government has imposed strict rules and policies for the insurance service providers, which makes the entry difficult. However, in the global market, Generali do face threats from the new entrants, as many non-financial providers are also entering in the industry for diversification and expansion. Hence, Generali needs to increase its services by innovation to attract consumers across the globe and retain its market position (Cerretti, and Modica, 2018).
Threats from the Substitute Products
Threats from the substitute products are high in the insurance industry. This is mainly because of many insurance companies providing more or less the same services. It is necessary for the Generali to produce some differentiated services in order to stand odd one out. However, Generali is taking initiatives to reduces this threat, as it wants to become a life-time partner with its customers. The company is moving towards digitalization and provide comprehensive assistance 24/7. Moreover, the company is transforming its operating model to simplify the processes and scale up the automation, which helps consumers and employees (Generali, 2019).
Rivalry of Existing Players
The competition in the insurance industry is very intense. Generali face competition in both local and international markets. There are big giants like Met Life, Prudential, etc. that gives tough competition, by offering new services in great prices. It has become necessary for the Generali to cut the cost and provide best differentiated services to customers. Moreover, the company should work on geographical diversification in order to mitigate the risk. It is necessary for Generali to maintain its leading market position, and work hard to get the one in international market too (Harvard case study, 2019).
References
Cerretti, M. and Modica, M. 2018. Insurance and reinsurance in Italy. [Online], Available at: https://uk.practicallaw.thomsonreuters.com/4-501-3463?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1, [Accessed on: 28th November, 2019].
Generali, 2019. What we are. [Online], Available at: https://www.generali.com/who-we-are/at-a-glance, [Accessed on: 28th November, 2019].
Generali, 2019. Strategy. [Online], Available at: https://www.generali.com/investors/investing-in-generali/strategy, [Accessed on: 28th November, 2019].
Harvard case study, 2019. Generali Paving The Way For Cee Expansion Harvard Case Study Solution & Online Case Analysis. [Online], Available at: https://caserighted.com/generali-paving-the-way-for-cee-expansion/, [Accessed on: 28th November, 2019].
McGraw, D. 2019. Porter five forces insurance industry. [Online], Available at: https://thebonsinexperiment.com/porter-five-forces-insurance-industry/, [Accessed on: 28th November, 2019].