Strategic management paper for Insular Life Health Care Incorporated (I-CARE)

Date of Publication

2007

Document Type

Oral Comprehensive Exam

Degree Name

Master of Business Administration

College

Ramon V. Del Rosario College of Business

Department/Unit

Decision Sciences and Innovation

Abstract/Summary

The Health Maintenance Organization (HMO) industry is undergoing an intense degree of change brought about by increased competition, demanding customers, and rising medical costs. Despite the presence of these market pressures, the very difficult and challenging environment of the HMO industry can still open windows of opportunity for those companies which think and act strategically. This requires a thorough understanding of the HMOs future business environment.

To prepare for the future environment, the company must come up with strategies that will achieve targeted objectives. However, before a company can identify which strategies to formulate, it must first analyze possible changes in the macroenvironment and determine the threats and opportunities that lie ahead. Because industries differ so significantly, analyzing the HMO industrys competitive environment begins with identifying the industrys dominant economic features and forming a picture of the industry landscape.

After identifying the threats and opportunities to the industry, the company can now determine its internal capabilities that will permit them to implement its strategies. Strengths are important as they provide a competent competitive advantage to the company. On the other hand, a companys weaknesses are not necessarily their disability. Acknowledging a companys weakness or lack of capabilities can help companies formulate strategies to turn their disadvantages into advantages.

Insular Life Health Care, Inc. (I-care) is a wholly owned subsidiary of The Insular Life Assurance Company, Ltd. It was incorporated in 14 October 1991. While it had modest sales of only P210.5 million in 2005 or gross revenues of P230.5 million, it ranked third among the 13 select HMOs operating in the Philippines in terms of net income after tax after the big leagues Philamcare and Medicard. Moreover, I-care registered the highest net profit ratio at 15% in year 2005 besting big leagues like Philamcare and Medicard. The proposed vision for the company is to be the most preferred partner in health care management and to be a trusted leader in the Philippines HMO industry. As a result, the ultimate objective of the company is to be the largest in terms of membership revenues.

However, the reality of the vision will not happen overnight. Strategic plans must be done. Improvements in operations and systems have to be done as well. Preparing infrastructure such as distribution channels, and information systems is essential to the countrys success.

There are few competitors who have had first-mover advantages. Big players such as Medicard, Intellicare and Philamcare have already a headstart. Therefore, I-Care must take it one step at a time by first setting short-term objectives. The companys overall strategic and financial objectives are:

Strategic Objectives

1.To be the sixth largest HMO in the Philippines in terms of membership revenues by the year 2009 by continuously developing new products and services that are responsive to the changing needs and preferences of customers.

2.To make the I-care name synonymous to quality healthcare services and superior customer service by the end of year 2009.

Financial Objectives

1.To increase its market share in terms of total membership revenues from P210 million to P441 million by the end of year 2009

2.To generate at least 15% net profit margin by the end of year 2009

Differentiation will be the generic strategy of I-Care. This was taken from its position in the strategic map of the HMO industry. The dimensions used were specialization and channels selection.

From the analysis of its value chain, I-Cares strengths are primarily their actuarial competence, medium to wide product line relative to rivals, investments in information system to support operations, strong brand name and image or reputation and strong utilization management. Some of its weakness include lack of communication and coordination among business units, behind rivals in e-commerce capabilities, poor advertising and promotion, lack of training programs for employees and slow in product or service innovation.

In order to compete, and based on its strengths and weaknesses, the company has formulated the following strategies:

To enhance existing health care coverage and develop new products and services that are catered to specific target customer segments

To compete based on distinctive image strategy emphasizing customer service and technology

To expand existing distribution channels by including e-commerce

The overall strategic objectives and strategies will be the basis for the respective functional departments strategies. To implement properly these strategies, the 7s framework will be used to determine the companys lack capabilities.

Due to increase in revenues brought about by increase activities in Marketing, implementation of e-commerce, close monitoring of expenses, building a solid reputation for superior customer service, and investing in technology geared towards superior customer service, I-Care will attain both its strategic and financial objectives. The projected income statement will show that I-care will earn approximately P785 million in net profit on its 18th year of operations.

Abstract Format

html

Language

English

Format

Print

Accession Number

OCE1157

Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

111 leaves ; 28 cm.

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