Chapter 1: Planning Flashcards
One of the greatest contributors to the failure of companies.
Inadequate planning
In addition to proper management, an insurance brokerage must also do what? (8)
Be innovative.
Be price competitive.
Attract/reward ideal employees.
Manage risks effectively.
Market products to appropriate segments.
Develop, formulate, and implement intelligent business strategies.
Plan for the future.
Focus on profitability.
Define a top-down management system.
Management makes decisions unilaterally on mission, strategies, and objectives for the brokerage.
What is a bottom-up approach?
Where management provides the mission and broad strategies, but leaves development of goals, objectives, and activities to individual business units.
Pro & con of top-down systems.
Management feels firmly in control/in charge of decision making.
Potential lack of “buy-in” by employees. “Management’s” plan, not theirs.
Pro & con of bottom-up systems.
IBUs fully buy-in to “their” plan.
Management may feel a lack of control, and IBUs may not be appreciative if changes are made by management.
Characteristics of a plan. (4)
Simplicity, practicability (realistic), severability (identifiable/separate parts), flexibility.
What is a long-term (3-5 years) brokerage plan called?
Strategic Plan
What do strategic plans do?
Give direction to action plans’ specific activities.
What is an action plan?
A plan that (typically) applies to IBUs, with specific activities that support fulfilment of the strategic plan. Generally have a 1-year time horizon, and are much more detailed than the strategic plan.
Components of a Strategic Plan (7)
Scanning the external environment
Analyzing internal environment & assessing current position
Matching strengths/weaknesses to opportunities/threats
Defining corporate focus
Developing strategies
Developing objectives
Setting goals
What goes into scanning of the external environment?
Looks at competitive environment to identify threats & opportunities.
a. Distant environment
Factors that are critical to long-term survival, but are out of the brokerage’s control/influence. eg. legislation, insurers’ plans
b. Near environment
Factors over which the brokerage may have a degree of influence. eg. brokerage’s clients, prospects, targeted market segments, direct competitors
What are the tools used to analyze the near environment?
Competitor profiling; size, financial condition, location of HQ, range of products, market share, service quality, public image
Market profiling; identification, analysis, forecasting of key marketplace factors that may pose threats or present opportunities
Client profiling; achieves understanding of the nature and characteristics of current clients. identifies the needs of clients
What does a brokerage need to know when analyzing internal environments & assessing current positions? (7)
What it does better than competitors
Missed opportunities; strengths not being used effectively
Competitive weaknesses
Fiscal/financial strength of the firm
How competent/strong its human resources are (staff)
Strength of product lines
Efficiency, and how cost effective the firm is
The matching of internal strengths & weaknesses to external opportunities & threats.
S.W.O.T. analysis
Define ‘corporate focus’.
A brokerage’s vision, value statement, and mission statement.
‘Who are we?’ ‘What is our purpose?’
What is ‘vision’, in a corporate focus?
a. What target are we aiming for?
b. What does the future look like for the firm?
c. What is special about the future vision of our firm?
What do Value Statements answer?
a. What values have we used as the foundation of our business?
b. Are all our values fixed/long-term?
c. What words define our values?
Mission Statements answer what questions?
a. What is the organization’s purpose of existence?
b. What is the organization’s long-term direction, and what is the point of reference for all employees?
What are the differences between strategies, objectives, and goals?
Strategies - long term ‘battle plans
Objectives - refinements of portions of the strategies
Goals - specific/detailed, achievements and targets that bring one closer to completing objectives
Purpose of strategy creation, regarding brokerages.
Describes how the brokerage intends to achieve its mission.
It is essential that strategies a brokerage adopts be…
Explicit and communicated in writing.
This will:
Facilitate allocation of resources
Provide clear direction for all employees
Bridge transition from broad, conceptual mission to specific objectives, goals, and budgets
What are objective?
Another step in translating broad, directional mission statements into concrete actions.
Objectives support the strategies, with multiple objectives for each strategy.
“Our objectives are to…”
Goals vs Objectives vs Strategies
Goals express in specific terms what Objectives express in general terms and which the Strategies state conceptually.
What is used to set goals?
SMART
Specific - clearly state what is to accomplished
Measurable
Action-oriented
Realistic - not so aggressive as to be unattainable
Timely - completion date/time frame
What goes in to Implementing the Plan?
- Controlling implementation
- Implementation program - organizes brokerage resources for specific activities
- Progress report - monitors to identify activities that are not on schedule, and to allow for necessary corrections - Linking budgets to strategies, objectives, and goals
- Budget must support achievement of the plan - Motivating for implementation
- Employees are often not aware of these objectives, resulting in challenges of accomplishing them
- Increasing correlation between individual employee goals and brokerage goals results in greater success
