Management
Manulife financial corporation: life insurance
Introduction
Manulife Financial is a Canadian based financial services company that has its principle operations in Canada, Asia and the United States. Since its inception in 1887, Manulife has built a solid global presence that provides its clients with trustworthy, reliable, strong and forward thinking solutions for some of their most significant financial decisions.
It has an international network of employees who are more than 84,000 including agents who offer clients a broad range of wealth management services and products as well as financial protection. Manulife offers commercial, personal, corporate and investment banking products to millions of customers through its three main operating divisions which represent an equal function of its overall business (Manulife Financial Corporation, 2012).
Operations in Asia
Dating back to more than 100 years, Manulife Financial has demonstrated proficiency in Asia after the issuance of the first Asian policy in Shanghai in 1987. As a result, it has been able to pursue a strong and sustained growth that enables it to still remain the leading provider of wealth management solutions in Asia. Manulife aims at preparing its customers for the future, a focus that drives their growth strategy and underpinning its commitment to the world. Its host countries have some of the largest and fastest growing economies enabling its growth of deep roots that leave a footprint throughout its regional areas. It has more than 50,000 agents on contract who sell its products as well as an expansion of its distribution capabilities that include more than 100 partnerships with banks and more than 500 independent brokers, dealers and agents (Manulife Financial Corporation, 2012).
Operations in Canada
Manulife’s first president a former Canadian Prime Minister, Sir John A helped the company grow to its current status. It now has more than 8,600 employees who can serve 1 in every five individuals in Canada. The company’s portfolio includes a full range of services and savings products that are available through a broad distribution base that meets its broad market base. Its investment offers a wide range of services and products while the Bank became one of the country’s first bank with insurance services (Manulife Financial Corporation, 2012). There are currently more than 16,000 businesses in Canada, who have their employee benefits programs entrusted to the bank whereby they are offered a seamless and unique integrated approach to wealth management particularly for its affluent clients. It was recently named one of Canadians top 25 Brands.
Operations in the United States
In the United States, Manulife Financial worked as John Hancock, and it recently celebrates its 150th anniversary in 2012. It has more than 6,300 employees with its main retail products focused on the provision of financial solutions at each stage of its clients’ lives. Products are distributed especially through licensed financial advisors as well as through the John Hancock Financial Network, which is a national network with independent firms. In the U.S, it is the best provider of target lifestyle portfolios that are based on the assets invested in Retirement plan services, Mutual Funds, Annuities and Variable Life Insurance. Since 2008, its Variable Universal Life products have been the first choice Americans take to meet their retirement and business planning as well as estates. Over time, it has indeed become a household name in the United States with almost 94 per cent overall brand recognition from a study by Chadwick Martin Bailey (Manulife Financial Corporation, 2012).
The Vision, Mission and Strategic Objectives of Manulife International
Vision
Its vision is to become one of the most professional financial services organization globally providing a reliable, strong, forward-thinking and trustworthy solutions for its clients most important financial decisions.
Values and Mission
Manulife’s values govern it daily strategic planning to how its treats its stakeholders and customers. They are described in an acronym PRIDE.
- Professionalism
- Real Value to Our Customers
- Integrity
- Demonstrated Financial Strength
- Employer of Choice
Professionalism
Manulife aims to be recognized as having the best standards of professionalism with its agents and employees possessing superior skill and knowledge for the benefits of its clients.
Real Value to Customers is Manulife most important personnel as it seeks to provide them with the best quality services, products, sustainable value and advice. As a result to ensure the customers are offered the best advice for their financial decisions.
IntegrityDealings in Manulife are characterized by the highest levels of fairness and honesty.
Demonstrated Financial StrengthManulife aims at being reliable to its clients as they expect and depend on, on it to fulfill its financial promises in the future. As a result, it has earned and expects to continue earning that faith from its clients by maintaining an uncompromised ability to pay claims, its superior investment performance results and healthy earnings streams as well as consistency with investment management philosophy (Manulife Financial Corporation, 2012).
Employer of ChoiceLastly, Manulife expects its employees to determine its future success. Therefore, the company aims at attracting and maintaining its brightest and best employees who will willingly invest in the human resource development for superior performance.
Strategic Objectives
Its strategic plan revolves around priorities that are all designed to meet its financial objectives as well as positioning the company for generational growth. Developed in 2012 and endorsed by its Board of Directors it outlines its focus of being a more customer-centric organization that is similarly able to leverage its branding and technology efforts.
Its strategic objectives and priorities are to:
■ Develop its Asian opportunity to the fullest,
■ Grow its asset and wealth management businesses in Canada, Asia and the U.S,
■ Continue to build a balanced Canadian franchise, and
■ Continue to grow a higher return on equity (ROE) and lower its risk in U.S. businesses (Manulife Financial Corporation, 2012).
Analysis of its Vision and Mission
Vision
The company's vision is what it believes are the ideal conditions for its community; it is how it expects its operations to be after all the important issues are addressed. Whatever an organizations dream is, they are always well articulated in clear mission statements that are short and precise sentences conveying its hope for its community of workers and clients in the future (Nihal, 2009). By developing a set of vision statements, a company clarifies its governing principles and beliefs for itself and its wider community (Bryson, 1988). Some of the general guiding principles on vision statements are that they should be:
- Shared and understood by all its members and the broader community
- Broad enough and inclusive of a diverse variety of local perspectives
- Uplifting and inspiring to all the company’s members who are involved in the effort
- Easy to communicate for instance they should be short enough to fit in a T-Shirt
Mission
The company's mission is its vision condensed into practical terms. It describes what the company is going to do and what it is going to that. They are similar to vision statements since they both look at the broader picture. They are however more concrete and action-oriented when compared to vision statements. The company's vision statement is expected to inspire people to dream, but its mission statement should inspire them to act. Mission statements sometimes refer to problems and while they do not delve into a lot of detail, they broadly hint at how the company expects to bridge and eliminate the problems through the mission statements (Bryson, 1988). The general guiding principles for mission statements are that they should be:
- Concise. They should be able to get their points across in a single sentence
- Outcome-oriented. They should explain the critical outcomes the company hopes to achieve through its working system. Mission statements explain the fundamental outcomes your organization is working to achieve.
- Inclusive. Although missions do not have statements on the company's critical goals, it is important to mention them broadly. Good mission statements should not be limiting particularly in sectors or strategies of the community that may become involved in the project.
Therefore, when the mission statements of Manulife Internal are checked and assessed according to these guidelines, it is evident that they fulfill the prerequisites needed to qualify as valid and true. The missions are concise, inclusive as well as out-come oriented which for instance is seen in its mission and aim of being reliable to its clients as they expect and depend on Manulife to fulfill its financial promises in the future. As a result, it has expects to continue earning that faith from its clients through maintaining an uncompromised ability to pay claims, its superior investment performance results and healthy earnings streams as well as consistency with investment management philosophy. Its mission on being an employer of choice is seen in its determination to see its employees' capability of steering the company to its future success and as a result it aims at attracting and maintaining its brightest and best employees who will willingly invest in the human resource development for superior performance. Its mission on providing real value to customers is inclusive as it particularly views clients as the most important personnel as it seeks to provide them with the best quality services, products, sustainable value and advice. As a result, it ensures that customers are offered the best advice for their financial decisions. Lastly, the mission statements are also concise as seen in its aim of performing dealings that are by the highest levels of fairness and honesty. This goes together with its dream of being recognized as having the best standards of professionalism with its agents and employees possessing superior skill and knowledge for the benefits of its clients.
SMART analysis on the objectives
All businesses set objectives since they help them to focus. These specific aims are usually catalysts to success for businesses that employ them when compared to those that do not. This is because a business with objectives knows exactly what it is trying to achieve. Objectives are, usually, set in all the areas of businesses which include production, sales, marketing and finance. Therefore, it is important to ensure that objectives have a guideline and a checklist that helps in their initial construction to ensure that they meet the needs and dreams of the business, organization or company. The SMART analysis is always applicable to check on objectives (Oxford Learning Lab, 2014).
A SMART objective is:
Specific,
Measurable,
Achievable,
Realistic and
Time scaled
An objective following the SMART guideline has a higher probability of succeeding since it is clear and specific narrowing down on what exactly is to be achieved. Achievement should be measurable so that the company can tell when it has achieved a specific milestone. Objectives should furthermore be achievable to ensure that it happens at the end of the day. When the objective is realistic, it means that it has taken into consideration the aspects of resource availability as well as time. Finally the true element of time means that the objective should have a set deadline that is workable that enables the company to focus on all the important tasks that are required to achieve the objective (Nihal, 2009).
The objectives of Manulife to develop its Asian opportunity to the fullest, grow its asset and wealth management businesses in Canada, Asia and the U.S, continue to build a balanced Canadian franchise and to grow a higher return on equity (“ROE”) and lower its risk in U.S. businesses are partly SMART as seen in the analysis below:
Specific: The objectives specifically mentions definite regional expectations that narrow down operations to either Canada, Asia and the U.S
Measurable: The objectives do not give a measureable value that can be measured to gauge whether or not they are achieved like, for instance, in the ROE, it should give an exact figure or percentage value.
Achievable; The company was able to assess it capabilities and market requirement status before setting the objectives to ensure that it will be able to meet all its objectives.
Realistic: The Company should be able to review the state of its employees, current market share and market resources to ensure that it will indeed be able to build a balanced franchise in Canada for instance.
Time Scaled: The objective does not have a definitive time scale attached to it and therefore it is not SMART since it will not have a specific deadline to guide it operations.
In general, at the end of its financial year, Manulife should be able to expand it Asian operations and deliver strong growth by expanding its distribution networks. It should similarly be able to generate record funds and sales and maintain its asset finance. Sales should also be achieved for both insurance and wealth products that are deepened and secured and to successfully expand its presence in the Managing General Agent channel and into the retail market other areas. Conclusively, it should have leverage on its trusted brand and its broad and diverse distribution together with the core business strength of its products.
External Analysis
Manulife has been able to stabilize and strengthen its capital position, hedge out strategies and reduce the risk as well reposition its product emphasis. The company’s positive progression in its earnings after the financial crisis in 2010 when it lost almost $1.7 billion has enabled it have a small gain as in the case of 2011, it also ended 2012 with a net income of $1.7 billion. The full measure of its progress is against its objectives that is now better understood by the market and is currently being reflected in the overall valuation of the company. The market capitalization of Manulife from December 31, 2012 went up to $24.7 billion from $5.2 billion in 2011. The total shareholder return in 2012 was on the other hand 30 per cent. The Canadian franchise has continued to grow and maintain stability. Manulife has been able to set records in Group Benefits with sales ticking over $1 billion. Affinity Markets have registered sales of over $100 million, and finally Manulife Mutual Funds have recorded assets under management of over $20 Billion and deposits of $2.1billion (Lento, Gregoire & Poulin, 2007).
The Manulife Bank reported record lending assets of over $21 billion in 2012 as it expanded its distribution reach by especially welcoming new advisors, improving support to its distribution partners and extending existing relationships (Nihal, 2009).
Manulife's strong distribution capability has allowed the firm to capture new businesses and provide a wide variety of financial services. It has a high capital ratio that is currently 222%, a value that is much higher than that required by regulators. The company’s investment mix similarly increased significantly in its value as the stock market continues to rebound (Lento, Gregoire & Poulin, 2007). In 2008, Manulife demonstrated its ability to access financial markets from any scenario through raising $2 billion from a selected consortium of Canadian banks. Although Manulife has however historically proven proficient in assimilating acquisitions, it has been put at continual risk from its acquisitive nature. This is seen from its recent quagmire with investors by raising $2.5 billion to shore up its capital that is already strong and hence a dilution of its equity base (Nihal, 2009).
Manulife's strong presence in Asia and especially in the fast growing Chinese market has provided an avenue for significant growth in the future. Its strong financial shape has helped it benefit from economic crises. It expected that its strong financial condition would also help it to potentially buy cheap and manageable acquisitions as well as distressed assets in the current financial scenario. Despite its upward trajectory, however, there is intense competition and market saturation in the North American market that is creating an environment with potential pressure on pricing and limited opportunities for growth. Manulife still faces a significant threat from both falling bond and equity markets. A recent fall in interest rates and corporate bond rates resulted in a significant negative impact on the firm.
PESTLE Analysis of Manulife Financial
The PESTLE Analysis framework scans a company’s external macro environment. The acronyms stand for Political, Economic Socio-cultural, Technological, Legal and Environmental.
Macro-environmental Analysis of Manulife
Politics
Manulife has suffered significantly from the economic turbulence of 2013 due to ineffective policies swayed by the political scene but however remains one of the stronger companies in the insurance sector. Its growth strategy and consequently its sound financial state should enable it to continue expanding.
Economics
While it was not uncommon for insurers like Manulife to earn in excess of up to 15% ROE annually over the last decade, it is widely expected that the ROEs for most companies will remain low. Earnings growth is not however expected to exceed single digits for most insurers.
Social
Despite the economic pressures particularly the bargaining and purchasing power of its client, Manulife insurers with international operations expect to benefit from the growth in international markets. The international marketplace, therefore, offers a stronger growth opportunity than the domestic arena, which is equally expected from the companies with a diverse customer base (Oxford Learning Lab, 2014).
Porter’s Five Forces
Porter's Five Forces analysis framework helps to analyze the characteristics affect competition within the company. It is best-suited for study industry competition but can however also be able to help companies establish a concrete business strategy. The less competitive a company is, the higher the potential for it to earn profits. Competitive industries on the other hand work to drive out the potential for other businesses that make money. The Five Forces model has three components measuring competition. The external forces which are out of control of the company include intensity of existing rivalry, threat of new competitors and threat of substitutes. The internal forces, on the other hand, which is the bargaining power of customers and that of suppliers are the result of the company's decisions. This combination determines the level of competition affecting the company (Oxford Learning Lab, 2014).
Industry Rivalry
Manulife currently has to decide where to invest its large cash reserve particularly due to its new competitor, Great West Life that became the successful bidder for Canada Life Financial. This has created a rivalry between the two companies.
Threat of New Entrants
With such new entrants like the Great West Life have become a huge threat to the operation of Manulife and therefore there is need for a strategic direction for consolidation of its financial services industry.
Threat of Substitutes
In seeking to address the growing concern of its competitors, Manulife is under the pressure of making a decision on the available substitutes that include the relatively safe bond market. There are other risky options to be explored that the company has to evaluate to ensure it does not lose out on rewards.
Bargaining Power of Buyers
Aside from all the investment and strategic decisions Manulife faces opportunity of increase of the bargaining power of its buyers with the appreciating value of the Canadian dollar. There is however an increased re-insurance risk that has been made evident the emergence of the Sudden Acute Respiratory Syndrome in the Asian continent.
Bargaining Power of Suppliers
Manulife Financial similarly has to contend with the acquisition of the legendary John Hancock Financial Services, Inc which is a key supplier of the company. The system has to have a balanced cash flow system.
References
Bryson, J. M. (1988) Strategic planning for public and nonprofit organizations: A guide to
Strengthening and sustaining organizational achievement. San Francisco: Jossey-Bass Publishers.
Lento, C., Gregoire, P., & Poulin, B. (2007) Manulife Financial and the John Hancock
Acquisition. Journal of the International Academy for Case Studies: Case from journal. Ref no: JIACS13-01-11. pp 15. Allied Academies
Manulife Financial Corporation. 2012 Annual Report. Annual Meeting May 2013.
Nihal, J. University of Oregon Investment Group. December 2009. Financials. Manulife
Financial Corporation
Oxford Learning Lab. Marketing Analysis. 2014. Retrieved from;
http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31
