Case Study Description of Conseco: Market Assumptions and Risk
In March 2007 C. James Prieur, CEO of insurance provider Conseco, was faced with a crisis. The front page of the New York Times featured a story on the grieving family of an elderly woman who had faithfully paid for her Conseco long-term care (LTC) policy, only to find that it would not pay her claims. Her family had to pay for her care (until her recent death), which unfortunately resulted in the loss of the family business. The family was now very publicly pursuing litigation. For a company that depended on thousands of employees, investors, and independent agents who sold the insurance plans, this reputational risk was a serious threat. On top of this immediate crisis, all signs in the industry were pointing to the fact that the LTC business itself was not viable, yet over the years Conseco had acquired a number of LTC insurance providers. Students are asked to analyze not only what Prieur's priorities should be in addressing the immediate crisis but also the risks inherent in the LTC industry and how this might affect Conseco's success as a business moving forward.
Swot Analysis of "Conseco: Market Assumptions and Risk" written by Russell Walker includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ltc Conseco facing as an external strategic factors. Some of the topics covered in Conseco: Market Assumptions and Risk case study are - Strategic Management Strategies, Crisis management, Leadership, Product development, Public relations, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Conseco: Market Assumptions and Risk casestudy better are - – central banks are concerned over increasing inflation, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Conseco: Market Assumptions and Risk
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Conseco: Market Assumptions and Risk case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ltc Conseco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ltc Conseco operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Conseco: Market Assumptions and Risk can be done for the following purposes –
1. Strategic planning using facts provided in Conseco: Market Assumptions and Risk case study
2. Improving business portfolio management of Ltc Conseco
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ltc Conseco
Strengths Conseco: Market Assumptions and Risk | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ltc Conseco in Conseco: Market Assumptions and Risk Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Conseco: Market Assumptions and Risk Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Ltc Conseco is one of the leading recruiters in the industry. Managers in the Conseco: Market Assumptions and Risk are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Ltc Conseco has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Conseco: Market Assumptions and Risk Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Ltc Conseco has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Conseco: Market Assumptions and Risk - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Ltc Conseco has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Ltc Conseco digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ltc Conseco has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Ltc Conseco is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Ltc Conseco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Conseco: Market Assumptions and Risk Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Conseco: Market Assumptions and Risk firm has clearly differentiated products in the market place. This has enabled Ltc Conseco to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Ltc Conseco to invest into research and development (R&D) and innovation.
Organizational Resilience of Ltc Conseco
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ltc Conseco does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Ltc Conseco is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ltc Conseco in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Ltc Conseco are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Ltc Conseco has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ltc Conseco has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Conseco: Market Assumptions and Risk | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Conseco: Market Assumptions and Risk are -
High operating costs
– Compare to the competitors, firm in the HBR case study Conseco: Market Assumptions and Risk has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ltc Conseco 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Conseco: Market Assumptions and Risk, in the dynamic environment Ltc Conseco has struggled to respond to the nimble upstart competition. Ltc Conseco has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Conseco: Market Assumptions and Risk that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Conseco: Market Assumptions and Risk can leverage the sales team experience to cultivate customer relationships as Ltc Conseco is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Ltc Conseco needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
No frontier risks strategy
– After analyzing the HBR case study Conseco: Market Assumptions and Risk, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Ltc Conseco, firm in the HBR case study Conseco: Market Assumptions and Risk needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Conseco: Market Assumptions and Risk, it seems that the employees of Ltc Conseco don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Ltc Conseco has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Russell Walker suggests that, Ltc Conseco is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High cash cycle compare to competitors
Ltc Conseco has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Ltc Conseco products
– To increase the profitability and margins on the products, Ltc Conseco needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Conseco: Market Assumptions and Risk | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Conseco: Market Assumptions and Risk are -
Buying journey improvements
– Ltc Conseco can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Conseco: Market Assumptions and Risk suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ltc Conseco in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ltc Conseco is facing challenges because of the dominance of functional experts in the organization. Conseco: Market Assumptions and Risk case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Ltc Conseco to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ltc Conseco can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ltc Conseco can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ltc Conseco can use these opportunities to build new business models that can help the communities that Ltc Conseco operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ltc Conseco can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Ltc Conseco has opened avenues for new revenue streams for the organization in the industry. This can help Ltc Conseco to build a more holistic ecosystem as suggested in the Conseco: Market Assumptions and Risk case study. Ltc Conseco can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ltc Conseco to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ltc Conseco to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ltc Conseco to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Ltc Conseco can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– Ltc Conseco has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Conseco: Market Assumptions and Risk - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ltc Conseco to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ltc Conseco can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Conseco: Market Assumptions and Risk External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Conseco: Market Assumptions and Risk are -
Stagnating economy with rate increase
– Ltc Conseco can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ltc Conseco in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ltc Conseco needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Ltc Conseco business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ltc Conseco.
Regulatory challenges
– Ltc Conseco needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ltc Conseco in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Ltc Conseco demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Ltc Conseco
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ltc Conseco.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ltc Conseco with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ltc Conseco can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Conseco: Market Assumptions and Risk Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Conseco: Market Assumptions and Risk needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Conseco: Market Assumptions and Risk is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Conseco: Market Assumptions and Risk is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Conseco: Market Assumptions and Risk is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ltc Conseco needs to make to build a sustainable competitive advantage.