National Western Life Insurance (NWLI) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for National Western Life Insurance (United States)

Based on various researches at Oak Spring University , National Western Life Insurance is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of National Western Life Insurance

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that National Western Life Insurance can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the National Western Life Insurance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which National Western Life Insurance 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of National Western Life Insurance can be done for the following purposes –
1. Strategic planning of National Western Life Insurance
2. Improving business portfolio management of National Western Life Insurance
3. Assessing feasibility of the new initiative in United States
4. Making a Insurance (Life) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of National Western Life Insurance

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Strengths of National Western Life Insurance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of National Western Life Insurance are -

Learning organization

- National Western Life Insurance 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 National Western Life Insurance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at National Western Life Insurance emphasize – knowledge, initiative, and innovation.

Sustainable margins compare to other players in Insurance (Life) industry

– National Western Life Insurance has clearly differentiated products in the market place. This has enabled National Western Life Insurance to fetch slight price premium compare to the competitors in the Insurance (Life) industry. The sustainable margins have also helped National Western Life Insurance to invest into research and development (R&D) and innovation.

Effective Research and Development (R&D)

– National Western Life Insurance has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – National Western Life Insurance staying ahead in the Insurance (Life) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Training and development

– National Western Life Insurance has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Innovation driven organization

– National Western Life Insurance is one of the most innovative firm in Insurance (Life) sector.

Ability to lead change in Insurance (Life)

– National Western Life Insurance is one of the leading players in the Insurance (Life) industry in United States. Over the years it has not only transformed the business landscape in the Insurance (Life) industry in United States but also across the existing markets. The ability to lead change has enabled National Western Life Insurance in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Strong track record of project management in the Insurance (Life) industry

– National Western Life Insurance is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

High brand equity

– National Western Life Insurance has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled National Western Life Insurance to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Diverse revenue streams

– National Western Life Insurance is present in almost all the verticals within the Insurance (Life) industry. This has provided National Western Life Insurance a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Operational resilience

– The operational resilience strategy of National Western Life Insurance comprises – understanding the underlying the factors in the Insurance (Life) 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

– National Western Life Insurance is one of the leading players in the Insurance (Life) industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.

Cross disciplinary teams

– Horizontal connected teams at the National Western Life Insurance 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.

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Weaknesses of National Western Life Insurance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of National Western Life Insurance are -

Employees’ less understanding of National Western Life Insurance strategy

– From the outside it seems that the employees of National Western Life Insurance 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.

Compensation and incentives

– The revenue per employee of National Western Life Insurance is just above the Insurance (Life) industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.

High operating costs

– Compare to the competitors, National Western Life Insurance has high operating costs in the Insurance (Life) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract National Western Life Insurance lucrative customers.

Aligning sales with marketing

– From the outside it seems that National Western Life Insurance needs to have more collaboration between its sales team and marketing team. Sales professionals in the Insurance (Life) industry have deep experience in developing customer relationships. Marketing department at National Western Life Insurance can leverage the sales team experience to cultivate customer relationships as National Western Life Insurance is planning to shift buying processes online.

Skills based hiring in Insurance (Life) industry

– The stress on hiring functional specialists at National Western Life Insurance 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.

Increasing silos among functional specialists

– The organizational structure of National Western Life Insurance is dominated by functional specialists. It is not different from other players in the Insurance (Life) industry, but National Western Life Insurance needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help National Western Life Insurance to focus more on services in the Insurance (Life) industry rather than just following the product oriented approach.

High cash cycle compare to competitors

National Western Life Insurance has a high cash cycle compare to other players in the Insurance (Life) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

High dependence on National Western Life Insurance ‘s star products

– The top 2 products and services of National Western Life Insurance still accounts for major business revenue. This dependence on star products in Insurance (Life) industry has resulted into insufficient focus on developing new products, even though National Western Life Insurance has relatively successful track record of launching new products.

Capital Spending Reduction

– Even during the low interest decade, National Western Life Insurance has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Insurance (Life) industry using digital technology.

Ability to respond to the competition

– As the decision making is very deliberative at National Western Life Insurance, in the dynamic environment of Insurance (Life) industry it has struggled to respond to the nimble upstart competition. National Western Life Insurance has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Products dominated business model

– Even though National Western Life Insurance has some of the most successful models in the Insurance (Life) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. National Western Life Insurance should strive to include more intangible value offerings along with its core products and services.

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National Western Life Insurance Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of National Western Life Insurance are -

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, National Western Life Insurance can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help National Western Life Insurance to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, National Western Life Insurance can use these opportunities to build new business models that can help the communities that National Western Life Insurance operates in. Secondly it can use opportunities from government spending in Insurance (Life) sector.

Low interest rates

– Even though inflation is raising its head in most developed economies, National Western Life Insurance 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.

Buying journey improvements

– National Western Life Insurance can improve the customer journey of consumers in the Insurance (Life) industry by using analytics and artificial intelligence. It 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.

Learning at scale

– Online learning technologies has now opened space for National Western Life Insurance 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.

Loyalty marketing

– National Western Life Insurance has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

Leveraging digital technologies

– National Western Life Insurance 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.

Creating value in data economy

– The success of analytics program of National Western Life Insurance has opened avenues for new revenue streams for the organization in Insurance (Life) industry. This can help National Western Life Insurance to build a more holistic ecosystem for National Western Life Insurance products in the Insurance (Life) industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at National Western Life Insurance can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Insurance (Life) industry.

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 National Western Life Insurance 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Insurance (Life) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. National Western Life Insurance 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. National Western Life Insurance 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.

Developing new processes and practices

– National Western Life Insurance can develop new processes and procedures in Insurance (Life) industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Better consumer reach

– The expansion of the 5G network will help National Western Life Insurance to increase its market reach. National Western Life Insurance will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

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Threats National Western Life Insurance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of National Western Life Insurance are -

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 National Western Life Insurance.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for National Western Life Insurance in Insurance (Life) industry. The Insurance (Life) 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.

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 National Western Life Insurance business can come under increasing regulations regarding data privacy, data security, etc.

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 National Western Life Insurance in the Insurance (Life) sector and impact the bottomline of the organization.

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.

Regulatory challenges

– National Western Life Insurance 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 Insurance (Life) industry regulations.

Technology acceleration in Forth Industrial Revolution

– National Western Life Insurance has witnessed rapid integration of technology during Covid-19 in the Insurance (Life) industry. As one of the leading players in the industry, National Western Life Insurance needs to keep up with the evolution of technology in the Insurance (Life) sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, National Western Life Insurance may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Insurance (Life) sector.

Increasing wage structure of National Western Life Insurance

– 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 National Western Life Insurance.

High dependence on third party suppliers

– National Western Life Insurance high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

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. National Western Life Insurance needs to understand the core reasons impacting the Insurance (Life) industry. This will help it in building a better workplace.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Insurance (Life) industry are lowering. It can presents National Western Life Insurance with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Insurance (Life) sector.

Shortening product life cycle

– it is one of the major threat that National Western Life Insurance is facing in Insurance (Life) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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Weighted SWOT Analysis of National Western Life Insurance Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at National Western Life Insurance 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 National Western Life Insurance 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 National Western Life Insurance 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 National Western Life Insurance 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 National Western Life Insurance needs to make to build a sustainable competitive advantage.

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