¶ … Insurance Company. Identify the relevant macro-environmental factors (level 1) in the case study. What impact do these factors have on the focal organization?

To the extent which the customer base and potential customer base of Time Insurance Company (Time) share the concerns of the global business community, these shared concerns serve as a template for appropriate professional behavior. These not only include matters that might (when improperly handled) prompt litigation against Time, but also include factors such as social accountability. Macro-environmental factors, however, are sometimes hard to determine in that they often fail to reflect a consensus. These must be seen as a polyglot of different concerns, some of which pertain to the company while others do not. The "value" system reviewed in the text is a measure of total value, and the market analyst must be careful to examine the total effect of changes. For instance, if prescribed staff restructuring requires the adoption of a WAN, which service representatives may use to enter information about customers, the loss in "macro-environmental" value among Amish communities that eschew the use of technology should be dismissed as inferior to the total value realized by the implementation of new technologies. Political concerns, such as the completion of necessary paperwork, must be regarded as superior to mitigating concerns about the time costs of completing the paperwork. This is because the value realized in expedition is outweighed by the risk-adjusted value associated with potential legal hazards. Although one can attempt to quantify the value of disparate changes to the firm's macro-environmental policy, many of these that could be considered 'good business practices' should be considered.

Discus the market factors (level 2) in the case study. How do collaboration, competition, supplier, and regulators affect the performance of the focal organization?

The market factors that categorize the current business climate are ones where the cost of issuing units is increasing. This might be associated with the cost of supplies, the cost of regulation, or scarcity of supplies due to competition for underwriting contracts. Although these may sometimes be negotiated and addressed, in the case of Time they seem to act as constraints on company activity that prompt other forms of generating revenue or cutting costs rather than items deserving of critical valuation and immediate redress. When cutting the number of steps that are non-value adding, steps must be included that impede the creation of negative value via fines levied by regulators.

Although a specific competitor is not mentioned, we must assume that a competitive market exists and the company should therefore either focus on being a cost or a service leader in order to maintain and grow its market share. Although collaboration with other suppliers might lead us to freeze price drops and maintain value, the value generated by this activity would be countermanded by regulation regarding the collusion of competitors. Unlike the example of macro-environmental factors, the process of handling market factors is strategy-based and reflects specific policies rather than the general mandates of a corporation's philosophy. There are links, however, between factors mentioned when addressing macro-environmental concerns and market factors. The clearest example is the link between the political factors in level one and regulatory factors in level two. None of the policies initiated by reformers seem to adversely effect the way that time has positioned itself quo level two.

Explain how the focal organization (level 3) creates value for its customers. What strategic changes are required to deliver outstanding value to its customers?

The focus of the group convened by Time is to seek better ways of meeting the needs of its customers at a lower cost. This it accomplishes by eliminating various steps, streamlining the process by which new policies are written, and limiting customer attrition during the approval phase. The focal organization, that which consists of stakeholders, business culture, organizational structure, strategies and value providers, is significantly altered in order to increase the delivered value of the service that Time provides. Here a pessimistic interpretation of the customer value funnel may lead one to believe that the interests of the customers are at odds with the dictates of the focal organization. One could cite that any process by which an organization is made more efficient is a threat to "value providers" (employees), business culture, and organizational structure in that it eliminates older policies that employees have become comfortable with. Any re-vamping of the way that a company does business is going to alter its business culture and organizational...

In that the long-term viability of the company is of ultimate importance, the re-structuring of Time is a boon to most employees even if the positions of some employees are eliminated, in that the prospect of bankruptcy is radically reduced. If employees are vested, smart financial decisions are always in their best interest in that they maintain an equity stake in the overall viability of the company.
Do Customers (level 4) perceive value as satisfactory, unsatisfactory, or superior? Why?

What attributes do customers value that are not receiving adequate attention by the organization?

As evidenced by the stated results of Time's newly implemented program, the effect of the changes has been to cause customers to alter their regard for the company, seeing value as once again satisfactory or superior due to the time costs that have been eliminated and the lower cost of policies. Although the funnel model prescribes that we should view positive value as a difference between that which is perceived and that which is delivered, this should be seen as a reflective model that evaluates one's satisfaction with a product in retrospect rather than one that determines whether or not potential customers will be enthusiastic about the product. As such, it is a value that is positively correlated with return business. This value is also positively correlated with new business, but only in that satisfied customers are more likely to recommend others to try the product. These values might prove higher in the case of Time than with other companies, as life insurance is a product that typically affects older generations much sooner than younger ones, and potential new policy holders are more likely than not to ask their parents' generation for advice when it comes time to select a life insurance policy. If Time offers term life insurance, the business of re-occurring customers is especially important because one does not have equity in a term life insurance policy. If policyholders hold equity, the company is less exposed to the risk of having them choose a different company because it is harder for them to liquidate the money that is currently vested in Time.

Critique the organization's business performance based on traditional (e.g. sales, profits, market share, and image) and value based (e.g. net present value, value over time) performance criteria. What can the organization do to improve its performance?

As stated, Time experienced a 60% reduction in policy re-issuances and a 10% reduction in cost per policy issued. Although the cost of implementation may have initially soured Time's operating expenses, the company was ultimately able to generate higher revenues due to their successful implementation. Better profits were largely due to greater retention. Because the net present value is calculated as the present value of all future earnings, Time's policy can be seen as a success in terms of dividend discount model methods of financial valuation. One can assume that better customer satisfaction can be used in the company's marketing campaigns along with greater retention rates, which will improve the company's image and sales. Because more customers are retained, the net number of customers is higher. If this rate exceeds the growth rate of the insurance industry, Time's market share will increase over...time.

In order to improve overall performance, Time must be able to convey to the general market the effect that implemented changes have had. It isn't enough that existing policy-holders and shareholders are aware of Time's increased efficiency; if the company wishes to grow it must market these changes before they are implemented and marketed by Time's competition. Clever marketing always has the possibility to portray the company in a way that will attract new business, but if the claims Time makes can be substantiated by objective evidence, its chances are even better. Of course, the development of further cost efficiencies would do much to please the company's board of directors and its shareholders.

What were the key factors in this case, especially as they have to deal with process re-design?

First it must be said that the inherent risks associated with restructuring were not discussed. Although Time was successful in re-vamping itself in order to enhance revenues, it must remembered that Time's hand was forced in making these changes by the prospect of increasing costs and customer attrition. Strategists usually think of these factors in terms of a best-case scenario, a worst-case scenario, and a base-case…