Contents

Executive Summary...................................................................................................................................4
Background to the Organization..............................................................................................................5
Analysis of the Environment.....................................................................................................................7
General evaluation ( Market size / growth / share )............................................................................7
Market Size........................................................................................................................................7
Market Growth..................................................................................................................................7
Market Share.....................................................................................................................................8
Degree of turbulence.............................................................................................................................9
Factors affecting many industries ( PESTEL Analysis )...................................................................10
Growth ( Lifecycle Analysis )..............................................................................................................13
Factors specific to the industry ( Key factors for success )...............................................................14
Factors specific to competition ( 05 Forces Analysis ).......................................................................14
Factors specific to immediate competitors.........................................................................................15
Gross Written Premium and Market Share..................................................................................15
Gross Written Premium and Market Share ( Class-wise )..........................................................16
Solvency Position.............................................................................................................................16
Earned Premium.............................................................................................................................17
Claim Incurred................................................................................................................................17
Branch network of competitors......................................................................................................18
Analysis of Strategic Resources & Capabilities.....................................................................................20
The resources and capabilities of Continental Insurance Lanka Ltd..............................................21
What is their purpose ?.......................................................................................................................21
Why are resources and capabilities, important in strategy?............................................................22
Value Chain Analysis..............................................................................................................................23
Primary Activities – Value Chain Analysis........................................................................................23
Secondary Activities – Value Chain Analysis....................................................................................25
Sustainable Competitive Advantage......................................................................................................27
VRIO framework - for Continental Insurance Lanka Ltd.............................................................28
Distinctive capabilities add value and deliver competitive advantage in three areas.....................28
Three distinguishing features of successful core competences.........................................................29
 Knowledge can deliver competitive advantage..................................................................................30
How can strategic resources and capabilities be improved..................................................................30
What other strategic resources are important......................................................................................31
Strategy dynamics...................................................................................................................................31
03 stage framework for strategy dynamics........................................................................................32
Strategic Leadership at Continental Insurance Lanka Ltd..................................................................33
Traditional and Contemporary leadership styles in.........................................................................34
Continental Insurance Lanka Ltd......................................................................................................34
Problem identification.............................................................................................................................35
SWOT Analysis....................................................................................................................................36
Porter’s Generic Strategy...................................................................................................................37
Ansoff Matrix.......................................................................................................................................38
BCG Growth Share Matrix................................................................................................................40
Strategic options......................................................................................................................................41
Evaluation of the Strategic options........................................................................................................41
Recommendations...................................................................................................................................42
Balance Scorecard...............................................................................................................................42
Conclusion................................................................................................................................................43
References and Bibliography..................................................................................................................44
REFLECTION.........................................................................................................................................46
Executive Summary

This report shall analyze the environment and the resources of Continental Insurance Lanka Ltd,
and formulate the strategic management policy for the organization.

The strategic management policy entails the broad general direction of where the organization is
headed. The organization could use its resources and / or develop new resources where needed in
order to improve performance which enables the organization to add value.

Background to the Organization

Analysis of the Environment
Environmental Analysis is crucial in identifying factors affecting the business. There are 09 tools
to analyze the business environment. They are :

General evaluation ( Market size / growth / share )

Market Size

The market is for all types of general insurance products such as motor insurance covers,
corporate health covers, travel insurance covers, home insurance covers etc.

The insurance market is a relatively big market where there are compulsory insurance policies
mandated by the government such as for motor insurance (3 rd party insurance covers). However
if we analyze the market in relation to Continental Insurance Lanka Ltd, we say can it is
relatively a medium sized player in the market ranking at No. 6 as per the Insurance Regulatory
Commission.

Market Growth

Continental Insurance Lanka Ltd is a growing player in the insurance industry with a growing
branch network as shown in the illustration below.
Market Share

The insurance market is a fragmented market with 28 licensed insurance companies providing
similar services across the nation.

Market of share of Continental Insurance Lanka Ltd amounts to 4.5 %

Key Competitors and Market Share

Degree of turbulence
Factors affecting many industries ( PESTEL Analysis )
Growth ( Lifecycle Analysis )

Continental Insurance Lanka Ltd is in the “growth stage” of the Growth Lifecycle analysis. It has
an expanding branch network and new products and innovative services are being introduced to
the market periodically. Their market share is growing year on year slowly but steadily. Hence I
would say with a very good business strategy in place, they could reach maturity and then extend
the life cycle with various other strategies if managed well.
Factors specific to the industry ( Key factors for success )

Factors specific to competition ( 05 Forces Analysis )

Threat of new entrants (Medium to High) Bargaining power of buyers (High)

High barriers to entry (licensing requirement) Possibility of switching providers (Eg:- Ceylinco / AIA)
Due to similarity of products and competitive rates, the
Highly regulated industry bargaining power is high.
Cost of marketing
Infrastructure cost Competitive rivalry (High)
High cost of maintenace Established competitors
Offering of competitive rates
Competing in the same market

Bargaining power of suppliers (High) Substitutes (Very Low)

Few re-insurance companies Medical expense sharing arrangements
Expert knowledge possessed by them
Factors specific to immediate competitors

Gross Written Premium and Market Share

The gross written premium and the market share of the competitors is mapped against
Continental Insurance Lanka Ltd, as illustrated above, and this helps us understand that the
company is doing moderately well and has acquired a market share of 4.57% by 2020.
Hence when we observe the statistics, we can see that it is in competition with Cooperative
Insurance and LOLC while the other big players are ahead in terms of their gross written
premium and market share.

Gross Written Premium and Market Share ( Class-wise )

The gross written premium in the former illustration is further sub-divided class-wise and is
mapped against Continental Insurance Lanka Ltd, as illustrated above.

Solvency Position

The solvency position of Continental Insurance Lanka Ltd, is in a favourable position in

comparison with its competitors as seen above.
Earned Premium

The premium earned is shown above class-wise for each competitor and compared with
Continental Insurance Lanka Ltd.

Claim Incurred

The claims incurred are shown above class-wise for each competitor and compared with
Continental Insurance Lanka Ltd, which shows a favouarble position for Continental Insurance
Lanka Ltd in comparison with the competitiors.
Branch network of competitors

Allianz Insurance

Ceylinco

Cooperative
LOLC

Sri Lanka Insurance

The branch network of each competitor is illustrated above together with the number of
employees and the number of agents of each organization. Accordingly, while Continental
Insurance Lanka Ltd has 61 branches, the competitive companies are having a larger network of
branches, which makes them have better presence in each area / district with the ability to have a
higher reach.
Analysis of Strategic Resources & Capabilities

Analysis of resources and capabilities is an inward looking exercise, as opposed to the analysis
of the environment which was more of an analysis of the outside to an organization.

These are important as they provide the organization with a competitive advantage and they help
to add value to the organization. This in turn helps to generate above average profits.
When we begin to analyze strategic resources and capabilities of an organization, 05 key
questions should be kept in mind at all times. They are :

The resources and capabilities of Continental Insurance Lanka Ltd

What is their purpose ?

Why are resources and capabilities, important in strategy?

Then we are posed with the questions of how we can improve competitive advantage and also
what other company resources are important. The below tools and methods of analysis will
help us answer these questions in a comprehensive and an elaborate manner.

It is important to identify and develop the resources that add value and deliver sustainable
competitive advantage. The first step of this is to analyze the value added by an organization’s
main resources and capabilities. This is done using the Value Chain Analysis.
Value Chain Analysis
Value chain analysis is a process of identifying and evaluating the primary and secondary
activities required to add value at each step in order to create value for customers. The purpose of
a value chain analysis is aimed at delivering the maximum value at the lowest possible cost by
increasing the overall efficiency.

Primary Activities – Value Chain Analysis

Secondary Activities – Value Chain Analysis
Sustainable Competitive Advantage
When we analyze how Continental Insurance Lanka Ltd could gain sustainable competitive
advantage through its resources and capabilities, we will have to focus on seven main elements.
VRIO framework - for Continental Insurance Lanka Ltd

Distinctive capabilities add value and deliver competitive advantage in three areas
Three distinguishing features of successful core competences
Knowledge can deliver competitive advantage

How can strategic resources and capabilities be improved

Benchmarking against some of the giants in the industry will certainly help Continental
Insurance Lanka Ltd, to identify the gaps of their performance and areas of development.
Ceylinco Insurance has 190 branches while Continental Insurance Lanka Ltd is operating with
61 branches. Hence, we can see that there is potential to develop the branch network.

Solvency position was at 254% at Continental Insurance Lanka Ltd in 2019, whereas all other
companies in the insurance industry were below that. Hence, we can exploit this resourcefulness
and plan carefully to expand operations in order to achieve better growth.

In terms of upgrading resources, it is good to develop better systems that automate some of the
processes which in turn will save time and money for the organization in the long-run.
What other strategic resources are important

Strategy dynamics
Strategy dynamics attempts to structure internal and external change and explore how strategy
should be developed as a consequence.
03 stage framework for strategy dynamics

In the insurance industry, there is a massive amount of paperwork that needs to be filed in their
daily operations. However, there is a new trend being formed globally towards a paperless office.
The aim is to cut down the costs and also be environmentally friendly by using less paper.

The world is moving towards digital products and platforms which is another change that is seen.

The government policy on the restriction of importation of vehicles is a change impacting the
insurance industry.

The economic crisis our country is facing currently has impacted the organization as most clients
are unable to upkeep with payments.

As a result, Continental Insurance Lanka Ltd introduced allows a credit period of 60 days to
settle payments, which eases the burden on clients.

“Virtual Assessor” is an innovative feature introduced by Continental Insurance Lanka Ltd, in

up-keeping with changing times as the world is moving more towards digital products.

The concept of a paperless office needs to be seized as an opportunity to implement IT systems

and processes and eliminate the use of paper in its daily operations.

Accordingly, Continental Insurance Lanka Ltd should reconfigure its resources to cater to this
change by adopting technological advances and integrating same to their systems, while training
their staff on how to embrace these changes.

Also, they could align their financial policies to accommodate the credit period or an installment
payments scheme, in response to the economic crisis.
Strategic Leadership at Continental Insurance Lanka Ltd

Continental Insurance Lanka Ltd has adopted a mix of Style Theories based leadership and
Contingency Theories based of leadership. We will see this in more detail below.
Traditional and Contemporary leadership styles in
Continental Insurance Lanka Ltd

Leaders convey the mission and vision, develop the strategic plan, and motivate employees to
use their skills to achieve the strategic goals and ultimately the leader's vision. Accordingly
Continental Insurance Lanka Ltd has included the main elements of leadership as illustrated
below, through its segment leaders as seen above, which we can conclude to be a very
successfully proven model.
Problem identification
There is a price war for insurance products among its competitors. Multiple companies offering
similar services make it difficult for Continental Insurance Lanka Ltd to retain clients and to
attract new clients.

Hence, innovation is the key in such instances.

The Industry Hand Book 2020 of Insurance Regulatory Commission of Sri Lanka, is a guide for
us to analyze the competitive environment of the industry. As such, we see that there is close
competition in the market for insurance products.

This demands for innovative products and services and novel thinking on the part of Continental
Insurance Lanka Ltd and is a “Market Pull” innovation.
In the development of strategic options, we will analyze the organization and all connected
factors further, using the following tools, in order to see clearly and extract the best suited
options subsequent to a detailed evaluation.

SWOT Analysis
Porter’s Generic Strategy

Porter's generic strategies are useful tools which assist with the management, growth and
profitability of a business that help generate a sustainable competitive advantage.
Ansoff Matrix
BCG Growth Share Matrix
Strategic options

Evaluation of the Strategic options

On a careful analysis of the tools we have used to analyze the environment and the resources, we
can see that Continental Insurance Lanka Ltd is faced with heavy competition.

The in depth analysis of the tools such as PESTLE, Porter’s 05 Forces, mapping of the Degree of
Turbulence, market share, market growth, factors specific to immediate competitors, SWOT
analysis, Porter’s Generic Strategy and Ansoff Matrix have helped to see the position of
Continental Insurance Lanka Ltd from many angles. This has facilitated in identifying the key
problems associated with the organization and helps us spot the most suited solutions from
within the analysis, after careful evaluation.

Option 01 would be to innovate a new package where Continental Insurance Lanka Ltd could
offer to their clients at an affordable rate by giving them the choice of customizing their cover
from a range of items. This will allow clients to customize their insurance package with the type
of cover they desire while being cost conscious.
They could also couple it with discounts offered from various merchants throughout the year.

Continental Insurance Lanka Ltd could also couple this with a credit period or by structuring an
installment scheme to ensure the clients are retained. This could also attract new clients.

While the focus is on designing more affordable options for clients, it is also desirous for
Continental Insurance Lanka Ltd to innovate on its technology to keep its costs low in the long-
run.

Recommendations
Option 01 & 02 can be looked at together and implemented jointly. While option 03 involves
making an investment which could bring in long-term results.

The most viable option would be to innovate a new package which allows the client to choose
from a range of covers while providing them with an option to pay in installments. In addition to
this, I would recommend that Continental Insurance Lanka Ltd conduct raffle draws and give
gifts to those clients who have been their loyal customers for more than 02 years and also for
those who have not made any claims during the insured period. This would improve brand
loyalty which will attract new clients for Continental Insurance Lanka Ltd.

The implementation of the chosen option thereafter expands into task oriented deliverables. As
such, it is very important to assess the company’s strategic objectives using a Balance Scorecard,
to get a clear idea and better focus.

Balance Scorecard
Conclusion
On a complete analysis of the environment and the resources of Continental Insurance Lanka
Ltd, we are able to deduct a holistic view on the direction of the organization. Then we look at
how strategy can be formulated and improved using these systematic analyses. We identify the
problematic areas which need to be addressed using tools of strategic analysis and decision
making.

Finally we evaluate the options and make a premeditated choice and implement the chosen
option in the most strategic manner, using the information surfaced during the analysis using the
above tools at each stage.
References and Bibliography

Continental Insurance Lanka Limited

https://www.cilanka.com/.

Insurance Regulatory Commission of Sri Lanka

https://ircsl.gov.lk/insurance-legislation/regulation-of-insurance-industry/

https://ircsl.gov.lk/instructions-and-guidelines/guidelines/

Insurance Regulatory Commission of Sri Lanka - Industry Hand Book 2020

Fitch Ratings
https://www.fitchratings.com/entity/continental-insurance-lanka-limited-94770090

Ceylinco General Insurance Limited

https://www.ceylinco-insurance.com/

Sri Lanka Insurance Corporation

https://www.srilankainsurance.com/

Co-operative Insurance House

https://www.ci.lk/

LOLC General Insurance PLC

https://www.lolcgeneral.com/

Allianz Insurance Lanka Ltd

https://www.allianz.lk/

NewsIn Asia website : Article on Sri Lanka among top 10 countries with highest food price
inflation: World Bank
https://newsin.asia/sri-lanka-among-top-10-countries-with-highest-food-price-inflation-world-
bank/
Daily FT website : Article on Continental Insurance recognised as “Fastest Growing Non-
Life Insurance Company in Sri Lanka 2022” by Global Banking and Finance Awards
https://www.ft.lk/financial-services/Continental-Insurance-recognised-as-Fastest-Growing-Non-
Life-Insurance-Company-in-Sri-Lanka-2022-by-Global-Banking-and-Finance-Awards/42-
736719

Daily FT website : Article on Fitch Ratings upgrade Harry J’s Continental Insurance to A+
https://www.ft.lk/financial-services/Fitch-Ratings-upgrade-Harry-J-s-Continental-Insurance-to-
A/42-729331

Article on Continental Insurance moves up in ‘Most Valuable Brands’ 2022 by Brands

Finance
https://www.cilanka.com/news/continental-insurance-moves-up-in-most-valuable-brands-2022/

https://brandirectory.com/brands/continental-insurance/

Write-up on the digital advancements road map of Continental Insurance

https://www.cilanka.com/news/the-winning-digital-insurance-road-map-of-continental-
insurance-lanka-limited/

Sustainability Policy of Continental Insurance

https://www.cilanka.com/our-company/our-sustainability-policy/
REFLECTION

Reflective writing is most commonly done following either the Gibbs Reflective Cycles Model
or Kolb Model.

I have decided to use the Gibbs Reflective Cycles Model for my reflection paper.

I have learnt many important aspects of management through the course of this module and I
have researched my way around areas I found challenging. I also must mention with a very high
sense of gratitude that the lecturer had been of immense support to me in understanding the
subject.

The subject has opened up my mind to look at systems and processes through various models we
learnt in class, and to structure the data available in a coherent manner enabling me to have a
clear view of various aspects of the organization.
I am now able to identify and assess the magnitude of issues affecting an organization, which
will help me act proactively in strategizing the future of the organization to maximize the profits
and to arrive at its goals.

This subject has shaped my pattern of thinking and has immensely contributed towards a shift in
the way I approach a problem to find a solution.

The subject was explained to us in a very clear manner with real examples drawn from the
corporate world. These discussions were enormously helpful in understanding the subject.

If we were given the opportunity to have physical lectures instead of zoom sessions, we would
have shared a lot of knowledge through interactions and group activities.

I could have participated more intensely in terms of activities and researched on the topics in
advance, so that I would have been able to contribute more using examples emanating out of my
findings as well.

In the next modules, I shall apply the knowledge gathered through this module as well as prepare
myself better for each topic well in advance, which would enable more interactive discussions
for everyone’s benefit.

Lastly I would like to mention that I very much enjoyed learning this subject and it is certainly
an added jewel to me I believe, as I am hoping to venture out on my own and establish a business
of mine in due course.