Topic BSC MANAGEMENT 2010/ 2012 BATCH -14

GROUP MEMBERS
NAME NIBM INDEX UCD STUDENT ID EMAIL

Ms. L K Jayawardhana Ms. K S P Perera Ms. S J K De S Gunasekara Mr. T D Weerawardana Mr. M R Razlan Aaqib Mr. M A M Abdullah

BSCI14-075 BSCI14-119 BSCI14-062 BSCI14-174 BSCI14-001 BSCI14-002

10295445 10296972 10295437 10295666 10295607 10296301

lakshij1@gmail.com spriyadarshinip@gmail.com janitha_gunesekara@hotmail.com thrakaweerawardana@yahoo.com razlanaaqib@hotmail.com aaboobucker@gmail.com

GROUP ASSIGNMENT 1

Select an organization that has gone for a re- orientation change in the recent past. Study the change management process and describe it in detail. Identity the most critical aspects of the change done and evaluate the effectiveness of the management’s efforts of dealing with each aspect. Come up with proposal to avoid the difficulties faced by the management in the said effort, in future similar situations. Length of your answer should be a minimum of 20 pages. Please note that the lecturer comment from and the plagiarism test result test sheet should be attached to the assignment. Module Lecturer Submission Date : : : Managing Change - BMGT2001L Mr. Kolitha Ranawaka. 27th December, 2010

Group Members

STATEMENT OF AUTHORSHIP

2

. …………………………….” Name of the Group Member Signature Ms. ……………………………. M R Razlan Aaqib Mr. L K Jayawardhana ……………………………. ……………………………..“We declare that all materials included in this report are the end result of our own work and that due acknowledgement has been given in the bibliography and references to ALL sources be they printed. ……………………………. ……………………………. Ms... electronic or personal. K S P Perera Ms. T D Weerawardana Mr. S J K De S Gunasekara Mr... M A M Abdullah ACKNOWLEDGEMENT 3 .

Also. this assignment would not have been possible. Kolitha Ranawaka who has always given support. Our special thanks are extended to our course Director/ Lecturer Mr. We indebt to all of you for their enthusiasm and reference input to the assignment. EXECUTIVE SUMMARY 4 . finally much credit should go to our group members who contributed with their individual efforts for the success of this assignment. Without them.We wish to express our sincere appreciation to the employees of AVIVA NDB Insurance PLC for their great contribution in assisting and guiding us to collect data for this assignment. direction and advices to prepare this assignment.

ethics and innovation have helped it to soar to new heights.Eagle Insurance now known as AVIVA NDB Insurance PLC took wing as a leading player within Sri Lanka's insurance landscape in the late 1980s. Sri Lanka who is selling Life and General Insurance policies. This assignment was mainly focused on analyzing the re-orientation change in the recent past at AVIVA NDB Insurance PLC. Over the years. the Company's good governance practices. TABLE OF CONTENT 5 .

Executive Summary Table of Contents Introduction 1. INTRODUCTION 6 .

Re Orientation involve the combination of separate acquitions. units such as mergers and 7 .

In February 2006. Aviva is World’s oldest insurance company and number one in the UK and 6th largest in the world. Capital Development and Investment Company Limited (CDIC).27%) of Eagle Insurance in 2003.1.92% stake in CDIC. As the major shareholder with a 75. Eagle Insurance Company Limited took wing as the fledging CTC Eagle Insurance Company. UK) as the company's main shareholder. the company became part of an international conglomerate with the National Development Bank (NDB). BAT Industries divested its financial services business to the Zurich Financial Services Group based in Switzerland. The Bank of Ceylon was also a key shareholder of Eagle Insurance with its 23. Eagle Insurance transformed in to AVIVA NDB Insurance creating a historical landmark in the insurance industry. The NDB holds 36. Origin In 1988.15% holding 8 .6% holding in its subsidiary. as part of a global strategy in 1999. NDB acquired 100% of NDB Finance Lanka Limited. globle giant Aviva and NDB group. once again Eagle became a member of a multinational group of Aviva International Holdings Limited Kingdom. Thus. In February 2010. This transformation combined the strengths of Eagle’s major shareholders. one of the largest financial conglomerates in Sri Lanka with 51% and 41. became the ultimate holding company of Eagle with an indirect shareholding of 51%.INTRODUCTION TO THE ORGANIZATION: AVIVA NDB INSURANCE PLC 1.1% of shares indirectly and 5% directly in Eagle Insurance. with Ceylon Tobacco Company (a member of BAT industries. Sri Lanka's development banking giant being the major local shareholder. the holding company (87.2.

2.2.3.2.17 of 1982 Re-registered under the Companies Act No.4.PQ 18 Legal Form • • • • • Public Company with limited liability Incorporated in Sri Lanka on 12th December 1986 under the Companies Act No. NDB has been a key shareholder of Eagle since 1997. Purpose Prosperity & peace of mind 1.2. TWICE THE VALUE” 1.2. 1. Vision “ONE AVIVA. Aviva became the major shareholder of Eagle in 2006. Corporate Information Name of the Company:Aviva NDB Insurance PLC Company Registration No. 7 of 2007 A composite Insurance Company licensed by the Insurance Board of Sri Lanka The shares of the company are listed on the Colombo Stock Exchange Tax Payer Identification Number (TIN) 9 . Core Values Progressiveness Performance Integrity Teamwork 1.5.respectively.

Chairman Deepal Sooriyaarachchi David Hope Sarath Wickramanayake Indrajit Wickramasinghe Accounting year 31 December Registered Office/ Head Office No. Kumaran Ratnam Road. Attorney-at-Law Company Registrars SSP Corporate Services (Private) Limited No.Ernest & Young Chartered Accountants Shah Rouf. Colombo 03 Lawyers Julius & Creasy Attorneys-at-Law & Solicitors No.101. Colombo 02 Company Secretary Ms Chathuri Munaweera – LLB.41. 75. Inner Flower Road. Janadhipathi Mawatha.134001356 Vat Registration Number 1340013467000 Directors Bill Lisle.Managing Director Harvey Chamberlain Eran Wickramaratne Lal de Mel Nihal Welikala 10 . Colombo 01 Auditors:.

2.0. 201. Pest refers to political. consumer protection and employment. work and leisure. Economics Factors:Economics Factors include issues such as exchange rates.No. They also include shifting attitudes towards education. which can have knock. cost of borrowings. socio-cultural and technical factors. Technical Factors:Technical Factors include issues such as the levels of investment that competitors are making in research and development and the outcome of this investment. PEST analysis PEST analysis can be used to examine the organization’s environment and search for evidence of change that might signal a problem or opportunity. Socio-cultural Factors:Socio-cultural Factors include demographic trends such as a fall in the birth rate or an ageing population. De Saram Place. economic. consumption patterns and so on. Cultural factors can also affect business ethics and the way business is done in different parts of the world. new competitors and the trade cycle. training. fiscal policies and so on. Political Factors:Include new legislation in area such as environment management. regulation of markets in area such as telecommunications and broadcasting.on effects on the availability of trained labour.1. Colombo 10 2. cost of raw materials. change in levels of disposable income. the 11 . Theoretical Background Organizational diagnosis is concerned with identifying what is that needs to be changed. security of suppliers.

it also includes an assessment of the organization’s strengths and weaknesses and its capability of responding to the threats and opportunities that confront it.availability of new materials. Such an analysis of the strategic environment is referred to as a SWOT analysis 12 . The research was funded by the fortune 500 companies to find out what could be done about this failure. 2. means of distribution and so on. Strengths Opportunities Weaknesses Threats This remarkable piece of history as to the origins of SWOT analysis was provided by Albert S Humphrey. the rate of obsolescence and the need to reinvest in plant and people. In addition to assessing the opportunities and treats that a PEST analysis might reveal. A scan of the internal and external environment is an important par of the strategic planning process.2. Robert Stewart. Dr Otis Benepe. Albert Humphrey. Environmental factors internal to the firm usually can be classified as Strength (S). SWOT analysis SWOT analysis offers a more comprehensive approach to diagnosing organizationenvironment fit. The Research Team were Marion Dosher. The background to SWOT stemmed from the need to find out why corporate planning failed. Birger Lie. products. production processes. one of the founding fathers of what we know today as SWOT analysis SWOT analysis came from the research conducted at Stanford Research Institute from 1960-1970. or Weakness (W) and those external to the firm can be classified as Opportunities (O) or Threats (T).

SWOT Analysis Framework Environmental Scan Internal Analysis External Analysis Strengths Weaknesses Threats SWOT Matrix Opportunities Strengths Firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. The following diagram shows how a SWOT analysis fits in to an environmental scan. Threats Changes in the external environment also may present threats to the firm. Opportunities The external environment analysis may reveal certain new opportunities for profit and growth. In some cases a weakness may be the flip side of strength. As such. 13 . it is instrumental in strategy formulation and selection. Weaknesses The absence of certain strengths may be viewed as a weakness.The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates.

Change in population age New distribution channels Management Threats Changing Customer base Closing of Geographic markets Technological advances Tax increase Change in population age New distribution channels Exter nal factor s Lack of patent Protection Absence of important Skills Weak brand Poor reputation among customers W Intern al factor s O Unreliable Product Lack of access to the best resources. Management Opportunities Changing customer taste Technological advances Changes in government polices Lower Personnel taxes. Distribution networks. Lack of access to key distribution networks. T Positi ve Negati ve 14 .S SWOT Analysis Weaknesses Strengths Patents Technological Skills Leading brand Good reputation among customers Production Quality Exclusive access to high grade resources.

It can be used to identify relationships that are misaligned and point to elements of 15 .The SWOT Matrix A firm should not necessarily pursue the more lucrative opportunities. The SWOT matrix (TOWS matrix) is shown below SWOT /TOWS Matrix Strengths Weaknesses S-O strategies W-O Strategies S-T Strategies W-T strategies Opportunities Threats • S-O strategies pursue opportunities that are a good fit to the company’s strengths. which. in some cases the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. make an important contribution to organizational effectiveness. • W-T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.3. • • W-O Strategies overcome weakness to pursue opportunities. a matrix of these factors can be constructed. To develop strategic that take in to account the SWOT profile. The McKinsey 7S Model The McKinsey 7S model highlights seven interrelated elements of organizations. Rather it may have a better chance at developing a competitive advantage by identifying a fit between the firm’s strengths and upcoming opportunities. S-T Strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. when aligned. 2.

Structure:. the model does not make explicit reference to outcomes or the external environment. integration and coordination mechanisms. reward and resource allocation.Core beliefs and values and how these influence the organization’s orientation to customers. resolving conflicts and so on.the organization that need to be changed.Division of activities. 16 . Shared values:. nature of informal organization. The seven elements are: • • • Strategy:. Style:.Typical behavior patterns of key groups. educational and attitudinal characteristics. shareholders and society at large • Skills:. and the organization as a whole. While it considers strategy.The organization’s core competencies and distinctive capabilities.Purpose of the business and the way the organization seeks to enhance its competitive advantage. such as managers and other professionals.Formal procedures for measurement. Systems:. its demographics. • • • Staff:.The organization’s human resources. employees. informal routines for communicating.

PRESENTATION OF INFORMATION (LKR Mn) Total revenue 2009 9655 2008 7265 2007 5875 2006 4813 2005 4277 Total Revenue 12000 10000 Value LKR Mn 8000 6000 4000 2000 0 5 4 3 Year 2 1 Total revenue (LKR Mn) Profit before taxation 2009 958 2008 605 2007 546 2006 539 2005 528 17 .0.3.

Profit before taxation 1200 1000 Value LKR Mn 800 600 400 200 0 1 2 3 Year 4 5 Profit before taxation (LKR Mn) Gross written premium GI 2009 2504 2008 2045 2007 1867 2006 1468 2005 1211 Gross Written Premium GI Value LKR Mn 3000 2500 2000 1500 1000 500 0 1 2 3 year 4 5 Gross written premium (LKR Mn) Gross written premium Life 2009 4632 2008 4342 2007 3788 2006 3150 2005 2832 18 .

Life 3000 2500 Value LKR Mn 2000 1500 1000 500 0 1 2 3 Year 4 5 Gross written premium (LKR Mn) Net assets 2009 2579 2008 2224 2007 2025 2006 1743 2005 1467 Gross Written Premium GI Value LKR Mn 3000 2500 2000 1500 1000 500 0 1 2 3 year 4 5 Gross written premium (LKR Mn) Life Fund 2009 18048 2008 14484 2007 12306 2006 10508 2005 9238 19 .Gross Written Premium .

98 Return on net assets 40 35 30 LKR Mn 25 20 15 10 5 0 1 2 3 Year 4 5 Return on net assets (%) 20 .12 2008 27.97 2006 30.2 2007 26.92 2005 35.Life Fund 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1 2 3 Year 4 5 LKR Mn Life Fund (LKR Mn) Return on net assets (%) 2009 37.

46 2007 17.(LKR Mn) Basic earnings per share 2009 24.45 2005 17.35 2008 15.18 Basic earnings per share 30 25 LKR Mn 20 15 10 5 0 1 2 3 Year 4 5 Basic earnings per share (LKR Mn) Market capitalisation 2009 5340 2008 3450 2007 4523 2006 4065 2005 2550 Market Capitalization 6000 5000 LKR Mn 4000 3000 2000 1000 0 1 2 3 Year 4 5 Market capitalisation 21 .57 2006 17.

0. the Company was able to maintain solvency levels which are much higher than the minimum levels required by the regulator. Economics Factors:During the year. ANALYSIS AND DISCUSSION PEST analysis Political Factors:In choosing assets for investment. The Company’s statements of solvency are certified annually by the Company’s appointed Actuary and independent external auditors.4 % and 6. 22 . AVIVA NDB has ensured that the determinations issued by the regulator relating to the admissibility of assets and the Solvency Margin Rules are complied with in full. As AVIVA NDB has invested a high proportion of its assets in government securities and other admissible assets.7 % for GWP with the General insurance and Life insurance segments reporting a growth of 22.4. the Company recorded a growth of 11.7 % respectively.

opening branches in Jaffna. the Company. expanded its reach to the North and East during 2009. Batticaloa and Vavuniya and increasing its footprint to 54 distribution points operating through 35 locations. in order to mitigate likely risks and ensure regulatory compliance. AVIVA NDB entered into an MOU during the year with Wayamba University to provide a certificate level qualification in Personal Financial Management exclusively to the Insurance Advisors of AVIVA NDB to enhance their financial knowledge. In line with the objectives of creating new market space. In a unique Private Public Partnership. the Company divested its asset management subsidiary Eagle NDB Fund Management Company Limited (now known as NDB AVIVA Wealth Management). NDB AVIVA Wealth Management is owned by NDB bank (51% effective control) and Aviva (49% effective control) who are the parent companies of AVIVA NDB and therefore still remains within the Group. NDB AVIVA Wealth Management is the outsourced service provider of investment management services to the Company. Socio-cultural Factors:The Company focused on voluntarism throughout 2009 where employees were given paid leave to engage in Company approved corporate social responsibility activities. The outsourced investment management operation is governed and overseen by the Investment Committee of the Board through an investment mandate drawn up based on the risk appetite of the Company. The sales force will storm the market in 2010 as WealthPlanners providing financial solutions not limited to insurance alone.In June 2009. This is another first in the industry pioneered by the Company. Bancassurance relationships were strengthened in 2009 with an operating presence of 129 locations. 2.945 member strong direct sales force contributed towards selling our policies in addition to the bancassurance distribution channel. the policyholders of AVIVA NDB will receive superior financial advice. which is one of the Company’s key corporate responsibilities. Through this technical skill enhancement. 23 .

Ratmalana. To strengthen this initiative volunteer staff underwent a one-day intensive training programme at the Kotte. This was an extension of the Company’s consistent focus on corporate responsibility. This was an initiative to empower and encourage employees to give back to the community and engage in activities identified from the company ‘charities list’.AVIVA NDB continued to conduct a mass media campaign reminding the public to light crackers with care and contributed significantly to a reduction of accidents during Avurudu festivities. They entered Advanced Level class and were entitled to receive the scholarship benefits. AVIVA NDB Samana. The buoyant equity market in 2009 stimulated a greater interest in unit linked products due to potential equity returns associated with these products. AVIVA NDB Insurance presented Higher Education Scholarship benefit certificates to 25 students from all districts in the country. Sevana School for children with special needs and the School for the Deaf and Blind. There 24 . These ‘Highfliers’ have proved their academic excellence by topping the batch in each district at the Government Year 5 Scholarship Examination held in 2002. Technical Factors:Unit-linked or investment-linked Life insurance products are in their nascent stage in Sri Lanka. was extended with the involvement of AVIVA NDB volunteers. as well as the volunteers themselves. These volunteers were allocated to Special Schools on Staff Volunteer Hours on a continuous basis. This was to ensure mutual benefit to the children with special needs. focusing on the disabled community under the theme of “Creating an equally-abled society”. AVIVA NDB launched the Employee Volunteer Leave programme – “Eagle Lend a Hand” in which employees were granted paid leave to engage in volunteer social work. The Company’s consistent aim is to educate and create awareness on the dangers of firecrackerswhen used carelessly and conducts extensive multimedia and below-the-line communication campaigns during festive seasons.

Weaknesses:- Opportunities:With the changes taking place in the industry the Company is pioneering once again to leverage on the growth potential and the opportunities garnered from the resolution of the 33 year old internal conflict. 25 .is a customer need for similar investment based products as evidenced by the growth in these products. Threats:Competition with other insurance companies. As consumer needs in first time. with 5 offering only General insurance and 2 offering only Life insurance products. AVIVA NDB Insurance launched Unit-linked or investment products for retirement and cater to education. skill and competency of its people to deliver value to all stakeholders. tried and tested processes and practices to transform into an entity that is supported by a “family culture” and rich heritage of the past. As a result. to deliver Prosperity and peace of mind to all its stakeholders at this new dawn. resources. SWOT analysis Strengths:The transformation will combine the strength that is NDB bank . the industry will need to explore new markets and products in order to sustain continuous growth. The transformation addresses a strategic shift in 2010 which focuses on gaining a sustainable competitive advantage by leveraging on the new windows of opportunity.The insurance sector in total consists of 17 insurance companies.a world class Sri Lankan . of which 10 are composite insurers.with Aviva’s global experience.

talent is diverse and we value it in all its forms. with the ultimate outcome of them having development paths tailored to their particular needs. Talking Talent has a long term view in terms of where the Company envisions being in the future and the type of talent we need in the organisation. Talking talent identifies and builds on the existing potential and strengths of the individual while recognising employees for who they are. During the year. A programme of “Talking Talent” was unveiled in 2009 as part of Aviva’s brand promise to its employees. miniscule portion of the total employee population. These leaders were taken through the Talking Talent process in detail. 26 . Whilst certain companies use the term “talent” to a selected. The process is to be rolled out to all employees of the Company in future.The McKinsey 7S Model The seven elements are: • Strategy:- • Structure:- • Systems:- • Staff:The full time employees of the Company increased to 786 during the year to support the expansion and growth initiatives. the Company commenced rolling out Aviva’s Talking Talent process to the second level of leaders. At AVIVA NDB. at AVIVA NDB all employees are considered as “talent”.

the Company is able to learn what would cause an employee to make or break the psychological contract with the Company as well. Every individual is unique. This is referred to in interactions with employees and in tailor-making employee solutions. Every departmental head is now equipped with a pack of cards. The Accelerated Leadership Development Programme is a 3 module residential programme focusing on enhancing technical and general management skills and personal development for 30 selected junior management staff. In tailor-making recognitions. branded ‘Rainbow Cards’. • Style:- • Shared values:- • Skills:- AVIVA NDB is known for its abundant learning and development opportunities. On the back of each card a reward is indicated which best suits the individual. The launch of Aviva Academy. to recognise their employees on-the-spot. Therefore. In identifying this. powered by the learning tools of the Aviva group. organization believes that the way recognise employees should not be a ‘one size fits all’ model. The Real Deal cards are also used as a recruitment and development tool.“Real Deal” is a tool that is used to identify what really and individually matters to employees in their work and life. was a significant event this year. 27 . representing the colours of the rainbow. The ‘real deal’ for all employees is being identified and is in the process of being centrally stored in the Human Resource Information System. AVIVA NDB launched a new recognition scheme during the year.

In addition. This is a continuation of the Leading People workshop launched in 2008. 48 Regional Managers participated in this inaugural programme. the Company launched the Aviva Academy Leadership Development Programme for managers of Life distribution. 28 .

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