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International Business Studies

Geographic and Current market

The organizations geographical market and products offered

Aviva Group Plc is a multinational British Insurance Company that is headquartered in London. The organization is considered the largest insurance company in the United Kingdom. Since its inception, the organization has not only operated within the UK but has also considered moving into other nations across the world. Currently, Aviva plc operates across 16 countries in the world (Aviva plc, 2014).  The company mainly focuses in five major markets in Europe, in Canada and in Asia. Aviva has reported a higher level of performance in its operations in various regions across the world. This has contributed to its primary listing in the London Stock Exchange as well as secondary listing on the New York Stock Exchange. With the expansion of the business and the higher performance level that is constantly reported by the organization, it is expected that Aviva Plc will move to other additional countries in the near future.

Aviva plc offer insurance services to the consumers. The company was created as a merger between two British Insurance companies, CGU plc and Norwich Union. This was followed with the adoption of the Aviva name that has remained the brand name of the insurance company. The major operations of Aviva Plc entail the provision of general and life insurance, fund management services and long-term savings products to the consumers. Delaware Insurance Department (2008) has indicated that Aviva Plc offers more than 50 products that cover pensions, life insurance, savings and investment, personal finance and health care insurance. It is also observed that Aviva Plc is one of the major insurance companies that offer the largest health care insurances in the UK and in most of the nations under which it operates. The company also provides private medical insurance and protection of income to the many customers across the world. Premium bonds, liability insurance, management of retail and institutional fund, commercial property liability and insurance of business are other services that are offered by the organization.

It is evident that the company offers a wide range of insurance products. According to Smale, Björkman & Sumelius (2013) most of the products mentioned are offered by the UK branch of the company that is the parent company. It is evident that not all of the products mentioned are offered in some of the Aviva subsidiaries that have been opened in different parts of the world. Nevertheless, it is vital to note that personal and business insurance products are offered in almost all the Aviva insurance firms that operate in various nations across the world.

Transaction modes

Wholly-owned subsidiary

In its expansion into different geographical regions, Aviva Plc has adopted different kinds of approaches to offer its services in the regions. In the Canadian market, the organization adopted the wholly-owned mode to serve the consumers in the market. According to Aviva plc, (2014) Aviva Canada Inc. is a wholly-owned subsidiary of the Aviva Plc that is head quartered in the United Kingdom. The Aviva Canada is basically a spin off from the Aviva Parent Company. As such, the UK based company has 100% stake in the Canadian based organization. The operations and the activities are managed by the parent company. Moreover, all the profits generated in the sale of the different insurance products are a contribution to the overall profitability of the organization (Aviva plc, 2014). Other regions where the company has adopted a wholly-owned subsidiary mode include France.

Joint Ventures

Aviva Plc has also used the joint venture mode to serve its major markets. This mode was used in India, where the organization formed a joint venture with an existing Indian insurance company to offer the insurance services to the consumers within the region. The joint venture was between Aviva plc and the Dabur Group an Indian based Insurance Company. According to Grönroos (2016) a joint venture is mainly formed between two organizations to enable them share their strengths, minimize risks observed within the market so as to achieve a higher competitive advantage in the industry. Operating as a joint venture in the Indian market therefore provided an opportunity for Aviva Plc to gain a higher competitive advantage by minimizing risks that are likely to be observed in the business market.

Aviva has also formed a joint venture with COFCO ltd in China. The organization has a 50% stake in the operations and profitability of the organization. This mode of joint venture was adopted by the organization to assist it gain a higher competitive advantage. This has actually been accomplished since the Aviva joint venture is ranked as the seventh amongst the foreign life insurance companies in China.

Other joint ventures are also observed in Vietnam, where the organization has formed a joint venture with VietinBank with an aim of providing term and endowment assurance products to the consumers. The company also has a joint venture with First Financial Holding that is based in Taiwan. The major aim of this joint venture is to offer life and health insurance to the consumers.


Aviva Plc has also adopted the mode of partnership to operate in various markets across the world. The company adopted a bancassurance partnership with the DBS bank in Hong Kong. This approach was adopted to expand the distribution channel of the company in the country. Partnerships mode have also been adopted in Lithuania to expand the distribution channel of the company. The formation of partnerships has resulted into the creation of new insurance entities between the partnering organizations (Eisend & Schmidt, 2014). Aviva and the partners involved are therefore involved in a single business unit and enjoy the profits obtained from the business in a 50% basis.

From the analysis of the modes that have been adopted by Aviva in its entry into different markets across the world, it is observed that the company has adopted the wholly-owned subsidiary, joint venture and partnership mode. There are however more joint ventures in comparison to the other forms of business opened across the world. This justifies the assertion that the company prefers the use of the joint venture mode in comparison with the other modes. According to Jensen & Petersen (2014) joint venture is a strategy adopted to enable an organization mitigate the possible threats and risks that are likely to be observed in a new market, as well as assist an organization acquire a higher competitive advantage in the new market. As opposed to the wholly-owned subsidiary, where the company is required to initiate a new start up and manage all the other business operations independently, in joint ventures, the foreign company merges with a local organization that was already in the business thus no need for initiation of an entirely new company (Aharoni, 2014). The fact that the local companies are already aware of the nature of the market and modalities involved means that they are likely to make sound decisions in their operations. As such, the formation of a joint venture with a well established local business presents lower risk in business than forming and entirely new business in the market. The possibility of achieving higher benefits from the formation of the joint ventures therefore explains why Aviva prefers the strategy in its expansion into different business markets across the world.

Historical development of the organization’s business operations

Countries of business operation

Aviva Plc was developed as a merger between Norwich Union and CGU in the year 1998. The business then operated under the Norwich Brand. The Aviva brand name was adopted in the year 2002. However, some regions such as the UK still maintained the Norwich name until the late 2009.

The company expanded rapidly in the UK leading to the need for it to go international. This explained the approach adopted by the management to operate in different nations across the world. Initially, the major focus of the business was on the European based nations, and the company opened wholly-owned subsidiaries and joint venture in countries such as France, Italy, Ireland, Spain and Indonesia. The organization then expanded to the USA market to further enhance its global presence. According to Gaur, Kumar & Singh (2014) the major presence of the organization in the USA was observed when the company acquired AmerUs Group in the year 2006. In a deal of about $ 2.9 billion, the Aviva acquired the US based organization that adopted the Aviva name after completion of the acquisition process (Gaur, Kumar & Singh, 2014).

Other later expansions were observed when Aviva entered the Asian Market. Through the formation of joint ventures with other Asian based organizations, the company managed to entre and operate in the Chinese and the Indian markets. The expansion process of Aviva plc led to their operations in about 16 nations across the world. The choice of the nation to venture in was determined by the lucrative nature of the environment and the ability of the management to establish a suitable local based organization for the formation of joint ventures of partnerships.

Strategies adopted in the countries

Aviva Plc has adopted the globalization of market strategy in its internationalization process. The company focuses on accessing different markets across the world to offer its insurance services. This approach has assisted the company acquire a large clientele base based on the increasing number of consumers who purchase its services from different parts of the nations. Apart from just increasing the clientele base this approach as Engwall & Hadjikhani (2014) indicates is effective in ensuring that the company equally improves its sale value. The globalization market strategies that have been adopted by the company has therefore not only contributed positively towards its internationalization process but have also resulted into an increase in the overall performance of the organization throughout the years that it has been adopted.

Effective branding is a strategy that has been adopted by Aviva to market its services to the customers. According to Denicolai, Zucchella & Strange (2014) building a strong brand name does not only enhance the reputation of the company but also assist in the development of a high level of trust with the customers. Aviva plc has adopted the branding strategy to improve the strength of its brand and to attract a larger number of consumers.

The original brand name of the company was Norwich. During its early stages of operation, the company offered the general, medical and life insurance policies under this name. The Norwich brand name was more pronounced in the United Kingdom. Commercial Union is another brand that has been adopted by the company (Eisend & Schmidt, 2014). This brand was mainly adopted in Poland and remained more pronounced in the region. The Hibernian brand was also adopted in other markets that the company operated. The three major brands were mainly adopted in the European based nations.

In the year 2002, Aviva plc considered the adoption of Aviva brand in most of its markets. In the USA for instance, the Aviva brand was more pronounced than the other three aforementioned brands. This was also observed in the Asian markets that the company later ventured in. The difference in the brand names under which the organization traded was not beneficial. As Thite, Wilkinson & Shah (2012) indicates, it is vital that an organization maintains a single brand name to enhance its strength. As such, the use of the different kinds of brand names was seen as challenges that will not assist the company acquire a stronger brand name in its operations.

In the year 2007, the management of the organization considered the adoption of a global brand in all the subsidiaries across the nation. The management required that all the subsidiaries operating in the different nations across the world adopt the Aviva brand name. This meant that only those subsidiaries that were not using the name were to make changes accordingly. According to Smith (2015) the change process that was to be conducted in a two year spun only affected the United Kingdom that was still using the Norwich brand, Ireland that has been using Hibernian brand and Poland that was adopting the commercial brand. By the end of the year 2009, all the three brands had been successfully changed to the global Aviva brand.

The adoption of the Aviva Brand did not just create a sense of uniformity but also ensured that the autonomous business units of the organization to be created into a single unit. It is evident that the international insurance company currently trade in more than 20 markets in Europe, America and Asia as Aviva. Approximately, 60% of the organization business operations are traded outside the United Kingdom. The creation of a worldwide brand improved the Aviva brand awareness in the globe as well as enhanced the Aviva brand strength that is essential in promoting the positive performance of the organization (Denicolai, Zucchella & Strange, 2014). Moreover, a unified global brand amplified the global impact of the marketing and promotions adopted by the company. As Chou & Liao (2015) indicates a single name is likely to lead to a well-known brand that is an added advantage when entering the new markets within the international market. The adoption of a single brand name has therefore provided greater benefits to the organization in terms of enhancing its brand awareness and is expected to be beneficial in future in assisting the organization enter other international markets with much ease.

Aviva plc has also adopted information technology in the management of its business operations. Apart from using information technology as a means of communication in its offices across the world, the organization has also considered the use of technology in the management of its clients. The development of the online platforms for the management of the customer feedbacks and queries has seen the company address many concerns and critical issues of the customers in real time (Chou & Liao, 2015). As opposed to the times when issues and problems with the insurer remained unresolved for longer period of time, this new development has offered an opportunity for the company to offer quality customer services. The use of GI system is also another form of technology application in insurance. Aviva plc has considered the use of the system to access ordnance survey data that are needed in the assessment of the risks involved in doing different kinds of insurance business (Delaware Insurance Department, 2008). The GI system has also provided Aviva with an opportunity to efficiently and accurately assess the circumstances of every customer to offer use of information technology in the organizations of the company have enhanced the effectiveness of the service delivery process as well as ensured that the consumers receive quality customer care services.

The adoption of the market globalization strategy, effective branding as well as the use of information technology has led to a significant improvement in the performance of the organization. The company has not just managed to enter into different markets across the world, but have also managed to enhance to gain a higher competitive advantage within these markets. The branding strategy that has been adopted by the organization has contributed significantly to the development of a strong brand and in the creation of effectiveness awareness on the brand. The use of the technologies in the provision of the services have also enabled the company analyze the most suitable customers, as well as offer policies that are suitable to different kinds of people depending on the charges charged. The use of the above strategies in the Aviva business international operations has therefore improved the performance of the organization.

Adaptation to different target markets

The Global Integration local responsiveness Matrix

The global integration-local responsiveness framework presents four distinct strategies that can be adopted by an organization in their process of internationalization.

The global strategy is mainly adopted in cases where there is a higher pressure fir global integration and a low pressure for local responsiveness. According to Chou & Liao (2015)  organizations that adopts this strategy mainly views the global market as a single market and mainly controls the operations and activities from the global headquarters with an aim of maintaining a higher level of standardization.

The home replication strategy is adopted in a situation where there is a low pressure for global integration as well as a low pressure for local responsiveness. Under this strategy, the multinational firms use the existing strategy at the parent company to explore the opportunities presented in the foreign markets. In most cases, the need for standardization as well as adapting to the local cultures is not mandatory.

The transnational strategy is adopted when there is a higher pressure for global integration as well as a higher pressure for local responsiveness. According to Lauring (2013) under this approach, the organization involved have to put in place special coordination processes to achieve global integration as well as allow for flexible value chains that will promote local responsiveness. As Smale, Björkman & Sumelius (2013) indicates, this kind of strategy is suitable in situations where standardization must be accomplished and adapting to the local culture and requirement is necessary for the progress of the business.

The multi-domestic strategy is adopted in cases where there is a low pressure for global integration and a higher pressure for local responsiveness. Under this approach, the international organization uses foreign subsidiaries to operate business units that are customized to meet the needs of the customers in the local markets. The approach is mainly adopted in situations where the needs of the customers in one market vary significantly from the needs of the other customers. This might be due to their external environment or culture. As such, the international firm must adapt to the local needs of the customers.

Focusing on the case of Aviva global insurance company, the organization has adopted different internationalization strategy in the global market. In situations where the company has initiated wholly-owned subsidiaries, the company has implemented the global strategy. This is observed in markets such as Canada and Europe where the company operates the markets as a single unit. The operations of the company are mainly managed from the parent organization with the idea that the nature of the market presented is similar. As Westjohn, Singh & Magnusson (2012) indicates, this strategy is mainly observed in the European based markets. This is due to the assumptions made by the organization that the geographical closeness of these markets means that they are likely to harbor consumers with near similar business needs and wants.

The insurance services offered in these regions have also remained the same as those offered in the parent company. For instance, the policies of life insurance, medical cover for both corporate and individuals as well as motor vehicle have remained standardized across the regions. As Reimann, Ehrgott, Kaufmann & Carter (2012) indicates, the cost charged on these premiums have also been maintained from that of the parent country. The cost of the aforementioned insurance policies in the United Kingdom is a clear reflection of the cost charged in the other European based nations.

It is also reported that most of the activities in the organization operating in the European based nations are also conducted by expatriates from the parent company. In fact, at the management positions, only the expatriates from the parent company are allowed to participate. The locals are only offered the subordinate jobs. As such, the management strategies adopted in the foreign European firms are also clear reflection of what is observed in the parent organization.

Apart from the wholly-owned subsidiaries Aviva plc also have a number of joint ventures across in different nations across the world. These joint ventures mainly adopt the transnational strategy in their operations. According to Boehe (2015) the company focuses on maintaining its standardization while presenting an opportunity for the local needs of the consumers within the markets to be met. This approach is mainly adopted in the nations within the USA and Asia. The difference in the cultural values and beliefs of the consumers in these areas, as well as the difference in the government management process, requires that the company adopts a different strategy in their operations (Gaur, Kumar & Singh, 2014). Through acquisition of the existing insurance firms in the region as well as the formation of partnerships the company has managed to incorporate the ideas and needs of the local consumers in their provision of the insurance services. The standardization of its insurance activities has ensured that a higher level of quality is maintained, while the flexibility in the provision of services have guaranteed the fulfillment of the needs and wants of the local consumers.

As much, as Aviva plc has adopted the transnational and global strategy successfully in its internationalization process, there are however certain changes in operations that the company needs to make. It is observed that the barriers to global integration are becoming pervasive in most of the business environments, as such, the company should think of other additional strategies that will ensure the barriers are managed to allow for smooth running of the business.

Barriers to cross-border global integration

Over the last decade, there has been an increase in the cross-border activities in the insurance service provision. The development of the European single market contributed significantly to the numerous cross border acquisition and mergers in the primary insurance sector. This therefore presented the thinking that the primary insurance services can be translated directly from one European market to the next (Horn, Scheffler & Schiele, 2014). However, in the emerging markets outside Europe, full integration of the national primary insurance markets has not been observed. As, such, there was no direct replication of the European insurance activities into these markets.

Recent development has even seen full integration of the insurance activities even in the European Union becoming impossible. This is due to the barriers observed in the global integration. The legal and regulatory framework, the tax rules of different nations, and the structure of public and social protection systems differ from one nation to the next. According to Ibrahim & Heuer (2016) these areas are normally regulated at the national levels. Moreover, they form the major barriers for any insurance firm to enter into the foreign market. According to Horn, Scheffler & Schiele (2014) irrespective of the policies that were adopted during the trade liberalization process, the policies on taxation legal framework for business regulations and the social protection system of every country are still major issues of the national concerns. Thus the legal framework and taxation policies are likely to differ from one nation to the next.

The difference in culture, society, mentality and language also act as a barrier to global integration. One cannot directly translate the activities and operations of the parent company to the foreign market due to the difference in culture that will contribute to the difference in perceptions of the consumers. Communication process within the organization must also be conducted in a language that can be understood by the locals. It is therefore important to adapt to the culture and language of the foreign market to be able to interact freely with the local consumers.

The risk observed in every region also differs across the world. Mortality, road safety and property protection differs from one region to the next as such the premiums offered by the insurance firms must also take into consideration the different nature of the risks observed in every nation.

Changes needed to be made

Based on the analysis of the strategy that have been put in place by Aviva, as well as the barriers to global integration, it is important that the company make changes in its operations to gain full integration into the international market. For instance, Aviva plc needs to decide on the nature of life insurance policies as well as the cost based on the mortality rates observed in every country. It is not wise to standardize the policy across the board rather the company needs to make changes in a way that the policy is accepted in the local set ups under which it operates (Chou & Liao, 2015). This is more important in the markets where the company operates in a form of a wholly-owned subsidiary.

The motor vehicle insurance policy should also be made based on the extent of infrastructure in a particular region. In addition, the road safety levels in the nation should also determine the nature of the insurance policy offered. All private and general medical covers should also be based on the nature of life risks, prevalence to diseases that a region experience. Higher values should be accorded to region prone to increase cases of accidents as well as increase rates of mortality. Otherwise adopting a standardized policy will result into losses being made in some region.

Compliance with the adequate regulatory framework that governs the operations of every insurance firm is also vital. The company should ensure that their activities and operations in every nation are in compliant with the regulatory framework set in place. This includes complying with the taxation policies as well as policies put in place to govern the protection of risks within the community. The company should design its supervisory framework and further develop its regulatory framework to facilitate access to the foreign markets. It is important that the company also corporate with the legal requirements of every nation in its process of going global, otherwise effective operation in the foreign markets will be impossible.  

Aspect of the company future

International Business goals

The current international business goal of the Aviva Plc is to expand its overall sales and consequently revenue. The organization wants to improve its revenue and gain a higher competitive advantage in the global insurance industry. As much as this objective have seen accomplished to some extent following the ranking of the organization as one of the major insurers in the world, there is still need for further sales expansion for the company to command top leadership in terms of sales and revenue in the international insurance sector.

It is expected that the increase in sales volume will be attained through the acquisition of a higher clientele base. As such, the company seeks to improve its customer base to more than 3o million customers that are currently being maintained by the company. Through extensive marketing and promotion of the services offered by the company, it is expected that a larger clientele base will be attained that will translate to higher sales volume.

The organization also has a current international business objective of minimizing the risks involved in doing business. As Ibrahim & Heuer (2016) indicates, the insurance business is risky in nature, and unless the risks involved are managed, the possibility in succeeding in the industry is minimal. The company therefore seeks to avert the risk involved by operating in different markets across the world. This is to ensure that even when one market experiences challenges that lead to business losses, better performances can be reported in other markets to ensure that the company maintains a higher competitive advantage.

Impact of the fourth industrial revolution

The invention of mobile supercomputing technology, the development of self-driving cars and the creation of intelligent robots all justifies the dramatic changes that have been experienced in the world. According to Klaus, the revolutions observed in the world are beginning to offer changes in the way people live. Previous industrial revolutions have empowered the process of mass production, and availed digital capabilities to a larger number of individuals. However, he is quick to point out that the fourth industrial revolution is likely to be different (Horn, Scheffler & Schiele, 2014). The revolution is characterized with fusion of biological and digital worlds and even challenges the ideas of what becomes human. The resulting revolution is likely to have major promises as well as great peril.  The world will have the potential to connect billions of people and improve the efficiency of organizations, however, there is a possibility of the organization not being able to adapt or the government failing to employ and regulate new technologies thus resulting into inequality and fragmentation of the society.

The fourth revolution is likely to have different impacts on the various markets that Aviva plc operates. For instance, there is a possibility of the revolution having positive impacts on the developed economies. This includes the European and the USA markets. For instance, the fourth revolution is likely to have positive benefits to the organization in its operation in the UK. The ability of the government to implement all the technologies that are to be initiated as well as the capability of the parent organization to adopt the technologies means that they are likely to benefit from the efficiency that comes along with the new technology. On the other hand, much benefit is not likely to be attained in the developing and emerging economies. For instance, in its operation in China, the company is not likely to implement all the technologies that will be initiated through the fourth industrial revolution. In addition, it is not a guarantee that the government in place will swiftly adapt to the new technologies. The organization is therefore unlikely to adapt to the changes leading to inequalities in their operations that will be detrimental to the overall performance of the organization.

The full adoption of the technological changes in nations such as UK does not only present benefits to the organization, but also come along with other challenges. For instance, the issue of inequality is likely to be pervasive in the nation. This is due to the fact that not everyone is capable of purchasing the services that will be offered through the advanced and quality services that will be offered by the organization. As such, the accessibility of the insurance services will only be limited to few individuals. As such, the possibility of inequality within the society is also likely to be higher. As Buckley (2014) indicates, a higher level of inequality will lead to insecurity. The need to offer maximum protection for various kinds of property will then be required. Increase cases of crime are also likely to be experienced in the region. The insurance firms will thus be operating in an environment full of risky behaviour thus making their premiums at a risk. The nature of the environment that will be observed following the fourth industrial revolution is therefore not likely to be favourable to the organization.

Focussing on the Global competitiveness index report, it is observed that there are three major development stages for every economy. The factor-driven stage, efficiency-driven stage and innovation-driven economies are the major stages of development that can be exhibited by an economy. The major basis for competitiveness in the factor-driven development stage is the low labor costs and unprocessed natural resources. The competitiveness for the efficiency-driven stage is based on the production of advanced and more efficient services. The competitiveness for the innovation-driven economies is the ability to produce innovative and unique products. Most of the economies under which Aviva plc operates are at the efficiency-driven stage. As such, the company competitiveness is based on the production of higher quality and more efficient services. As Cavusgil et al (2014) indicates, this development stage, presents an opportunity for the company to maintain a higher competitive advantage since the efficient products are likely to be acceptable to a wide range of consumers. As much as the impacts of the industrial revolution may affect negatively the operations of the organization in some economies, the fact that it emphasizes on the production of higher quality and efficient services means that it is likely to remain competitive in the future. It is however, recommended that the organization makes changes in its international strategies to adopt approaches that are likely to be more local responsive to ensure that they sufficiently meet the needs of all consumers in all the economies that it venture in.

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