Jibun Co., Ltd. - Five Forces Analysis
Hello, I'm Rakuiko, and I work in the insurance industry while also promoting financial education.😊
This is a continuation of the Jibun Co., Ltd. series.
Previous article: Jibun Co., Ltd. - SWOT Analysis
While I managed to do a SWOT analysis, it was easy to come up with strengths and weaknesses, but opportunities and threats were quite difficult...
I was creating it while feeling uneasy about whether I was doing it right, but apparently, there is something that can clarify those issues.
That is the Five Forces analysis. You can find Mr. Kinoshita's broadcast here👇️
What are the five threats?
The Five Forces analysis is said to be an analysis that clarifies the revenue structure of competitors and the entire industry to verify the profitability of your company or yourself.
The five positions are as follows.
Existing competitors... Competition within the industry
New entrants... Newcomers to the industry
Substitutes... Existence of substitute products
Buyers... Bargaining power of buyers (customers)
Suppliers... Bargaining power of suppliers
This also seems difficult, doesn't it?😅
Even so, I think that by grasping what kind of threats surround you, you can fend off those threats, or if you can create a state where those threats do not exist, your value will increase, and you will become someone sought after by the market.
Jibun Co., Ltd. has just been launched and is still on shaky ground, so I will try to apply this to my main business, an 'insurance agency'.
Existing competitors:
The insurance agency business competes with all kinds of business formats, including agencies of the same insurance company, as well as banks, post offices, repair shops, car dealers, corporate agencies, and online insurance. I need to clarify and promote my superiority as a 'corporate agency' and a 'community-based agency'.
New entrants:
I believe the threat of new entrants into the insurance agency business is not that high. The number of insurance agencies, especially individual proprietors and companies specializing in insurance sales, is decreasing year by year. The reason for this is the reduction or cutting of commissions paid by insurance companies to agencies. Unless you have a certain scale, significantly increase the number of contracts to boost revenue, or have a proper organizational structure, the commissions you receive will be low. Therefore, the current situation is that individual proprietors and small agencies often merge or join agencies that are subsidiaries of insurance companies. Since the path to starting a new agency and specializing in insurance is difficult, there are not many new entrants.
Substitutes:
As substitutes for insurance products, one could consider mutual aid, short-term small-amount insurance, or, if it is not a major loss that would ruin your life, cases where you do not take out insurance and instead handle it with savings or financial assets.
There is also a way of thinking that assets with value (such as those with resale value or highly liquid financial assets) can be viewed as substitutes for insurance.
Bargaining power of buyers (customers):
Nowadays, it is easy to get insurance quotes on your smartphone or PC, get bulk quotes, join only the coverage you need, or switch to insurance with lower premiums. Since customers can always compare with other companies and switch easily, it is necessary to improve services and clarify the differences from other companies and the advantages of purchasing through an agency.
Bargaining power of suppliers:
When it comes to suppliers for an agency, they are insurance companies. If an insurance company launches a new product, changes its regulations, or modifies its systems, we must respond to those changes, which increases costs. Furthermore, commission rates can sometimes be worsened at the convenience of the insurance company, so our position is relatively weak in terms of negotiating with suppliers.
It is also necessary to handle other insurance companies and establish a system where a replacement can be found even if one company fails.
Summary
Since the insurance industry is saturated, the main business involves taking existing contracts from others or having them taken from you. Recently, new needs have emerged, such as 'cyber insurance' (insurance for damages caused by PC hijacking or virus infections), which is becoming mainstream for corporate contracts. While there is a possibility of securing new contracts when such products are released, it is fundamentally a competition for market share.
The key is how to demonstrate differences from other companies and provide value that encourages clients to join through us.
Visualizing the issues makes it clear what needs to be done💡
Since the section on our main business alone became quite long, I will focus only on the main business this time. Next time, I plan to conduct a Five Forces analysis for Jibun Co., Ltd. as a whole!
See you next time!