Sun Life Financial - Case Report

SUN LIFE FINANCIAL - CASE REPORT

For:

teacher X

Corporate strategy

By:

Sйbastien

Younes

Table of content

Table of content 3

1. Executive Summary 4

2. Introduction 4

2.1. Company background 4

2.2. Sun Life Financial Involvement in China 5

3. Definition of the problem 6

4. Description of the procedure to solve the problem 7

5. The research 8

5.1. The main implications of the resource-based view 8

5.2. The competence based perspective of strategic management 10

5.3. The strategic logic 11

5.4. The business and the organization concept 11

The business concept 11

The organization concept 12

5.5. The core process 13

6. Environmental analysis 14

6.1. The swot 14

Strengths 14

Weaknesses 14

Opportunities 15

Threats 15

6.2. The PEST 16

Political factors 16

Economic factors 16

Social factors 16

Technological factors (information gathered from internet dating 2005) 17

7. The attractiveness of the Chinese market 17

The Market 17

The people 18

8. Internal Strategies VS Operation China 18

9. Results and Conclusions 19

9.1. (Dis)Advantages Entry Strategies +City Choices 19

Entry Strategies 19

City Choice 20

9.2. Governmental Relations & Joint Venture Management 21

10. Recommendations 22

11. Bibliography 22

1. Executive Summary

For the course of corporate strategy we had to make a report dealing with the problem of Sub Life Financial entry into the Chinese market.

In this report we will deal with several topics related to the corporate strategy course and we based our theory upon the literature of this course. The book that was taken to base our theory is "the new strategic management" of Ron Sanchez and Aimй Heene.

After a long analysis of the case we came up with a recommendation of having a full speed approach and choosing Shanghai as city to enter the Chinese market.

2. Introduction

2.1. Company background

Sun Life Financial of Canada began in 1865, Montreal, selling insurance policies to Canadians in the process of the country's creation. By the 1890s, Sun Life Financial had begun an internationalization process, by expanding into Nicaragua, Ecuador, Peru and Chile and later into Asia, including Japan, India and China; at the turn of the century, Sun Life Financial looked to diversify it's investment and began expanding trough growing industries, such as electric utilities and gas, telephone and transport. Sun Life Financial maintained private ownership and staved off a take-over attempt by U.S firm in the 1950s, allowing it to strengthen its roots in Canada.

Sun Life Financial had a six pronged approach to its strategy

 Aggressively expand the wealth management business

 Strategically grow higher return protection business lines

 Achieve superior shareholder returns while maintaining Financial discipline

 Leverage strong brands across multiple product offerings

 Capitalize on distribution strengths

 Pursue expansion in key strategic markets

Nowadays the majority of their sales were generated by sales in Canada and United states.

2.2. Sun Life Financial Involvement in China

In 1992, China opened two geographical market areas in the country to foreign investmenent, Shanghai and Guangzhou. Sun Life already had a presence in China in the 1920s but as the communist party took the power in 1949 they were asked to leave the country. The purpose of Sun Life was to be present in Asia and to provide information to the Canadian headquarters.

In 1999, the Chinese government granted the right for the company to apply for a license. And later on they signed a memorandum of understanding for a joint venture with china Everbright Group. These agreements were required by the Chinese government to maintain domestic involvement in business expansion within the country.

Its strategy was to partner with a respected and prestigious firm that had clout with the national and local authorities.

The company wanted to create an entity that was "Chinese in operation in spirit with western business practices, management and technology." Sun Life aimed to enter into the "strategically higher return protection business lines followed by plans to enter the wealth management business. This plan would mean creating a mutual fund and starting a fee based asset management business; in the future, Sun Life financial felt that the pensions business would be attractive. However, both wealth management and pension's domains were not open to foreign companies.