Business Synopsis

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Business

Synopsis

ING (International Netherlands Group) is a Dutch company in thefinancial services sector. It has operations in over fifty countriesand is rated among the top twenty financial institutions in the worldand top ten in Europe. Its main lines of business include bankingservices, insurance, and asset management. It offers global, regionaland local products. Several factors in the Asian insurance marketimply that it will expand vividly in the next few years. Some ofthese factors include the popularity of insurance products, increasein income and sustainable economic growth. Market surveillancesuggests that government and employers’ pension programs cannotadequately meet the demand. Additionally, as a result of increasedearnings, there is a rapid rise in savings, which supports insuranceplans. ING Asia/Pacific is responsible for the company business inthe region. With over six million clients, it is ranked among the topplayers in the market, with performance exceeding the expectations(Schotter, 2006).

Local vs. Regional/Global business

Compared to the global market, the regional business is expected tobe more stable and grow rapidly. According to the Asia/Pacific CEO,Jacques Kemp, the performance of the organization is relativelyhealthy but has not reached the ceiling. His strategy is to grow thecompany faster by taking advantage of the prevailing condition in theregional economies. In addition to improving the Asia business,compared to the overall performance of the company, he aims atenhancing competitiveness with the over 900 financial and insurancefirms in the region. Although there is no definitive problemidentified in the regional operation to warrant a comprehensivebusiness strategy, there is a need for a plan of activities thatenables all the units to work towards a common goal. The company hasbeen successful in the region, but the various units have beenoperating autonomously. Kemp believes that increased communicationand integration of corporate activities with result into betterperformance (Schotter, 2006).

According to Hitt et al. (2007), the ING regional business has a‘business level strategy’ rather than a ‘corporate levelstrategy’. This is a structure in which a company implementssystems at the unit level with an aim of competing in the individualmarkets. The regional office in Asia/Pacific, which is a monitoringcenter, is located in Hong Kong. The business units, at the countrylevel, are tasked with the achievement of the organizational goals.They run autonomously, which occasionally resulted into disagreementswith the regional office and challenges in harmonizing operations.For example, some units focus on a particular line of products whileothers provide comprehensive financial services. Consequently, somebusiness units are not under the control of the regional office. Theneed for management structures that enhanced coordination of theoperations is necessary (Schotter, 2006).

Kemp’s characteristics

Kemp is an experienced business executive who had worked in variouscapacities in the company. He has been involved in several aspects ofING international affairs. Kemp served at the headquarters’ foreignoffice, as the chairman of ING Bank International and headed variousaspects of the organization’s global operations. He was alsoinvolved in initiating changes, among them, creating new markets,e-business, and mergers. Therefore, he had adequate experience in themanagement of business operations at the international level.Consequently, the issues he identified during the size-up werecritical in the future in ING Asia/Pacific operations (Schotter,2006).

Challenges

The issues identified by Kemp can be considered to be the challengesfacing the regional business. However, it is important to underlinethe fact that there is no crisis as such. His desire is to create acooperative strategy that will create coherent and integratedregional operations. According to Hitt et al. (2007), this is anapproach in which different units work together to achieve a sharedobjective, resulting in value for customers and competitiveadvantage. Despite the fact that the organization is performingabove expectation, the market position can be enhanced. Some of theconcerns he highlighted include the need to align functions and linesof business, clear and well-defined objectives, performance-basedcompensation and a more ambitious business model. Many factors can beassociated with the identified issues. For example, the lack ofcommon regional goals and strategies was caused by the organizationalstructure where the units in each country operated independently.Consequently, each unit had its policies and priorities, autonomousdecisions, and different marketing strategies. Some policies adoptedby the managers were not sufficient or clearly defined. Additionally,it contributed to a situation where business units were unable toshare knowledge and information that could enhance the overallperformance. The lack of adequate communication was spotted as acritical cause of lack of CEO influence through delegated authoritiesin the region (Schotter, 2006).

Solutions

The strategies adopted to deal with these issues aimed at ensuringthat the regional goals are integrated and aligned with the globalING business model. This will allow the company to optimize theprofits in the Asia/Pacific market. The most important aspect of theproposed solution is the creation of a transnational approach to theregional business. Hitt et al. (2007) define a transnational strategyas the one that seeks to achieve global efficiency while at the sametime enhancing local responsiveness. The strategy will bring togetherthe various operating units to increase the economies of scale andefficacy. It will also allow centralization of some of the decisionsand functions, and thus, improve the control over the regionaloperations. Several strategies can be used, which may include changesin organizational structures, culture, and processes (Hitt et al.,2007).

These adjustments should be aimed at aligning the units, settingclear regional and local strategies and adopting a model that rewardperformance. Kemp talked to different consultants who proposedvarious approaches to the issue. They included human resourcesmanagement, branding and building professional capabilities. Acombination of these ideas and Kemp`s thoughts resulted in a coherentbusiness plan. Consequently, a transnational strategy that balancesthe benefits of the universal approach to the market and theresponsiveness and flexibility to the local market was adopted. Othersystems selected include enhanced coordination and control process,where all processes are standardized and aligned to the company’sgoals (Schotter, 2006). However, it is important to note that thestrategy may be faced with obstacles such as differences in corporatecultures, merging divergent management styles, the new status ofexecutives and linking control systems (Hitt et al., 2007).

Conclusion

ING performance in the Asia/Pacific region was above expectation.However, the regional CEO identified some issues that would enhanceits performance. The most important issue was the need to integratesome of the functions. Kemp noted that every unit, located indifferent countries, adopted diverse approaches to the market and hadconflicting goals. It is essential for an international company toadopt strategies that are consistent with the markets. However, theING regional organizational structures did not reflect a globalbusiness policy. These factors necessitated the need for change,which incorporated the views of three consultant as well as the CEOinputs.

Works Cited

Hitt, Michael A., et al. Strategic management competitiveness andglobalisation. Stamford, CT: Thomson South-Western. (2007).

Schotter, Andreas Richard Ivey School of Business. TheUniversity of Western Ontario. (2006).