Question
You are a strategy manager for RRB DAC, an insurer which operates in a market subject to strong competitive pressures. RRB DAC distributes its products
You are a strategy manager for RRB DAC, an insurer which operates in a market subject to strong competitive pressures. RRB DAC distributes its products through intermediaries, meaning that RRB DAC's reputation is of critical importance. Over the last five years, RRB DAC has achieved a consistent level of profit. However, due to competitive pressures, there is a continuous expectation of reducing costs to ensure future profitability.
The following specific issues in relation to RRB DAC's business have been identified as a threat to future profitability:
Lack of obvious further cost reduction opportunities.
Reduction in the number of skilled and experienced employees.
Disruption to the insurance distribution market by new direct insurer entrants.
Increasing scrutiny from the Central Bank of Ireland.
a) Explain three significant challenges for RRB DAC in maintaining its future profitability. (9 marks)
b)Explain the potential difficulties for RRB DAC in maintaining positive relationships with its key stakeholders whilst achieving its future profitability targets. (9 marks)
c) Discuss three business opportunities for RRB DAC if the challenges are overcome. (12 marks)
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