Business Strategies of Massachusetts Mutual Life Insurance Company - Case Study Example

?An American Business Enterprise Table of Contents I. Introduction 5 A and Location of the Corporation 5 B.Reason for Choosing the Firm 5 II.Framework of the Business 5 A.A Condensed History of the Firm 5 B.Incorporation of the firm 6 C. Creators and organizers of the firm 6 III.Basic Business Factors 7 A.Operation of the Enterprise 7 1. Income Of The Business 7 Rank Of The Company 7 2.Customers of the Business 8 3. Goods and Services 8 4. Methods for Quality Control 8 5. Competitors 9 6. Problems Facing The Firm 9 B.Organization 9 1. Organization of the firm 9 2.Current Key Executives And Directors 10 3. Strengths And Weaknesses Of Organization 10 C.Human Resource 10 1.Personel Policies 10 2.Skills Required To Accomplish The Mission 11 3.Attitude Towards Employees 11 4. Training Programs 12 5. Incentives And Job Enrichment 12 D. Financing 13 1. Types Of Securities Sold To Public And Its Listing 13 2. Current Performance 13 3. Profit And Loss Of The Company 14 4. Rating by Moody’s and Standard and Poor 14 5. Financial New Generated In Past Years 14 E.Corporate Social Responsibility 15 F. Management 15 1. Strength And Weaknesses Of Management 15 2. Business Policies 16 3. Strategies Used 17 4. Statement About Social Responsibility 17 5. Plans For The Future 17 IV.Conclusion 18 A.Evaluation Of The Firm 18 B. Personal Attainment 19 Work Cited 20 I. Introduction A.Name and Location of the Corporation The name of the company in consideration is Massachusetts Mutual Life Insurance Company (MassMutual) which is situated in Springfield. The marketing name that has been offered for Massachusetts Mutual Life Insurance Company (MassMutual) is MassMutual Financial Group (MassMutual Financial Group, “2010 Annual Report”). B.Reason for Choosing the Firm The main reason behind the choice of MassMutual is that it is one of the biggest life insurance companies in the world and has been successful at attaining 93rd rank in the Fortune 500 list. It has been noted that the company operates for the benefits and the advantages of the members along with its participating policyholders (MassMutual Financial Group, “2010 Annual Report”). II.Framework of the Business A.A Condensed History of the Firm It was in the year 1851 when the company commenced its operation in a single room and had a single objective of assisting the people to protect their families as well as their future. After 160 years of operation, the company is still focusing upon its core objective of assisting the people to safeguard their families. The company operates for the advantage of its beneficiaries and is therefore proud of its long history. In the course of time, the company has offered its millions of customers with financial as well as retirement related securities. The company has also been successful at paying its policy holders with dividends since the year of 1860s. By earning financial strength ratings, the company has achieved remarkable position in the particular sector. The company’s trained professionals comprise of thousands of agents situated all over the United States. The main task of the agents is to understand the customers’ financial goals and therefore serve them to formulate their financial strategies accordingly. Although since inception the company’s core product has been life insurance, it has also been offering its customers with numerous other insurance schemes as well as investment products designed for the individuals, businesses and the families. The institutional investors as well as the nonprofit, corporate, governmental and union employees can as well avail the company’s retirement services (Massachusetts Mutual Life Insurance Company, “Our Company”). B.Incorporation of the firm The company was incorporated in Springfield at Massachusetts in the United States. C. Creators and organizers of the firm The company was incorporated by George W. Rice who had been young insurance representative, selling policies for the company named as Connecticut Mutual Life in Connecticut. His objective was to initiate a business in neighboring Massachusetts. Between the year 1843-1851, Rice’s Massachusetts Mutual had been one of the companies among dozens other to leap into existence. The mutual companies had been quite attractive in the burgeoning insurance industry as very little working capital was required. According to Massachusetts State Law, the insurance companies required an initial stock subscription of approximately $100000. Therefore, Rice made an attempt to persuade 31 investors to buy stock in the new venture. It was in the year 1867 when the phenomenon of retirement happened with MassMutual and therefore it was capable of being what it wanted to be. The first president of the company had been Caleb Rice. III.Basic Business Factors A.Operation of the Enterprise 1. Income Of The Business It has been noted from the financial results of MassMutual that there has been strong revenues and sales growth in last nine months till September 30, 2011. It also recorded huge level of surplus as well as capital. There has been rise in the revenue to $14459 million for the nine month ended September 30, 2011 in comparison to $11, 294 million during the same time in the year 2010. In addition to these, the net income had been $374 million in comparison to $477 million during the year 2010 (MassMutual Financial Group, “Consolidated Statutory Financial Highlights of Massachusetts Mutual Life Insurance Company (MassMutual) Nine Months Ended September 30, 2011”). Rank Of The Company It is worthy of stating that the company has received top rank among seven numerous groups in the 2011 Top Performers in the awards of Contact Center Industry Awards of America Region on June 14, 2011(Massachusetts Mutual Life Insurance Company, “Press Release 2011”). 2.Customers of the Business The main customers of the company are individuals, families, key business executives, corporations, businesses and institutions, advisers, consultants, retirement plan sponsors, capital market participants and intermediaries (Massachusetts Mutual Life Insurance Company, “The MassMutual Fact Sheet”). 3. Goods and Services The company’s main business service comprise of retirement services, assets management along with international insurance (Massachusetts Mutual Life Insurance Company, “The MassMutual Fact Sheet”). 4. Methods for Quality Control It has been noted that the main reason behind the achievement of numerous ranks has been the quality of products as well as services that the company provides to its customers along with the quality of management and people management. The company practices certain code of conduct which is applicable to sell the employees of MassMutual. The company has a network of trusted as well as conversant financial professional thereby helping the company to maintain the quality of the products and that of the services (MassMutual Financial Group, “Quality and Performance 2011”). 5. Competitors The key competitors of the company are Genworth financial Inc, MetLife Inc, Lincoln National Corporation, New York Life Insurance Corporation, Hartford Financial Services Group Incorporation and Northwestern Mutual Life Insurance Company among others (The Wall Street Journal, “Overview”). 6. Problems Facing The Firm It was observed in the year 2009 that the company’s database was hacked. It was reported that the database of one of the employees was compromised thereby exposing an unknown number of employees’ personal data for quite a long period of time (Reeder, “MassMutual Database Hacked”). It has also been noted that the company had decided to layoff nearly 75 employees at its headquarters in the information department. This had been one of the significant issues for the company (Johnson, “MassMutual to lay off 75 IT Employees from Springfield Operation”). B.Organization 1. Organization of the firm It has been noted that the firm has been organized in terms of the products that it renders to wide range of customers all over the globe. 2.Current Key Executives And Directors The CEO of the company is Roger Crandall who looks after Babson Capital Management, Baring Assets Management, OppenheimerFunds, human resources, Investment, Legal, and Mass Mutual International along with certain other divisions. The various independent directors for the company are Patricia Dennis, Todd Stitzer, Raymond LeBoeuf , Kathleen Courbet, Cristobal Conde and Robert Furek among others (The Official Board, “Massachusetts Mutual Life Insurance”). It has been found that MassMutual has chosen Timothy Corbett as new Executive Vice President as well as Chief Investment Officer from March 2011 (IBR, “MassMutual Appoints New Chief Investment Officer”). 3. Strengths And Weaknesses Of Organization The main strength of the Organization is that the company has robust management team. The company enjoys the benefit of mutual corporate governance structure. The main weakness of the organization is the fact that the CEO of the company is held accountable for many operations of the company which over burdens him and therefore may lead to anxiety and tension. The company must practice flat organizational structure. C.Human Resource 1.Personel Policies It has been noted that there are numerous HR policies practiced in MassMutual such as health and wellness benefits for the employees, work life policies, compensation policies, financial security, financial protection and financial health programs which haves been designed specifically for the employees working with the company (MassMutual Financial Group, “2011 Benefits at a Glance”). 2.Skills Required To Accomplish The Mission The employees need to have the capability to think across disciplines and must possess solid knowledge regarding the products and services of the company. He must be flexible enough to adapt himself with the changing business environment. The company generally looks for collaborative skills in the employees (Conz, “HR and IT Partner at MassMutual”). 3.Attitude Towards Employees It has been noted that the company values diverse workforce and therefore puts greater emphasis on the employees of the company. It believes that the key to accomplish success in the Organization depends upon the efforts made by the people of the Organization. Therefore, it is quite essential to hire and therefore retain the best talents who can assist in growing the business. In order to do this, the company tries to offer competitive compensation as well as benefit programs to its employees so that the best talent can stay with the company for longer period of time (MassMutual Financial Group, “Business Planning Strategies”). 4. Training Programs The company comprehends the fact that training and development is quite essential for the success of the Organization. The company’s agents receive degrees with the help of the company’s online university. There are nearly 500 courses in each semester for the agents. They obtain advanced training so that they can develop and identify their client base efficiently. Specialized training is also received by the agents with the help of American College in Pennsylvania. This courses make the agents certified family business specialists (MassMutual Financial Group, “Press Release 2009”). 5. Incentives And Job Enrichment The company recognizes the fact that the paycheck of the employees is not the ultimate thing. It is significant for the company to take into consideration other aspects of life as well. Therefore, it offers its employees with numerous incentives. The company’s compensation is based on ‘pay for performance’. The compensation plan of the company comprises of ‘competitive base salary’ as well as ‘variable incentive opportunities’ at all the level of the Organization. The company also presents its employees with attractive health coverage in order to make the employees feel financially secure. The company as well comprehends the fact that the employees may have numerous other responsibilities at their home, in their community and work. Therefore it keeps this into consideration and offers its employees to achieve balance in their work as well as personal life. It also has retirement plan in place and thus offers its employees with cash balance pension plan as well as 401(k) thrift plan so that the employees can prepare for their future in a better manner (Massachusetts Mutual Life Insurance Company, “Employee Benefits”). D. Financing 1. Types Of Securities Sold To Public And Its Listing It has been noted that MassMutual Corporate Investors and MassMutual Participation Investors (The “Trust”) have been listed in New York Stock Exchange (ADVFN, “MassMutual Share Price (MPV)”). The company tends to offer wide range of insurance products along with its disability insurance, long-term care policies, retirement protection and annuities. The company trades money market and fixed income funds, assets allocation funds, large cap equity funds, mid cap equity funds, small caP equity funds, international funds, specialty funds and emerging market equity (MassMutual Financial Group, “MassMutual Select & Premier Funds - Monthly Class A Performance as of 8/31/2011”). It can be identified that MassMutual Participation Investors is a fixed-income mutual fund and is close-ended in nature which is administered by Babson Capital Management LLC (Babson Capital, “2004AnnualReport”). 2. Current Performance In the year 2010, the Oppenheimer fund’s 53 percent was ranked in top quartile and it was ranked 73 percent in the top half. The assets under management also rose to $51billion at Barring. Therefore it can be stated that the performance of the products of the company have been quite well. 3. Profit And Loss Of The Company The company recorded profit of $722 million in the year 2008 with revenues of $25268 million and similarly it recorded revenue of $18745 million and loss of $924 millions in the year 2009. It is to note that in the year 2010, the company recorded the revenue of $25424 million while it faced a loss of $115 million (US Pages, “MassMutual Financial Group”). 4. Rating by Moody’s and Standard and Poor Mass mutual has been rated as A++ according to A.M. Best, Aa2 according to Moody’s, AA according to S&P and it has obtained AAA according to Fitch in the year 2010 (Free Annuity Rates, “Annuity Company Ratings”). 5. Financial New Generated In Past Years The company has been capable of generating financial news in the year 2010. One of them which were evident in the year 2010 has been related to the company’s ability to continue strong dividend payout for its policy holders. In that news, it was announced that the company has approved to pay nearly $1.23 billion in dividends to its eligible policyholders in the year 2011 (MassMutual Financial Group, “MassMutual Continues Strong Dividend Payout for Policyholders”). The news was easily accessible to the public by means of its websites and newspapers. It had published this news in its press release section and numerous news websites such as Bloomberg business had also published this news to be accessed by the public easily. E.Corporate Social Responsibility The company puts greater emphasis upon the corporate social responsibility and believes on the fact that the best way to endorse the community is by contributing to the education. It also aims at enhancing the health and the financial well-being of those people living and making up of those communities. The company performs lot of charitable works in Springfield, MA, Enfield among other places. As part of the corporate social responsibility, the company has initiated numerous programmes such as Life Bridge-Free Life Insurance Program and MassMutual Career Pathways Program (MassMutual Financial Group, “Corporate Responsibility”). The company also empowers its employees by providing them with necessary skills and tools so that they can plan for a happy and healthy life at their home, work as well as communities. The numerous programs designed for the employees are Volunteer in action, Community Activities, Employees Wellness Program, Winners Circle, Matching Gifts, etc. The employees are as well provided with an opportunity to involve themselves in the community by participating in programs such as Annual United Way Campaign in area schools. All these programs are specifically designed since the company considers it significant to serve the people and community in a right manner (MassMutual Financial Group, “Corporate Responsibility”). F. Management 1. Strength And Weaknesses Of Management In order to identify the strengths and weaknesses of the management at achieving the goals of the organization, it is significant to identify the goals and missions of MassMutual. The company aims at assisting the customers achieve their goals by enhancing their well being and increasing their wealth as well as financial well-being (MassMutual Federal Credit Union, “Info about Us...Our History, Mission and Volunteers”). The main strength of the management is effectively carrying out its function stems from the fact that the company has a good market position and is strong financially. It has obtained A++ ranking from top notch rating companies. It can however be stated that management at some areas has been incapable of achieving its mission because of certain lacunas. One of them has been number of legal proceedings against the company. It has also failed to position itself strategically in those areas where the returns are quite high (Scribd, “About MassMutual”). 2. Business Policies It has been noted that the company’s principal investment are found to be privately placed. The long-standing debt obligations are purchased from the issuers directly who are smaller companies. Most of the investments have the features of equity such as warrants, common stocks, conversion rights and others thuds providing the trust with an opportunity to realize capital gains (BabsonCapital, “MassMutualParticipation Investors”). 3. Strategies Used It is observed in the annual report of the company that it makes use of numerous strategies in order to make the business successful. It provides its employees with adequate training so that they can serve the customers in a better manner. By introducing numerous products, it is capable of staying ahead of the competitors. The company has employed knowledgeable financial professionals who can assist the customers to comprehend their personal needs. The company is focusing on expansion of its distribution channel so that it can expand its services globally. The company believes in diversification which has enabled the company to achieve long term corporate investment returns for its policy holders without exposing them to any kinds of risks even in volatile market (MassMutual Financial Group, “The MassMutual Fact Sheet”). 4. Statement About Social Responsibility The company’s statement in regards to social responsibility is “We believe that doing business the right way, that continually working to make good decisions, results in a long-term prosperity that benefits our people, planet, communities and culture. This fundamental belief drives our business strategy and operating principles, and is a part of the fabric of our organization” (MassMutual Financial Group, “Corporate Responsibility”). 5. Plans For The Future The company has made its partnership with SCORE in order to encourage new small businesses and to generate new jobs that are required for the economic recovery. SCORE is one of the Organizations which were founded in the year 1964 with an aim to offer undersized business training as well as workshops for many new and emerging businesses all over the country. MassMutual has been a national corporate sponsor that will assist non-profit organizations to accomplish their goals of endorsing growth of approximately 1 million undersized businesses by the year 2017 (PRNewsWire, “MassMutual Joins With SCORE To Help Grow 1 Million Businesses by 2017”). IV.Conclusion A.Evaluation Of The Firm It can be concluded that MassMutual has been the pioneer in its segments and has been serving its customers with wide range of products since many years. It has been because of the leadership strategies of the company that has helped the organization to achieve sustained growth in a short period of time. Despite several efforts the company has been facing numerous challenges which need to be overcome by devising strategies that can help the Organization to boom in the turbulent business environment. In order to evaluate the performance of the company, the company’s annual report was gauged. Annual report helped in identification of the strategies that the company employed in order to maintain its position in turbulent business environment. The company was judged based on numerous aspects such as financial aspects, human resource aspects and management aspects among others. The strengths and the weaknesses were identified. B. Personal Attainment Through this project, I developed an understanding of the strategies that can be employed to maintain the competitive position in the market place. It enhanced my skills and knowledge about this company and enhanced my knowledge on strategic management as well. Work Cited ADVFN. “Massmutual Share Price (MPV)”. December 5, 2011. MassMutual News, 2011. . Babson Capital. “2004AnnualReport”. December 5, 2011. MassMutual Corporate Investors, 2004. . BabsonCapital. “MassMutualParticipation Investors”. December 5, 2011. Basbson Capital, 2008. . Conz, Nathan. “HR and IT Partner at MassMutual”. December 5, 2011. Human Resources, 2008. < http://www.insurancetech.com/articles/208402245>. Free Annuity Rates. “Annuity Company Ratings”. December 5, 2011. Company, 2011. . IBR. “MassMutual Appoints New Chief Investment Officer”. December 5, 2011. IBR Staff Writer. . Johnson, Patrick. “MassMutual To Lay Off 75 IT Employees From Springfield Operation”. December 5, 2011. 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For Third Year in a Row MassMutual Call Centers and Representatives Capture Awards for Client Service, Best Practices, 2011. . MassMutual Financial Group, “2011 Benefits At A Glance”. December 5, 2011. Benefits Information For Potential Emloyees, 2011. . MassMutual Financial Group. “The MassMutual Fact Sheet”. December 5, 2011. Key 2010 accomplishments, 2010. . MassMutual Financial Group. “Business Planning Strategies”. December 5, 2011. Flexible Plan Designs, 2011. MassMutual Financial Group. “Press Release 2009”. December 5, 2011. MassMutual Agencies Ramp Up Recruiting, Offer Major Incentives to Candidates, 2009. . Massachusetts Mutual Life Insurance Company. “The MassMutual Fact Sheet”. December 5, 2011. Financial Strength Ratings, 2011. . MassMutual Federal Credit Union. “Info About Us...Our History, Mission And Volunteers”. December 5, 2011. Info About Us, 2011. . MassMutual Financial Group. “Quality and Performance 2011”. December 5, 2011. What is the Sign Of Good Decision, 2011. . MassMutual Financial Group. “MassMutual Continues Strong Dividend Payout for Policyholders”. December 5, 2011. Press Release 2010, 2010. PRNewsWire.“MassMutual Joins With SCORE To Help Grow 1 Million Businesses by 2017”. December 5, 2011. Offers E-Guide That Helps Businesses Obtain Funding Through Bank Loans, 2011. . Reeder, Kara. “MassMutual Database Hacked”. December 5, 2011. Home, 2009. . Scribd. “About MassMutual”. December 5, 2011. External Analysis for Massachusetts Mutual Life Insurance Group. . The Wall Street Journal. “Overview”. December 5, 2011. MassMutual Group, 2011. . The Official Board. “Massachusetts Mutual Life Insurance”. December 5, 2011. Org Chart, 2011. . US Pages. “MassMutual Financial Group”. December 5, 2011. Finance Industry, 2011. . Read More