Strengths and Weaknesses From the Internal and External Environments in MetLife, Research Paper Example

MetLife is a leading company in auto and home insurance including retail banking services. The company operates within U.S. and Latin America over and above other parts of the Asian Pacific. Over 70 million customers globally have put their trust in MetLife recognizing it as the company of choices in provision of such services (MetLife Worldwide). It is ranked 90 of the top 100 companies in sales within United States (Economy watch). They offer many products and services including life insurance, retail banking, auto & home insurance, investments and retirement services as well as other subsidiaries. This paper looks into MetLife giving a view of the internal and external environments in MetLife that affects its operations providing opportunities and threats for the company.

With the company having won the trust of over 70 million customers globally, it has an opportunity to explore more and use the opportunity to advance its product and services. An innovation in products and services would be simpler for the company. The customers are highly receptive to MetLife and they entrust the company with whatever innovation they come with. Gauging from history, the company increased sales by 8% in 2008 (Economy watch) thanks to the appreciating customers who have an interest in anything from the company. The customers are also spread globally for MetLife meaning that the products and services marketing are better and easier because of the many connections and referrals from one customer to the other (MetLife Worldwide).

Diversity is the main strength in the company’s profile. It is through Product diversity that MetLife exploits different tastes and preferences to provide varying services and products (Economy watch). The company can gamble on an innovation with an assurance that there will be some part of the customers to appreciate the innovation in products and innovations. Therefore, opportunities to conduct business and increase profitability for the company are a possibility for the company. It helps the management in maintaining business and proper running of the company with minimal challenges in the marketing field.

MetLife strength lies in the capacity to hedge a number of stock risks, for instance changes in interest rates or even fluctuations experienced in foreign currencies within the country as well as global depressions, which is why current inflation did not affect the organization (Economy watch). Having the capacity to handle the vicissitudes in the economical filed including changes of rates of interests gives MetLife a chance to exploit any market without fear. It provides the company with a competitive advantage over many others operating in the same field (MetLife Worldwide). Therefore, the company success derives from risking investments without any fear of future depressions or financial crisis and in turn, it becomes a positive idea that gives the company a boost in sales and GDP in the fiscal year.

A major strength in the company’s profile is its strong branding reputation (Annual Review 2002). It also has strength in cash flows, strong franchise worldwide, sound financial fundamentals and business diversification. The branding reputation engulfs people’s trust in the brands from MetLife meaning that it has a higher capacity of doing good business hugely from the support of the population (Annual Review 2002). It means that the company holds an advantage over many others because its brands are a ‘hot cake’ with a high reception from the consumers of the goods and services. The cash flows are an opportunity for the company in the sense that they give it a boost to heavy transactions that increase its sales and profits respectively. It is definite that the future of MetLife in doing business is bright and there is a possibility of hitting the market and topping the list in huge brands globally.

MetLife has over 88,000 shareholders and investors. The great number is an opportunity to the company because it increases the investments to great numbers therefore developing the company into a giant in the global market. Shareholders invest in major stocks giving MetLife a stronghold in the market and a capacity to recruit many other shareholders in future. A great number of shareholders help the company to offset liabilities in insurance legations and claim. From the MetLife financial reports, future prospects predict an increase in shareholders that will enhance a freeze of its assets. This is an opportunity to grow and advance the company’s profile, which is an advantage to sales increment and profits in the fiscal year of the company (Annual Review 2002).

There is an internal weakness that poses as strength as well as a weakness for the company. MetLife recently experienced a change in the board directing the company. Brand new board of directors was introduced in the company’s profile. The new board succeeded the previous directors whose term ended in the last fiscal year. There is a possibility of increasing the board members in number from what was there previously as well as increasing the number of lawyers. This is a threat to the company because it means more expenses in terms of salaries for the increased number of employees. The future budget on salaries for the employees is a burden to the company and incase they do not deliver and increase profitability in the company; it will just be a liability to the company and increase underdevelopments in the company. There is also a risk that stakeholders have a chance to dictate the running of the organization. Because of the varied interest of the stakeholders, the argument might pull down the company’s innovations and lower the possibilities of profitability from the company.

Lately, the company introduced a new electronic processing system and a program of environmental concerns to be used in business operations (Annual Review 2002). This is a great strength and an opportunity for the company to grow. It is in line with new technological advancements that feature globally and of use in enhancing its activities operations. The system speeds up the many operations and transactions making it a leading company in business of products and services globally. The company can now respond to service delivery faster than ever therefore, allowing better transactions. This is a sole reason why customers entrust their services and products search to MetLife as a choice among many other companies. This gives it an advantage over others and an opportunity to expand its products, service provision globally, and make the best out of the perfect environment for business.

There is however a threat from the introduction of the new electronic technology in the industry. The threats in the information technology systems are evident in three main ways. First, the necessity of third parties will be no more meaning that service deliver will be poor as compared to the face-to-face interactions with clients. In addition, the company’s competitors might replicate the system and design a classic and better user-friendly format for the same system. This is a possible threat because it might bring down the vision of MetLife as a company to the advantage of the competitors.

The foundation of a marketing sector in 1997, refereed to as “The MetLife Mature Market Institute” is a great opportunity and strength for the company in organizing its operations and benefiting from every opportunity exploited. This marketing institute is a leader in pharmaceutical programs streamlining and diversifying the scope therefore a benefit to every company that implements its programs. The opportunity is applicable in the guaranteeing consumers’ expectation from MetLife of growth and diversification therefore creating attachment with a reputable company (Annual Review 2002).

The external environment has had a big challenge to MetLife. It has been a flaw on the part of the environment leading to a fall in terms of sales and operations of the company. It continues to pose a threat to the company and increases the risks of bad debt and economic hardships in future. A good example is the end of 2009 fiscal year when MetLife received over 110,000 claims on life and home insurance claims (Annual Review). The worst applies when the company’s prospects expect the number of claims to increase more in 2010 because of the catastrophic changes and circumstances in the market that have been government imposed through the strict regulations. It will be a difficult future for MetLife unless changes are imposed into the system.

The external environment has since its inception being a major threat to the company’s operations. As indicated in the MetLife financial reports, the 2008 total revenue was approximately $4,086 Million. This was 53 percent less that the 2007 total revenue, which was estimated at $5,932 Million (Economy Watch). The losses have resulted from the sub prime mortgaging problem. The country’s economic environment posed unregulated mortgage processes and unregulated credit ratings, which was a major blow to the company’s operations. This has been a feature in the current market status and a big blow to business. The situation crippled the real estate market and generated major problems within the sector. This is a challenge to the company because there is uncertainty in the future of the country’s policies on insurance, interest rates and mortgages that are at the core of the business operations of the company. It might be a bigger challenge to hit the company in future and it is not health in initiating approaches and innovations to cope with the external environment.

The economic factors in the country affect MetLife in many ways. The consumer purchasing power is low within the country, which is the heart of the company’s operations. This fact acts as a weakness to the company and brings down the transactions and sales of the company. Goods and services from MetLife experience a challenge therefore making it hard to make profits as prospected from the financial reports of the company. It poses a risk to the company and reduces its competitive advantage as well as its opportunities to grow and develop its brand. The ability of MetLife to sustain its securities, common stocks and liquidity has been brought down by the economic factors therefore posing a risk of other companies taking over the market (Annual Review).

There is however, a negative note on the side of customers where the customers that the company deals with bring down most of its operations. MetLife is expanding its operations mostly in undeveloped countries where the customers have less ability to pay premiums because of the less incomes they generate. There is also a low literacy level in the countries where MetLife operates. These customers have a difficult time in understanding the policies and terms or service that MetLife upholds. Therefore, MetLife faces difficulties in implementation of plans and projects in these countries making it difficult to advance its products and services in these countries.

A major strength in MetLife is the diversity of products that the company deals with. It supplies many products to the customers globally that are a benefit to them. With over 41 products and services globally, MetLife offers a choice to many people therefore increasing its popularity in the region of operations. With the insurance service provided to the customers and a good name to the company, any product provided from the company is widely acceptable (Annual Review).

The demographic nature of the country is strength to MetLife as a company dealing with products and services of that nature. It is prospected that the population is growing at an alarming rate as well as globally, which is an advantage to MetLife. The future for the company is getting better and the market will expand and increase the demand for the company’s services and products (Economy Watch). The ages within the country’s population are soon gaining diversity with the majority being the youths according to the Census Bureau in 2003. This is an opportunity for MetLife to exploit the diverse market and make different products to suit the demands of respective age groups. Migrations into the country with majority being from Hispanic groups develop a better opportunity for the company in terms of increasing its sales and profits. Demand is soon increasing and the future stands as bright for the company including its subsidiaries. This is also an opportunity for the company to lower its production cost because of high production. It will be an advantage to the company because it will increase the profits and the investment value of MetLife as a goods and services company (Annual Review).

However, it might also be a weakness to the company because of coping with the high demand. MetLife currently has a good capacity to hold and serve the population of the country well enough but there are limits that might demand too much from the company. This poses as a risk with the company unable to handle the demand pressures and loosing its competitive advantage. The other competing companies might take advantage of the situation and use the opportunity to gain roots and share the competitive advantage that in future might have negative consequences for MetLife in loosing touch with the customers.

Works Cited

Annual Review 2002. CAO Organization People: Responsibility and the MetLife Brand http://investor.metlife.com/media_files/NYS/MET/reports/annual_review2002/docs/hr.html

Economy watch. “Economy, Investment & Finance Reports” MetLife, from http://www.economywatch.com/companies/forbes-list/usa/metlife.html

MetLife Worldwide. Corporate-profile: MetLife, from http://www.metlife.com/about/corporate-profile/global-locations/index.html