BUS 384 - Business Operations and Planning
Assignment 2024
Solutions To Achieve Business Excellence With A Business Process
Reengineering Approach
Introduction :
The development of the business world is one of the factors that determine the
success of national development activities being carried out in Indonesia. Very fast
development results in unavoidable competition, especially among similar companies. The
company management is required to coordinate the use of all resources owned efficiently
and effectively. To reduce the risks faced by business people can consider the possibilities
that will occur. Insurance is a mechanism to provide protection to the insured in the event
of future risks. Competition of insurance companies in Indonesia is quite tight, until now
there are 76 general insurance companies registered according to data (Financial Services
Authority 2015).
Insurance in 2014. The research uses published financial statements using 10
criteria. The 10 criteria are (1) risk based capital (RBC), (2) liquidity ratio, (3) guarantee
funds, (4) investment/technical reserves and claims payable, (5) fixed assets, (6) changes
in gross premium income and equity capital, (7) gross premium/average equity capital, (8)
net investment income/average investment, (9) ratio of net claims expense/net premium
income, and (10) ratio of profit to average equity capital.
The results of the InfoBank Research Bureau (BirI) study show that the majority of
insurance companies are performing well, but only 40% have achieved the title of "very
good". There are 15 companies ranked based on ten criteria set by BirI, PT Asuransi XYZ
is included in the list ranked in the top five general insurance companies with the predicate
"very good". In order to survive in this highly competitive competition, the company must
continue to improve the quality of service to customers.
PT Asuransi XYZ's vision is to become the number one general insurance company
in Asia, but until now the company has not received this title. The company continues to
evaluate and improve improvements in order to be able to excel among competitors.
Business excellence section as one of the work units at PT Asuransi XYZ is responsible
for service quality to achieve customer satisfaction, thus contributing to competitive
advantage.
PT Asuransi XYZ has 33 sections that need to be pursued in order to be able to
make an optimal contribution to user satisfaction. The most decisive thing in achieving
service excellence is the processes that occur in sections related to business excellence.
Seeing the number of sections in the company, a strategy is needed to achieve business
excellence optimally. This strategy is used so that all sections are able to achieve the targets
that have been set and the company is able to become a competitor among similar
companies. These services include methods, procedures, and systems that are integrated to
produce satisfactory services.
In each section there are specific business processes and have different obstacles
and quality objectives. The following presents the quality objective data of PT Asuransi
XYZ as a form of initial identification of problems that need to be studied more deeply.
Quality objective targets are set by company leaders to measure performance
achievement in each section. The company has tried to improve service quality by assessing
the achievement of quality objective targets every month. At PT Asuransi XYZ there are
33 sections, but four sections did not reach the target in three consecutive quarters, namely
the Medan branch which is a representative office in Medan, miscellaneous claims is the
part of handling other claims, underwriting motor and marine is the part of making motor
and marine policies, and business excellence is a part of creating a strategic approach to
achieve company excellence.
The quarterly performance achievement data of each section can be seen in
Appendix 1. PT Asuransi XYZ establishes a Business excellene section that is given
responsible for coordinating business process improvements in order to improve target
achievement in each section. The business process improvements made also have
implications for improving service excellence. The company is fully aware that improving
service quality can result in well-integrated processes and systems.
There are many obstacles in achieving business excellence and the company must
develop steps to find the causes of the emergence of obstacles and find alternative solutions.
There are other things that need to be done in the long term even though improvements to
business excellence by PT Asuransi XYZ have been achieved. The company as a business
unit like other companies wants to continue to grow and develop more than its competitors,
therefore it must have a long-term strategy to achieve it. Based on the previous description,
it is interesting to conduct a study related to business excellence and strategies to achieve
long-term competitive advantage of PT Asuransi XYZ.
Business Excellence:
Kanji (2001) argues that business excellence is the power to change the way of
working by utilizing existing opportunities, expanding global markets, and providing the
best service. The business excellence approach will lead to the power to achieve
organizational excellence in a better direction. So, business excellence focuses on
innovation and continuous improvement, through building a superior and competent
organization. This goal can be achieved by establishing good relationships with various
parties on an ongoing basis, with a business excellence approach that can obtain customer
satisfaction and improve organizational growth on an ongoing basis.
Business excellence according to Porter and Tanner (2004) is an organizational
advantage that can do something more than its competitors by improving quality, customer
satisfaction, and reducing production costs. Improvements are made on an ongoing basis
to achieve company goals. There are 9 criteria for business excellence, namely (1)
leadership, (2) customer focus, (3) strategic planning, (4) learning organization, (5) focus
on human resources, (6) partnership development, (7) fact-based process management, (8)
focus on results, and (9) social responsibility.
Business Process Reengineering:
Business Process Reengineering according to Hammer and Champy (2005) is a
business process reengineering in the form of fundamental system changes. Changes aim
to support the organization's mission and reduce costs. Business process reengineering
requires identifying the processes used, then discarding unnecessary processes or
simplifying processes with new process prototypes. So, the BPR method is expected to
produce a new business process design and have a major positive impact on the
organization.
The business improvement process is carried out by (1) eliminating non-essential
parts of the process, (2) applying technology where possible, (3) empowerment by
transferring decision-making and control responsibilities to the level of work required, (4)
improving workflow with an emphasis on value-added functions, and (5) establishing
measurement criteria that are useful for analysis and strategic planning.
Problem Solving:
Problem solving analysis according to Gaspersz (2011) can be done by carefully
analyzing the process, then trying to close the gap that occurs between the current situation
and the desired target. This problem-solving technique is oriented towards continuous
performance improvement by thinking of creative and innovative solutions to the problems
formed. The use of technology is an integral part of the learning process for complex
problem solutions. Every decision made must be able to solve existing quality problems.
Five Why's Analysis:
According to Gaspersz (2011), five why's analysis is a tool for problem solving
approach. The approach helps to identify the root cause of a process non-conformity. This
analysis is done by asking why questions to each problem that is suspected to be the cause.
This is repeated five times until the root cause is found and the solution is based on the
answer to the last why question. The questions asked relate to targets or goals that follow
the SMART principle (specific, measurable, achievable, relevant, time bound). The stages
that precede the five why's analysis are as follows:
1. Determine the boundaries of the problem.
2. Bringing teams together to share different views, knowledge and
approaches to a problem.
3. Viewing actual objects with actual data.
4. Start asking questions using why.
5. After finding the root cause, test each answer from the bottom whether it
will have an impact on the consequences at the top level.
6. The root cause of the problem has been found, then identify and implement
a solution.
7. Solutions lead to system or procedure improvements.
Analytical Hierarchy Process:
The Analytical Hierarchy Process (AHP) concept used in long-term strategy
formulation is to gain a better understanding of the whole system with many criteria in a
plan. The planning is related to the allocation of resources and the prioritization of
strategies that are played by actors in a particular situation (Saaty 1993). The application
of AHP provides an opportunity for dissent and conflict in the structure created, the use of
AHP is used to examine problems that can be accounted for (Fewidarto 1996). Thus, AHP
is an analytical method that can be modeled in decision making with a system approach,
where decision makers understand the condition of the system and make predictions in
decision making. The stages in applying the Analytical Hierarchy Process are as follows:
Stages of structure preparation:
1. Analyze the needs to be achieved in setting up the hierarchy.
2. Determine the goal or focus of a problem, criteria, and desired problem-
solving alternatives.
3. Create a hierarchy that describes the structure of the problem to be solved
into elements in a structured manner.
4. Create a pair-wise comparison matrix.
Stages of structure assessment:
1. Horizontal processing with element multiplication, priority vector
calculation, eigenvalue, consistency index, and consistency ratio.
2. To know that the assessment results are consistent, it is necessary to
calculate the inconsistency ratio to test the consistency of the assessment or
logical consistency.
3. If the assessment results are inconsistent, then revise the opinion until the
assessment is consistent.
4. If the assessment results are consistent, then the combined matrix is
compiled and the combined priority vector is calculated.
5. Calculate the consistency ratio and the combined consistency index.
6. Vertical processing with system priority vector calculation.
Stages of result interpretation:
1. Planning is the selection or setting of objectives to determine the strategy
for each element of the structure.
2. Priority Setting is the determination of the order of needs arranged based on
the level of importance of the needs.
3. Resource Allocation is the process of allocating or distributing resources to
each process on the elements of the structure.
Previous Research:
Research on strategies to achieve business excellence with a problem solving
approach (business process reengineering) has been conducted by several researchers, such
as research conducted by Lisnawati (2011) on the Study of Business Excellence
Implementation in Quality Services at PT Asuransi MSIG Indonesia. This research aims to
(1) find out the implementation of business excellence in the company, (2) analyze the
factors, actors and goals that affect the implementation of business excellence, and (3) find
out the right and effective alternative steps that can be applied to the company's business
excellence activities. This research results in improving the performance of quality
objectives including the preparation of objective quality results in all parts of the company
by monitoring, reviewing and analyzing the quality performance of each part of the
company, recommending improvements to quality objectives, and following up on
performance gaps and non-compliance. This research uses the Analytical Hierarchy
Process (AHP) analysis tool which is processed using Expert Choice 11 and Microsoft
Office Excel 2007. The improvements were implemented through the company's main
work tools, namely ISO 9001:2008 activities, consumer voice, i-action, and i-suggest.
Business excellence scenarios that can be applied incentively to improve the quality of the
company's services include customer voice surveys.
Sasanawati (2011) conducted a study entitled Implementation of Business Process
Reengineering to Evaluate, Reengineer, and Improve the Human Resource Response
Center at Total E & P Indonesia. This research suggests steps to improve the system with
the Business Process Reengineering framework. The system created resulted in a
comprehensive solution to evaluate, re-engineer, and improve the system. The solution was
implemented by building a simulation model using a software called Process Simulator.
The application of this software can effectively reduce the workload of the person in
charge, improve the efficiency of internal processes, and speed up the time needed to
process requests.
Rahmadian (2014) conducted a study entitled Preparation Strategy for the
Implementation of ISO 9001: 2008 Quality Management System in the Department of
Management, FEM IPB. This study identifies potential obstacles in preparation for the
implementation of ISO 9001: 2008 SMK in the Department of Management, FEM IPB,
then analyzes alternative strategies related to the preparation of its implementation, then
recommends strategies that need to be done to prepare for its implementation. Analytical
Hierarchy Process (AHP) was used in this research, experts were asked to compare the
level of importance of each element. Experts were asked to compare the level of importance
of each element. Comparing the level of importance aims to determine the weighting of
each element. There are four alternative strategies for the preparation of SMK ISO
implementation, then one alternative is selected, namely by inviting a consultant to assist
the preparation n.
Data Collection
The data collection method to find out the problems related to the achievement of
Quality Objective at PT Asuransi XYZ, is done by using in depth interview to the section
that did not achieve the QO target in Q1-Q3 period 2015. This in-depth interview was
conducted to identify the root of the problem in the existing business process, then analyze
the existing problems with business process reengineering. The interviews were conducted
to internal parties of the company, namely the manager level related to the work process or
the section that knows the performance system and quality objectives of the company.
The formulation of company goals begins with a discussion with the business
excellence manager about the goals the company wants to achieve. After knowing the
description of the company's desired goals, a literature review was conducted so that the
preparation of the structure could be well integrated. The information obtained from the
discussion and literature review was used to develop the hierarchy. The hierarchy consists
of goals, factors, actors, objectives, and strategies. Then a questionnaire was made aimed
at internal and external experts of the company. Internal experts consist of managers and
business excellence staff of PT Asuransi XYZ, while external experts consist of marketing
and risk analysts of PT Asuransi ABC. Filling out questionnaires by experts is done to see
the level of comparison on each element that has been determined.
Data Processing Method:
Data analysis is carried out qualitatively and quantitatively presented in the form of
descriptive descriptions. The method of processing and analyzing data in depth interviews
with resource persons at PT Asuransi XYZ to find out the obstacles in achieving quality
objectives is to use a problem solving approach. This approach is an analysis to find the
root of the problem, then look for an alternative through business process reengineering.
This approach is used to identify the possibilities arising from the selected alternative.
1. Trace the root of the problem and determine the appropriate solution:
a. Using Five Why's analysis.
b. Preparation of alternative solutions with business process
reengineering.
c. Selection of the right solution with pair-wise comparison.
2. Long-term goal setting strategy:
a. Identify each element in the structure with literature studies, in-
depth interviews with sources, and discussions with experts
regarding the hierarchical structure in strategy development.
b. The stage of preparing the AHP structure.
c. AHP structure assessment stage.
Analytical Hierarchy Process (AHP) is used in the process of determining strategies
to achieve company goals. In this study, experts were asked to compare the level of
importance of each element. Comparing the level of importance aims to determine the
weighting of each element. AHP is needed to determine the weight for elements at one
level and at another will affect the weight of elements at the level below. In the end, the
AHP method can be used to calculate the weight at each level as an overall goal assessment.
The hierarchical structure used is a functional hierarchy structure consisting of five levels.
The first level is the goal to be achieved, the second level is factors, the third level is actors,
the fourth level is objectives, and the fifth level is alternative strategies. Data processing
and analysis methods are presented in Table.
Identify Quality Objective and Solution:
XYZ Insurance is one of the global general insurance companies that has
representatives in several countries. The company is the largest general insurance group in
the world with strong partnerships and a wide geographical network. Asuransi XYZ
combines best practices at local and global levels as a leading general insurance company
for a long-term perspective. PT Asuransi XYZ as one of the largest multinational
companies in Indonesia that develops consistently from year to year by providing the best
service to its customers.
The company sets quality objectives as company targets to be achieved in the next
year. The achievement of the targets that have been set is then evaluated by the Business
excellence section to record the achievements of 33 sections in the company as an annual
evaluation. The evaluation is carried out every quarter and the increase or decrease is
recorded. If there are sections that do not reach the target, the BE team will analyze the
cause of the problem.
Seen from the results of the identification of Quality Objective from quarter one to
quarter three, there are four sections that did not reach the target, namely Medan branch,
miscellaneous claims, underwriting motor and marine, and business excellence. Then an
in-depth interview was conducted with each section to formulate alternative solutions with
a problem solving approach. Solution formulation is done by identifying the root cause of
the problem using five why's analysis of an ongoing work process. The identification of
problems in each section is described below.
Medan Branch (BM):
Delivery of business B documents in accordance with the business process, the
standard completion of work starting from the delivery of documents from the Medan
branch to Jakarta is two working days. The company sets a QO target for the series of
processes that must be able to reach 90% of all files sent. Currently, the business process
has only reached 86%. The identification process of document delivery from Medan branch
to Jakarta is shown in Table 4.
Based on the root cause analysis with the first why, the problem of XGEN's limited
memory capacity is obtained, this is caused by the outdated version of the software used.
The procurement of the devices was not carried out because there was no allocation
of financial resources due to the fact that approval from the regional office had not yet been
obtained. Thus, the approval of device procurement is the root of the problem for which a
solution must be found. Based on the root of the problem, the solution that can be suggested
to overcome the non-achievement of quality targets at the Medan branch is the renewal of
XGEN.
The company needs to replace XGEN with a device that supports company
activities such as System Application and Product in data processing (SAP). The SAP
system can stabilize the head office through an integrated work process with a planned and
simpler system. SAP is software developed to support an organization in carrying out its
operational activities more efficiently and effectively.
Underwriting Motor and Marine Section (UWMM):
Working on the issuance of marine cargo open policy in accordance with the
business process, the standard completion of work starting from receiving files from the
production section until the return of the open policy (OP) is three working days. The
company sets a QO target for the series of processes that must be able to reach 80% of all
incoming files. Currently, the business process has only reached 52% of the target. The
identification process of marine cargo open policy processing is listed in Table.
Competitive Strategy Analysis
Structure Development:
The structure starts from a complex problem and is then broken down into its main
elements which are broken down into their parts again, and so on hierarchically. The
number of these parts consists of five to nine (Marimin and Maghfiroh 2010). The
hierarchical structure used in this research is a functional hierarchy structure that
decomposes a complex system into main elements arranged in levels of factors, actors,
goals, and strategies (Saaty 1993).
The hierarchical structure in determining the strategy to become a superior general
insurance company in the world in ensuring the continuity of various types of business
consists of five levels, namely the first level is the focus or goal, the second level is the
factors that affect efforts to achieve the goal, the third level is the actor who plays a role in
the dynamics of each factor, the fourth level is the goal of the actor who describes the need
to change factors to achieve the goal, and the fifth level is an alternative that can be done.
The preparation of the structure involved several experts, each expert was asked for their
opinion on the structure created. The discussion resulted in nine factors that influence the
goal and three alternative strategies to achieve the goal.
The stages of determining alternative strategies in the hierarchical structure are as
follows (1) identifying quality objectives with several experts in the company to find out
the company's goals, (2) conducting a literature review related to matters that support the
achievement of company goals applied to an organization, (3) conducting in-depth
interviews and preparing an initial structure consisting of focus and alternative strategies
with business excellence managers, (4) conducting discussions with experts regarding the
results of the initial hierarchical structure created. (5) compile the results of discussions
with experts to create the final hierarchical structure.
Ultimate Goal Setting:
According to Weber (2009), an organization is a structured relationship framework
in which there is authority, responsibility, and division of labor to carry out organizational
functions in achieving the desired goals. The theory is used as a reference to identify the
ultimate goal through discussions with several internal parties, namely the manager level
to find out the company's goals in the long term. The opinions of the company's internal
parties in formulating goals are the same, namely referring to the company's vision and
mission. The opinions obtained from the company's internal parties were then discussed by
experts, then a goal was obtained that was guided by the company's vision, namely "to
become a superior general insurance company in the world in ensuring the continuity of
various types of business."
Identification of Factor Assignment in the Hierarchy:
Factor identification is carried out by means of literature studies and interviews.
Interviews were conducted with internal company parties, namely managers in the
company regarding factors that affect the ultimate goal. Some factors are also obtained
through root cause analysis in the previous objective. The following theory supports the
formulation of factors:
Competitive environment factor (LP):
The success of an insurance industry depends on how it relates to its environment.
The competitive environment affects the number and type of competitors managers have
to deal with and how they behave. The competitive environment is considered as a factor
inhibiting the growth rate of the industry. According to Porter (2007), there are five
competitive advantages that need to be considered and influence the performance of
insurance companies in the future, especially in competitive strategies, namely (1)
competition among loss insurance companies in the current national insurance services
market, (2) the threat of new entrants to the national insurance services market from both
domestic and foreign companies (3) the bargaining power of suppliers, plays a role in
determining price, quality, performance, method, payment time, and timeliness of handling
the process (4) the threat of substitute services, the government issues employment social
security which is similar in nature to insurance and is subsidized by the government (5) the
bargaining power of consumers, is very influential in determining the price and income of
companies in the midst of competition in the insurance industry.
Competitiveness factor of maintaining relationships with customers (HP):
According to Buttle (2004) customer relationship management (CRM) is a strategy
in business that integrates internal processes and functions with all external networks to
create and realize value for target consumers profitably. This strategy seeks to attract and
retain consumers in creating profitable reciprocal relationships. The main concept of CRM
is the creation of customer value that does not only aim to maximize revenue from a single
transaction but as a competitive advantage with the customer fostering long-term
relationships. According to Kotler & Keller (2007) a customer will give high value to a
company's product or service if he feels the benefits obtained are greater than the costs
incurred, and other products or services from competitors are unable to provide better
benefits.
Government regulation factor (RP):
Regulation of the Minister of Finance of the Republic of Indonesia Number
53/PMK.10/2012 concerning the financial health of insurance and reinsurance companies.
Insurance products and marketing of insurance products that are increasingly diverse and
complex can increase the risks faced by insurance companies and policyholders, insured,
or participants. For this reason, it is necessary to improve the governance of insurance
companies, both in the form of limited liability companies and those that are not limited
liability companies. The implementation of good corporate governance, adequate risk
management, and sound insurance practices in insurance companies as well as the
empowerment of policyholders, insured, or participants need to be improved so that risks
related to insurance products and marketing of insurance products can be managed
properly.
Factors that make it easy for customers to access information (AI):
Information is important for customers to determine purchasing decisions.
Insurance companies must find the right business strategy in facing business competition
in order to retain customers and increase sales. Loyal customers are a mirror of customer
satisfaction, where at this time the price is not the main factor for them, but becomes
something relative. Therefore, as information technology develops, it is necessary to
implement a better strategy by implementing Customer Relationship Management (CRM)
in terms of selling insurance products. This helps customers become more effective in
accessing marketing and customer support services, and can support better decision
making.
Company management system factor (PP):
Good Corporate Governance is a company management system that has been
implemented in various countries in the world. The essence of Good Corporate Governance
is basically the commitment, rules, and practices of conducting business in a healthy and
ethical manner to maximize company value. Corporate Governance (CG) is a system for
directing and controlling the company's business activities.
According to Astanti (2015) in her research shows that insurance companies have
implemented the principles of Good Corporate Governance to create healthy corporate
governance, among others, to maximize corporate value, provide a reference regarding the
principles of Good Corporate Governance that must be applied at the level of authority of
each level of management and employees, as well as efforts to provide a sense of trust to
shareholders and stakeholders.
Human resource development system (HRD) factors:
The human resource development system is a system that is able to make
performance the basis for implementing human resource development, both planning,
providing, developing and dismissing employees. Human resource planning system in
insurance companies refers to the needs of the workforce to support organizational goals,
namely skilled, expert and professional workforce. To meet the skilled, expert and
professional workforce, it is necessary to clarify the objectives outlined in the labor needs
plan including the need for job enlargement and job enrichment, the need for minimal
turnover and the need for competent company labor market competition.
Governance efficiency factor (TL):
Identifying the root of the problem that has been done, the company is advised to
review the governance section of PT Asuransi XYZ. Governance efficiency is carried out
through a re-planning of several sections whose quality objective targets are not achieved.
This strategic formulation involves all aspects of the company including regional sections
because inefficient procedures will affect the overall performance of the company. The
efficiency process is characterized by process improvement so that it becomes more
organized. In the suggested process improvement, it is expected that the level of fulfillment
of target achievement will be more effective.
Continuous improvement policy factor (KCI):
Continuous Improvement of company policies is carried out by following any
changes in market dynamics. This is done by continuing to learn to be better at every policy
taken by the company. The company strives to realize the target of implementing good
governance efficiency to obtain service excellence results. Continuous improvement is
carried out to improve the tasks, authorities, and responsibilities between functions in the
company in order to create a strong joint commitment in achieving the company's vision.
This will also increase stakeholder trust and create a conducive work climate that
encourages improved company performance. Continuous Improvement as an evaluation of
competition with businesses that cannot be avoided. This competition makes companies
think creatively to keep creating.
Product and service management factors (PPL):
The management of these products and services includes improvements in
accordance with consumer desires, product development, innovation of products and
services, and expansion of the company's business lines. According to Robbins (1994)
innovation is a new idea that is applied to improve a product, process, or service. This
innovation is a differentiating trait for creative and innovative thinking. This ability to
move less productive resources into productive resources so as to provide economic value.
This management will attract customers to look at the company's products compared to
competitors. Product expansion is done by expanding the focus and target market to be
addressed. This market share expansion must be followed by paying attention to the
standardization of services provided to produce uniform services.
Structuring begins with determining the goal in a problem, which is to become a
superior general insurance company in the world in ensuring the continuity of various types
of business. At the next level, determining the level of factors that affect efforts to achieve
the goal. Based on the 9 factors obtained, an initial assessment was carried out using the
Saaty rating scale to four experts. The initial hierarchical structure formed can be seen in
Figure.
Factor-related Actor Assignment:
Identification of actors to become a superior general insurance company in
supporting the continuity of other businesses in the world was carried out by means of
literature studies and interviews with internal company parties. Discussions were held with
experts regarding the results of literature studies and interviews that had been conducted.
The theories that support the formulation of actors are as follows:
1. President Director (PD)
PT Asuransi XYZ is a company whose fundamental decision system lies with the
top leadership. The president director has the role of determining the company's plans,
goals, policies, and is responsible for all the lower management in the organization. The
president director decides and determines the company's highest policy, is responsible for
leading the company, is responsible for the losses faced by the company, plans and
develops the company's sources of income, coordinates all company activities, and acts as
a company representative in relation to the world outside the company.
2. General Manager (GM)
The general manager is tasked with overseeing the operations division and is
responsible for all activities of all units, including production, marketing, sales, and
finance. General Managers are at the middle management level which includes all
management between the first-line managers and top management who serve as a liaison
between the two. They are responsible for the implementation of the overall strategy and
policies determined by top management. General Managers have managerial functions,
namely planning what their team will do to achieve the desired goals, organizing the right
strategy, assembling the team in the organization along with the resources used, directing
and implementing the plan, and controlling the activities that have been implemented.
3. Financial Control System (FCS)
Financial system supervisors consist of the Ministry of Finance of the Republic of
Indonesia and the Financial Services Authority. The role of the finance ministry is based
on Law 40/2014 article 39 which requires the implementation of a mandatory insurance
program on a competitive basis. Parties that can organize compulsory insurance programs
fulfill the requirements set by the Financial Services Authority. Insurance program
providers must be able to offer additional benefits with additional premiums or
contributions. Insurance program providers are prohibited from forcing policyholders to
accept additional benefit offers.
Actor-related Goal Setting
The next level is to formulate the goals that the actor wants to achieve to become a
superior general insurance company in the world in ensuring the continuity of various types
of business. According to OJK regulation Article 3 NOMOR2/POJK.05/2014 regarding
the implementation of good corporate governance for insurance companies. The OJK
regulations are (1) optimizing the value of insurance companies for stakeholders, especially
policyholders, insured, participants, and parties entitled to benefit (2) improving the
management of insurance companies in a professional, effective and efficient manner (3)
increasing the compliance of insurance company organs and sharia supervisory boards and
the ranks below so that in making decisions and carrying out actions based on high ethics,
compliance with laws and regulations, and awareness of the social responsibility of
insurance companies towards stakeholders and environmental sustainability (4) realizing
insurance companies that are healthier, reliable, trustworthy, and competitive (5) increasing
the contribution of insurance companies in the national economy.
In-depth interviews were conducted with internal company parties, namely the
manager level. The results of the literature study and in-depth interviews with company
internals were then discussed with experts regarding the right goals. The objectives that
must be considered by the four actors in making policies to achieve the ultimate goal are
as follows:
1. Increasing customer satisfaction and loyalty through excellent service is to
improve the services provided to policyholders.
2. Increasing market share through strengthening competitiveness is to increase
the strength of the company to face similar companies.
3. Expanding the scope and range of services is expanding the company line by
opening new branches but having the same service standardization.
4. Expanding the scope of products and services is a new idea to attract customers
to look at the company's products over competitors.
Strategy Setting in the Hierarchy:
Scenarios or strategies are steps taken in achieving the goal of becoming a superior
general insurance company in the world in ensuring the continuity of various types of
business. The preparation of strategies is based on OJK regulation Number
2/POJK.05/2014 Article 2 concerning good corporate governance for insurance companies.
The regulation is used as a reference to determine the strategy. Initial identification of
alternative arrangements as follows (1) a system of open disclosure of reliable information
about the company (2) complying with the rules for implementing corporate organizational
responsibility (3) responsibility regarding the suitability of the management of insurance
companies with the law (4) becoming an insurance company that is managed in a good
manner independent without pressure from certain parties (5) justice in fulfilling the rights
of all stakeholders. The initial identification was re-discussed with experts regarding the
accuracy of alternatives to achieve company goals and the following strategies were
obtained:
1. Total business process evaluation strategy: improve business process
optimization through automation that will reduce various errors to increase
efficiency.
2. Global business development strategy: developing corporate strategies,
designing operating systems, working with people around the world to
generate mutual benefits by capitalizing on potential opportunities that refer
to international trade including new products or technologies.
3. Customer relationship intensity improvement strategy: an organized
customer relationship management method that is a strategy to maintain
existing customers and attract new customers.
Structure Assessment:
The structure assessment begins with data collection regarding the priority of
influencing factors to become a superior general insurance company in the world in
ensuring the continuity of various types of business. Experts assessed 9 factors that affect
the ultimate goal, then the weighting results were calculated and sorted from largest to
smallest and then reduced. The data collection uses a comparison scale according to Saaty.
The initial data collection was carried out to four experts, through the initial data collection,
the researcher wanted to see the priority of factors that affect the ultimate goal. The results
of the expert assessment in Table 9 are 9 factors that affect the company's strategy obtained
with a contribution limit of up to 0.70. The factors of the company management system
and the ease with which customers can access information have almost the same weight
with a difference of 0.001, so these factors are not included.
