5. Changing Strategies and Control Systems at a German Insurance Company

The entire case study is presented in a dissertation, with planned publication in 2013.

These service-specific aspects are the simultaneous nature of service production and consumption, the interaction with the customer that makes it relatively difficult to standardise the output of service, as well as the fact that service consists of activities and not physical objects (Zeithaml et al. 1985).

Only three empirical tests in service industry are known to the author: Chan and Wong’s (1999) test in an international banking centre as well as the study of O’Farrell et al. (1993) in business service firms provided support to Porter’s typology; Kim et al. (2004), on the other hand, concluded that in order to be successful in e-Business, cost leadership and differentiation need to be combined. The study conducted by Miller (1988) included some service organizations but did not discuss service industry characteristics. Fitzsimmons and Fitzsimmons (2006) conceptually applied Porter’s typology to service industries, and Meidan and Chin (1995) used Porter’s generic strategies to map the strategies of building societies. However, empirical tests that especially take service characteristics into account are still limited to the above mentioned examples.

Resources hold a potential for leading the company possessing them to a sustained competitive advantage provided the resources are valuable, rare, not imitable and non-sustainable (Barney 1991). Whereas the resource-based perspective is rather static, based as it is on the resources available, capabilities enable the company to create new resources and to refresh the existing stock of valuable resources in changing environments (Ambrosini and Bowman 2009).

The tightness of control, non-monetary vs. monetary control and the control time horizon are used as dimensions.

Modell as well as Lowry include control over the service production process when discussing management accounting.

The measurement of white-collar productivity has become increasingly important as the share of knowledge workers increases. However, the debate on service productivity is still only in its infancy (Vuorinen et al. 1998). In service industries productivity is more difficult to define and measure (McLaughlin and Coffey 1990), not least for lack of a description of what the output actually is. This problem is compounded by uncertainty as to whether the service unit is working at capacity and with the required quality at the time when measurements are made.

Quality of service is concerned with generating customer satisfaction. Johnston (1987), Parasuraman et al. (1985) and Grönroos (1994), just to mention a few researchers, define quality of service in terms of customer satisfaction, that is, by the degree of fit between customer expectations and perceptions of service.

Similar conclusions were made by Pettigrew and Whipp (1991, p. 55). In their study they also concluded, some years after the deregulation of the insurance market in the UK, that another truth from the 60s needed to be abandoned; it was no longer the case that ‘profits grow in line with market growth.’

The insurance companies are regionally organized under public law and do not compete in each other’s regions.

The governing boards do not have any decision-making power over the insurance companies, but can only recommend decisions to be taken by the regional companies. The governing boards will be discussed in more detail in Sect. 5.3.4 (Coordination and control system).

Comment by the manager responsible for evaluation of project ideas.

The return on assets has traditionally compensated for the small contribution or even the losses from the insurance business. This changed with the financial crises, as the investment market became more volatile.

The governing boards will be discussed in more detail later in this part.

Although the name indicates that only a service centre was established, nearly all service production was re-organised into service centres. Only some special underwriting entities were not integrated into the service centre model.

The service level agreements are the same for all entities of the customer and sales channel service centre: 90 % accessibility for sales partners and 80 % for customers in the telephone entities. In correspondence a response to a new application should be returned within 3 days and for modification transactions within 8 days. The transactions are routed to employees based on these service level agreements. The arrangement is a kind of FIFO (first-in first-out), though also dependent on the application’s deadline flag. Department managers can overrule this routing for special types of transactions or even for a specific transaction request. The service production employees themselves, however, are supposed to handle transactions in the order in which they are routed to their individual inboxes.

The insurer launched a price-sensitive internet insurance in 2008 in order to attract younger clientele.

Corporate strategy, market positioning or business strategy and service production strategy.