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How the SWOT analysis can be used to make investment recommendations

——based on the case of “China Life Insurance Company Limited”

Contents
1.Introduction3
2.Company Overview5
2.1 History and firm size5
2.2 Product and service network5
2.3 Financial overview6
2.4 Strategic Objectives6
3.SWOT analysis7
3.1 Strengths8
3.1.1 Financial achievement8
3.1.2 Corporation operation10
3.2 Weaknesses11
3.2.1 Geographic concentration12
3.2.2 Declining performance12
3.3 Opportunities14
3.3.1 High growth of Chinese insurance industry14
3.3.2 Large population and growth in pensions15
3.4 Threats16
3.4.1 Intensive competition16
3.4.2 Influence of bancassurance channel17
4.Evaluation18
4.1 Investment recommendation18
4.2 Evaluation of SWOT19
5.Conclusion21
6.References22
7.Appendices25

1. Introduction

In recent years, there has been an increasing interest in financial investment, especially in stock investment, which is always high-yielding along with high-risk. When making stock investments, for the sake of getting as high a return as possible on the base of the comparatively lowest risk, methods are needed to analyze the value of the company before deciding a particular corporation is worth to invest in or not.

There are numerous methods to analyze a corporation in terms of the financial management, marketing strategies and operation. Of all, SWOT analysis is a typical management consulting tool to make an overall analysis of a whole company. Consequently, this method can be used to make investment recommendations to enable the investors to have a clear view of the corporation that they are going to invest in.

“SWOT, an acronym that stands for strengths, weakness, opportunities, and threats, is a careful evaluation of an organization’s internal strengths and weakness as well as its environmental opportunities and threats” (Griffin, 2008, p.67). As an outstanding and base strategic planning method, it can be used to analyze and compare a number of things in business. Therefore, it is a typical consulting method which is used by numerous management consultancies to do the company analysis in order to evaluate whether a company is worth to invest in or not.

Based on the case “China Life Insurance Company Limited”, this paper is going to investigate how SWOT analysis can be used and applied to real cases in order to make investment recommendations. After a concise explanation of the SWOT analysis being given out at this first part, it is followed by a brief overview of the China Life Insurance Company Limited in terms of company size, marketing, financial overview, and strategy vision in the second part. In terms of the external environment and the internal resources, the third part will focus on the SWOT analysis of the “China Life Insurance Company Limited” with multiple data and information as supporting. And then, it will move on to make an investment recommendation on the China Life Insurance Company according to the SWOT analysis. At the same time, the drawbacks of SWOT will be explained and a brief reference will be made to other consulting tools that may be put into use in making investment recommendations. Finally, the paper will conclude that a comparatively integrate investment recommendation will be made after the conjunction of using multiple management consulting tools.

Throughout this paper the term “CLI” and “China Life” will be used to refer to “China Life Insurance Company Limited”.

2. Company Overview

2.1 History and firm size

China Life Insurance Company Ltd. is the biggest life insurance company in the world, and also the biggest insurance company in China. It has a long history as its precursor was established in 1949 and is supported by the Chinese government. Now China Life stands 9th in the “Fortune 500” list among the Chinese enterprises. Moreover, it is the first Chinese insurance company...
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