Size matters. Or does it? That was the dilemma facing Suhas Nair and his team. The issue under discussion was the restructuring of Indian General Insurance Ltd. (IGIL), the largest, state-owned, non-life firm in the country. Nair had a personal stake too. His tenure as chairman and Managing Director of IGIL was to end in two years. And he was keen on hanging up his boots on a high note. Nair opened the meeting: “Should we merge the four subsidiaries of IGIL into a single outfit that would give us the advantage of size?” “Or should we delink them into learner, autonomous, and agile unit?”
“Just to provide a perspective,” said Rajiv Parasnis, Director (Management Services), “consolidation is the global trend. Look at Japan. The top six insurers are in merger-talks.” “Out context is different,” said Anup Sinha, Director (Personnel). “First, the insurance markets where consolidation is taking place are mature, making it easier to diversify into other financial services, invest in technology, and expand our operations. A merger will also help integrate our business.”………………
1.What are the threats being faced by Indian General Insurance Ltd. (IGIL)?
2.What are its traditional strengths? What ‘business definitions’ should it follow while capitalizing on its traditional strengths?
3.Would you suggest restructuring of IGIL? Why or Why not?
4.What strategies should IGIL follow to retain its market leadership?
In mid- October, at the annual general meeting of Reliance Industries ltd. Chairman Mukesh Ambani talked about 5 ‘fundamental strategic shifts that were underway his petrochemicals & refining Goliath. RIL will now pursue acquisition for global size & scale. That is the first major shift. The second big departure from the part is Ambani’s willingness to accept partnership primarily joint ventures as way of life. The other changes involve relying on agriculture & rural sectors for growth, focusing on research & innovation & getting a global foot print in a bid to be recognized as a true Indian Multinational…………………………………
- As a strategy professional, how do you look at these shifts?
- What has been the experience, in general, with merger, acquisitions & joint ventures