Sun Life Financial

I. Statement of the Problem

What is the best way to organize Sun Life Financial's entry into the Chinese market?

* Which geographical market area (City) to operate?

* What strategy to use?

II. Objectives

* To know whether Sun Life Financial is internally ready to enter the Chinese market.

* To investigate whether Sun Life Financial has the resources to respond to opportunities and threats in the company's environment.

* To choose what city in which to operate.

* To decide on Sun Life Financial's strategy that would provide long-term viability without exhausting resources.

III. Relevant Case Facts and Analysis

SWOT ANALYSIS

 Strength:

* The most obvious and at the same time probably the biggest strength is the experience Sun Life Financial has in the insurance business. Sun Life Financial was set up in Canada in 1865. It was not long until the company began the internationalization process and entered numerous foreign markets like Nicaragua, Japan and China (until 1949 when the communist system was put into place). Sun Life Financial has started to diversify its investments and began expanding through growing industries.

* This experience is crucial when it comes to making management decisions and determining strategies. Furthermore, Sun Life Financial has a great deal of experience when it comes to internationalization and entering new markets.This will be of high value when entering the Chinese insurance market, since through the years the company had the chance to develop, apply and test many strategies.

* A second strength is the representative office opened in Beijing in 1992. This office enables Sun Life Financial to establish a presence in China which can provide information to the international headquarters that can help determine the right approach and strategy. The representative office can help Sun Life Financial gain crucial contacts with local and national governments as well.

* The existing joint venture agreement with the China Everbright Group can be considered a strength as well. A joint venture agreement provides all sorts of benefits for a company. In this case the China Everbright Group had to share its distribution network and its management local's expertise. And since Everbright is a Chinese company, they have the ability to deal with the local and national governments.

 Weaknesses:

* However, Sun Life Financial also has these weaknesses. Being a foreign company entering a new, already existing market, relationships with local and national governments can be a lot more complicated, especially in China.

* A second weakness that has to be taken into account is that Sun Life Financial has no experience in the Chinese insurance market. This market is relatively new and dominated by Chinese insurance companies with more experience and knowledge concerning the Chinese insurance market. Obviously, they will not be willing to share any of their expertise unless there is a joint venture agreement, as in the case with Sun Life Financial. Chinese customers might be hesitant to trust a new foreign player on the insurance market in their country. It will take some time and effort to win the Chinese trust.

 Opportunity:

* With a population over 1.3 billion people, China is the largest country in the world. Naturally, this offers a great opportunity for Sun Life Financial. All these people can in the future be prospective customers. Also, China has an extremely fast growing economy that is attractive to many foreign companies. Even more important to Sun Life Financial is the fast growing Chinese insurance market. This means numerous opportunities for Sun Life Financial to gain a substantial market share in the insurance market in China, since China is an untapped market.

* More so, social security is decreasing in China. The state no longer provides for its citizens throughout their lives. This offers an opportunity for Sun Life Financial to replace the function the Chinese state has fulfilled all these years. The people of China have to arrange their own future security now and Sun Life Financial offers the products and services that fit these criteria.

 Threat:

* However, one major threat in doing business with China is the high level of bureaucracy. Bureaucracy is a large, complex administrative structure that can obstruct Sun Life Financial in obtaining licenses and in the products they are allowed to offer on the Chinese insurance market. It will cost Sun Life Financial extra funds and time and it should therefore always be taken into account when strategies are determined and planned.

* Also, corruption and piracy still exist in the country. This is one of the main challenges Sun Life Financial will face when doing business in China (Study shows that two out of three American companies that do business in China face red tape and bureaucracy).

* Another threat could also be associated to the joint venture with China Everbright. When in a joint venture agreement, it is not only agreed to share expertise but also to share risk. More aspects will have to be shared like profit, decision-making, etc. And when two parties are involved in the decision-making process, there is always a possibility that the parties do not agree with each other, thus slowing down some processes.

PEST ANALYSIS

In this case, PEST (Political, Economical, Social and Technological) analysis will be used to analyze China and the Chinese insurance market. The scan of the external macro-environment in which Sun Life Financial operates reveals the following:

 Political:

* China's communist system had been put in place under Mao Zedong in 1949, and it placed tight controls on the country through political, social, and economic policies. Communism is a system of government in which the state plans and controls the economy and a single - often authoritarian - party holds power; state controls are imposed with the elimination of private ownership of property or capital while claiming to make progress toward a higher social order in which all goods are equally shared by the people.

* When