Excerpt from Research Proposal:
AXA SOCIAL FEAR, the French insurance giant, is considering providing its risk in Taikang Life Insurance, the fourth-largest a life insurance policy company in China. Advertising a major advantage is a major strategic decision. A number of elements must be considered with such a sale, like the overall tactical direction in the parent firm and the functioning environment of both the parent and the part. In this case, it seems that two factors have come into play. The foremost is that the French firm is seeking to improve its balance sheet; the second is there is regulatory pressure to divest the Chinese language subsidiary. Because the latter is far more of a pressured situation which includes relatively significantly less bearing about strategic management, this paper will analyze the decision to offer this key asset in the context of internal and external evaluation.
AXA management has recognized that their balance sheet is at a poor position, a consequence of the global economic slowdown. Among the most common solutions to this problem is definitely the sale of non-core assets. Group stakes in foreign companies are often the goal of property sales to generate cash that could improve a company’s poor balance sheet. An internal analysis such as a SWOT can reveal this sort of weaknesses within a company’s finances and information management toward opportunities intended for solutions in the marketplace.
Furthermore, when a firm such as AXA is definitely faced with multiple potential divestitures, it can focus the asset to be offered on the basis of asset value and the competitiveness of the asset within its sector. Porter’s Five Forces model can disclose the potential deal asset with all the least beneficial operating circumstances. Many American firms have got determined lately that the circumstances in the Chinese insurance marketplace are currently unfavorable.
With this approach, AXA can be exiting the Chinese market. Such a move is not to be taken lightly simply by AXA management. They would have got undertaken an industry analysis to ascertain that the Chinese life insurance organization was no for a longer time attractive. They would have identified their minority stake in an unattractive sector as a chance to shore the weakness on their balance sheet with an asset deal.
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