a study of strategic intelligence as a strategic management

376 Pages·2010·3.8 MB·English

A STUDY OF STRATEGIC INTELLIGENCE
AS A STRATEGIC MANAGEMENT TOOL
IN THE LONG-TERM INSURANCE
INDUSTRY IN SOUTH AFRICA
by
JEAN-PIERRE KRUGER
submitted in fulfilment of the requirements for the
degree of
MASTER OF COMMERCE
in the subject of
BUSINESS MANAGEMENT
at the
UNIVERSITY OF SOUTH AFRICA
SUPERVISOR: Professor René Pellissier
JANUARY 2010
Abstract
Changes and challenges that have occurred in the past two decades have forced a radical shift in
the basic foundations of how business is conducted. Internal, as well as external forces have
forced organisations to constantly monitor their surrounding environment in order to create an
awareness of opportunities and threats to allow them to survive in their competitive
environment.
Organisations need to gather all the information at their disposal, and turn the raw data into
intelligence through a process of analysis and an exercise of human judgement. By utilising the
potential offered by information systems in the process of generating intelligence and creating a
corporate knowledge base to be used in strategic decision-making will lead to competitive
advantage and constant innovation.
Strategic Intelligence has information as its foundation. This research proposes that through its
ability to absorb sources of information, the synergy of Business Intelligence, Competitive
Intelligence, and Knowledge Management combined to form Strategic Intelligence, will allow
organisations to incorporate all of their information and intellectual capital into a single database
or system which will meet the intelligence requirements of management.
The purpose of this study is to identify the current use of Strategic Intelligence in the Long-term
Insurance Industry in the South African environment, and through the use of a survey
questioned the benefits or problems experienced by executive management who have not yet
implemented and used Strategic Intelligence as an input to the Strategic Management process,
and identified the perceived value Strategic Intelligence could add in the decision-making
process.
The research study shows that organisations have not yet fully embraced a model for a
cooperative global internal corporate Strategic Intelligence System or Portal that will incorporate
all aspects of Strategic Intelligence into a single, easily manageable resource for management’s
strategic planning and decision-making process, even though it could enhance their ability to
withstand the onslaught of global competitors and expand their business into new markets,
protect their local market or identify potential merger or acquisition targets, and increase
innovation within the organisations.

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Key Terms
Business Intelligence, Competitive Intelligence, Knowledge Management, Long-Term Insurance
Industry, Strategic Intelligence, Strategic Management, Strategic Management Tool, Strategic
Decision-Making.

iii
Acknowledgements
I would like to thank Professor René Pellissier, my supervisor, for her patience, constant support
and guidance throughout the length of my studies. Her many suggestions, constant support, and
numerous revisions, resulted in the work submitted as this research study. Thank you for your
constant motivation, inspiration and encouragement.
Furthermore, I would like to thank my friends and co-workers for their patience, and assistance
during the length of my studies, and in particular, thank you to Kyra Cÿrus, my dear friend, for
all her assistance, support and motivation.
I would also like to thank the authors and researchers who provided the material used to compile
this research. Without their hard work and belief in the different areas, this work could not have
been completed.
And final thanks for all the abuse and torment suffered by me in the past few months at the
hands of my Bulldog puppy, Thor, while trying to complete this dissertation.
The boundaries set upon one’s dreams and goals are the creation of excuses and fear of the unknown.

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Statement of Originality
Student Number: 3334-232-6

I declare that “A STUDY OF STRATEGIC INTELLIGENCE AS A STRATEGIC
MANAGEMENT TOOL IN THE LONG-TERM INSURANCE INDUSTRY IN
SOUTH AFRICA” is my own work and that all the sources that I have used or quoted have
been indicated and acknowledged by means of complete references.

Jean-Pierre Kruger Date

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Glossary
APQC American Productivity and Quality Centre
BI Business Intelligence
CI Competitive Intelligence
IC Intellectual Capital
ICT Information Communication Technology
IS Information Systems
IT Information Technology
KM Knowledge Management
MIS Management Information Systems
SI Strategic Intelligence
SPSS Statistical Package for the Social Science
WWW World Wide Web

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Table of Contents
Abstract ........................................................................................................................................................ ii
Key Terms ................................................................................................................................................... iii
Acknowledgements .................................................................................................................................... iv
Statement of Originality ............................................................................................................................. v
Glossary ....................................................................................................................................................... vi
Table of Contents ..................................................................................................................................... vii
List of Figures ........................................................................................................................................... xiii
List of Tables ........................................................................................................................................... xvii

Chapter 1 Introduction ................................................................................................. 1
1.1 Introduction ................................................................................................................................ 2
1.2 Background ................................................................................................................................. 3
1.2.1 Current Literature .............................................................................................................. 3
1.2.2 The South African Long-Term Insurance Industry...................................................... 6
1.3 Research Purpose ....................................................................................................................... 7
1.4 Research aim and questions ...................................................................................................... 8
1.5 Research Objectives ................................................................................................................... 9
1.6 Research Statement .................................................................................................................. 10
1.7 Research Methodology ............................................................................................................ 10
1.8 Value added by this research .................................................................................................. 11
1.9 Chapter Layout ......................................................................................................................... 12

Chapter 2 Strategic Intelligence .............................................................................. 14
2.1 Introduction .............................................................................................................................. 15

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2.2 Strategic Management .............................................................................................................. 16
2.2.1 Defining Strategy ............................................................................................................. 16
2.2.2 Strategic Management ..................................................................................................... 18
2.2.3 Strategic Planning ............................................................................................................. 21
2.2.4 Strategic Analysis.............................................................................................................. 23
2.2.4.1 The Macro Environment ............................................................................................ 25
2.2.4.2 The Industry Environment ........................................................................................ 26
2.2.4.3 The External Competitive Environment ................................................................. 28
2.2.4.4 The Organisation’s Internal Environment ............................................................... 29
2.2.5 Strategic Decision-Making .............................................................................................. 30
2.2.5.1 Phases of the decision-making process .................................................................... 34
2.2.5.2 Information requirements of Strategic Decision-Making ...................................... 36
2.3 Intelligence Hierarchy .............................................................................................................. 38
2.4 Intelligentsia .............................................................................................................................. 42
2.4.1 Business Intelligence ........................................................................................................ 43
2.4.1.1 The Architecture of Business Intelligence ............................................................... 46
2.4.2 Competitive Intelligence ................................................................................................. 49
2.4.2.1 Defining Competitive Intelligence ............................................................................ 50
2.4.2.2 Benefits of Competitive Intelligence......................................................................... 51
2.4.2.3 The Competitive Intelligence Process ...................................................................... 53
2.4.2.4 The Data Acquisition Process ................................................................................... 56
2.4.2.5 The Validation of the Sources ................................................................................... 61
2.4.2.6 Tools used in Competitive Intelligence Analysis .................................................... 61
2.4.2.7 Distributing Intelligence ............................................................................................. 71
2.4.3 Knowledge Management ................................................................................................ 72
2.4.3.1 Defining Knowledge ................................................................................................... 72

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2.4.3.2 The Different Types of Knowledge .......................................................................... 75
2.4.3.3 Understanding Knowledge Management ................................................................. 81
2.4.3.4 The Aim and Mission of Knowledge Management ................................................ 84
2.4.3.5 Knowledge Management Systems ............................................................................. 91
2.4.4 Strategic Intelligence ........................................................................................................ 99
2.4.4.1 The two most common approaches to Strategic Intelligence ............................. 102
2.4.4.2 Creating Value through a Strategic Intelligence Process...................................... 104
2.4.4.3 Strategic Information Systems ................................................................................. 105
2.4.4.4 Strategic Intelligence Systems .................................................................................. 107
2.4.4.5 Implementation of Strategic Intelligence ............................................................... 114
2.5 Conclusion............................................................................................................................... 116

Chapter 3 The South African Long-term Insurance Industry ....................... 118
3.1 Introduction ............................................................................................................................ 119
3.2 Insurance ................................................................................................................................. 119
3.3 The Life Insurance Industry ................................................................................................. 123
3.3.1 Origins ............................................................................................................................. 123
3.3.2 Life Assurance Defined ................................................................................................ 124
3.3.3 The Scope of Life Assurance ....................................................................................... 124
3.4 The South African Long-Term Insurance Industry .......................................................... 128
3.4.1 South African Legislation ............................................................................................. 128
3.4.2 Regulatory Bodies .......................................................................................................... 129
3.4.3 Source of Business ......................................................................................................... 133
3.4.4 Long-term insurance policies ....................................................................................... 133
3.4.5 Reinsurance ..................................................................................................................... 135
3.4.6 Competitive Landscape ................................................................................................. 136

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3.4.7 Challenges facing the market........................................................................................ 137
3.4.8 Market Share ................................................................................................................... 141
3.5 Conclusion............................................................................................................................... 149

Chapter 4 Research Methodology ......................................................................... 152
4.1 Introduction ............................................................................................................................ 153
4.2 Defining Research .................................................................................................................. 153
4.3 Purpose of the Research ....................................................................................................... 155
4.4 Population and Sample .......................................................................................................... 157
4.5 Research Method .................................................................................................................... 160
4.6 Research Design ..................................................................................................................... 161
4.7 Research Instrument .............................................................................................................. 165
4.8 Data Collection ....................................................................................................................... 167
4.9 Response Rate ......................................................................................................................... 168
4.10 Data Reliability ...................................................................................................................... 169
4.11 Data Validity .......................................................................................................................... 170
4.12 Limitations ............................................................................................................................. 171
4.13 Ethical Considerations ......................................................................................................... 171
4.14 Conclusion ............................................................................................................................. 173

Chapter 5 Analysis of the Research Results ....................................................... 175
5.1 Introduction ............................................................................................................................ 176
5.2 Organisational Information .................................................................................................. 177
5.3 Strategic Management and Strategic Decision-Making .................................................... 180
5.3.1 Discussion of Results .................................................................................................... 181
5.3.2 Ranking Variables .......................................................................................................... 184

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