The government has played a very fundament role in ensuring the insurances owners buys the liability insurance hence pushing for a gross income of $20,000 per capita. The organization also gets the government support in the sense that the Korean government has the duty of regulating the financial industry. It thus means that all market participants are bonded by certain guideline and policies. Presents of the five teams have increased the overhead cost but it has significantly been advantageous to the organization especially in the provision of quality services and the general operations for both the headquarters and the entire branches. The distribution of the indirect cost all over the branches was among the important measures that assisted the branch manager. It implies that as the overhead increases, most of the operations taking place within branches become a bit diversified hence making the difference brought by the overhead more significant.
The major challenges facing the organization, is the fact that it is subjected to heavy regulation that has over the time affected the position in the market. Over-protection along with heavy regulation makes the financial institutions to become weak in the aspect of the competitive edges hence affecting their market financial positions. Accounting for 40% of indirect cost which is a combination of both administrative and operational cost has great impact to the organization financial position therefore affecting its stand in the market share. The organization didn’t take overhead cost seriously and it ended up frustrating the managers of high reputation making the management system to become ineffective and slow decision making process.
The automobile sold its insurance policies at less value in the market share within Korea as compared to the sales in the United States thus gives their competitors an opportunity to maximize or rather dominated the market. It therefore implies that the American based insurance organization pose a threat of outshine the Korean based organizations. In addition, the dramatic increase of overhead due to the cost of the five teams pose a threat of destabilization of the organization in the competitive market. Treating the operational cost of the operating support team as revenue poses a threat to the organization. The preparation of the operating performance records or reports and the expenses of tackling accidents should be recorded as a proportional figure to the accidents that took place instead of terming them revenue. This gives a misleading financial position of the organization (branches) which might demoralize the workforce and deters customer from the organization.
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