Axa Group Porter’s 5 Five Forces (2021)

Axa Group Company Overview:


Axa Group was first formed in 1835, as a response to the collapse of two French insurance companies. During the first 120 years of its existence, Axa acquired various other businesses including Union des Assurances De Paris (UAP), which is now Europe’s second-largest insurer. In 1999, Axa was listed on the Paris stock exchange, with a secondary listing on the New York Stock Exchange. At this point, Axa made its most significant acquisition to date by merging with Groupama. The enlarged group became one of the five largest insurance companies worldwide. Today we are going over Porter’s Five Forces Model Analysis of Axa Group



Axa Group Competitive Rivalry:


The primary competitive rivalry in Axa group is with other companies in the insurance sector, for example, Allianz, Aviva, and Prudential. The buyer has a large number of choices available to them when deciding which firm to place their business with; therefore competition between insurance providers is arguably the most important factor in the success. However there are other factors that play a role, these include how well they understand the buyer’s needs and requirements.


Axa Group Bargaining Power of Suppliers:



The Axa Group has a large number of suppliers, including insurers such as Aviva and Allianz, banks such as HSBC and Citi, technology companies such as IBM and CISCO Systems, construction companies such as Vinci Group and Cofely Fabricom. The Bargaining power of suppliers is high because they need the Axa group to sell their products or services.



Axa Group Bargaining Power of Buyers:



The bargaining power of buyers also depends on a range of factors, including what type of insurance they are looking for. For example, the bargaining power of individual buyers is low in comparison to large companies or organizations when they are seeking insurance cover, for example, business insurance. The buyer’s bargaining power will increase if there is only one supplier that offers a particular product/service (known as a monopsony).



Axa Group Threat of New Entrants:



The main threats of new entrants are low barriers to entry for competitors or substitutes. For example, with internet technology, it is now possible for individuals or companies to purchase standard cover directly from an insurer over the internet. This reduces costs and gives customers more choice regarding what insurance they purchase. This can be seen as a potential threat for the Axa Group, however, it is unlikely that new entrants will pose a long-term risk to the company’s position in the market.



Axa Group Threat of Substitutes:



The main substitute for insurance companies would be self-insurance (directly paying for insurance expenses out of your own funds). This is a common theme among businesses, as internal risk management departments reduce the need for external support. In general insurance companies will have little to fear from this threat, unless their prices become uncompetitive.



Axa Group Porter’s 5 Forces Conclusion:


Overall Axa group has a strong competitive position in the global insurance market. The strong brand name, the financial strength of the group, and wide range of products are likely to provide some protection from new entrants or rivals offering substitutes to Axa’s products. However, there is potential for significant future growth in emerging markets such as China and India which could pose a threat in the future if the insurance industry grows rapidly.




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