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Business Management · Mission, business strategy, teamwork and time management

Business Strategy and Strategic Planning for IAI Actuarial Exams

Updated 11 October 2026 · Fact-checked

Business strategy is the set of choices that decides where an organisation competes and how it wins. Strategic planning is the process: analyse the position, set objectives, choose strategy at corporate, business and functional levels, implement it, then monitor and review. In exams, link every point to the case.

Understand Business Strategy and Strategic Planning

A strategy is a long-term plan for how an organisation will reach its objectives. It answers three questions: where are we now, where do we want to be, and how do we get there. Day-to-day decisions are tactics. Strategy is about direction, scope and the use of scarce resources.

The strategic planning process is usually described as a cycle. First, set the mission and objectives. Second, analyse the external environment (opportunities and threats) and the internal position (strengths and weaknesses). Third, generate and evaluate strategic options. Fourth, choose a strategy. Fifth, implement it through plans, budgets, structure and people. Sixth, monitor results against targets and review. Review feeds back into the analysis, so the process repeats.

Strategy exists at three levels. Corporate strategy decides which businesses the group should be in, such as whether an insurer should add health or asset management, or buy another firm. Business strategy (competitive strategy) decides how one business unit competes in its market, for example on price, service or niche focus. Functional strategy decides how each function, such as underwriting, claims, IT, HR or investments, supports the business strategy. Each level must fit the one above it.

The main analysis tools are these. SWOT sorts internal factors (strengths, weaknesses) and external factors (opportunities, threats). PESTLE scans the external environment: political, economic, social, technological, legal and environmental. Porter's five forces test industry attractiveness: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, and rivalry among existing competitors. For an insurer, think of IRDAI rules, interest rates, health awareness, insurtech, digital distribution and bancassurance partners.

Strategy only works if it is implemented and reviewed. Implementation needs clear owners, resources, timelines and communication. Review compares results with objectives using measures such as growth, profitability, solvency and customer outcomes. If the environment or results change, the strategy is adjusted.

How to solve Business Strategy and Strategic Planning questions

Use this method for any case-study or written question on strategy. It keeps your answer structured and tied to the scenario.

  1. 1Read the question and mark the command word: identify, explain, analyse, recommend or evaluate.
  2. 2Pick out the organisation's mission, objectives, size, market and any facts given in the case.
  3. 3Choose the framework that fits: process steps, levels of strategy, SWOT, PESTLE or five forces.
  4. 4Apply the framework to the case. Each point should name a factor and say why it matters to this organisation.
  5. 5Link the analysis to strategic options and say which fits the objectives and resources, with a reason.
  6. 6Cover implementation and review: who does what, what resources are needed, and how success is measured.
  7. 7Finish with a short recommendation or conclusion that answers the exact question asked.

Quickest way: Framework, case fact, so-what

When to use it: Use when time is short, such as 10 to 15 minutes for a written part of a 1 hour 30 minute CB3 paper, or for MCQs on definitions.

  1. Name the framework in one line.
  2. List four to six points, each with a case fact attached.
  3. Add one 'so what' for each point: the effect on strategy.
  4. For MCQs, identify the level (corporate, business, functional) by asking whether the decision is about which businesses, how to compete, or how a function supports it.

Common mistakes in Business Strategy and Strategic Planning

  • Listing SWOT or PESTLE points with no link to the case.

    Students memorise generic lists and write them out.

    Fix: Use facts from the scenario. Write the factor, then the effect on this organisation's strategy.

  • Mixing up corporate, business and functional strategy.

    The three names sound similar and examples overlap.

    Fix: Ask: which businesses to be in (corporate), how to compete in one market (business), how a department supports it (functional).

  • Putting internal factors under opportunities or threats.

    Students forget that SWOT splits internal from external.

    Fix: Strengths and weaknesses come from inside the firm. Opportunities and threats come from outside it.

  • Describing planning as a one-off event ending at strategy choice.

    Implementation and review are skipped to save time.

    Fix: Always include implementation, monitoring and feedback into the next round of analysis.

  • Treating the five forces as a list of competitors.

    Students focus only on rivalry.

    Fix: Cover all five forces and say how each affects industry profitability, including substitutes and supplier power.

  • Giving a recommendation without justification.

    Students run out of time or fear being wrong.

    Fix: State the option, tie it to objectives and resources, and mention a key risk.

Worked examples

Example 1

A mid-sized Indian life insurer has strong bancassurance ties but weak digital capability. It plans to launch a health product. Classify each as strength, weakness, opportunity or threat: (a) bancassurance ties, (b) weak digital capability, (c) rising health awareness among customers, (d) a new entrant offering low-cost digital health cover.

Show the solution
  1. Decide whether each factor is internal or external.
  2. (a) Bancassurance ties belong to the insurer, so they are internal and helpful: a strength.
  3. (b) Weak digital capability is internal and harmful: a weakness.
  4. (c) Rising health awareness is outside the insurer's control and helpful: an opportunity.
  5. (d) A new low-cost entrant is external and harmful: a threat.

Answer: (a) Strength, (b) Weakness, (c) Opportunity, (d) Threat. Strategy should use the bank network to seize the health opportunity, while fixing digital capability to meet the entrant.

Example 2

A general insurer's board decides to enter the health insurance market. Later, the motor team decides to use telematics data for pricing. Identify the level of strategy for each decision and explain how the two relate.

Show the solution
  1. Entering a new market is a decision about which businesses the group will be in. This is corporate strategy.
  2. Using telematics in motor pricing is a decision about how a function (underwriting and pricing) supports competition in an existing business. This is functional strategy.
  3. The two must fit. Corporate choices set the scope and resources, and the business strategy sets how to compete, such as through better risk selection.
  4. Functional plans such as telematics should support the business strategy. They should also be reviewed against objectives like growth and profitability.

Answer: Entering health is corporate strategy. Telematics pricing is functional strategy. Functional strategy must support business strategy, which in turn sits within the corporate direction.

Exam tips

  • Always tie each framework point to a fact from the case. Generic lists earn few marks.
  • Learn the six steps of the planning cycle in order, and include implementation and review in longer answers.
  • For MCQs on levels of strategy, decide the scope of the decision first: group, single business or function.
  • Use insurer examples such as IRDAI regulation, bancassurance, insurtech and interest rate changes when applying PESTLE or five forces.
  • If asked to recommend, give one clear choice with reasons and a risk. Do not just list options.

Practice questions from Mission, business strategy, teamwork and time management

Business Strategy and Strategic Planning in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Business Strategy and Strategic Planning: frequently asked questions

What are the steps in the strategic planning process?

Set mission and objectives, analyse the external and internal environment, generate options, choose a strategy, implement it, then monitor and review. Review feeds back into the next round of analysis, so it is a cycle.

What is the difference between corporate, business and functional strategy?

Corporate strategy decides which businesses the group is in. Business strategy decides how one unit competes in its market. Functional strategy decides how departments such as claims or IT support the business strategy.

How do I apply SWOT and PESTLE to an insurer?

Use SWOT to separate internal strengths and weaknesses from external opportunities and threats. Use PESTLE to scan outside factors such as regulation, interest rates, demographics, technology and climate. Always say how each factor affects the insurer's strategy.

What are Porter's five forces?

They are the threat of new entrants, buyer power, supplier power, the threat of substitutes and rivalry among existing firms. Together they show how attractive and profitable an industry is.