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Information Systems for Business

Autor:   •  April 24, 2019  •  Research Paper  •  4,789 Words (20 Pages)  •  32 Views

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SUPERANNUATION

GROUP ASSIGNMENT

GROUP 8

Ian Kabui Waweru - 110238942

Anh Nguyet Minh Pham - 110248904

Md Muhibur Radman - 110264456

Mangapathi Sai Ram Valavala - 110250136

October 28th, 2018

Table of Contents

Executive summary        2

Question 1        3

Question 2        3

Question 3        4

Question 4        4

Question 5        5

Question 6        6

Question 7        6

Question 8        7

Question 9        7

Question 10        8

Question 11        8

Question 12        9

Question 13        9

References        11

Executive summary

Superannuation is the amount of money set aside from income over lifetime to equip employees when they are retired (ATO). This report will how examine the information system’s theories and applications apply in the Australian superannuation industry. This report will provide overview information about the superannuation industry performances in Australia as well as the chosen segment which is retail superannuation. The three selected businesses in retail superannuation are ING Direct (ING Direct Living Super), AMP Limited (APM Flexible Super), and Suncorp Superannuation (Suncorp Everyday Super). In the next parts, several models such as Business model, Business process model, Porter’s competitive forces, Porter’s value chain analysis model and Strategic Alignment model learnt during the course will be applied to obtain deeper knowledge about this industry and retail superannuation segment. To conclude the report, several new trending information and communication technologies will be given to justify their ability in creating comparative advantages to businesses and their challenges.  

Question 1

According to IBISWorld (2018a), superannuation industry is in the stage of maturity in its lifecycle with an expected growth rate of 0.8% annually for the next 10 years. Currently, there are 194 businesses competing in this industry(Wu 2018a). It can be said that the size of superannuation industry is relatively large compared to health insurance industry with 37 businesses (Wu 2018b) and life insurance industry with 24 businesses(Wu 2018c).  

IBISWorld (2018a) report also showed that total revenue of superannuation industry was $217.4 billion with an annual growth rate of 1.4% in the period from 2014 to 2019. The profit comes from this industry is around $194.6 billion. This figure indicates that the development of superannuation in Australia is quite stable and has an upward trend.

When it comes to distribution, nearly half of businesses (46.4% of the businesses) competing in superannuation industry located in Victoria. Approximately 39.8% of total superannuation funds are located in New South Wales. The rest of the businesses which account for 13.8% are distributed in the other states. Among 194 superannuation businesses, Commonwealth Bank of Australia (3.7%), QSuper (4%), AMP limited (4.4%) and AustralianSuper (5.4%) appear to be the main players. As can be seen, the total market share of the four major players is less than 20% which refers that the market concentration is low (2018a).

There are several reasons for people having superannuation accounts. One reason can be the tax incentive as discussed in Rothman’s report (2003). In addition, superannuation protects users from bankruptcy (Mace 2018). Moreover. As mentioned above, superannuation industry in Australia is expected to grow 1.4% annually, which indicate stability of the industry and ensure returns for investors.

Superannuation industry consists of several segment. These are Corporate funds, Industry funds, Public sector funds, Retail funds and Self-managed super funds. Among these segments, Small funds are the largest portion accounting for 29.5%, followed by Retail funds accounting for 25%. Industry funds and Public sector funds ranked 3rd and 4th place with 24.8% and 18.4%, respectively (Wu 2018a).

Question 2

This report will focus on the Retail funds segment. As discussed above, Retail funds is the second largest segment behind Small funds in Australian superannuation industry. People can access Retail funds which are publicly offered through intermediaries. It can either in form of purchasing investment units or policies sold. Compared to the share of industry assets of the three other funds which are Small funds, Industry funds and Public sector funds has increased over the past five years, Retail funds suffered a decrease in the share of assets.

The revenue for this sector in the recent year was 51.3 billion, lower than that of Industry funds with 57 billion and Small funds with 69.5 billion. Retail funds generate profit at around 42.5 billion last year with and decreasing growth rate of 0.5% annually over the past five year (Wu 2018d). However, this segment is expected to grow 1.1% annually from 2019 to 2023. Although Retail funds had a negative development in term of revenue, revenue growth rate is not the best indicator of industry performance. The growth in Funds Under Administration (FUA) is a better indicator to evaluate performance. Retail funds’ FUA is predicted to increase up to 6% annually in the next five years. Wu wrote in his report that the FUA of retail superannuation industry was expected to rise by 1.1% per year which inspires managers looking for new investment opportunities. He also suggested that retail super funds might play a vital role in the Australian financial system in the future (Wu 2018d).

Following the industry report, just like the whole superannuation industry, retail super funds are in mature stage. The majority of enterprises, making up nearly 97%, competing in this segment locates in the two biggest states of Australia which are Victoria, accounting for 55.6% and New South Wales, accounting for 41%.

Major players in this segment are defined to be AMP Limited (19%), National Australia Bank Limited (16.5%), Commonwealth Bank of Australia (16.1%) and Westpac Banking Corporation (15.2%) (Wu 2018d).

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