Table of Contents

Chapter 1 ..................................................................................................................3
Introduction ..............................................................................................................3
1.1 Origin of the Report: .......................................................................................................................... 4
1.2 Purpose of the Study: .......................................................................................................................... 5
1.3 Objectives of the Report: .................................................................................................................... 6
1.4 Methodology: ...................................................................................................................................... 7
1.5 Limitations of the Report: ................................................................................................................... 7

Chapter 2 ..................................................................................................................9
Company Profile ......................................................................................................9
(Central Insurance Company Limited) .................................................................9
2.1 Brief History: .................................................................................................................................... 10
2.2 Mission of the Company: .................................................................................................................. 11
2.3 Vision of the Company: .................................................................................................................... 11
2.4 Services of the Company: ................................................................................................................. 11

Chapter 3 ................................................................................................................13
Organizational Structure ......................................................................................13
3.1 Organizational Structure: .................................................................................................................. 14
3.2 Types of Organizational Structure: ................................................................................................... 14
3.3 Organizational Structure: In the Perspective of Central Insurance Company Limited ..................... 19
3.4 SWOT Analysis: ............................................................................................................................. 21
3.4.1 History of SWOT Analysis: ...................................................................................................... 21
3.4.2The Purpose of a SWOT Analysis: ............................................................................................. 22
3.4.3 Scope of Using SWOT Analysis:............................................................................................... 22
3.4.4 The elements of a SWOT analysis: ............................................................................................ 23
3.5 SWOT Analysis: Perspective of Central Insurance Company Limited ............................................ 26

Chapter 4 ................................................................................................................30
Corporate Social Responsibility (CSRI Analysis) ...................30
4.1 Corporate Social Responsibility(CSR): ............................................................................................ 31

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 4.2 The Importance of CSR: ................................................................................................................... 31
4.3 Corporate Social Responsibility(CSR): in the Perspective of CICL................................................. 32

Chapter 5 ................................................................................................................45
Findings ...................................................................................................................45
5.1 CSR Index ......................................................................................................................................... 46
5.3 Conclusion ........................................................................................................................................ 55
5.4 Bibliography: .................................................................................................................................... 56

Appendix .................................................................................................................57

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 Chapter 1

Introduction

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1.1 Origin of the Report:
This report has been prepared as a study on “Organizational Structure and Corporate Social
Responsibility: A Study on Central Insurance Company Limited.” as a part of the fulfillment of
course requirement. The report was prepared under the supervision of Ms. Sheikh Tanzila Deepty,
Assistant professor of Dept. of Finance, University of Dhaka. We are very much thankful to her for
assigning us with such type of practical work that has enhanced our knowledge and experience.

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1.2 Purpose of the Study:
The purpose of the report is to make an analysis of the organizational structure and corporate social
responsibility of Central Insurance Company Limited. The study attempts to find out the company’s
organizational structure and corporate social responsibility by studying organizational hierarchy,
chain of command, directions and many other important issues. The study also aims at showing how
the company deals with all these issues and observing the real life activities, showing the appropriate
findings.

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1.3 Objectives of the Report:
The main objective of the study is to find out the respective company’s organizational structure by
studying the company’s different features and characteristics and some specific actions. Again, how
the company maintains the day to day corporate social responsibilities is also the concern of our
study. In broader sense the objectives to be covered under the study are:

1. To demonstrate some general features and characteristics of Central Insurance Company

Limited.
2. To identify the basic elements of its financial statements.
3. To evaluate its managerial performance.
4. To make a survey on the factors of the excel sheet queries.
5. To apply SWOT analysis.
6. To analyze the corporate social responsibility of that particular company.
7. To provide with findings on the basis of the study.

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1.4 Methodology:
For smooth and accurate study everyone needs to follow some rules & regulations. The study
concerned information was collected from two sources:

Primary Sources:

Information was collected from primary sources in these ways:

1. By self observation of the respective company.

2. By talking face to face with the data supervisor officials of the company.
3. By scrutinizing the company with the standard point of view.

Secondary Sources:

Data were collected from secondary sources by the following ways:

1. Visiting the corporations and taking their stored data of financial performance and corporate
social responsibility histories and organizational structure.
2. Visiting Dhaka Stock Exchange and taking necessary information like annual report from
there.

Data analysis and interpretation:

Data analysis and its interpretation have been done on the basis of the predestined sectors of queries
that has been shown in the excel sheet in the appendix. Observations have been done and findings
have been prepared on SWOT analysis and CSRI analysis and simultaneously the findings have been
interpreted.

1.5 Limitations of the Report:

On the way of our study, we have faced some challenges that have been termed as the limitations of
this study. These are followings:

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Budgeted time limitation:

It was one of the main constraints that hindered to cover all aspects of the study.

Validity and Reliability:

Validity and reliability of the obtained information depends on the responses from the respondent.

Data Insufficiency:

Especially there was a lack of information about the determination of the organizational structure and
corporate social responsibility of that company. Sufficient books, publications, facts and figure were
not available. These constrains narrowed the scope of accurate analysis. If these limitations had not
been there, the report would have been more useful and attractive.

Inappropriateness and Scarcity of Evidence:

Actually, Inappropriateness and Scarcity of evidence lacked our proper representation of corporate
social responsibility of the study.

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 Chapter 2

Company Profile

(Central Insurance Company Limited)

Central Insurance Company Limited

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Central Insurance Company Limited is one of the first generation non-life insurance company in the
private sector of Bangladesh which provides diversified non-life insurance services.The company is a
public listed company categorized in private sector incorporated as a Public Limited Company under
the Companies Act 1913 on November 12, 1987.Under the supervision of regulatory bodies the
company established itself as one of the leading non-life insurance company of the country.

2.1 Brief History:

Central Insurance Company Limited was incorporated on 12th November 1987 and started its
commercial operation in general insurance business on 10th December 1987 as a public limited
company by shares under the Companies Act, 1913 with an authorized capital of Tk. 100 million
which was raised to Tk. 300 million.

The company conducts the business operations under the rules and regulations of IDRA,the
supervision of the Board of Directors and the legal framework of the Insurance Act, 1938 and the
Insurance Rules,1958 as amended from time to time. The Company operates through its head office
at Dhaka and branch offices throughout the country.

Highlights of the Company:

1. Date of Incorporation as Public Limited on : November 12, 1987

2. Commencement of Business on : November 12, 1987

3. Registered with the Department of Insurance on : 30 November 1987

4. Initial Public Offerings (IPO) on : 22 September 1994

5. Listing with Dhaka Stock Exchange Limited (DSE) on : 20 March 1995

6. Listing with Chittagong Stock Exchange Limited (CSE) : 22 October 1995

7. Authorized Capital as on 31 July 2013 : BDT 1000 million

8. Paid up Capital as 31 July 2013 : BDT 415.19 million

9. Number of Branches as 31 July 2013 : 30

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2.2 Mission of the Company:
The mission of Central Insurance Company Limited is to improve the quality of the life style of the
people by providing security of their trade and hard earned properties through its professional
service.

2.3 Vision of the Company:

The mission of the Central Insurance Company Limited is to be the most confident and a reliable
insurer of the country.

2.4 Services of the Company:

Insurance business is basically a service-oriented activity. The main objective of insurance business is to
underwrite risk effectively, render customer service efficiently and to settle claim promptly to win
confidence of the insuring public and to protect the interest of the clients through wider re-insurance
arrangement. As per Memorandum of Association, the company is carrying out following types of
Insurance Business:

 Fire Insurance Business

 Marine Insurance Business
 Motor Insurance Business
 Miscellaneous Insurance Business

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So, these are all about Central Insurance Company Limited. This is the company on what we are going to
concentrate today on some specific issues.

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 Chapter 3

Organizational Structure

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3.1 Organizational Structure:
Organizational structure is a system used to define a hierarchy within an organization. An
organizational structure defines how activities such as task allocation, coordination and supervision
are directed towards the achievement of organizational aims. It can also be considered as the viewing
glass or perspective through which individuals see their organization and its environment.
Organizational structure also determines how information flows from level to level within the
company. The structure is illustrated using an organizational chart.

3.2 Types of Organizational Structure:

Every organization, to be effective, must have a structure. It is the setup that determines the hierarchy
and reporting structure in an organization. There are different types of organizational structures that
companies follow, depending on a variety of factors like leadership style, type of organization,
geographical regions, work flow and hierarchy. Primarily, Organizational structures can be divided
into following two types:

1. Traditional Structures
2. Contemporary Structures

1. Traditional Structures:

These structures are based on functional division and departments. These are the kind of structures
that follow the organization's rules and procedures to the ‘T’. They are characterized by having
precise authority lines for all levels in the management.

Characteristics of Traditional Structures:

1. Hierarchy maintenance;
2. Rigid rules and regulations ;
3. Traditional ideology;
4. Bureaucracy
5. Time consuming methodology;
6. Traditional method of keeping record;
7. Rigid chain of command;
8. Lack o of information clarification;

The various types of structures that fall under traditional structures are:

1.1. Simple Structure

1.2. Functional Structure
1.3. Divisional Structure

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1.1. Simple Structure

Simple structure is an organizational design with low departmentalization, wide spans of control,
centralized authority and little formalization. Most companies start as entrepreneurial ventures using
a simple structure. However, when the companies become large, most companies don’t remain as
simple structure.

Pictorial Representation:

Figure 3.1: Simple Structure

1.2. Functional Structure

Functional organizational structure classifies people according to the function they perform in their
professional life or according to the functions performed by them in the organization. The
organization chart for a functional organization consists of a Vice President, a Sales Department, a
Customer Service Department, Engineering or Production Department, an Accounting Department,
an Administration Department, etc.

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 Pictorial Representation:

Figure 3.2: Functional Structure.

1.3. Divisional Structure:

Divisional structure is the kinds of structures that are based on different divisions in the organization.
They group together employees based on the products, markets and geographical locations covered.
It can be divided into different types such as product structure, market structure and geographic
structure etc.

Pictorial Representation:

Figure 3.3: Divisional structure.

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2. Contemporary Structures:

The changes business scenarios over the time have encouraged people to find contemporary
organizational structures. Managers are finding that traditional designs often aren’t appropriate in this
dynamic business world. As a result various contemporary structures have been emerged.
Contemporary structures can be divided into following types:

2.1 Team Structure

2.2 Matrix- project Structure
2.3 Boundaryless Structure

2.1 Team Structure

Team structure is an organizational structure in which the entire organization is made up of work
group or teams. In this structure, employee empowerment is crucial because there is no line of
managerial authority from top to bottom. Rather employee teams design and do work in the way they
think is best, but they are also held responsibilities for all work performance results in their
respective areas.

Pictorial Representation:

Figure 3.4: Team Structure

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2.2 Matrix-project Structure:

Matrix-project organisation was introduced in USA in the early 1960's. It was used to solve
management problems in the Aerospace industry.

Matrix Organisation is a combination of two or more organisation structures. For example,

Functional Organisation and Project Organisation.

The organisation is divided into different functions, e.g. Purchase, Production, R & D, etc. Each
function has a Functional (Departmental) Manager, e.g. Purchase Manager, Production Manager, etc.

The organisation is also divided on the basis of projects e.g. Project A, Project B, etc. Each project
has a Project Manager e.g. Project A Manager, Project B Manager, etc.

One unique aspect of this design is that it creates a dual chain of command in which employees have
two managers – their functional area manager and their product or project manager. The project has
authority over the functional members who are part of his or her project team in areas related to the
project goals. However, any decision about promotions, salary recommendations, and annual reviews
typically remain the functional managers responsibility. To work efficiently, both managers have to
communicate regularly, coordinate work demands on employees and resolve conflicts together.

Pictorial Representation:

Figure 3.5:Matrix-Project Structure

2.3 The Boundaryless Structure:

Another contemporary organizational design is the boundary less organization which is an

organization whose design is not defined by or limited to, the horizontal , vertical, or external
boundaries imposed by a predefined structure.

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3.3 Organizational Structure: In the Perspective of Central Insurance
Company Limited
With a view to analyzing organizational structure in the perspective of CICL, we observed the organ
gram of that company. We have found that the company follows matrix-project organizational
structure. Because here specialists from functional departments work on one or more projects and
employees work on the projects on the projects continuously.

Now we are going to describe about how CICL maintains matrix-project organizational structure in
its organization:

1.Hybrid Structure :

The organizational structure of CICL is hybrid because its organizational structure is a

combination of two or more organisation structures. It combines functional organisation with a
project organisation.

2. Existence of Functional Manager:

We found the existence of functional manager in the structure of CICL. The Functional Manager
of CICL has authority over the technical (functional) aspects of the project.

The responsibilities of functional manager are:-

 S/he decides how to do the work.

 S/he distributes the project work among his subordinates.
 S/he looks after the operational aspects.

3. Existence of Project Manager :

Besides, the existence of functional manager in the structure of CICL, we also observed the
presence of project manager in the structure of CICL. The project manager of CICL has full
authority over the financial and physical resources which he can use for completing the project.

The responsibilities of project manager are:-

 S/he decides what to do.

 S/he is responsible for scheduling the project work.
 S/he co-ordinates the activities of the different functional members.
 S/he evaluates the project performance.

4.Specialisation :

In the organization of CICL, there is a specialisation. The project manager concentrates on the
administrative aspects of the project while the functional manager concentrates on the technical
aspects of the project.

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5. Performing Multi Project:

As CICL performs multi project they follow matrix-project structure as this structure is suitable
for multiple projects.

6.Dual Chain of Command:

As there are two managers in this structure, the employees of this organization maintain dual
chain of command.

In the light of the above circumstances, we can infer that CICL maintains the characteristics of
matrix-project organizational structure to a great extent. Besides this they also follow some
characteristics of other organizational structure as well. So, we can say that the organizational
structure of CICL is matrix-project organizational structure. It is mentionable that sometimes
depending on the situation the company also follows functional structure, sometimes follows
committee/team structure etc.

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3.4 SWOT Analysis:
A SWOT analysis is commonly used in marketing and business in general as a method of identifying
opposition for a new venture or strategy. Acronym for Strengths, Weaknesses, Opportunities and
Threats, this allows professionals to identify all of the positive and negative elements that may affect
any new proposed actions.

It is impossible to accurately map out a business's future without evaluating it from all angles, which
includes an exhaustive look at all internal and external resources and threats. A SWOT accomplishes
this in four straight-forward steps that even rookie business owners can understand and embrace.

Figure 3.6:SWOT

3.4.1 History of SWOT Analysis:

This remarkable piece of history as to the origins of SWOT analysis was provided by Albert S
Humphrey, one of the founding fathers of what we know today as SWOT analysis.

The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a research
project at Stanford University in the 1960s and 1970s using data from many top companies. The goal
was to identify why corporate planning failed.While working on a research project at the Stanford
University sometime around 1960s to 1970s, Albert Humphrey developed an analytical tool to
evaluate the strategic plans and find out why corporate planning failed. He coined this technique as
SOFT analysis where –

S stood for what things are Satisfactory at present,

O denoted what Opportunities can be explored in the future,

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F meant the Faults in the present and

T signified the Threats that could surface in the future.

In 1964 Urick and Orr at a conference changed the F to a W, and it has stuck as that, soFt to sWot.

3.4.2The Purpose of a SWOT Analysis:

The SWOT analysis enables companies to identify the positive and negative influencing factors
inside and outside of a company or organization. The main purposes of SWOT analysis are-

1. To help decision makers and compare ideas.

2. To bring a clearer and common purpose and understanding of factors for success.
3. To organize the important factors linked to success and failure in the business world.
4. To analyse issues that have led to failure in the past.
5. To provide linearity to the decision making process allowing complex ideas to be presented
systemically.
6. To revise plans to best navigate systems, communities, and organizations
7. As a brainstorming and recording device as a means of communication
8. To enhance “credibility of interpretation” to be utilized in presentation to leaders or key
supporters.

3.4.3 Scope of Using SWOT Analysis:

SWOT is meant to be used during the proposal stage of strategic planning. It acts as a precursor to
any sort of company action, which makes it appropriate for the following moments:

 Exploring avenues for new initiatives

 Making decisions about execution strategies for a new policy
 Identifying possible areas for change in a program
 Refining and redirecting efforts mid-plan

The SWOT analysis is an excellent tool in organizing information and presenting solutions,
identifying roadblocks and emphasizing opportunities.

Besides ,the above mention fields here are some examples of when a SWOT analysis can be used to
assess:

 A company (its position in the market, commercial viability, etc)

 A method of sales distribution
 A product or brand
 A business idea
 A strategic option, such as entering a new market or launching a new product
 A opportunity to make an acquisition
 A potential partnership

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  Changing a supplier
 Outsourcing a service, activity or resource
 Project planning and project management
 An investment opportunity
 Personal financial planning
 Personal career development - direction, choice, change, etc.
 Education and qualifications planning and decision-making
 Life-change - downshifting, relocation,
 Relationships, perhaps even family planning?..

3.4.4 The elements of a SWOT analysis:

A SWOT analysis is a common strategic business planning tool that involves composing a list of four
elements related to a new business project: strengths, weaknesses, opportunities and threats.

Strengths

In a SWOT analysis, strengths describe the core competencies of a business, strategic factors that
may make a certain project more likely to succeed and areas where the business may have
advantages over other similar businesses. Strengths are resources and capabilities that can be used for
competitive advantage. For example, if an established cereal company plans to launch a new product,
brand recognition might be listed as strength. Examples of strengths that are often cited include:

 Strong brand names

 Good reputation
 Cost advantages of proprietary
 Proprietary technology / Patents
 Consistent / growing revenue streams
 Strong customer base across multiple vertical industries
 Experienced Management Team
 Organizational expertise field
 Financial Resources / investor relationships
 Strong brand awareness in the marketplace
 Partnerships with industry leaders
 Refined operations process
 Strong company culture

Businesses that are aware of their strengths are better able to improve and exploit them to their
advantage.

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Weaknesses

Weaknesses are things that can make a certain project less likely to succeed and areas where a
company is particularly lacking. Weaknesses can derail a project before it even begins. For instance,
a brand new company might be unknown to most consumers; low brand recognition and lack of
customer loyalty could be weaknesses. Other Weaknesses include:

 Weak brand name

 Poor reputation
 Ineffective and high cost structure etc.
 Poor financial position (debt, declining revenue, etc.)
 Unskilled workforce in critical areas
 Unfavorable perception of brand in marketplace
 No proprietary technology / patents in critical areas
 Out of date equipment / machinery / technology
 High costs of doing business
 Poor location for access to customers / partners / talent
 Scalability issues with core products / services
 Poor relationships with customers
 Unresolved litigation, other legal issues

Once weaknesses are identified, a business takes steps to lessen the impact or turn them into
strengths.

Opportunities

Opportunities are things that have the potential to increase profits, productivity or benefit a business
in some other way.These factors could involve vendors who wish to work with the company to help
achieve success, the positive perception of the company by the general public, and market conditions
that could make the project desirable to the a segment of the market. Additional Opportunities
include:

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  Arrival of new technology
 Unfulfilled customer needs
 Taking business courses (training)
 New technology in development / beta testing
 New markets for existing products
 Partner product bundles
 Partner co-marketing
 Access to skilled workforce
 Competitors facing problems (bankruptcy, lawsuits, etc.)
 New sales tools to penetrate existing markets
 Diversification into new markets with new products
 International distribution partnerships
 Favourable impacts of new legislation

Recognizing and taking advantage of opportunities are important aspects of running a successful
business.

Threats

Threats are the final element of a SWOT analysis; they have the potential to harm a business. For
instance, if you run the only pizza shop in town, the possibility that a new competitor will open a
shop and take some of your business is a threat. Unfavourable changes to laws, higher taxes and
changes in consumer preferences other possible threats. Some other threats include:

 Trend changes
 New regulations
 New substitute products
 Competitors getting stronger
 Market trends moving away from core products
 Pressure from supply chain squeezing margins
 Rising costs of doing business
 Consumer ability to shift to substitute products
 Slow market growth / decline in market size
 Change in customer needs
 Key employees leave (to competitors, family reasons, etc.)
 Threat of lawsuits (employees, customers, partners)
 Local economic / political climate inhibiting growth

Identifying a threat helps the business manager to limit its impact of risk.

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3.5 SWOT Analysis: Perspective of Central Insurance Company Limited
Observing different aspects of Central Insurance Company Limited we have performed SWOT
analysis of Central Insurance Company Limited. While performing SWOT analysis we detected
various strengths, weakness, opportunities and threats in the perspective of Central Insurance
Company Limited.

 Strengths:
1. Strong financial security;
2. Adequate ability to meet its financial commitments on short-term policy obligations;
3. Presence through subsidiary company;
4. Carrying out merchant bank activities smoothly through its subsidiary company;
5. Positive net profit turn;
6. Good management environment;
7. Existence of good relationship with customers;
8. Continuation of satisfactory relationship with employees;
9. Increase in monetary gain performance;

Explanation:

Credit Rating Agency of Bangladesh Limited (CRAB)has affirmed the long term rating of Central
Insurance Company Limited at “A3 ” and short term rating at “ST-3”.On the basis of this rating we
confer that the company has Strong financial security and adequate ability to meet its financial
commitments on short-term policy obligations.

Central Insurance Company Limited has subsidiary company named Central Insurance Investment
Ltd and for this reason it can carry out its merchant bank activities smoothly.

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Central Insurance Company Limited has positive net profit turn. Observing financial statements of
Central Insurance Company Limited we found its increase of sale volume from the year 2011 to
2014.As a result we confer that it has positive net profit turn.

Assessing different criteria related to management it was found that the management environment of
the company is satisfactory. The management is able to keep good communication with internal and
external people.

From the year 2011, the company maintains satisfactory position in return on asset growth, return on
equity growth and in profit margin growth.

 Weakness:
1. Limited branch offices;
2. Limited services;
3. Slow to respond to changing needs;
4. No product development;
5. Less reputation compared to its competitors;

Explanation:

Central Insurance Company Limited has limited branch offices compared to its competitors. After
the year of 2013, its branches are only 30 across the country.

Central Insurance Company Limited has been providing limited services for many years. While
analyzing we found that the company had been dealing with only four types of insurance policy since
2008.

The company does not provide innovative products to cater to different needs of different customers.
As a result it is slow to respond to changing needs and hence there is no product development.
Consequently, it has less reputation compared to its competitors.

 Opportunities:
1. Expanding branches;
2. Innovating new products;
3. Offering attractive insurance policy for special purposes;
4. Investing in cost saving technology;
5. Providing quality services;
6. Providing services to the remotest areas;

Explanation:

Central Insurance Company Limited (CICL) has limited branch offices though it was established in
1987.It has only 30 branches across the country. As a result it cannot provide its service as widely as
its competitors. By inaugurating new branches it can widen its work area.

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 Services provided by CICL are very limited in proportion to its competitors. At present it is
providing insurance service only in four sectors. By introducing new policies it can attract its
customer in this modern and competitive business world.

World is changing. Every moment new problems are arising. We observed that the company had no
tendency to provide new policies for changing demand. So, the company has a opportunity to offer
new policies for the changing demand.

Technology is very much important in the arena of dynamic business world. New technology can
contribute in curtailing cost in business. CICL should invest in cost saving technology for its
business purposes. It will reduce its operational cost and will make a smooth way of increasing
profit.

Modern business world is customer oriented. Businesses are ready to grab its customers by providing
quality service. Focusing on this point, CICL should improve the quality of its services.

The work area of CICL is very narrow compared to its competitors. CICL can take advantage by
providing service in the remotest area where insurance service has not reached yet.

 Threats:
1. Existence of strong competitors;
2. Small size compared to its competitors;
3. Entry of new insurance company in the sector;
4. Varying Government policies and other regulatory rules;
5. Adverse business conditions;
6. Less popularity compared to its competitors;
7. Lack of advertisement;

Explanation:

Central Insurance Company Limited is facing some threats in this field. While analysing SWOT we
found strong competitors of Central Insurance Company Limited in the market. To survive in this
market CICL need to face challenges blatantly.

While other companies have hundreds of branches, CICL has only 30 branches.

At present, there are 77 insurance companies operating in the country. Side by side, new insurance
companies are admitting in this sector.

Credit Rating Agency of Bangladesh Limited (CRAB) has rated the long term rating of Central
Insurance Company Limited at “A3”. According to CRAB, ‘insurance companies rated ‘A3’ have
strong financial security characteristics, but are somewhat more likely to be affected by adverse
business conditions than insurers with higher ratings.’ In addition, CRAB has rated the short term
rating of Central Insurance Company Limited at “ST-3”. According to CRAB, ‘insurance companies
rated ‘ST-3’ have adequate ability to meet their financial commitments on short term policy
obligations. However, adverse economic conditions or changing circumstances are more likely to
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lead to a weakened ability of the insurers to meet their financial obligations.’ So, adverse business
condition is a serious threat for the company as it can hamper it financial strength.

Reputation is very necessary for business bloom. But compared to the competitors of CICL, CICL
has less reputation.

Advertisement has a positive impact in the modern age of business. But in case of CICL we found
that it has lack of advertisement compared to its competitors.

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 Chapter 4

Corporate Social Responsibility

(CSRI Analysis)

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4.1 Corporate Social Responsibility(CSR):
Corporate Social Responsibility is a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders. CSR is
generally understood as being the way through which a company achieves a balance of economic,
environmental and social imperatives, while at the same time addressing the expectations of
shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which
can be a strategic business management concept, and charity, sponsorships or philanthropy. Even
though the latter can also make a valuable contribution to poverty reduction, will directly enhance the
reputation of a company and strengthen its brand.

4.2 The Importance of CSR:

“It’s all about the bottom line”. There are few people, whether in the private or public sector, who
hasn’t heard that phrase. Because the bottom line refers to the last line of a financial statement –
profit or loss – it has traditionally been the ultimate measure of short and long-term organizational
decisions, referring to the economics of costs and revenue.

While economics is still important, the increased complexity of global markets and sophistication of
consumers, as well as the increased importance of environmental and social impacts, has changed the
way successful organizations look at what positively impacts their bottom line.

Today, organizations that want to achieve long-term success must consider what is known as the
Triple Bottom Line: Economic, Environmental and Social. This Triple Bottom Line is also known as
the 3Ps: Profit, Planet and People.

Corporate Social Responsibility (CSR), as a strategic practice, is key to organizational success

because it is one of the few practices that can positively impact all three elements of the Triple
Bottom Line, contributing to a healthy bottom line and long-term sustainability.

Because CSR can influence economic, environmental and social factors in a variety of ways, there is
no “one size fits all” approach. An effective CSR strategy must consider alignment with the
organization’s business strategy, commercial added value, and sustainability of impact. The benefits
of an effective CSR approach to an organization can include:

 Stronger performance and profitability

 Improved relations with the investment community and access to capital
 Enhanced employee relations and company culture
 Risk management and access to social opportunities
 Stronger relationships with communities and legal regulators

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4.3 Corporate Social Responsibility(CSR): in the Perspective of CICL

1 . Increase of Shareholder’s Value (economic return):

In order to evaluate the increase of shareholder’s value, the net profit after tax of four consecutive
years are considered. In the following bar chart, there is an fall of TK.6.21 million in profit from
2010 to 2011. But in 2012, the net profit increased by Tk.12.01 million. In 2013, the Central
Insurance Company also increase their profit. In this time they increased profit by Tk. 19 million.

Increase of shareholder value

(Net Profit After Tax- million)

82.05

63.05
57.25
51.04

2010 2011 2012 2013

Fig 4.1: Increase of share holder value.

So, the Central Insurance Company has a positive net profit turn. Their net profit after tax increased
gradually in 2013,though they have a negative turn in 2011. From 2010 to 2013, they increased their
net profit after tax by Tk. 24.8 million.

2. Corporate response on environmental issues:

Corporate response on environmental issues is highly important for any business organization. It
means that this response must be ensured from the central branch to motivate the local branches to a
great extent.

But talking to the SVP and company Secretary of Central Insurance Company Limited, we learnt that
there was no proper corporate response on environmental issues as local branches were a bit
conscious about it. But the main branch was not so much conscious of this important issue.

So, “0” has been marked from the year of 2011 to 2013.

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3. Relationship with local authorities and regulator:

Without proper relation and connection with local authorities, any company can’t be declared to be
legitimate and law following. So, it is crucial for any company to have relationship with local
authorities and regulators.

Here, from annual report and further face to face conversations with the SVP and company Secretary,
we were assured that the company maintained a good relationship with local authorities and
regulator.

That’s why “1” has been marked from the year of 2011 to 2013 to indicate that this company
conforms to all local authorities and regulators.

4 . Good Governance Practices:

The Practice of governance is to ensure that an organization or partnership fulfills itsoverall purpose,
maintains its regulatory authorities rule, achieves its intended outcomes for citizens and service
users, and operates in an effective, efficient and ethical manner. This principle should guide all
governance activity. The Central Insurance Company maintains its regulatory Authorities rules like
Companies Act,1994, Securities &Exchange Rules 1987, Insurance Act, 1938, amended Act of 2010
Insurance Rules 1956, and other relevant local laws. It is always fulfil its overall purpose and
achieves its intended outcomes for citizens and service users, and operates in an effective, efficient
and ethical manner. So, the Central Insurance Company has a positive intend to practice of good
governance.

5. Communication with Board of Directors (AGM):

The general meeting is Axis highest decision-making body, and the forum through which the
shareholders can exercise their influence over the company. The ordinary general meeting where the
board shall submit the annual report and audit report as well as the consolidated financial statements
is called the Annual General Meeting.

Central Insurance Company Limited arranged Annual General Meeting (AGM) every year. In 2011,
2012 & 2013, they arranged AGM. Through which they confirmed the communication between
shareholders and the Board of Directors.

6. Overall Customer Satisfaction:

Customers are the decisive people to whom services or products are ultimately reached. Any
company which can ensure overall customer satisfaction can easily reach to the peak of popularity.

Here in the case of Central Insurance Company Limited, we can see that it failed in ensuring more
premium than the previous year. For what it can be assumed that it failed to ensure the required

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overall customer satisfaction in that particular year. So, it has been marked “0” in 2011. But in 2012
and 2013, the rate of premium was very high comparatively. So, it can be assumed that customer
satisfaction was also relatively high. That’s why “1” has been marked for those particular years.

7. Provide product information & safety:

Any business organization like an insurance company acts to provide information to its customers
and clients and also ensures safety as its regular function.

Here we can see that Central Insurance Company Limited in their prospectus and code of information
and policy shows how to provide information to increase its policy credibility. It also insures its
customers’ safety on required premium.

That’s why we can see in the excel sheet that from 2011 to 2013those particular cells have been
marked “1”.

8. Customer commitment & protection:

Business organizations always tend to preserve customer commitment and protection. Because if
there do not remain any customer commitment or protection, customers won’t get any belief in
taking the services or products of that particular company.

Here we can see that Central Insurance Company Limited in their annual report, web sites and other
directories have clearly notifies of there being customer committed and protection concerned.

That’s why we can see in the excel sheet that from 2011 to 2013those particular cells have been
marked “1”.

9. Provide Follow up Services:

Follow up services means to provide customers with that services which may be required to make the
actual services more effective. It is ensured after the original service has been provided.

Here in the excel sheet, we can find that Central Insurance Company Limited provides with that
services. As it is an insurance company, providing this sort of services will help it to retain
customers.

That’s why “1” has been marked for all the years from 2011 to 2013.

10. Provide Equal Opportunity:

As far in this report it has been assumed that equal opportunity means equal opportunity of the
employees.

Here in the excel sheet, we can find that Central Insurance Company Limited does not provide with
equal opportunity among the employees. Talking to SVP and Secretary of Central Insurance

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Company Limited, we have known that employees with different qualifications and experience levels
get different opportunities. All employees are not measured in the same scale.

That’s why “0” has been marked for all the years from 2011 to 2013.

11. Provide Work Insurance:

Providing work insurance is a common issue in this modern business world. As competition has risen
up, safety of workers will obviously motivate them, ultimately increasing the productivity.

Here we can see in the excel sheet that Central Insurance Company Limited provides Group
Insurance to its employees. Thus it can ensure the safety of its employees.

That’s why “1” has been marked for all the years from 2011 to 2013.

12. Provide Job Evaluation:

Job evaluation is highly required to inspire employees, and to motivate them to ensure their
productivity. Job evaluation is ever present in the modern companies to inspire innovation, creativity
and hardworking etc.

Central Insurance Company Limited also motivates extra ordinary performances. It gives proper job
evaluation on the basis of the previous factors andits reward and compensation depends upon the
workers’ performance.

That’s why “1” has been marked for all the years from 2011 to 2013.

13. Provide career plan system:

Career plan system helps to enhance workers’ capability and knowledge. Also much experience is
gathered by this system. So, it’s a common strategy of the modern companies to provide career plan
system.

Central Insurance Company Limited also provides career plan system. Talking to Mr. Md. Jafar Ali,
SVP and Secretary of Central Insurance Company Limited, we got that this company provides this
facility.

That’s why “1” has been marked for all the years from 2011 to 2013.

14. Provide training and development:

Providing training and development programs are welcomed in today’s modern companies.
Employees who are employed in the very beginning are at first provided with job relevant training
and development activities.

Central Insurance Company Limited also provides training and development activities. Without these
programs, no job related efficiency can’t be expected. So, Central Insurance Company Limited
follows these activities.
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That’s why “1” has been marked for all the years from 2011 to 2013.

15. Provide fair remuneration system:

Every business organization must provide fair remuneration system to its employees. Without
compensative and fair remuneration service, no company can keep its employees properly motivated.
So, it is crucial for any company.

Here, we can see that Central Insurance Company Limited provide fair remuneration service to its
employees. Talking to Mr. SVP and Secretary we got known to it.

That’s why “1” has been marked for all the years from 2011 to 2013.

16. Provide retirement plan:

Many governmental organization and nongovernmental organizations sometimes provide retirement

plan to motivate the employees of those particular company.

Actually, Central Insurance Company Limited does not provide any particular retirement plan, but it
provides provident fund to its employees. From that sense, after getting proper information from Mr.
SVP and Secretary of that particular company, we have known that no definite retirement plan is
executed in central Insurance Company Limited.

That’s why “0” has been marked for all the years from 2011 to 2013.

17. Relationship with union:

Every organization tries to maintain a good relationship with its employees. That’s why a union is
formed to consider the claim and demands of the employees.

Here in Central Insurance Company Limited, we got that the higher level employees try to main a
good relationship with the employees.

That’s why “1” has been marked for all the years from 2011 to 2013.

18. Provide communication with employees:

It is all the same that any company will keep good relationship and communication with its
employees. Without proper communication, information, business relation and regular day to day
activities can’t be thought. So, it is crucial for any sort of business.

Here in Central Insurance Company Limited, we got that it provides good communication with
employees and customers. Very rapid actions are taken if claims are once placed to the company.
Different employees of different departments are connected with each other.

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19. Provide compensation and reward system:

There are some companies which provide compensation and reward system to regulate motivation
program in a good direction. So, these programs are not compulsory but extra ordinary.

Here, in Central Insurance Company Limited we can see that employees are provided with
compensation and reward program for their extra ordinary activities or contribution.

That’s why “1” has been marked for all the years from 2011 to 2013.

20. Provide support for social life of local community:

This is a type of activity which helps to retain popularity of any certain business organization. In
today’s communicative and competitive business world, providing support for social life of local
community may help to be popular with the customer world.

Here in Central Insurance Company Limited, talking to Mr. SVP and Secretary, we understood that
this company provides support for social life of local community. This company provides some
benevolent fund to support for social life of local community.

That’s why “1” has been marked for all the years from 2011 to 2013.

21. Involve in improving environmental condition:

As today’s modern business is greatly liable for hazardous environmental impact, improvement of
environmental condition has become a common factor in recent business policies.

In the annual report, prospectus and conversation with Mr. SVP and company secretary, we have
known that this company is much aware of environmental issues. Rallies, slogans and other tree
plantation and eco friendly business maintenance is an important feature of them.

That’s why “1” has been marked for all the years from 2011 to 2013.

22. Efforts against environmental damage:

Today’s rapid environmental change is very awful for the people of the world. So, how this change
can be avoided and more environmental stability can be achieved is everybody’s concern.

Talking face to face with the company SVP and Secretary, we have known that no specific action has
been taken against environmental damage in any of the years from 2011 to 2013.

That’s why “0” has been marked for all the years from 2011 to 2013.

23. Provide job opportunity for community:

Sometimes companies provide special job opportunity for community. In this process though
sometimes talent may not be considered, company relationship increases.

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From the data sources, it has been known that no special job opportunity is provided for community.
But from benevolent fund, the community is provided with some facilities.

That’s why “0” has been marked for all the years from 2011 to 2013.

24. Philanthropic activities:

Philanthropic activities are non profitable activities which enhance the margin of company profile
and popularity among the public. Again, it helps to create trust and unity among the employees and
customers.

From the respective data source, it has been known that Central Insurance Company Limited was
engaged in many philanthropic activities like helping the survivors of Rana Plaza by donating
150000 taka or donating in Bangladesh Bima Foundation etc.

That’s why “0” has been marked for all the years from 2011 to 2013.

25. Provide low production cost:

For any type of insurance company, production cost which means lower policy cost cannot be
implemented. As IDRA (Insurance Development Regulatory Authority) is in the full regulation of all
insurance companies, the policy cost is predestined by it for all the insurance companies at a same
rate.

So, it is all the same for Central Insurance Company Limited that its low production cost can’t be
implemented.

That’s why “0” has been marked for all the years from 2011 to 2013.

26. Provide lower price of product and/or service than competitors:

As discussed previously that IDRA regulates all the insurance companies and also designs the policy
and premium price at a same rate for all the general insurance companies in Bangladesh. So, it is
impossible and illegitimate to provide lower price of product and/ or service than competitors.

Talking to Mr. SVP and company secretary we learnt that in this sector, there is no way to provide
lower price of product and/or service than competitors.

That’s why “0” has been marked for all the years from 2011 to 2013.

27. Invest in cost saving technology:

Cost saving technology is highly welcomed in any business organization. As it helps to gain profit on
the basis of less cost, this is a very warm and recent idea in business world.

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Central Insurance Company Limited is fully digitalized and all its functions are highly proactive. As
for being digitalized, it can reduce extra manual labor and other residual expenses. But it started its
activities in fully digitalized way from 2013.

That’s why “0” has been marked for all the years from 2011 to 2012 and “1” has been marked for the
year of 2013.

28. Provide new service and/or product development:

Insurance Development and Regulation Authority is in the absolute regulation of insurance sector in
Bangladesh. At the time of establishment of any insurance company, the company must select the
number of product it wants to deal with and collect a license. After the license has been collected, the
product number can’t be renewed.

So, according to Mr. SVP and Company Secretary, Central Insurance Company Limited as started its
journey with four products, couldn’t provide new service or product development.

That’s why “0” has been marked for all the years from 2011 to 2013.

29. Offer product and/or service for special need:

Any type of insurance company, if at the time of establishment does not keep in any provision of
special product for special need, it can’t change afterward. So, it depends upon the company whether
at the time of taking license on the products, the specially needed products were enlisted or not.

Here in Central Insurance Company Limited, talking to Mr. SVP and company Secretary we found
that the company didn’t enlist any sort of special product or service for special need at the time of
licensing. So, it doesn’t provide any offer for special product or service.

That’s why “0” has been marked for all the years from 2011 to 2013.

30. Offer more quality product and/or service than competitors:

More quality products or services help to enhance any company’s popularity in the market and
among the customers. It also helps to remain a step forward from the competitors.

Talking to Mr. SVP and company Secretary of Central Insurance Company Limited and scrutinizing
the annual report from 2010 to 2103, we found that from 2011 to 2012 there was not any specific
quality product or service than competitors in this company. But in 2013, according to him, the
company became able to offer more quality products and/ or service than competitors.

That’s why “0” has been marked for all the years from 2011 to 2012. And on the other hand, “1” has
been marked for 2013.

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31. Offer highly differentiated product and/or service:

Some companies provide highly differentiated products or services for being distinguished featured
and differently recognized.

But Central Insurance Company Limited does not provide any offer of highly differentiated products
or services.

That’s why “0” has been marked for all the years from 2011 to 2013.

32.Productivity increase (Inventory):

As insurance company has no value of production and inventory, we have considered premium and
profit basis for calculating the sector.

Here, we have analyzed that Central Insurance Company Limited made less premium on the year of
2011 comparatively from 2010. And in the same way, it made more profit in the year of 2012 and in
2013 consecutively.

That’s why “0” has been marked for the year of 2011 and “1” has been marked for the year of 2012
and 2013.

33. Market Share Growth:

Market share Growth

Market Share Growth

41519312
37070814

22467160
19536660

2010 2011 2012 2013

Fig 4.2: Market share growth.

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34. Sale volume increase:

As insurance company has no particular sale volume, we have assumed premium fluctuation to be
the reason of sale volume increment or decrease.

For the year of 2011, 2012 and 2013, sale volume has never been undermined. It has an upward
direction.

So, only for that reason “1” has been marked to indicate that sale volume has been increasing since
2011 to 2013.

35. Profit Margin Growth:

Profit margin is a very important ratio through which we can measures the profitability of a
company.

Profit Margin Growth

Profit Margin Growth

17%

13%

2011 2012 2013

-3%

Fig 4.3: Profit Margin Growth

Central Insurance Company Limited is 0.34 in 2010 and decreased in 2011 and was 0.32. In 2012
and 2013 profit margin were 0.37 and 0.43 respectively. The profit margin growth was -3% in 2011
and in 2012 and 2013 it was 13% and 17% respectively.

36. Return on Equity:

Return on equity is an important measure of the profitability of a company . The amount of net
income returned as a percentage of shareholders equity. Return on equity measures a corporation's
profitability by revealing how much profit a company generates with the money shareholders have
invested.

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ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

Net income is for the full fiscal year (before dividends paid to common stock holders but after
dividends to preferred stock.) Shareholder's equity does not include preferred shares.

Return on equity measures how efficiently a firm can use the money from shareholders to generate
profits and grow the company. . Unlike other return on investment ratios, ROE is a profitability ratio
from the investor's point of view—not the company. In other words, this ratio calculates how much
money is made based on the investors' investment in the company, not the company's investment in
assets or something else.

That being said, investors want to see a high return on equity ratio because this indicates that the
company is using its investors' funds effectively. Higher ratios are almost always better than lower
ratios, but have to be compared to other companies' ratios in the industry. Since every industry has
different levels of investors and income, ROE can't be used to compare companies outside of their
industries very effectively.

Many investors also choose to calculate the return on equity at the beginning of a period and the end
of a period to see the change in return. This helps track a company's progress and ability to maintain
a positive earnings trend.

Analysis: We have observed the Net Profit and Total Asset of Central Insurance Company Limited
from the year of 2010 to 2013 on assessing the annual report of that certain company.

We have found some fluctuation in the Return on Asset (ROA) measurement. The fluctuations are
described hereby:

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 Return on Equity(ROE)
Return on Equity(ROE)

0.10
0.08 0.09
0.08

2010 2011 2012 2013

Fig 4.4: Return on equity.

For 2010, we got that the Net Profit was 57.25 million taka and Total Asset was 972.52 million .On
the basis of these two figures, we got ROA 0.0589. In the year 2011, the net profit was 51.04 million
taka and the total asset was 1062.43 million taka. As the net profit of 2011 was lower than 2010 we
see, 1.1% decrees, which is 0.0480 ROA. In 2012 the net profit was 63.05 million taka and the total
asset was 1304.61, which increased ROA by 0.0483. ROA increased 0.3% in the year from 2011 to
2012. Similarly in the year 2013 the net profit was 83.05 million taka and the total asset was 1467.05
million taka. The ROA of 2013 is 0.0569 which shows 8.6 % increases than 2012.

37.Return on Assets (ROA):

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how
efficient management is at using its assets to generate earnings. Calculated by dividing a company's
annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as
"return on investment".

The formula for return on assets is:

The return on assets ratio measures how effectively a company can turn earn a return on its
investment in assets. In other words, ROA shows how efficiently a company can covert the money
used to purchase assets into net income or profits.

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Since all assets are either funded by equity or debt, some investors try to disregard the costs of
acquiring the assets in the return calculation by adding back interest expense in the formula.

It only makes sense that a higher ratio is more favorable to investors because it shows that the
company is more effectively managing its assets to produce greater amounts of net income. A
positive ROA ratio usually indicates an upward profit trend as well. ROA is most useful for
comparing companies in the same industry as different industries use assets differently. For instance,
construction companies use large, expensive equipment while software companies use computers and
servers.

Analysis:

We have observed the Net Profit and Shareholders’ Equity of Central Insurance Company Limited
from the year of 2010 to 2013 on assessing the annual report of that certain company.

We have found some fluctuation in the Return on Equity (ROE) measurement. The fluctuations are
described hereby:

Return on Asset (ROA)

Return on Asset (ROA)

0.059
0.056
0.048 0.048

2010 2011 2012 2013

Figure 4.5: Return on Asset.

For 2010, we got that the Net Profit was 57.25 million taka and Shareholders’ Equity was 552.23
million taka. On the basis of these two figures, we got ROE of 0.104. In the year 2011, Net Profit
was 51.04 million taka and Shareholders’ Equity was 603.57 million taka which shows 0.085 of ROE
which results 1.9% decrease of ROE. In the year of 2012, we get Net Profit of 63.05 million taka and
Shareholders’ Equity of 835.21 million taka and ROE 0.075 which ultimately shows 1% decrease of
ROE. In the year of 2013, we get Net Profit of 83.05 million taka and Shareholders’ Equity of 917.26
million taka which ultimately shows 0.089 of ROE and it increases by 1.4% from the previous year.

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Chapter 5

Findings

Page 45 of 61
5.1 CSR Index
Observing the thirty variables of Central Insurance Company Limited, we can get to some finding.We
have designed the findings on the basis of some topics. We are going to represent the corporate social
index for Central Insurance Company Limited from the year of 2011 to 2013 in the following table:

Year 2011 2012 2013

CSR Index 48.65 62.16 72.97

CSR index
CSR index

72.97
62.16
48.65

2011 2012 2013

Fig 5.1: Corporate Social Responsibility Index

5.1.1 Shareholder Relation:

Shareholders’ relation of central insurance Company Limited is the dependent value where it is
dependent on five different factors given in the excel sheet. What we have found from Shareholder
Relation is given below in the chart:

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 Shareholder Relation
Shareholder Relation

80% 80%

60%

2011 2012 2013

Fig 5.2: Shareholders’ relation of CICL

Out of five variables about shareholder’s relation with the company, the company has fulfilled only
60% ( 3 variables answers were 1). In 2012 & 2013, Central Life insurance Company Limited has
fulfilled 80%( 4 variables answers were 1).

5.1.2 Consumer Relation:

The central insurance company limited has a strong relation with the consumers which is given in
the excel sheet. Depending on the fulfilling of the four issues of consumer relation (Overall
consumer satisfaction, providing of product information, customer commitment and protection,
providing follow-up services) a chart is given bellow:

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 Consumer Relation
Consumer Relation

100% 100%

75%

2011 2012 2013

Fig 5.3: Consumer’s relation of CICL

Out of four variables about consumer’s relation with the company, the company has fulfilled only
75% ( 3 variables answers were 1 ). In 2012 & 2013, Central Life insurance Company Limited has
fulfilled 100% ( 4 variables answers were 1). It means that in 2012 & 2013, the company fulfilled all
the corporate social responsibility related to the consumer relation.

5.1.3 Employee relation

The Central Insurance Company Limited has a good employee relation with the employees. They
maintain a stable employee relation which is given bellow.

Employee Relation
Employee Relation

80% 80% 80%

2011 2012 2013

Fig 5.4: employee relation.

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Out of ten variables about employee relation with the company, the company has fulfilled 80% ( 8
variables answers were 1 ) in from 2011 to 2013 constantly. Though the company does not give
equal opportunity to all the employees and provident any retirement plan, they provide group
insurance facility and provident fund facility. Besides, the company have a good relationship with
the employee union and evaluate the performance of the employees.

5.1.4 Community relation:

The central insurance company bears challenging relation with the social community which is given
in the following chart:

Community Relation
Community Relation

60%

40% 40%

2011 2012 2013

Fig 5.5: Community relation.

Out of five variables about community relation of the company, the company has fulfilled 40% ( 2
variables answers were 1 ) from 2011 to 2012 constantly. In 2013 the company has fulfilled 60%(3
variables answers were 1).The company provides benevolent fund to support the social community.
It is very much aware of environmental issues. But it doesn’t provide any job opportunities to its
employees.

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5.1.5 Low-cost strategy:
The central insurance company is not much efficient in their low cost strategy which is given in the
below chart:

Low-cost strategy
Low-cost stategy

33%

0% 0%

2011 2012 2013

Fig 5.6: Low-cost strategy.

Out of three variables about low cost strategy of the company, the company has fulfilled 33% ( 1
variables answers were 1and it was investing in cost saving technology ) in the year 2013.But in the
year 2011 & 2012 it was very hard for the company to maintain an efficient low cost strategy. But,
in 2013 the company became fully digitalized. As for being digitalized, it can reduce extra manual
labour and other residual expenses.

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5.1.6 Differentiation strategy:
The use of differentiation strategy in the CICL is shown in the flowing bar chart.

Differentiation Strategy
Differentiation Strategy

25%

0% 0%

2011 2012 2013

Fig 5.7: Differentiation strategy.

Out of four variables about differentiation strategy of the CICL, the company failed to use any
differentiation strategy in 2011 & 2012.But in 2013 the company digitalized its whole services and
this differentiation strategy make the use of differentiation strategy 25%(1 variable answer was 1).

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5.1.7 Value gain performance:
The Central Insurance Company Limited has a progressive value gain performance. Out of three
variables about value change performance, the company achieved 67% in 2011. Then in 2012 &
2013 they achieved 100% which means they fulfilled all of our variables regarding value gain
performance.

Value Gain Performance

Value Gain Performance

100% 100%

67%

2011 2012 2013

Fig 5.8: Value gain performance.

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5.1.8 Monetary gain performance:
The monetary gain performance of the company for the respective three years are given bellow:

Monetary Gain Performance

Monetary Gain Performance

100%

67%

0%

2011 2012 2013

Fig 5.9: Monetary gain performance.

In 2011, the company failed to increase RAE and ROA and profit margin. So, the monetary gain
performance for the company remain stable for the that year. But, in 2012 the company gained
67%(Profit margin and ROA increased) monetary gain performance. In, 2013, the company gained
100%( all the variables related to the monetary gain performance increased) monetary gain
performance.

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25.2 Recommendations:

So, the recommendations that should be followed by Central Insurance Company Limited are given
below:

1. At first the company should have a transparent clarification of the annual report it publishes
every year.
2. The company should obtain license of some other demandable products to flourish the
significance of it to the customers.
3. The company should be much more aware of environmental impacts on the climate. As it is a
challenging issue of the whole world, much more campaign against environmental changes
will add to its reputation before the public.
4. The company should every year publish prospectus of its company to recognize itself to the
common people.
5. The company must do community development to gain reputation.
6. By taking license from IDRA, the company should offer some highly differentiated products
to the public.
7. The company should continue investing in the cost saving technology by continuing
digitalizing the company.
8. To motivate the employees, the company should start retirement plan in recent years.
Otherwise, there is a great probability of leaving out the company when the employees will
get much more facilities in another companies.
9. The company should have corporate response on the environmental issues.
10. The company must develop skills on predicting the business environment, opportunities and
threats in the perspective of political environment as it is becoming much more threatening to
all types of business in recent years.

By following all these recommendations, Central Insurance Company Limited can reduce its
challenges to a great extent.

Insurance sector in the business field of Bangladesh is growing up very significantly. It is hoped that
reducing all the challenges of Central Insurance Company Limited, it would be beneficial to its own
sector in the coming future.

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5.3 Conclusion
We have discussed in this report about Central Insurance Company Limited. Our discussion was
mainly on the basis of the thirty seven variables. Whether the company maintains these conditions or
not was our concern. For measuring and justifying all the thirty seven variables, we took the help of
DSE (Dhaka Stock Exchange), BSEC (Bangladesh Securities and Exchange Commission), company
websites, business Wikipedia, other websites and finally we visited Central Insurance Company
Limited and talked to the SVP and company Secretary of that company and gathered the necessary
information required for the accuracy of this report. On the basis of the information, we have
described the Organizational structure of that particular company. After that we have represented the
Strength, Weakness, Opportunity and Threat that is (SWOT) analysis of that particular company.
After that on the basis of the obtained information, we have described the Corporate Social
Responsibility of that particular company. By observing these entire issues prime to be indicated to
categorize the company, we have found that the company is yet to be grown up, but is developing
very fast. It has some very good qualities like rapid action against claim, digitalization etc. On the
other hand it has also some challenges to develop described earlier. So, ultimately what we found is
that Central Insurance Company Limited is not much dominating in the insurance sector of
Bangladesh but still it is developing at a remarkable speed. It is also expected that the company by
following some directions can reduce to a certain level of all its challenges. The recommendations
are provided on the basis of the information and the whole study of the company.

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5.4 Bibliography:

1. Block, S. B. and Hirt, G. A. (ed) (2005-2006) Foundations of Financial Management, Irwin:

McGraw-Hill.
2. Fraser, L. M. and Ormiston, A. (ed) (2006) Understanding Financial Statement, New Delhi:
Prentice Hall of India.
3. http://www.investopedia.com/terms/r/returnonequity.asp
4. http://en.wikipedia.org/wiki/Return_on_equity
5. http://accountingexplained.com/financial/ratios/return-on-equity
6. http://www.financeformulas.net/Net_Profit_Margin.html
7. http://ifawebnews.com/2011/12/30/5-key-motivating-factors-that-can-boost-insurance-
agency-productivity/
8. http://www.marsdd.com/mars-library/growth-strategies-kotler-on-marketing
9. http://www.cicl-bd.com/

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Appendix

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1.Corporate Social Responsibility Index

Company Name: Central Insurance Company Limited

Corporate Social Responsibility Index 61.26

No. Item 2011 2012 2013

Shareholder Relation:
1 Increase shareholder value (economic return) 0 1 1
2 Corporate response on environmental issues 0 0 0
3 Relationship with local authorities and regulator 1 1 1
4 Good governance practices 1 1 1
5 Communication with Board of Directors (AGM) 1 1 1
Consumer Relation:
6 Overall customer satisfaction 0 1 1
7 Provide product information & safety 1 1 1
8 Customer commitment & protection 1 1 1
9 Provide follow-up service 1 1 1
Employee Relation :
10 Provide equal opportunity 0 0 0
11 Provide work insurance 1 1 1
12 Provide job evaluation 1 1 1
13 Provide career plan system 1 1 1
14 Provide training and development 1 1 1
15 Provide fair remuneration system 1 1 1

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16 Provide retirement plan 0 0 0
17 Relationship with union 1 1 1
18 Provide communication with employees 1 1 1
19 Provide compensation and reward system 1 1 1
Community Relation:
20 Provide support for social life of local community 1 1 1
21 Involve in improving environmental condition 0 0 0
22 Efforts against environmental damage 0 0 1
23 Provide job opportunity for community 0 0 0
24 Philanthropic activities 1 1 1
Low-cost Strategy:
25 Provide low production cost 0 0 0
26 Provide lower price of product and/or service than 0 0 0
competitors
27 Invest in cost saving technology 0 0 1
Differentiation Strategy:
28 Provide new service and/or product development 0 0 0
29 Offer product and/or service for special need 0 0 0
30 Offer more quality product and/or service than competitors 0 0 1
31 Offer highly differentiated product and/or service 0 0 0
Value Gain Performance :
32 Productivity increase (Inventory) 0 1 1
33 Market share growth 1 1 1
34 Sale volume increase 1 1 1
Monetary Gain Performance :
35 Profit margin growth 0 1 1
36 Return on equity (ROE) growth 0 0 1
37 Return on asset (ROA) growth 0 1 1
Total Score 48.65 62.16 72.97

2. Questionnaire used in the investigation on Central Insurance Company Limited

University of Dhaka
Department of Finance

Questionnaire about CSR of Central Insurance Company Limited

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1. Do you provide follow up service and how do your company give this service? Follow up service
means the service that you provide after the key service you have already provided like the
subsidiary services to make the actual service effective, provided to the customer.
2. Do you provide equal opportunity to the employees and customers of same categories? Please,
add an example.
3. Do you provide work insurance to the employees working in your company?

4. How do you evaluate your employees’ job on the basis of their performance?

5. Do you provide support for social life of local community in your company?

6. Do you provide work insurance to the employees working in your company?

7. Do you involve in improving environmental condition in your company?

8. Do you have any effort against environmental damage?

9. Do you provide retirement plan for the employees?

10. Do you have officer’s union?

11. Do you provide communication with the employees?

12. Do you provide compensation and reward system ?

13. Do you provide job opportunity for community?

14. Do you involve in any philanthropic activities?

15. Do you provide low premium cost than other companies?

16. How much premium cost do you consider on the basis of risks?

17. Do you invest in cost saving technology?

18. Do you provide new service and/or product development in recent years 20111, 2012 , 2013?

19. Do you have any special offer or service for special need?

20. Do you offer more quality product and/or service than competitors?

21. Do you offer highly differentiated product and/or service?

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 3.Organ gram of Central Insurance Company Limited:

Board of Directors

Executive Committee Chairman Audit Committee

Managing Director

Company Secretary
Co-ordinator

Head of
Developments &
Incharge-Share Incharge Branch Incharges
Department Provident Fund

Head of
Head of
Head of BCD & Head of Head of
Claims &
Accounts Underwriti Head of IT Establishm Administra
Re-
& CEO ng ent tion
Insurance
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