THE APPLICATION OF DECISION ANALYSIS FOR BUSINESS DEVELOPMENT IN PT ASURANSI JIWA MANULIFE INDONESIA FINAL PROJECT
By FANIE FIKRI 19009020
Undergraduate Program School of Business and Management Institut Teknologi Bandung
VALIDATION PAGE
THE PRACTICAL USE OF DECISION ANALYSIS FOR BUSINESS DEVELOPMENT IN PT ASURANSI JIWA MANULIFE INDONESIA
By: FANIE FIKRI ID No: 19009020
Undergraduate Program School of Business and Management Institut Teknologi Bandung
Supervisor
(Dr. Utomo Sarjono Putro)
ABSTRACT Every time people and organization faced to take decision because it is often that they have several options that need to be chosen. Particularly in business, decision-making is very important because the decision maker needs to be able adaptive with the problem that arises that ranges from operational to strategic level then take the best course of action. Choosing the best method will also make sure of optimal resources company usage because the scarcity of resources and hence, resources need to be used effectively. This research will focus on the determining the best course of action using the decision analysis and method for the problem in tactical level that arises in PT Asuransi Jiwa Manulife Indonesia which is a subsidiary of Manulife Financial which centre office is in Canada. This research will only focus on the issue of business development in employment benefit division gathered from its center branch in Jakarta. The data gathering is done by doing an interview with the head of product development and its team and by conducting a research on the literature review and the secondary data. The interview is done in order to get the data of expert opinion on the value estimation of each alternative, while the research on the secondary data is conducted from company internal report. The data that has been gathered is being analyzed using the PrOACT method in order to get a better knowledge of the alternative. That method shows the alternative, consequences, and tradeoffs. The consequences are constructing by generating table that consist 5 main issues: financial, operation, IT, marketing, and sales and divided into few sub-objectives. The tradeoffs were constructing by assessing rating from 1 to 3 to in term of these alternative capability in satisfying the objective. The data is being processed by using the decision making tools, which are decision tree and sensitive analysis using excel add-in Tree Plan and sensit. The first step is to construct a decision tree add-in excel that calculate the potential contribution for asset growth of each alternative. The first option is to develop Employment Benefit (EB) Click internet service, the second option is to repackage Group and Life Health Insurance (GLH) and the third option is to develop Targeted Date Fund (TDF) feature. The next step is to observe a change of value of variables with different scenario to determine the impact of change on the variable. The tool that is used in this step is the sensitivity analysis using sensit. The result is that developing EB Click (Success) as the most sensitive variable followed by developing EB Click (Failure). The decision test shows that the the decision tree is actually robust because there is no change of the best alternative for several different scenarios. When the value of EB Click service in either success probability or failure probability with both low and high extreme, EB Click still become the most favorable alternative. The alternative of developing EB Click service definitely will be the best option possible because the result is very robust therefore there is no alternative that would possible better than EB Click service. EB Click service also an additional service to its existing client therefore a chance of rejection will be unlikely as it does not take out any advantages for the existing client but offer more convenient service. In addition PT Asuransi Jiwa Manulife Indonesia is the first that offering such facility to its client. Keywords: Insurance, Decision Analysis, Decision Tree, PrOACT
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ABSTRAKSI Setiap saat organisasi dihadapkan untuk mengambil keputusan karena biasanya ada beberapa pilihan. Dalam bisnis, proses pengambilan keputusan sangat penting karena pengambil keputusan butuh beradaptasi dengan masalah dari tingkat strategis hingga operasional. Memilih metode juga harus melihat sumber daya perusahaan agar dapat dimanfaatkan secara efektif. Penilitian ini akan fokus dalam menentukan tindakan yang paling tepat menggunakan analisis dan metode pengambilan keputusan dalam tingkat taktis di PT Asuransi Jiwa Manulife Indonesia yang merupakan anak perusahaan Manulife Financial yang berpusat di Kanada. Penelitian ini hanya fokus pada isu pengembangan bisnis pada divisi employment benefit yang datanya didapatkan dari cabang utamanya di Jakarta. Pengambilan data dilakukan dengan interview bersama kepala pengembangan product dan dengan melakukan riset pada tinjauan literature serta data sekunder. Interview dilakukan agar mendapatkan data pandangan ahli menganai nilai estimasi dari setiap alternative sementara riset data sekunder yang dikumpulkan akan dianalisa menggunakan metode PrOACT untuk mendapatkan infromasi lebih mengenai alternatif. Metode ini menunjukkan alternative, konsekuensi, dan timbal-balik. Konsekuensi dibentuk dengan membuat tabel yang terdiri dari 5 isu utama: keuangan, operasi, teknologi informasi, pemasaran, dan penjualan yang kemudian dijabarkan lebih lanjut. Timbal-balik didapatkan dengan memberikan penilaian dari angka 1 sampai 3 sebagaimana alternatif dapat memenuhi tujuan. Kemudian data diproses menggunakan alat pengambilan keputusan yaitu pohon keputusan, dan analisa kesensitifan menggunakan progam excel tree plan dan sensit. Langkah pertama adalah menciptakan pohon keputusan dari program tree plan kemudian dikalkulasikan potensi kepada pertumbuhan aset masing-masing alternative. Pilihan pertama adalah mengembangkan Employment Benefit (EB) Click internet service, pilhan kedua adalah mengemas-ulang Group and Life Health Insurance (GLH), dan pilahan ketiga adalah mengembangkan Targeted Date Fund (TDF) fitur. Langkah berikutnya adalah mengamati perubahan nilai dari skenario-skenario yang berbeda dari pengaruh perubah pada peubah. Alat yang digunakan pada langkah ini adalah sensit. Hasilnya menunjukkan EB Click (Success) adalah faktor yang paling sensitif diikuti oleh EB Click (Failure). Uji keputusan menunjukkan bahwa pohon keputusan kokoh yang berarti tidak ada perubahan alternatif dalam berbagai scenario. Ketika nilai dari EB Click pada kemungkinan sukses dan gagal dengan ekstrim tinggi dan rendah, EB Click tetap menjadi pilihan yang paling menjanjikan. Alternatif mengembangkan EB Click service tentunya merupakan pilihan yang terbaik karena sangat kokoh sehingga tidak ada alternative lain yang lebih baik dari EB Click Service. EB Click Service memberikan pelayanan tambah pada kliennya yang sekarang sehingga kemungkinan penolakan kurang memungkinkan sebagaimana hal tersebut memberikan kerugian apapun untuk kleinnya yang sekarang namun memberikan pelayanan yang lebih nyaman. Sebagai tambahan PT Asuransi Jiwa Manulife Indonesia adalah yang pertama menawarkan fasilitas tersebut. Kata Kunci: Asuransi, Analisa Keputusan, Pohon Keputusan, PrOACT
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FOREWORD I dedicate this page to everyone who had helped me in finishing my bachelor thesis. First of all I want to grateful to God that giving me such persistence to be able to focus on my final project. I have gained knowledge that I’m sure will be useful in my future from making this project. This project involve a lot of person who continue to help me, give me critics, guide me, give me an input, and also supporting me therefore I would like to give my appreciation and gratitude to the following people:
1) Beloved family, they always continue to support me, cheer me up, continue to encourage me and help me find the object of this project. 2) Dr. Utomo Sarjono Putro, as my supervisor in doing my final project. I thank you for your guide me through the process of creating my final project and for being so patience. 3) The employee who works at PT Asuransi Jiwa Manulife Indonesia that prepare the time for me to get an interview and give me the data I need for my research, especially Mr. Bagus as my main informer and also Mr. Alvin, Mr. Arifin, Mr. Anton, Ms. Neti, and Ms. Nelly. 4) All of my friends, tutor, and lecturer in School of Business and Management who has give a lot of contribution in my research input and encouragement.
I also realize that I probably still making a mistake in this paper consider I’m still learning therefore I appreciate if the reader of my research paper can give me some feedback and input to help me improve this paper. Thank you for your concern and time.
Bandung, 31 August 2012
Fanie Fikri NIM: 19009020 III
TABLE OF CONTENTS ABSTRACT....................................................................................................................... I FOREWORD .................................................................................................................. III TABLE OF CONTENTS................................................................................................ IV LIST OF FIGURES ......................................................................................................... V LIST OF TABLES ......................................................................................................... VII LIST OF APPENDICES .............................................................................................. VIII INTRODUCTION ............................................................................................................ 1 1.1 Background ............................................................................................................. 1 1.2 Problem Identification ............................................................................................. 3 1.3 Objective ................................................................................................................. 3 1.4 Scope of Problem .................................................................................................... 4 1.5 Expected Contribution............................................................................................. 4 1.6 Report Structure ...................................................................................................... 5 LITERATURE REVIEW ................................................................................................. 7 2.1 Decision Analysis .................................................................................................... 7 2.1.1 Definition ............................................................................................................. 7 2.1.2 Decision Tools...................................................................................................... 7 2.1.2.1 Decision Tree .................................................................................................... 7 2.1.2.1.1 Definition ....................................................................................................... 8 2.1.2.1.2 Decision Tree Component.............................................................................. 8 2.1.2.2 Sensitivity Analysis ......................................................................................... 10 2.2 Smart Choice Method............................................................................................ 10 2.2.1 Problem Definition ............................................................................................. 11 2.2.2 Objective Resolution .......................................................................................... 12 2.2.3 Alternatives in Consideration ............................................................................. 13 2.2.4 Consequences in Alternatives ............................................................................ 14 2.2.5 Tradeoffs in Solution.......................................................................................... 14 2.2.6 Uncertainties Involvement ................................................................................. 15 2.2.7 Risk Associated .................................................................................................. 16 2.2.6 Linked Decision ................................................................................................. 16 METHODOLOGY ......................................................................................................... 17 3.1 Methodology Chart ............................................................................................... 17 IV
3.2 Methodology Explanation ..................................................................................... 17 3.2.1 Problem Identification ........................................................................................ 17 3.2.2 Objective ............................................................................................................ 17 3.2.3 Scope of Research .............................................................................................. 18 3.2.4 Literature Study .................................................................................................. 18 3.2.5 Data Collection................................................................................................... 18 3.2.6 Data Analysis ..................................................................................................... 18 3.2.6.1 Smart Choice (PrOACT-URL)........................................................................ 18 3.2.6.2 Decision Tree .................................................................................................. 19 3.2.7 Sensitivity Analysis ............................................................................................ 19 3.2.8 Conclusion.......................................................................................................... 20 DATA ANALYSIS......................................................................................................... 21 4.1 Define the Decision Problem ................................................................................ 21 4.2 Define the Objectives of the Research .................................................................. 22 4.3 Define the Scope of the Research ......................................................................... 24 4.4 Define the Alternatives.......................................................................................... 25 4.4.1 Employment Benefit Click ................................................................................. 27 4.4.2 Group Life and Health Insurance Repackaging ................................................. 28 4.4.3 Targeted Date Fund ............................................................................................ 29 4.5 Define the Consequences ...................................................................................... 30 4.6 Define the Tradeoffs.............................................................................................. 34 4.7 Clarify the Uncertainties ....................................................................................... 37 4.8 Define the Risk Tolerance ..................................................................................... 38 4.9 Consider Linked Decision ..................................................................................... 40 4.10 Decision Tree ...................................................................................................... 42 4.11 Sensitivity Analysis ............................................................................................. 45 4.11.1 Identify Sensitivity Variable ............................................................................ 45 4.11.2 Decision Test .................................................................................................... 48 4.11.2.1 EB Click (Success) ........................................................................................ 48 4.11.2.2 EB Click (Failure) ......................................................................................... 51 CONCLUSION AND RECOMMENDATION.............................................................. 55 5.1 Conclusion............................................................................................................. 55 5.2 Recommendation................................................................................................... 57 REFERENCES ............................................................................................................... 59 V
LIST OF FIGURES
Figure 1.1 Employment Benefit Division Growth 2007-2012 ......................................... 3 Figure 2.1 Decision Tree Example ................................................................................... 7 Figure 3.1 Methodology Chart........................................................................................ 17 Figure 4.1 Value Focused Thinking ............................................................................... 23 Figure 4.2 Manulife Organization Structure ................................................................... 25 Figure 4.3 DPLK Scheme ............................................................................................... 30 Figure 4.4 Risk Preference Graph................................................................................... 39 Figure 4.5 Relationship among Linked Decisions .......................................................... 41 Figure 4.6 Decision Tree with EMV (Expected Monetary Value) ................................. 43 Figure 4.7 Decision Tree with Utility ............................................................................. 44 Figure 4.8 Tornado Chart with EMV.............................................................................. 46 Figure 4.9 Spider Chart with EMV ................................................................................. 47 Figure 4.10 EB Click (Success) with Low Extreme ....................................................... 49 Figure 4.11 EB Click (Success) with High Extreme ...................................................... 50 Figure 4.12 EB Click (Failure) with Low Extreme ........................................................ 52 Figure 4.13 EB Click (Failure) with High Extreme........................................................ 53
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LIST OF TABLES
Table 2.1 Consequence Table ......................................................................................... 14 Table 4.1 Table of Consequences ................................................................................... 32 Table 4.2 Table of Consequences Ranked ...................................................................... 34 Table 4.3 Table of Product Desirability.......................................................................... 36 Table 4.4 Desirability for Risk Profiles .......................................................................... 38 Table 4.5 Table of Utility ............................................................................................... 39 Table 4.6 Sensitivity Analysis Input Output with EMV ................................................. 45 Table 4.7 Single-Factor Sensitivity Analysis for Tornado Chart with EMV ................. 41 Table 4.8 Single-Factor Sensitivity Analysis for Spider Chart with EMV .................... 43
VII
LIST OF APPENDICES
Appendix A Track Record Growth .................................................................................... i Appendix B Lottery Interview ........................................................................................ iii
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