Prudential Singapore Case Study Analysis Report - Assignment Solution

1.0 External Environment (PESTLE)

Political

• Singapore is a politically-stable country. This particularly means that no political factors significantly influence the business.

Economic

• The favourable movement of currency is a positive economic factor for Prudential.
• Volatility in interest rate might act as a negative influencer (Lee, 2015).
• The increasing per-capita income acts as a positive influence which creates an opportunity for increasing the sales revenue of the business.

Social

• The demographics of Singapore are such that there is a large population of the country which makes the market lucrative enough for multinational insurance companies such as Prudential.
• The local populace of the country is vulnerable and prone to health, life and general risk which also provides a golden opportunity for insurance companies such as Prudential to establish their business.
• The increasing trend of education and literacy is a positive sign, as the workforce requirement may as well be met right in Singapore rather than recruiting internationally (Wood, 2018).

Technological

• As the trend of education gains a firm footing in the Singaporean industry, there is also show an increasing trend of reliance on technology within the same.
• Singapore is one of the countries which have been hit the most due to the recent technology disruption (Wood, 2018).
• There is an increasing trend of reliance on mobile and smartphone technology for making important decisions.

Legal

• New taxes have been levied upon the consumer as well as the businesses, which has made operating a business as an MNC quite complex in Singapore.
• Apart from the new taxes, there are certain policy formulations regarding insurance companies which have recently been promulgated in the country. This policy formulations must be taken into consideration in order for the business to operate successfully in the industry (Wood, 2018).

Environmental

• Environment preservation is one of the most important concerns of Singapore. Promotions and campaigns related to environmental-friendliness are often initiated by the government.
• Measures related to energy efficiency and ‘paperless business’ have also been taken in the past (Jia, 2018). These measures have had a direct impact on the population of the country in terms of their responsiveness towards environmental friendliness.

2.0 Industry Analysis

Intensity of Rivalry

As of 2015, 22 major businesses operating in the insurance industry of Singapore have been identified as per Exhibit 4 of the case study. This shows that the intensity of rivalry in the industry is quite high which, in turn, has a negative implication on the Prudential Singapore.

Bargaining Power of Suppliers

The insurance industry of the country is characterized by the supplier of distribution services. The advent of bancassurance as a distribution channel in Asia before the 21st century changed the distribution landscape of the industry.

Bargaining Power of Buyers

There are many buyers in the industry. At the same time, the intensity of rivalry is also very high amongst the competitors offering the same services of insurance to the customers. The bargaining power of buyers, therefore, tends to be high. This is true not for the individual customers but for large corporate clients. The industry players have yet to decide their primary target audience, as per the case study (Hbr.org, 2019).

Threat of Substitutes

There are no apparent substitutes to insurance services. Hence, the threat of substitutes remain is low.

Threat of New Entrants

The threat of new entrants is moderate, which means that it is neither too high nor too low.