Prudential Financial Inc. is listed in Fortune Global 500 companies, is an American based multinational company, who provides many services and its subsidiaries provide investment management, insurance, and various financial services and products to institutional and retail consumers throughout United States. It is operating in more than 40 countries. It is operating from over 140 years and helped many institutional and individual customers in growing and protecting their wealth. The company is known for delivering services to their customers on own premises. It provides customers with various services and products including annuities, mutual funds, and life insurance. It strives hard to develop the long-term value for the stakeholders through consistent and business fundamentals guided by the vision and core values of the company (Prudential, 2019).
The company needs Porter five forces model to analyze the industry and use it for understanding the underlying levers of the profitability level in the industry. The managers of Prudential Financial Inc use the porter five forces for understanding the competitive forces influencing the profitability and establish the strategy for gaining the competitive advantage (Fernfortuniveristy, 2019). Here is the detailed Porter five forces analysis of Prudential Financial Inc.
Bargaining Power of Buyers
The suppliers in the insurance industry are many than the companies providing the services to the consumers. This clearly means that buyers have less firms to choose the products or services from and thus have no such control on prices. The individual does not pose the threat on the insurance industry. However, big corporate clients have greater bargaining power and pay premium in millions of dollars. The insurance companies always try hard for getting high-margin clients, and Prudential Financial Inc have the strong brand name and loyal customer base (UKessays, 2019).
Bargaining Power of Suppliers
As being listed in the Global Fortune 500, Prudential Financial Inc. is the biggest company providing the financial services to the consumers, and has much control on the suppliers, because numerous suppliers want to work with the company. The suppliers of the capital do not posses the big threats, human capital suppliers are the threats. Suppliers provide the credible threat for the forward integration in industry, thus weakening the supplier force. However, Prudential Financial maintains a good relationship with its suppliers to have cost advantage. And keep the suppliers in line to have efficient supply chain (Murphy, 2018).
Threats of New Entrants
Prudential Financial Inc is facing the threats from new entrants from other financial companies who diversify itself in insurance services. It is difficult for entering in the insurance industry as the small start-up because of regulatory and capital requirements. There are many large insurance and financial companies like investment and banks offering the same services, and Prudential Financial Inc. is facing the threat from them (Pinkasovitch, 2019).
Threats from the Substitute Products
There are not man substitutes available for the services or products offered by Prudential Financial Inc. in United States, and the substitutes available are producing low profits. This clearly state that no such maximum profit ceiling earns in this industry especially where Prudential operates. This weakens the force of substitute products. Prudential Financial Inc focuses on offering the good quality services, and buyers prefer this because of great quality and low prices. The company should focus on differentiating its products with the competitors to gain more consumers (Murphy, 2018).
Rivalry of Existing Players
There are various companies providing the financial services and the insurance services in United States besides Prudential Financial, but there are few who has the strong brand name, market share and large customer base that the company itself has. This makes it hard for them to grab the large market share. However, Prudential Financial always try hard to develop strategies which helps them in gaining market share more and compete strongly in the market (Fernfort, 2019).
References
Fernfort university, 2019. Prudential Financial, Inc. Porter Five Forces Analysis. [Online], Available at: http://fernfortuniversity.com/term-papers/porter5/analysis/1023-prudential-financial–inc-.php, [Accessed on: 19th June, 2019].
Murphy, E. 2018. Prudential US Porter Five Forces Analysis. Available at: https://www.essay48.com/term-paper/13907-Prudential-US-Porter-Five-Forces, [Accessed on: 19th June, 2019].
Pinkasovitch, A. 2019. Analyzing Stocks With Porter’s Five Forces. [Online], Available at: https://www.investopedia.com/articles/fundamental-analysis/11/using-porters-5-forces-for-stock-analysis.asp, [Accessed on: 19th June, 2019].
Prudential, 2019. About the company. [Online], Available at: https://www.prudential.com/about, [Accessed on: 19th June, 2019].
UK essays, 2019. Potters Five Forces With Respect To Icici Prudential Economics Essay. [Online], Available at: https://www.ukessays.com/essays/economics/potters-five-forces-with-respect-to-icici-prudential-economics-essay.php, [Accessed on: 19th June, 2019].