<div class="post">
<div class="body">
<div id="f820c5a3-69eb-4566-91d3-81ed8bff6ddf" class="postBody" contenteditable="true">
<p align="justify">Principal Financial Group; is an American global financial investment management and insurance company incorporated in Des Moines in 1879. The company operates through its offices&#8217; world. It employs over 17,000 people in around 25 nations and territories in the world. It provides retirement, insurance, and asset management services to over 34 Million customers all over the world (Principal, 2021).</p>
<p align="justify">The company offers retirement, insurance, and asset management solutions serving businesses, individuals, and institutional customers. It operates through its diverse family of financial services companies and a national network of financial professionals. Porter&#8217;s five forces model is a useful tool to identify threats and opportunities faced by Principal Financial Group in the financial sector in the world.</p>
<h2 align="justify">Competitive Rivalry in The Market</h2>
<p align="justify">The insurance industry in the United States is very competitive. It provides a little margin for error to competitors. The majority of working-class people opt for insurance. Insurance is a lucrative business and there are plenty of companies. The primary rival of Principal&#8217;s is Travelers, Metlife, and New York Life Insurance. All of these companies provide insurance, financial asset management services, and products in the United States. The revenue of Travelers, Metlife, and New York Life Insurance are $31.981 Billion (Fortune, 2021), $65.567 Billion (Fortune, 2021), and $44.117 Billion (Fortune, 2021).</p>
<p align="justify">Principal is ranked at 201 in Fortune 500 with the revenue of Principal is $14.742 Billion (Fortune, 2021). Principal&#8217;s has a slight advantage over the competitor is due to its more extensive clientele and multiple products. It caters to individuals, corporate companies, and the government. It also engages in business in Asia. Where the clientele is increasing and people are opting for financial management companies. It provides them a new opportunity for business.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The insurance industry evolves with time to meet the demand of the time. Technology is the driving force behind the latest revolution all over the industries. Fintech and insurtech are the future of the financial industry. Industry runners as developing tools with the help of machine learning and artificial intelligence to provide a customized and better solution for the client. Principal is leading this moment.</p>
<p align="justify">It is investing heavily in augmented reality to understand the financial industry. It has developed digital tools for the business to better plan the future (Aithority, 2020). The threat of substitutes is moderate in the industry, Principal is evolving with time. The threat against is low compared to other industry runners.</p>
<h2 align="justify">Threat of New Entrants</h2>
<p align="justify">The new entrants must come with new innovative products to disrupt the industry front runners. The fintech startups can disrupt those companies. The startup requires higher initial investment to be able to compete with them with a reliable product. Which is a major hindrance for new entrants. The financial industry is a closed industry and regulators keep a strict eye on it. The regulatory cost is way too much for startups (Deloitte, 2017). The higher initial cost &; high sunk investment makes it difficult for a startup to compete with established insurance companies.</p>
<p align="justify">Technology is evolving the industry. Principal is using the technology to design tools to understand the market and introduce better products. The new entrants must come with a new innovative product to compete with those well-established financial institutes. It makes it difficult for new entrants.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Buyers will normally compete with the industry by bargaining for lower prices, higher quality products, or more services and most importantly, playing competitors against each other at the expense of the industry profitability. Buyer power is high when the volume of purchases of the buyer is high, there are alternative sources of supply, and the cost of switching suppliers is low (WK Muhu, 2008).</p>
<p align="justify">The buyer of insurance products are individuals, business companies, and government institutes. Customers will expect higher buyer power when the volume of purchases of the buyer is high, there are alternative sources of supply. The individual doesn&#8217;t hold any bargaining power over the company at all. Companies can exert their power because they provide bigger clientele and opt for their services in bulk. The overall bargain power of buyers is moderate.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">Suppliers hold moderate to low bargaining power in the industry. Their bargaining power depends upon few factors such as suppliers’ importance and concentration of suppliers. Suppliers can reduce the profitability of the industry by raising prices or reducing the quality of the products and services (Magoutas. A, 2017). Suppliers are dominant if there are few suppliers and they are integrated with the industry. More supplier in the market means more options for the client. It can decrease the bargaining power. Suppliers in the insurance industry is mainly of two types.</p>
<p align="justify">One is the agent and brokerage firms that bring human capital and corporate clients to the insurance company. The other one is the lending institutes which provide funds in case of payment. Lending institutes hold higher power because they lend loan due diligence. Overall the bargaining power is low against the insurance and asset management industry.</p>
<h2 align="justify">References</h2>
<p align="left">Aithority. (2020). Principal Financial Group Expands Their Suite of Digital Solutions to Help Businesses Plan for the Future. Available at: https://aithority.com/technology/financial-services/principal-financial-group-expands-their-suite-of-digital-solutions-to-help-businesses-plan-for-the-future/<br />
Deloitte. (2017). The Future of Regulatory Productivity, powered by RegTech. Available at:<br />
Fortune. (2021). Fortune 500 Metlife. Available at: https://fortune.com/company/metlife/fortune500/<br />
Fortune. (2021). Fortune 500 New York Life Insurance. Available at: https://fortune.com/company/new-york-life-insurance/fortune500/<br />
Fortune. (2021). Fortune 500 Principal Financial. Available at: https://fortune.com/company/principal-financial/fortune500/<br />
Fortune. (2021). Fortune 500 Travelers. Available at: https://fortune.com/company/travelers-cos/fortune500/<br />
http://erepository.uonbi.ac.ke/bitstream/handle/11295/7998/Muhu_Perception%20of%20managers%20%20attractiveness%20of%20P.S.V.%20insurance%20Business.pdf?sequence=3<br />
https://www.researchgate.net/publication/320704251_Strategic_competition_analysis_and_group_mapping_The_case_of_the_Greek_insurance_industry#pf12<br />
https://www2.deloitte.com/us/en/pages/regulatory/articles/cost-of-compliance-regulatory-productivity.html<br />
Maguotas, A. et al, (2017). Strategic competition analysis and group mapping: The case of the Greek insurance industry. Available at:<br />
Muhu, WK., (2008) Management Perception of the Attractiveness of the Public Service Vehicle Insurance Business in Kenya. Available at:<br />
Principal. (2021). Company Profile. Available at: https://secure02.principal.com/publicvsupply/GetFile?fm=DD730&;ty=VOP&;EXT=.VOP</p>
</div>
</div>
</div>