FMA 601: Deutsche Telecom and Prudential Financial Report

This report presents a foreign market analysis for two companies: Deutsche Telecom and Prudential Financial. The analysis for Deutsche Telecom focuses on the UAE, evaluating the market environment using a PESTEL analysis, identifying major risks such as competition and legal regulations, and formulating corporate strategies for pricing and promotion. It also suggests ways to improve long-term profitability. The analysis for Prudential Financial centers on Saudi Arabia, covering similar aspects including market environment evaluation, risk identification, and strategic recommendations for pricing, promotion and long-term profitability. The report covers background information on each company's global operations, providing a comprehensive overview of their market entry strategies and challenges.

Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
1. Give a brief back ground of Deutsche Telecom’s global operations.................................1
2. Evaluate market environment in UAE to analyze the market potential for the company..2
3. What are the major sources of risk facing the company?...................................................3
4. Formulate an overall corporate strategy for pricing and promotion...................................3
5. Suggest some ways to help improve long term profitability of the firm in the new market3
TASK 2............................................................................................................................................4
1. Give a brief back ground of Prudential Financial global operations..................................4
2. Evaluate the market environment in Saudi Arabia, to analyze the market potential for the
company.................................................................................................................................4
3. What are the major sources of risk facing the company?...................................................5
4. Formulate an overall corporate strategy for pricing and promotion...................................5
5. Suggest some ways to help improve long term profitability of the firm in the new market6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In the modern era, businesses view foreign markets in the form of potential opportunities
that can provide due assistance in augmentation of sales along with profitability in the long run.
For this purpose, it becomes important for the businesses to gain knowledge of the foreign
market whereby they propose to gain entry (Sirajuddin and Kumar, 2018). The potential of a
foreign market is identified usually on the basis of the population prevailing in the country along
with the per capita income of the people. It has been well known that selection of a suitable
foreign market is one of the most important decisions that a company has to undertake which
undergoing internationalisation. Yet, it is seen that the lack of knowledge of companies upon the
global markets restrain them from effectively gaining access to the markets. In this relation,
foreign market analysis is a kind of research that is carried out for the purpose of screening the
environment of the market and identifying the potential opportunities along with the risks of
operating within its confines.
The current project is categorised into 2 tasks. The first task is based upon the foreign
market analysis of UAE for Deutsche Telecom. It is a telecommunication corporation having its
headquarters within the confines of Bonn, Germany. This is the biggest telecommunication
provider organisation in the boundaries of Europe in terms of revenue. The second task is
concerned with the foreign market analysis of Saudi Arabia for Prudential Financial. It is a well
renowned corporation whose subsidiaries are engaged in provision of financial products along
with the services such as investment management, insurance, etc. It operates within United States
and 40 other nations across the global periphery. The foreign market analysis for both the
countries include evaluation of market environment for identification of potential for the
organisation, major sources of risk for the corporation, formulation of pricing and promotion
strategy and ways for improvement of profitability position of the entity in the long run.
MAIN BODY
TASK 1
1. Give a brief back ground of Deutsche Telecom’s global operations
Deutsche Telekom AG is recognised to be a company functioning within the bounds of
telecommunication sector. It was formed during the year 1995 when privatisation of the earlier
state controlled Deutsche Bundepost took place. This organisation has a large number of
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subsidiaries operating across the global periphery, inclusive of the famous mobile
communication brand known as T-Mobile. In accordance with the April of 2020, the government
of Germany possesses a direct stake of 14.5% in the organisation while 17.4% share is held by
the governmental bank named KfW. The corporation is a constituent of the EURO STOXX 50
stock market index. Deutsche Telekom possesses substantial shares top notch telecom
corporations such as Central European subsidiaries Slovak Telekom (Slovakia), Magyar
Telekom (Hungary). Furthermore, Magyar Telekom is the entity that has majority of the shares
within Makedonski Telekom (North Macedonia) while Hrvatski Telekom (Croatia) possesses
majority of the shares within Crnogorski Telekom (Montenegro). Deutsche Telekom even
possesses share within Hellenic telecommunications operator known as OTE that has shares in
many other corporations like Telekom Albania, Telekom Romania and the IT&C retailer
Germanos. DT even carries out a whole sale division with the name of International Carrier Sales
& Solutions (ICSS) which is engaged in the provision of white label voice along with data
solution to several big carriers such as T-Mobile.
2. Evaluate market environment in UAE to analyze the market potential for the company
PESTEL analysis is considered as framework which is used by a company in order to
evaluate external environment factors that are affecting business operations and function. It is
essential for a company management to evaluate external factors so that they will develop
strategies in effective manner (Young, 2018). In respect of Deutsche Telecom they conduct
PESTEL analysis which is mentioned below in respect to analyze external factors:-
Political factor – The UAE has different political factors which may impact on the company
entrance of Deutsche Telecom. Respective country United Arab Emirates have individually
governmental corporations which leads to flexibility management across the nation. Respective
nation is also having healthy as well as effective trade relation with other countries around the
world which will be opportunity for respective company to expand business (Telang and
Deshpande, 2016). The negative impact of this is that UAE involve in conflict with other country
which may lead to occurrence of terrorist any time.
Economical factor – The economic condition of respective company is effective as well
as they have high Gross domestic product per capital which will be beneficial for the company
(A PESTLE Analysis of The UAE, 2020). Moreover respective company also has very less
unemployment rate. In respect of Deutsche Telecom they have opportunity that customer have
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strong buying power which leads to increase sales of respective company. This will also lead to
increase in company profit as well as market shares.
Social factor – Respective nation living standard is comfortable as buying power of
people are good or effective as well as at respective country there are very less unemployment
people. It is opportunity for the respective company as they can expand their business at this
nation so that they can attract more and more for their telecom services.
Technological factor – It is essential for every company to adopt new technology as that
will help in introducing innovative and creative products successfully. The UAE populations are
based on the young people who are very technology savvy due to which there are numbers of
companies at UEA which are highly technology based. So that will be opportunity for the
respective company that they can attract more and more customers by offering high quality
technology at the marketplace (Anwar, 2019).
Environmental factor – The respective nation has hot as well as dry climate which
impact on the many companies who generally related to farming. But company which is not
involved in that industry can enhance their business at UAE successfully as their people are
attracted toward new products and services. In respect of Deutsche Telecom they also has
opportunity to attract more and more audiences toward their telecom services as well as their
business process will also not impacted through UAE environment.
Legal factor – The rules and regulation at the UAE are very strong as well as it is essential
for every people as well as companies to follow it provide otherwise strict legal action will taken
on it. So it is essential for Deutsche Telecom to follow each and every legislation related to
telecom service at UAE as that help in conducting business effectively.
3. What are the major sources of risk facing the company?
There are several sources of risk that can be faced by Deutsche Telecom while facilitating
expansion of business operations within the confines of United Arab Emirates. Some of these are
described beneath:-
Competition: When an organisation operates in international landscape by carrying out
expansion in foreign market, the biggest risk facing it is acknowledged to be the extensive
competition prevailing in that market (Zook and Smith, 2016). In this relation, the primary
source of risk for Deutsche Telecom is regarded to be the high level of competition that prevails
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in UAE. Etisalat and du are identified to be the major players in this sector within UAE which
pose direct risk to the sustainability of Deutsche Telecom in the new market.
Legal regulations: Yet another risk that can be faced by an organisation that expands its
operations in a new territory is acknowledged to the legal restrictions and rules. In this relation,
Deutsche Telecom is a company functioning within telecommunication sector. This sector is
governed by several legal bodies that together ensure that the operations of the organisation
within this industry are carried out in a true and transparent manner without contradicting any
legal regulations. Deutsche Telecom thus stands the risk of breaking any legal regulation that
prevails within United Arab Emirates.
Population composition: There are over 200 nationalities already living and operating
within the bounds of UAE. Now, whereby an organisation carries out expansion within this
market, the chances of cultural differences arising is obviated. This is thus another source of risk
that Deutsche Telecom will be facing while working within the confines of United Arab
Emirates. Thus, it is important for the organisational representatives to exhibit cultural sensitivity
at all times.
4. Formulate an overall corporate strategy for pricing and promotion.
While expanding Deutsche Telecom in UAE, the respective top management team of the
entity is required to focus on developing effective corporate strategy in several areas. Here, the
company would be use of economic pricing strategy in the UAE. The main reason behind
choosing this pricing strategy is to influence interest of the customers’ towards them by simply
offering their products’ and services at affordable prices. This would directly contribute in
maintaining sales performance of the entity in the near future. Apart from this, the respective
manager would also make use of social media as its core corporate strategy. The main reason
behind opting this strategy is that it allows the company in approaching maximum number of
people and enhancing their awareness regarding the offering. Also, usage of this marketing
medium would also help them out in developing strong relationship with the customers in
lucrative form.
5. Suggest some ways to help improve long term profitability of the firm in the new market
To ensure the long term profitability of an organisation in new market, a firm can
undertake several measures. The first and foremost ways that could be adopted by the Deutsche
Telecom while expanding its business in UAE is conducting an effective market research within
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the zone so that they can easily develop core understanding regarding the targeted customers. As
a result, they can easily determine the core requirement as well as expectation of the customers’
from the company. Also, they will get opportunity to modify their products and services as per
the customers. This would also provide them support in maintaining sales performance in the
new nation. In addition to this, the result of this can also been seen in the form of maximisation
of the profitability too. Market research, tie up with other company
TASK 2
1. Give a brief back ground of Prudential Financial global operations
Prudential Financial Inc. is a well renowned corporation dealing in financial offerings
like investment management, insurance and so on to institutional customer base as well as retail
across the peripheral boundaries of US and many other nations in the world. It is regarded to be
an American Fortune Global 500 and Fortune 500 corporation. Within the bounds of United
States, this company is considered as the biggest insurance corporation having a total asset base
of around 1.456 trillion U.S. dollars. The primary offerings of this company include annuity,
mutual fund, pension, asset management, security brokerage facility, life insurance, retirement
associated investment, and many more. The provision of these financial products and services to
institutional customer base as well as people take place via its distribution networks within the
financial service sector. Prudential Financial operates within the bounds of Asia, US, Europe,
Latin America. The respective company has arranged its primary operation in to the Financial
Services Businesses and the Closed Block Business. This entity encompasses a wide array of
subsidiaries, carrying a total of over 4 trillion dollars of life insurance.
2. Evaluate the market environment in Saudi Arabia, to analyze the market potential for the
company
Prudential Financial is acknowledged to be the largest insurance company in United
States. It provides business operations in all over the world. This is also an American Fortune
Global 500 and Fortune 500 company whose subsidiaries having business operations like
insurance, invest management and other different kind of products or services to both retail and
institutional customers in all over the US along with other 40 countries. The principle nature of
products and services in which it deals include annuities, mutual funds, life insurance, asset
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management, securities brokerage services and pension & retirement related investments. Now,
the management of an organisation is having main aim related to entering in new market i.e.
Saudi Arabia. The establishment of business in new nation is not easy task. This requires
performance of large number of actions like determination about market, conditions exist there,
factors that have impact over business operations under certain industry, presence of competitors
and building of plan that will help to arrange all aspects in respect to determined information.
Here, PESTLE is used to analyse market environment of Saudi Arabia;
Political: All the decision making power lies in the hand of king. Here, king is
considered as head of the state and government. This depicts uncertainty in nation where
anything can be exercised by king by its own decision. There is no power in others hand and a
mechanism to appeal against same. This will present a threat in front of Prudential Financial
where no certainty of rulings.
Economical: The economic situation of Saudi is quite significant due to the oil reserves.
Also, there is huge contribution of industrial sector in the overall GDP of a nation. This presents
an opportunity in front of an organisation that that easily setup their business with the aid of
financial support. Also, the level of infrastructure is quite good that will present as opportunity in
front of an organisation that easily made good level physical appearance that will directs in
direction of getting positive experiences.
Social: People are concerned about the health and saving of money. This nature will help
an organisation to attract people towards their offerings and services and establish business
activities effectively in market.
Technological: There is high level presence of technology in Saudi. This will create
large number of opportunities to grow business along with presenting the operations in front of
public. Here, this will further aid in promoting automation that reduces the chance of errors.
Legal: The rules relating to regulation of business activities along with employment are
strict in nature. Also, the amount of penalties is more worsen from same. This will present as
threat in front of an organisation that first understand about all such aspects and then start
business activities otherwise have to face the negative consequences in form of financial
penalties.
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Environmental: The society and government is concern about the environment. So
Prudential Finance has to focus over operating operations in such manner that least impact will
be determined over environment.
3. What are the major sources of risk facing the company?
There are a number of sources of risk facing Prudential Financial when it will expand in
the territorial boundaries of Saudi Arabia. These are briefly discussed as follows:-
Communication Style – Contrasts in communication styles can frequently be a cultural
issue and thus, universal associations working together in Saudi Arabia without satisfactory
preparation may regularly end up feeling befuddled and disappointed. The communication style
in Saudi Arabia will in general be very roundabout and high setting. At the end of the day, this
implies communication styles in Saudi Arabia will in general depend all the more intensely on
non-verbal communication and other non-verbal signals, for example, tone of voice and the
utilization of quietness (CHALLENGES OF DOING BUSINESS IN SAUDI ARABIA, 2020).
While working together in Saudi Arabia, it is astute to recall that data is seldom unequivocally
expressed, quiet is regularly utilized for thought and a direct "no" is rarely utilized. It is thus
important for Prudential Financial to take into account these considerations while operating
within the bounds of Saudi Arabia.
Competition – This is one of the most crucial sources of risk which can pose threat to the
sustainability of an organisation in international landscape. There are many companies that will
be operating in the same sector as Prudential Financial. These will create the threat of direct
competition for the organisation. In response to this, the organisation must prepare a sound
corporate strategy that will enable to appeal to the customer base of Saudi Arabia and thereby
augment the sales volume in the long run.
4. Formulate an overall corporate strategy for pricing and promotion.
Prudential Financial is one of the insurance companies of US which is planning to expand
its business in the Saudi Arabia. In order to expand the business effectively and settling it down
in the new nation, the company would go for adopting penetrates pricing strategy. The main
reason behind using this strategy is influence interest of its potential customers towards. Also,
with the lower prices as well as effective services with higher quality, the company would be
able to satisfy requirements of the customers. This will also maximise their sales performance as
well as profitability with the same strategy. Also, they will be able to gain competitive edge with
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the new marketplace too. Apart from this, it can be further said that manager of the Prudential
Financial would go for adopting social media marketing method with the motive of sharing their
insurance schemes. This will help the company in approaching maximum number of customers
towards them. With the help of the social media platform, the company would be able to
approach maximum number of customers that would result in the maximisation of the
organisational profitability in rapid manner.
5. Suggest some ways to help improve long term profitability of the firm in the new market
In order to maximise the profitability of Prudential Financial at Saudi Arabia, there are few
suggestions provided to then management team. The main among them are indulging into the tie
up with the other existing successful. This would provide internal support to the company as they
will get the help from the partner company in terms of resources as well as customers. This
would also provide them support in maximising their profitability in the same marketplace. At
next, it is further advised to the same entity to develop their insurance scheme as the national and
regional values. This would directly influence interest of customers’ towards them maximise
their benefits in terms of profitability in the new market.
CONCLUSION
On the basis of above discussion carried out upon two foreign markets, it can be
comprehensively stated that going global is the primary aim of almost every corporation.
Domestic or small scale companies urge to function in an international landscape for attainment
of economic growth along with job creation. Further, large scale companies intent to gain access
to foreign markets in order to inflate their position as well as share in global market place. Thus,
irrespective of the scale and size of operations as well as the hidden motive, almost every
company intends to enter operate in a global context. However, this is not an easy process. It
becomes important for the companies to carry out foreign market analysis so as to identify the
most potential market for gaining access into. This provides the organisations with the
opportunity to inflate its scale of operations along with market positioning across the global
periphery. Besides this, it has been identified that the market environment consists of several
opportunities and risks that should be duly taken into account by the corporation before making a
decision related to selection of foreign market for carrying out expansion. In addition to this, it is
significant for a firm to devise an effective corporate strategy for domains such as pricing and
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promotion so that the entity can successfully function within the bounds of foreign market. As a
result of this, the enterprise is able to build an extensive customer base which is loyal towards the
company and does not easily shift to alternate brands in any case.
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REFERENCES
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hostile takeover?. Thunderbird International Business Review, 61(2), pp.439-451.
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Online
A PESTLE Analysis of The UAE. 2020. [Online]. Available Through:
<https://pestleanalysis.com/pestle-analysis-of-uae/ >.
About the UAE. Fact Sheet. Population. 2020. [Online]. Available Through:
<https://u.ae/en/about-the-uae/fact-sheet >.
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CHALLENGES OF DOING BUSINESS IN SAUDI ARABIA. 2020. [Online]. Available Through:
<https://www.communicaid.com/cross-cultural-training/blog/challenges-of-doing-
business-in-saudi-arabia/ >.
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