Strategic Management Analysis: Brexit's Impact on the Insurance Sector

This report provides a strategic management analysis of the impact of Brexit on the insurance sector, using Prudential U&E as a case study. It begins with an executive summary outlining the report's key findings, followed by an introduction that sets the context for the analysis. The report then delves into the business environment through PESTLE and Porter's Five Forces analyses, identifying political, economic, social, and technological factors affecting the industry and assessing the competitive landscape. It examines success factors within the insurance industry and evaluates the resources and capabilities of Prudential U&E, including its financial strength and customer-focused approach. The report explores the impact of Brexit on the company, including diversification efforts, customer focus, and the relocation of funds. It also analyzes Prudential U&E's strategic responses, including cost leadership, differentiation, and focus strategies. The report discusses various challenges and provides strategic proposals to navigate the changing environment, offering insights into how the insurance sector can adapt and thrive in the face of Brexit. The report concludes by summarizing key takeaways and recommendations for future strategic planning.

Sustainable Strategic
Management

TABLE OF CONTENTS
Executive summary:.........................................................................................................................3
INTRODUCTION...........................................................................................................................1
1.1 Analysing business environment and business success factors........................................1
1.2 Strategy analysis...............................................................................................................4
1.3 Strategic proposals............................................................................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

Executive summary:
This report is based on the impact of Brexit situation on the insurance sector. All the
challenges, threats and opportunities of this voting on the stated sector is present in this report.
This assignment reflects how an event can cause impacts on entire business sector. To evaluate
the impacts the research is done on the U&E entity. The main concern is given on the business
environment in which PESTLE analysis is done which helped the company to determine the
factors which are affecting their business environment. Further porter's five forces have analysed
the competitive market and the competitors. Success factors and different findings of the industry
are defined. Porter's generic strategies are used by Prudential U & E to increase their
productivity. Development of strategic proposals are defined in the report. Different challenges,
issues like macro politics culture change, less of awareness are discussed which helped to
overcome their weak areas. Environment analysis and strategies helped the industry to
understand the needs and demands of the people. This assignment helps in finding the key
challenges and opportunities that come along with the Brexit. Also, several methods were also
identified to deal with the challenges by grabbing the opportunities.

INTRODUCTION
Strategic management guides the organisation to set their objectives and then use
resources to achieve these goals. It is the formulation of different long-term objectives and the
steps taken by top management authority to assess the internal and external environment.
Prudential U&E is life insurance company in UK (Bow, 2016). It provides loans and financial
help to employees. It has 24 million customers and listed in London Stock Exchange. Its total
revenue is £71.842 billion. In this report, the main task involved are analysis of environment and
industry success factors. Further resource capabilities and its importance are analysed. Business
and corporate strategy are studied. Organisational learning and encouragement factors are
analysed. Moreover, alliances partnership and acquisition are described. Competitive advantage
of the company is analysed.
1.1 Environment analysis
PESTLE analysis:
Political factor:
Political factor has negatively affected the Prudential U&E business as capital
requirements are not changed which was expected to change due to launch of European
Commission's Solvency project. The companies have to spend more to face their challenges.
Further, the organisation has to fulfil all the requirements of government and legal policies to run
their business successfully.
Economic factor:
Prudential U&E company is adversely affected by economic slowdown and financial
problems of banks. Due to this, the investors are demotivated and pressure of uncertainty on
them increases which has reduces their trust on insurers. This has decreased the share prices of
Prudential U&E company and they suffered high loss.
Social factor:
In UK, people are ageing and pension holders are increased which leads to increase in
demand of pension plans. Social factor has benefited the company as their plans are mainly
based on the people whose age are above 45. Hence, change in demographic factor helped them
to increase their funds and revenue. Further, the local people of UK has lost their trust towards
financial services which has increased the mis- selling of insurance products. Prudential U&E
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has also increased complexity in their plans which demotivated their customers. This has created
problem for the company to win back the confidence of their customers.
Technological factor:
Prudential U&E is not taking advantage of digital devices for promoting their plans and
policies. They are not advertising their products and financial services on the internet effectively
which has reduced their publicity. To achieve success, it is very important for the company to
make use of internet marketing to increase their publicity and interact more with their customers.
Porter's five forces:
Competition level:
Competition level is strong for Prudential U&E company though there are very few
competitors in the market. Every financial company is trying to give its best services to their
customers. They do their best efforts to enhance their product line and attract the customers.
Threat of new entrants:
Threat from new entrants is not too much strong. This is due to their product differential,
high switching cost and customers loyalty. To enter in the market, new entrants require high
professional as well as financial knowledge. Additionally, they require large amount to face
tough competition from well-established finance companies. Further, customers less confidence
over financial companies have discouraged them to open their financial business. Therefore,
threat of new entrant for Prudential U&E is very low.
Bargaining power of suppliers:
Prudential U&E company has faced high bargaining power of suppliers as this company
requires high security and reliable infrastructure to protect their customers funds and loans
related data. They have to maintain online banking and other trading services safely so that their
data can't be lost.
Bargaining power of buyers:
The company has moderate bargaining power of buyers because they have millions of
customers. Further, clients have high bargaining power because they have to pay high premiums.
Threat of substitute products:
The organisation has weak influence of substitute products because very few substitutes
of the financial plans are available in the market. Some substitutes have influenced the company
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which involves mutual fund plans, investment equities etc. but it does not impact so much on the
business operations of Prudential U&E organisation.
Survival and business success factors:
Insurance industry gives priority to their customer’s requirements and helps them to
resolve their problems. This sector has managed the impacts of Brexit wisely. There are several
practices which insurance entities use for their survival. These practices involves the screening
i.e. collection of relevant information from the applicants. In addition to this, they conduct
various cross examinations to prevent any fraud.
PESTLE and Porters five forces helped the industry sector to analyse their position and
their competitive market. It also helped the company to know about their strengths and other
external factors that are affecting the industry. These factors and model helped the industry to
increase their overall profits and revenue.
The success of this factor lies within taking risks but with effective monitoring. In order
to survive this field needs to perform timely evaluation of the amount of risk some policyholder
possess.
Success factors:
Client centred:
The financial industry makes its policies according to the needs of the customers which
maintain their relationships and helps to promote financial strategies.
Ethical:
In order to increase the financial industry success, it is very necessary for them to build
trust among the customers. Business ethics are very critical to achieve success. The industry has
to perform their duties with responsibilities so that they make effective reputation.
Transparent:
The best financial industry provides unbiased strategy and provide wide variety of mutual
fund, insurance policies options to the customers. Accounting and operational transparency plays
an important role in building industry partnerships.
Survival factors:
 Managing the reputation of the industry by ensuring that the industry is following all
government measures and rules.
 It has to provide the best customer services by implementing financial plans.
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 Financial industry is able to provide better returns on investments.
Resource and capabilities and their importance
Important resources:
Prudential U&E has strong revenue which helps it in providing better facilities and
financial plans at low interest rate so that they can increase their customers base. The main
resource which the financial company requires is cash. The company has maintained strong
financial position and it has dollar 2.6 billion cash resource which has showed that it has
increased their performance and able to provide the best customers services. Additionally, the
company has strong team of employees which helps them in increasing their productivity and
overall performance of the year. They encourage their employees and support working
environment to deliver their outstanding performance.
Capabilities of Prudential U&E company
Different capabilities of the financial company are shown below:
 The organisation has developed extensive and better approach policies for their
customers.
 It is providing the best products and services to its clients and customers and increasing
their brand image.
 Focused on investment management to maintain their business operations.
 The company is providing various pension related plans and encouraging its customers to
invest more in their plans.
1.2 Impact of Brexit
Scope:
Prudential U&E is working well in organising its business operations. It has 24 million
customers in the world and has increased its branches in various countries. It has owned the
largest life insurance company that is Jackson National life insurance. It is constituent of FTSE
100 Index and listed in Hong Kong Stock exchange, Singapore exchange etc.
Diversification:
The organisation has operating income of £3.212 billion in the year 2016. It is involved
in providing life insurance, investment management and customer finance. Further, it is serving
in various countries of the world. The organisation has increased its sale by 5% as compared to
previous year (Financial sector confidence about UK economy drops sharply, 2016). This
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increase in its sale has shown that it is focused on developing various customer related services.
The organisation has increased its business and supported various claims and increased its sale
by 42%.
Focus on customers:
The organisation gives priority to their customers and understands their needs and
demands which helps them to develop better strategy. They give their concentration on
developing the policies related to their retirement, health, death, child care and other saving
plans. Further, they make plans which easily meet the company's requirements.
Prudential U & E will relocate M & G funds as Britain is leaving European Union. They
have to move their funds from its assets management. Due to this shift, Prudential U & E has to
face £225 million in their M & G's operations. They have supported by Asian customers as they
are demanding for saving and insurance schemes. Brexit has affected the capital markets of
Europe. It has encouraged the development of capital markets so that they can minimize the
dependency of European economy on banks. European and UK markets are dependent on each
other and it has created more complex and costly process to detached from Brexit. Further, the
main benefit of Brexit on European market is that economy scale of single market has allowed
them to offer more services to their clients at low price. This will reduce complexity and helps in
freely movement of labour.
Porter's generic strategies:
Cost leadership strategies
This strategy wins over the market share. Offer the lower price and high return on the
investment. By satisfying the people heart and growing in the market with the high earning
potential. Providing the better facilities to the people in the lower rates, customs and personalized
facilities. By adapting the cost leadership strategy Prudential U&E can issue there shares in the
cheaper rate and grow their market. Because by keeping the rate low the company can grow their
value in the place of market growth. By following the cost leadership strategies, the Prudential
U&E can change its strategies in the future to the differentiation strategies too if it needed in case
of lower price credibility.
Differentiation strategy
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The services provided by it should be different in the terms and condition. It should provide the
better valuable polices and the unique features from another company in the market. It should
attract the customer to buy the product and services handled (Our strategy, 2017). And that
increase the goodwill of the company. It should provide the time to time benefits to the customer
and even the short terms achievements or beneficial amount which help them to invest continue.
Focus strategies
The company should focus on the short term or basic goals planned and to be completed. In the
very short time. This could be beneficial for the small company too. Providing the product and
services in the lower prices on the need of the selected different groups of the products or shares.
The appropriate market has to be differentiated. So that it can be seen and would be seen and
focused accordingly. Prudential U&E should mark the target to be completed by focusing on that
particular thing only. By adapting the focus strategies Prudential U&E can grow faster as they
target short groups.
1.3 Strategic proposals
The organisation is facing many problems like customers less contribution and awareness
has created great problem. Further, the company is facing major challenge from macro politics,
culture change etc. Additionally, the organisation has to promote growth and sustainable profit
with low interest rates. They have to develop new sources of revenue to win their customers
trust. The organisation has to compete with their aggressive and innovative competitors to make
effective position in the market. Due to shift of customers interest and technology advancement
has increased the demand of effective projects to be launched which can meet their demands.
Prudential U&E. Has to develop different projects for the development of strategic
proposals. These projects are defined as follows:
Mobile banking:
In order to run their business properly, it is very necessary for the company to implement
new technologies and digital strategies so that they can remain competitive in the market. They
have to provide mobile banking services effectively.
Next generation platforms:
Prudential U&E is facing the risk of customers confidence as they are relied on old
technologies. To overcome these problems, they have to move on next generation capabilities so
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that they can win back their customers confidence. The authority of the company has top view
technology as strategic growth rather than additional expenditure.
Cyber security:
Cyber security is another great problem of Prudential U&E company as they always
vulnerable to hackers and viruses. These hackers stole their important information on which
whole business works. The finance organisation has to develop strong security system so that
they can prevent their data from hackers and information thefts.
The Brexit voting has come along with various opportunities and threats to the entity. It is
estimated that prudential could relocate U&E funds due to Britain leaving the EU. There are so
many negative impacts of Brexit over the insurance entities and the major among them is they
may have to face losses in their investment yields and income. Also, a challenge that is in front
of organisation is the demand of high-quality staff members. The biggest challenge faced by
insurance entities after Brexit is that they are not licensed to sell their services in other countries.
Opportunities to U&E after Brexit involves freedom to set own rules without depending
upon the layer of laws. Further, this situation assists in assessing world class talent. The main
threat is decreased number of customers due to this separation. Further, entity can prepare
effective strategies to deal with the uncertainty that might take place. Moreover, there is an
opportunity to easily target the decreased public as this separation also diminishes the intensity
of competition present in the market. In addition to this, in order to deal with the threat that is the
reduced customer figures, entity can enhance their marketing and advertising strategies. Further,
by taking the opportunity entity can have the competitive advantage. It is however noted that,
organisation can use RACES criteria which stands for resources, acceptability, consistency,
effectiveness and sustainability. These criteria will lead to the overall development of the
establishment. A strategic proposal is presented to enhance the effectiveness of marketing
strategies based on RACES is as follows:
 Resources: It is necessary to list down all the resources that are required in the marketing.
 Acceptability: Marketing should be done of a service that can be accepted by the wide
range of people. It also ensures that the implemented strategy do not impact any
stakeholders.
 Consistent: U&E should work consistently on its marketing strategies according to the
rising needs and demand of customers.
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 Effectiveness: It is necessary to bring effectiveness in marketing methods to enhance the
number of customers. This effectiveness is directly proportional to the overall business
value. Sustainability: It deals with the entire rationale of the marketing strategy. Technique
should cover the key points to address the major issues.
Business model Canvas:
This model helps in determining the core activities of the business such as key partners,
customer segments, resources, finances, relationships etc.
Alliances, partnership and relationships.
Key
partners
Value
proposition
Customer
relationship
Key
resources
Cost
structure
Channels Revenue
streams
Bank of
England
Provides
financial
security
Intermediar
y consumers
Provide
online help
Tax Cooperate
Pensions
Investments
Financial
conduct
Authority
Selects
investment
plans very
carefully
Emerging
firm’s
clients
Outsourced
human
resources
Government
contracts
and bonds
Direct sales
through PFP
Intermediar
y sales
Prudential
plc.
Reduce
risks for the
people
Best
manpower
team
wages Direct retail
sales
Porter's value chain analysis:
Primary activities:
Inbound logistics:
Prudential U&E has given more concentration on designing and developing various
websites and software rather than moving physical products. So, inbound logistics factors are not
much important for the company.
Outbound logistics:
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The organisation has developed various plans software and apps to increase the
interaction with their customers. This helped the organisation to increase their degree of control,
interaction and transparency with their customers.
Marketing and sales:
The company is promoting its services to the customers by launching different apps like
MyPru and websites. IT is using multi-channel marketing approach to increase their publicity
across print media, internet etc.
Support services:
Infrastructure:
Different department like legal, sustainability CSR and rigorous writing are important
aspects of the organisation.
Technology development:
The organisation has focused on technological resources and given topmost priority in
global business. They have targeted different demographics to analyse the technical requirements
in particular areas.
Human resource management:
Human resource department has developed effective environment in the company and
helped the organisation to increase its productivity. They have made strong recruitment and
selection strategy to hire talented and skilled candidates. The organisation is also providing
various resources to the companies to increase their performance.
Procurement:
Prudential U&E company has made strong plans to secure their IT departments and cyber
security so that they can effectively run their business operation.
Prudential U&E partners assist across the world. They provide their best services to the
customers and encourage them to be part of their company. Strategic partner alliance helps the
customers to maintain effective relationships with them. Different partners and investors of the
company helps in increasing the publicity and revenue. They invest their money in the
company's share and helps them to promote their strategies (Wallace, 2017). Further, Prudential
U&E provides high array of financial services that serve their diverse needs and demands of their
customers. The firms' partnership puts their customers at top priority and maintain good
relationships with them. The best mergers and acquisition services to the customers can be
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achieved by securing the relationships with other organisations. The organisation is continuously
growing, developing and learning to provide their best services to their customers. This helped
them to win the customer's trust and confidence and attract them to invest in their plans.
Understanding and analysation of competitive advantage.
Competitive advantages in terms of business stands for allowing an entity to surpass its
competitors. The beginning of this element involves role of economy innovation in a market
place. The origin of this technique depends upon the innovations. With the help of this tactic,
access can be made to natural resources. Mainly, there are two types of competitive advantages
namely, cost leadership strategy and differential strategy.
Cost leadership strategy; The cost leadership strategy is associated with the production of the
services or product that are comparatively developed at low prices than the other competitors.
This is the most effective method to gain the advantage. The lower costs will result in high
profitability to the entity. In this method, if the price associated with the inventory will be less
than company will receive less amount to the customer. This will directly enhance the customer
figure to their organisation. Thus, the business value will be enhanced. Further, this tool will aid
in creation of the brand image.
Differential strategy: In these techniques, the focus is on generating new and better products that
are existing in the market. The services offered by the entities in this technique are different from
their competitors. The main aim of enterprises that chose this type of strategy is to prove their
services better from others. Further, sometimes some modifications can help them in improvise
their products. These modifications will help in saving their cost associated with the
development of whole new product.
But it is a somehow challenging maintaining both the things together. Quality along with
low prices is a bit difficult task. In order to achieve both of them together entities can take up
some steps such as creation of the high demanding product, development of services after
complete market research, etc.
The competitive advantage can be analyses using two frameworks-
 Business model canvas- This model can be abbreviated as BMC, it is a strategic
management and lean set up template that is used to develop new business model. In this
chart, there are various elements present such as value preposition, infrastructure,
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customers and finance. With the help of this chart, all these factors can be compared with
the other entities. Hence, the competitive advantage will be analyzed.
 Porter's value chain model- This is a set of tasks that are done by an entity in order to
deliver a valuable product. This model contains the detailed information of inbound
logistics, operations, outbound logistics, marketing and sales. All these elements help in
determining the competitive advantage of an organisation.
CONCLUSION
The report is based on the sustainable strategic management of business organisations. In
order to achieve this, analysis of business environments and success factors is done. Also, to
attain the required understanding business strategies for an organisation are also prepared.
Further, various hurdles in the development of the strategies are evaluated so that ways to resolve
them can be created. This study further covers the understanding and analysis of competitive
advantages.
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REFERENCES
Bow, M., 2016. Fear of China crackdown sends Pru into freefall. [Online]. Available through:
<http://www.independent.co.uk/news/business/news/fear-of-china-crackdown-sends-pru-
into-freefall-a6850341.html>. [Accessed on 9th August, 2017].
Financial sector confidence about UK economy drops sharply. 2016. [Online]. Available
through: <https://www.theguardian.com/business/2016/mar/29/financial-sector-
confidence-over-uk-economy-drops-sharply>. [Accessed on 8th August, 2017].
Our strategy. 2017. [Online]. Available through: <http://www.Prudential
U&E.co.uk/about-us/our-strategy>. [Accessed on 9th August, 2017].
Wallace, W., 2017. Alliances and Partnerships. [PDF]. Available through:
<https://www.ebsglobal.net/EBS/media/EBS/PDFs/Alliances-Partnerships-Course-
Taster.pdf>. [Accessed on 8th August, 2017].
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