Analysis of Prudential Plc's Strategies, Culture, and Human Resources

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Competitive advantage from innovation: Prudential Plc

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Executive Summary
The report comprehensively analyzes the UK insurance industry with a special emphasis on the organization
of Prudential Plc. It further delves into the various success factors of the company along with a detailed
discussion on the strategies implemented by the organization as well as its culture, structure, functionalities
and the management of personnel. The report also include a critical appraisal of these aforementioned
factors based on certain theories and frameworks to determine how the wider business environment affects
the company and its operational procedures.

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Table of Contents
Introduction........................................................................................................................................................3
Industrial analysis and success factors...............................................................................................................3
Porter’s Five Forces...........................................................................................................................................3
PESTLE analysis................................................................................................................................................5
Organizational analysis......................................................................................................................................6
RBV model.........................................................................................................................................................6
Porter’s Value chain...........................................................................................................................................7
Analysis of culture, structure, systems and human resources............................................................................9
HRM causal model.............................................................................................................................................9
Cultural web framework...................................................................................................................................10
Critical appraisal...............................................................................................................................................12
Conclusion........................................................................................................................................................13
References........................................................................................................................................................14

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Introduction
The organization Prudential Plc is the organization chosen for the analysis of the insurance industry of the
UK. It is a holding organization, emphasizes the provision of life insurance coverage to the for the retired
senior citizens and helps in the management of assets of specific individuals and business enterprises. The
group performs in countries of Asia, the UK and the US. In the following study, the external influences of
the organization together with the human resource structuring has been ascertained. In addition, a critical
evaluation of the internal and external aspects of the organization has been taken into consideration.
Industrial analysis and success factors
The insurance firms present in the UK like the Prudential Plc values the future of the people and for that
make specific strategies for the development of their insurance policies. These policies can be segregated
into various categories, such as non-life insurance and life insurance. The aspects of life insurance can be
further divided into term insurance, life assurance and annuities. The philosophy of these insurance
companies is to reduce the risk factors like losing all the possessions in the future due to some unfortunate
reasons, like fire or flood. Ensuring that the families sustain themselves during times of death is another
crucial factor based on which different individuals open new policies. On behalf of the customers, these
companies make assumptions about the risks. The earnings that are generated from the policyholder further
benefits in the payment of the claims. The basic functionalities these insurance industries perform are
screening, developing premiums depending on the risks, prevent any fraud activities, create deductibles,
coinsurance and can even cancel the insurance or reduce the amount that was mentioned earlier in the
insurance documents.
Porter’s Five Forces
Threat of new entrants
The companies who enter the business of insurance can pose as threats to the industry, Prudential Plc, as
they bring extensive innovative strategies and with lower pricing policy. This makes the business of
Prudential complicated, as they need to reduce their own prices and propose new value-added insurance
policies. These threats can be overcome if the company introduces creative thinking in their operations,
enhances economies of scale and invests elaborately on various research and development statistics. This
would help the company to increase the profit margins as well as discourage the counterparts.

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Bargaining power of suppliers
The suppliers of the insurance industry have high bargaining power as numerous companies obtain the raw
materials from these stakeholders. These dominating suppliers can negatively impact the brand value of
Prudential Plc if the negotiation is not up to their expectations. The company can recover from this issue by
linking up with multiple supply chains and make experiments using different materials which the
competitors are not incorporating (Fairuz et al., 2019. The company has to strive for securing the
commitment of the suppliers such that these manufacturers do not take advantage of the organization and
keep their bargaining power limited during times of negotiation.
Bargaining power of buyers
The buyers of the insurance companies tend to stick with the band which offers them low prices and yet
offer the best variety of policies. This creates obligations on Prudential Plc as they have to lower their prices
in order to gain a competitive advantage in the target market (Hugo, 2018). Smaller customer base creates
more bargaining power and hence they can seek out extensive discounts and various offers. Thus, the
company, Prudential Plc has to enlarge its customer base, which would enable the company to reduce the
bargaining power of the customers and leverage in more sales generation. This would result in improving
profit margins. Innovation in the products makes customers seek more discounts and other offerings.
Generation of new products helps in focusing on the defects of the existing customers and thus gain more
edge over the competitive brands.
Threat from the substitutes
When other companies offer similar kind of policies like Prudential Plc, the customers gain the opportunity
of availing a similar variety of insurance coverage at lower prices. This discourages the operational
strategies of the branded organization. Therefore, the threat of these substitutes is high when they propose a
value-added feature for their products. Thus, the company has to be service focused rather than inclining on
investing in products (Engle and Zazzara, 2018).
Competitive rivalry
The competitive rivalry of the company is essential to be analysed in order to evaluate the competitive
picture of the industry. The company of Prudential Plc is impacted by the competitive forces in the market
which often govern the pricing and promotional strategy of the company. Hre business of Prudential Plc is

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affected by the pricing strategy of the competitors as they highly influence the customer base of the
company in the long run.
PESTLE analysis
Political
The political environment of the company is crucial for the overall business development of the company as
it affects the lawmaking of the industry. Prudential Plc is responsible for properly, maintaining a healthy
political relationship with the government in order to various facilities of the government (Biondi and
Graeff, 2018).
Economic
The economic factors are influencing the purchasing power of the customers of the company of Prudential
Plc as it will impact the turnover of the company for that year. The economic factors are important to be
analysed in order to evaluate the economic power of the target market.
Social
The social factors of the company of Prudential Plc are important to be analysed in order to help the
promotional policy formulation on the basis of the social combination of the target market.
Technological
The technological issues are crucial for the business of Prudential Plc as it will help the company to simplify
its processes to become more effective.
Legal
The legal factors include the formulation of relevant laws regarding the insurance industry and the
Prudential Plc is required to align with the legal procedures of the industry (Hartley et al., 2016).
Environmental
The environmental factors of the company and the industry are to be analysed as per the latest
environmental guidelines of the insurance industry which is to be related to the functioning of Prudential
Plc.

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Organizational analysis
One of the major players within the insurance industry in the UK, Prudential Plc has consistently performed
better than its competing organizations and the key contributing factors in this regard are the companies
sound implementation of business decisions and strategic measures. The organizational strategies typically
implemented by Prudential Plc can be analyzed through certain frameworks like the RBV model and
Porter’s Value Chain model, which have been discussed below and are as follows.
RBV model
Figure 1: RBV model of competitive advantage
(Source: Kaufman, 2015)
The RBV model or the resource based view model fundamentally quantifies the degree of competitive
advantage enjoyed by a company, and is one of the most widely acknowledged frameworks within the field
of organizational strategies and their implementation. Published by Wernerfelt, Barney, Prahalad and Hamel
in the mid 1980’s, the model essentially describes that an organization can gain a significant advantage by
efficiently utilizing its internal resource to optimize the wider business environment as opposed to acquiring
new resources and seizing opportunities. The model goes on to divide resources into two segments based on
their nature, one being tangible assets and the other being intangible assets.
The tangible assets refer to the physical assets of an organization, which is Prudential Plc for the context of
this report, and includes the various immovable properties the company has like the allotted lands, machines,

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building premises, equipments, financial resources and so on. The key principle behind the concept of
tangible assets is the fact that they are relatively purchasable and provides minimal advantages to an
organization owing to the possibility of their acquisition by competing forces. As a result, these assets are
considered secondary assets and must be prioritized after intangible assets. In the context of the tangible
assets of Prudential Plc, it was roughly estimated to be around £508.645 billion as of 2018. Listed on the
London Stock Exchange, Prudential Plc has over 25 million customers that engage in annually recurring
transactions and has its operations in over fourteen different countries across the world (Bongin et al., 2017).
The intangible assets are the assets of an organization that are not physically present by themselves, but are
owned by the organization. These include the awareness and presence of the brand, their intellectual
properties, registered logos, trademarks and so on. These are typically considered the primary resources and
offer significant advantage to an organization as compared to its competitors. Moreover, these assets are not
purchasable and fundamentally act as the primary source of the advantage. In the context of Prudential Plc,
the reputation the company has in the UK, Europe and Asia is massive and is a key contributing factor with
regards to its strong market positions. The company was also deemed to be Asia’s largest retail fund
manager, and has consistently grown within the insurance industry despite stagnant global averages
(Hernandez Barros et al., 2016).
The RBV model works on two fundamental assumptions, one being that the resources do not bear mobility
and cannot be transferred from one organization to another within a short period. The other assumption
essentially relates to heterogeneity, whereby two companies typically possess a different pool of resources.
This enables a scenario of perfect competition, whereby the difference in the resources result in varying
degrees of organizational performance. It also integrates the VRIO model within the extended model,
whereby VRIO depicts whether the resources are valuable, rare, difficult to imitate and organized to provide
intrinsic value.
Porter’s Value chain

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Figure 2: Porter’s generic value chain
(Source: Porter and Kramer, 2019)
Porter’s generic value chain is another widely acknowledged framework that focuses on the processes within
an organization that are directly responsible for changing the inputs to purchasable outputs that are
eventually obtained by customers and consumers. The model divides the operations of an organization based
on its importance into two categories of primary activities and secondary activities (Herring, 2018).
The primary activities in the context of Prudential Plc would be an emphasis on optimizing the quality of
inbound and outbound logistics like correspondence with customers, improving its operational
functionalities, strategically marketing its plans and term policies to customers that are most likely to
purchase and to offer an overall positive experience with regards to services after the sale gets completed.
The secondary activities would essentially include the internalized processes of Prudential Plc like the
organizational infrastructure, management of the personnel involved, developing their existing technology
and management systems and engaging in efficient measures of procuring leads (Silva, 2017).
The implementation of the chain model would essentially involve a four step process including the
identification of the subsets of each primary and secondary activity, establish the various linking factors
between them and subsequently develop opportunities to increase the provision of value. The modifications
and alterations would further increase the degree of competitive advantage for Prudential Plc and allow it to
significantly strengthen its existing market conditions in the long run.

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Analysis of culture, structure, systems and human resources
HRM causal model
The causal models are critically analysed to identify the potential duty sharing of the human resource
department of Prudential Plc which will; facilitate the company to allocate various responsibilities among
the team. The human resource team and its functioning is highly dependent on the responsibilities that are
allocated to the team in order to properly perform the duties of the company. Prudential Plc company is
required to evaluate the various policies regarding the development of proper human resource policies in
order to identify the potential duties of the human resource. According to the HRM causal models, the roles
and duties of the human resource team are segregated as per the business requirements of the organisation in
order to help the company to achieve its long term goals.
The company is striving to achieve better effectiveness while using the HRM causal model in its operations
as the industry is impacted by the use of the effective HRM causal model. The causal model is the scientific
model that is being used by the company of Prudential Plc to simplify the process and functioning of the
human resource department to hire required talents in the company (Persaud, 2015). The HRM Causal
model of Prudential Plc is committed towards the proper utilization of the human resources strategies of the
company to achieve greater organizational goals of the company. The human resources department of
Prudential Plc is integral to the implementation of the long term human resource policies of the company to
help the organisation grow with the help of better talent retention policies. The human resources model
should;d be required to fill the necessary vacancies in the organisation with the proper hiring procedures
along with the training of the existing staff of the company (Ashenden, 2015).
Prudential Plc has followed a proper HRM causal model to allocate the financial resources to the human
resource department and the overall management of the company in the particular biome period. However,
the use of HRM causal model is to be evaluated from time to time as the model require timely advancements
in its framework. The business of the company of Prudential Plc is required to potentially analyse the better
opportunities in the market to retain the existing talent and should require to invest a lot of funds in the
training of the staff and employees to help them grow along with the organisation. The company should
implement the processes of industry standards human resource management policies while allocating the
required amount of funds to the department for training and development of the staffs. The performance
measurement policy of the Prudential Plc is essential to identify the potential w4ell performing employees to
reward them with monetary benefits along with the non monetary perks to motivate them for performing
better. On the other hand, an effective HRMN causal model is important for the organizational growth of
Prudential Plc in order to sustain in the market in the long run as well as contribute towards the sustainable

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development of the company.
Figure 3: HRM Causal model
(Source: Obeidat, 2016)
Cultural web framework
Figure 4: Cultural Web Framework
(Source: Speiginer et al., 2015)
The cultural web is another widely acknowledged framework that analyzes a company’s organizational
culture with regards to the wider business environment. Originally formulated by Johnson and Scholes in the
year of 1992, the framework tries to quantify the subjective nature of the culture within an organization by
dividing it into six elements consisting of stories, rituals, symbols, power structures, organizational
structures and systems of control. In the context of Prudential Plc, the stories or the previous events have
largely shaped the manner in which the company operates today. The long heritage and dedication to

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customer-centric approaches has enabled the company to dominate markets across continents and
consistently win awards related to investments, life insurances and pension provisions. The rituals have also
been a key contributing factor to their success, as the company managed to manage its finances well during
the economic crashes and slowdown that subsequently garnered a significant amount of positive press and
public appreciation (Kaplan, 2016). The symbols or the physical extensions of the company are extremely
professional, with large office facilities across the world and one of the most recognizable logos globally.
The organizational structure is also heavily structured and organized, and this has been a crucial element
with regards to their consistent performance and success within the highly competitive insurance industry.
The control systems within Prudential Plc is one of the most robust networks when compared to other
financial service institutions, this has largely been possible due to their continued emphasis on managing the
various risk factors and financial analysis measures. The power structure within Prudential Plc is extremely
dynamic, and focuses on a functional approach whereby the senior management regularly engage the
employees and new recruits with the objective of increasing productivity and performance levels. The
organization is also highly adaptive, and has changed its policies consistently based on the needs of the
market (Billio et al., 2017). This has been a key factor when it comes to their excellent financial standpoint
and market positions.
Figure 5: Awards received by Prudential Plc
(Source: Prudential.co.uk., 2019)