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This report examined the possibility of market entry in Saudi Arabia for Prudential PLC. Findings show opportunities are growing in key segments such as insurance, where insurance penetration at only 1.7% of GDP, remains relatively low even compared to the rest of Asia. And with a CAGR of 5%, the insurance premium is expected to grow to $12.8bn by 2024, up from US$9.5billion in 2018 showing a big opportunity. Nevertheless, this will depend on the continued impact of covid-19 which has been negative for the sector so far. Recommendations are given on how Prudential Financial can successfully enter the Saudi Arabia market and improve long term profitability.
Foreign Market Analysis (FMA 601) Case Study
Key Learning Outcomes
- Understand the broad macro-environment of Saudi Arabia in terms of political, economic, social, or legal factors in order to analyze its market potential, opportunities and sources of risk for case study company (PESTEL/PEST/STEEPLE).
- Formulate an overall corporate strategy for pricing and promotion.
- Suggest some ways to help improve long term profitability of case study firm from the new market.
Prudential PLC is a UK based financial multinational, specialising in the provision of financial services such as insurance, asset management, investment management, and other financial services across more than 14 markets globally. Revenue for the year ending 2019 was US$2.2bn on operating income of US$792million with $453bn in assets under management globally (Annual Report 2019). Global operations are comprised of major divisions including Prudential Corporation Asia (handling over half of company’s global assets) and Jackson National Life Insurance, one of the largest providers of life insurance in the US.
Industry trends encompass all the key macro factors from the external business environment that can positively or negatively impact Prudential. According to Johnson et al., (2017), the business environment can create both opportunities as well as risks that are capable of transforming entire industries, creating winners and losers. This is why managers pay great attention to political, economic, social, technological, legal and environmental issues arising out of their industry environment as they often act as industry drivers, throwing up both opportunities as well as new risks.
Asia is the biggest market for Prudential PLC and in the following section, focus is put on Saudi Arabia, evaluating its market environment, market potential as well as the major sources of risk likely to face the company.
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