Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? Description

In November 2012, Prudential Financial and General Motors closed on a $25.1B pension risk transfer (PRT) transaction, the largest of its kind to date by an order of magnitude both in the U.S. market and globally. In exchange for an in-kind transfer of $25.1B in assets, Prudential Financial agreed to irrevocably guarantee the full payment of pension benefits to approximately 110,000 participants of General Motors Retirement Program for Salaried Employees and assume all risks related to investment, interest rate, and longevity as well as all operational and administrative requirements to make those payments for as long as necessary. As they gear to close another significant PRT transaction with Verizon, Dylan Tyson and Phil Waldeck, senior managers of the Pension & Structured Solutions group at Prudential, consider the strategic importance of these deals for Prudential business strategy and the potential growth of the PRT business in light of trends in interest rates and longevity, the regulatory and reporting landscape for defined-benefit pension plans, and the appetite for pension funding risk of plan sponsors. The case examines the pension fund industry, drivers of pension funding risk including investment risk, interest rate risk, and rising participant longevity, the regulatory and reporting landscape for pension funds, and the strategies available to pension funds to de-risk their plans. It then examines insurance companies and specifically Prudential Financial's competitive advantage in managing pension risk and implementing de-risking strategies for pension funds in the context of Prudential Financial's decision to commit resources to expand its PRT group that resulted in the pension liability buy-out deal with General Motors. Finally, the case examines the development and implementation of a PRT deal of this size and complexity, and explores the implications of such deals for the future of the asset management industry.

Case Description Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Strategic Managment Tools Used in Case Study Analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

STEP 1. Problem Identification in Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 6. Recommendations Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

STEP 7. Basis of Recommendations for Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study

Case Analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? is a Harvard Business (HBR) Case Study on Finance & Accounting , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Finance & Accounting, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Finance & Accounting Solutions

In the Texas Business School, Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Step 1 – Problem Identification of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? - Harvard Business School Case Study

The first step to solve HBR Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Pension Prudential is facing right now. Even though the problem statement is essentially – “Finance & Accounting” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Pension Prudential, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?.

The external environment analysis of Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study. PESTEL analysis of " Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

To do comprehensive PESTEL analysis of case study – Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Government policies have significant impact on the business environment of any country. The firm in “ Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Pension Prudential is operating, firms are required to store customer data within the premises of the country. Pension Prudential needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Pension Prudential in case study Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Pension Prudential in case study “ Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Pension Prudential in case study “ Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Pension Prudential can compete against other competitors.

Government Scheme & Subsidies Impact on Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Pension Prudential needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Social Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Technological Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Environmental Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Legal Factors that Impact Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study. PESTEL analysis of " Prudential Financial - General Motors Pension Risk Transfer: Back to the Future?" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Prudential Financial - General Motors Pension Risk Transfer: Back to the Future? case study solution