Porter 5 forces analysis

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					Porter 5 forces analysis

Bargaining power of Customer:
 Buyer concentration to firm concentration ratio: Bank industry is a high buyer
concentration industry, many people use bank service, such as deposit money,
mortgage, loan, investment, insurance and currency exchange (HIGH). The
concentration ratio of international bank industry is medium, many large bank exist in
the world, such as Standard Chartered, CitiBank, HSBC, Fortis, and Deutsche Bank
(Medium).
   Buyer information availability (HIGH): When Internet becomes changing people’s
life, customer can easily obtain information through Internet, they can easily compare
the price and service.
   Buyer price sensitivity (HIGH): Interest Rate and service charge is sensitive
indicator for customer in bank industry, customer may due to those indicators to draw
out all or a lot amount of capital from bank to bank/ other financial institution. The
switching cost of this action is low.
   Availability of existing substitute products (HIGH): Many substitute product or
service present in recent year, such as currency exchange, insurance and loan. They
mainly provided by other financial institution.


Bargaining power of Supplier (Low):
      Bank capital supplier (Low): Depositor also is capital supplier of bank, they
     will compare with other financial product to see whether draw out capital or not.


      Computer equipment supplier (Low): The concentration ratio of computer is
     high, many companies use IBM, but it doesn’t mean other computer companies
     are not good, such as Sun Microsystems, Fujitsu and Hewlett-Pack also provide
     similar computer equipment and solution.


     Credit Card supplier (Medium):
      Credit Card industry is a high concentration ratio industry, VISA, Master Card
     and American Express is the most popular credit card in the world. Although
     other organization also release credit card system, such as JCB, there market
     share in the world is much less than these three organizations. Moreover, these
     three organizations brand name is louder than other organizations, so the
     switching cost from these organizations to others may be too large.
Threats of new entrants (High):
 When many countries and cities join WTO and the Internet effect, the barrier of bank
become disappear. Many financial even non-financial organizations can easily entry to
bank industry. They can use more little money to build a website; they can also
integrate with other organizations. The switching cost of this behavior become smaller
than before and the advantage is larger than before also.


Threats of substitute product
 Internet makes many organizations can use smaller amount of money relatively to
provide similar even same service, and the service charge become smaller. Customer
will due to convenience, low cost and high efficiency to change the service to other
organization. Real-time money transfer (i.e. Western Union), real-time payment (i.e.
Paypal), currency exchange (i.e. Xe.com) and insurance (i.e. InsWeb.com), they
through Internet to provide a high quality but low service charge service.


The intensity of competitive rivalry:
 There are many banks in the world, as “The Banker” magazine metioned, the
Earning Before Internest and Tax (EBIT) in 2006 of top 1000 banks in the world is
6451 billions US dollars, higher than 2005. Due to technology becomes improve;
financial control become release and the change of environment in the society,
competition between banks become violent and the maturity of financial market in
western country is very high, so the competitiveness force bank to find other profit
continuously.


PESTEL Analysis

Political:
   England is a member of European Union, the culture, economic and politics is
 different to other Europe Counties.


Economic:
     England use their own currency (Pounds) not Euro.
Social:
     England culture is different from other European countries.


Technological:
 E-Banking is the trend in recent year; they provide similar or same service through
Internet with lower charge, such as check balance, pay bill and loans. In



SWOT Analysis:


Strengths:
     Large branch network in Asia and Africa in retailing business
     Have own private data communication network for internal use of job
     Market leader in currency and loan activities in London, New York and
     Singapore.
     A long history of serving trade and industry since British Empire


Weakness:
   The Cost of IBM is expensive than other manufacturers.
     Credit card division’s system is out of date and many staff was employed for
     input process.
     Spend a lot amount in IT but can’t get the equal service.
     The rent of office is expensive
    Used a lot of papers per week.
Opportunities


Threats:


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posted:5/17/2012
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