Porter s Five Forces for Banking Industry Analysis External Analysis Introduction 

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Porter s Five Forces for Banking Industry Analysis External Analysis Introduction  Powered By Docstoc
					External Analysis
                  Introduction
 Internal analysis helps to identify the core
 competences of the business, while external
 analysis, particularly of the
 microenvironment, assists in identifying
 those industries and markets where the
 competences can be applied.
   Industries are centered on the supply of a product

   markets are concerned with the demand.
 Factors in the environment, the industry and
  market, will drive the enterprise toward one type
  of international strategy  either one that is fully
  global or one that makes concessions to localized
  customer needs.
 One way of conceptualizing the external
  environment is as a network of macro and
  microenvironments, all of which are related to
  each other.
   Every international enterprise operates within one or
    more industries and one or more markets which are
    found in more than one country.
          Macroenvironment
 Analysis of the macroenvironmemt is
 concerned with changes and trends in social
 and cultural, demographic, political, legal,
 technological, economic and financial factors.
 The macroenvironment can be further
 subdivided into both global and local (or
 national) elements:
  The global macroenvironment  concerned
   with global trends.
  The national macroenvironment 
   concerned with trends and changes at the
   level of the individual country
         Microenvironment
 The microenvironment, the competitive
 environment facing a business, consists of
 the industries and markets in which the
 organization conducts its business.
 It can be subdivided:
  The global microenvironment  concerned
   with global industry and market trends.
  The national or regional microenvironment
    concerned with national industry and
   market trends
 An industry consists of a      A market comprises the
  group of businesses             demand side of an
  producing similar outputs       economic system.
 They expect to share the
                                 It is defined in terms of
  following related features:
    Skills and competences
                                  shared:
    Technology                    Products or services

    Process & value-adding        Customers
     activities                    Customer requirements
    Materials                     Distribution channels
    Supplier channels             competitors
    Distribution channels
    products
 Businesses gain competitive advantage by
 developing core competences within an
 industry which are then deployed in
 markets to satisfy customer demands.

 The success of a business will depend on
 its competitive position in both areas of
 operation  as a supplier of outputs and as
 a buyer of inputs.
Globalization of Industries and Markets
 Industries and markets differ vastly in the extent
  to which they are globalized.
   The consumer electronic industry and its markets are
    largely globalized.
   Both the market for personal banking and associated
    industry providing banking services are still largely
    localized.
   Paint industry is largely globalized; packaging,
    advertising and brand names are often adapted for
    both linguistic and cultural reasons
    Yip’s Globalization Drivers
 There are four categories of drivers which
 must be analyzed in order to determine the
 degree of globalization within an industry
  Markets
  Cost
  Government
  Competitive
 Market globalization
                                   Gov. globalization drivers
  drivers
                                     Trade policies
    Customer needs
                                     Technical standards
    Customers and channels
                                     Marketing regulations
    Marketing
                                     Gov.-owned competitors
    Leading countries
                                     Gov.-owned customers
 Cost globalization drivers         Host Gov. concerns
   Economies of scale & scope
   Experience curve
   Sourcing
                                   Competitive globalization
   Logistics
                                    drivers
                                      Exports and imports
   Country costs, productivity
    and skills                        Competitors
   Product life cycle and            Interdependence of countries
    product development costs
                                             Social and
                                             demographic
Technological                                factors




                          Market
                          drivers
factors




                        Potential
             Cost                       Government
            drivers
                           for            drivers
                      globalization


                          Competitive
Economic                    drivers
                                                Political
and                                             and legal
financial                                       factors
factors



     The macroenvironment and globalization drivers
    Advantage of using Yip’s framework
 It allows identification of those drivers that are
  global and those that are local, so that the
  attributes of transnational strategy can be tailored
  to match the drivers.
 It can be used to analyze both industry and market
 It can be mapped onto Porter’s five forces
 Changes in the drivers can be indicated by
  macroenvironmental analysis.
 It assists in the identification of the critical success
  factors of a global industry and market
                  Industry Analysis
                      Threats of substitute
                           products



Bargaining                                            Bargaining
 power of      Intensity of rivalry in the industry    power of
 suppliers                                              buyers



                       Threats from new
                           entrants


             Porter’s five-forces framework
               Market Analysis
 Market segmentation analysis
 Customer motivation
   Sensitivity to price
   Sensitivity to quality
   The extent of brand loyalty
 Unmet need
 In addition to above analyses, Porter’s five-
  forces framework can also be applied to a
  market or submarket within an industry.
                           Firm strategy
        Change             structure and
                               rivalry



                                                    Demand
         Factor                                    conditions
       conditions



                            Related and
                            supporting            Government
                             industries

Determinants of national competitive advantage – Porter’s diamond

				
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