Business environment is dynamic and therefor a Manger must be dynamic

1. KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
THE MANAGER AND THE TURBULENT BUSINESS ENVIRONMENT
USING THE PORTER'S FIVE FORCES FRAMEWORK
THE STUDY OF GCB BANK LIMITED
BY STEVE SPRINGER LARYEA - 1071713
BSC MATHEMATICS
INTRODUCTION
Business environments in our world today is under ongoing a state change or disequilibrium. The
environment in one way or the other determines how successful the company will be hence
Manager must therefore employ environmental scanning. Environmental scanning is a process of
collecting information about the external environment in order to identify and analyze trends.
This study therefore seeks to examine The Manager and the Turbulent Business Environment
using the Porter’s Five Forces Framework with GCB Bank Limited as a subject of study.
The past few years have seen a phenomenal growth in the Ghanaian banking sector. As at March
2016, the banking sector comprised 29 banks, of which 14 were domestically controlled. The
banks managed 1,173 branches and 912 Automated Teller Machines (ATMs) distributed across
the ten (10) regions of the country. Total assets of the banking sector grew by 17.2 percent to
GH¢64.56 billion as at end March 2016, up from GH¢55.09 billion in March 2015.
(Bank of Ghana Financial Stability Report Vol. 1.1, May 2016)
GCB Bank Limited, then Ghana Commercial Bank was established in 1953 as the first
indigenous bank. At the end of December 2015, GCB Bank Limited had a profit of 244,735
thousand Ghana Cedis which makes them one of the best performing banks in Ghana
(Consolidated Financial statements for the year ended Dec 31, 2015).
The Porter's Five Forces framework is a powerful tool for understanding who has more power in
a business situation. This helps the manager to understand both the strength of the current
competitive position, and the strength of a position the company want to venture. Having this

2. understanding, you then take advantage of the strength and adopt new strategies to overcome
weakness so you avoid taking wrong steps.
In Porter's model, the five forces that shape industry competition are:
 Competitive rivalry
 Bargaining power of suppliers
 Bargaining power of customers
 Threat of new entrants
 Threat of substitution

3. SCOPE OF STUDY
COMPETITIVE RIVALRY
In the past it used to be very frustrating transacting business in Ghanaian banks particularly if
one was not privileged to be a member of one of the few elite banks (Barclays and Standard
Chartered banks) operating in the country. It was a common thing to see very long and winding
queues extending several kilometres outside the banking halls of especially the GCB Bank
Limited then Ghana Commercial Bank (GCB) and few others like Social Security Bank (now
SG-SSB) and Agricultural Development Bank (ADB). This was a boom for GCB Bank Limited
because there were few banks in the system and the few elite banks exploited Ghanaians with
high bank charges for every little service rendered.
Now the Ghanaian banking sector is very vibrant and numbering up to 32 commercial banks, 140
rural banks and over 25 other financial institution all chasing the about 10 percent of the
bankable segment of the population. For example, on the K.N.U.S.T campus, at the Commercial
Area, there about 12 banks in operation and GCB Bank alone has 2 branches. During season
where fresh men and women comes to the university, all banks mount canopies on campus
chasing after these people to bank with them. Many banks now work half day on Saturdays, thus
making it possible for busy workers to access banking services at the weekend. GCB Bank also
started Saturday banking on the 1st October 2016 so as to be in this intense competition. In
addition to that GCB Bank has extends it closing time from 4pm to 5pm during week days. Most
banks now uses technologies such as introduction of ATMs, e-banking, telephone banking, SMS
banking etc. to roll out their products to their Ghanaian customers. Banking halls are housed in
ultra-modern buildings, staffed with well-trained smart looking ladies and gentlemen. On
K.N.U.S.T, the halls of residence area, there are 12 Automated Teller Machines from different
banks. This is a healthy competition and any bank that wobbles will definitely loose out.

4. BARGAINING POWER OF SUPPLIERS
Bargaining power of suppliers, is one of the forces that shape the competitive structure of an
industry. Capital is the primary resource of any bank. GCB bank Limited has three suppliers of
its product, money.
1. Customer deposits :
Deposit made by individuals, corporate bodies, government agencies and other institution are the
source of capital for GCB bank. Other Banks seeks for customer so as to get a higher capital and
if the economy is not booming, it will affect the capital at hand
2. The credit market :
This comprises of the Mortgages loans, Mortgage securities and loans from other financial
institutions. The credit market as a source of supply of the raw material, money, is open to all at
all times if they are qualified participants.
3. The central bank :
The Central Bank for all banks in Ghana is Bank of Ghana and effectively the last resort for
resource. For the moment, it will continue to supply liquidity to the banking system in virtually
unlimited quantities at very reasonable cost.
BARGAINING POWER OF CUSTOMERS
The customers, ordinary individuals, have less bargaining power. A classic bit of banking
wisdom is, "If you owe the bank GH¢100,000, you have a problem and If you owe the bank
GH¢100,000,000, the bank has a problem”. Any negotiation of terms and conditions of a
banking deal will take the form of a win/win negotiation where both sides are attempting to
develop a "deal" that is optimum for both participants. It is a mutualistic process where both
sides wins. For example, a customer want loan for his business and the bank gives the loan with
interest. Both of them achieve their goal and the terms on conditions on it must be in a way that
satisfies both the giver and the receiver.

5. THREAT OF NEW ENTRANTS
Despite of the biggest entry barrier like regulatory and capital requirements, new banks are
emerging every now and then. From at March 2016 to September 2016, 3 new banks emerged in
Ghana. Nigeria has one of the largest banking sectors in Africa with over eighty banks in
operation. Within the few years, 7 Banking industries from Nigeria are now in full operation in
Ghana now and more can enter the system because of ECOWAS.
THREAT OF SUBSTITUTION
When customers have a wide variety of choice, they tend not to worry much on an unsatisfactory
service received from a service provider. With the fierce competition in the banking sector in
Ghana, customer switch from on bank to the other seeking to get satisfaction. For example GCB
Bank offers ATM card within one month, other banks offer it instant, customer tend to move to
where they get it instant than waiting for a month before they get their ATM card. Other
financial institution tend to be threat on the banking sector as they offer suitable and relax service
to customer. And with the emergence of the Telecommunication networks engaging in mobile
banking, customer tend to patronize.
CONCLUSION
It is however important to recognize that the level of competition in the Ghanaian banking sector
has a causal effect on the level of efficiency and we have seen some appreciable level of
improvement in service delivery and efficiency across the various banks in the country.
REFERENCES
1. Porter, M. (1998). Competitive Strategy. New York: Free Press. pp. 27-29.
2. Carlson, M., & Mitchener, K. J. (March 2005). Branch Banking, Bank Competition,
and Financial Stability (). Retrieved November 12, 2007 from

6. 3. Porter, M. (1998). Competitive Advantage. New York: Free Press, 1998.
4. Developments in the Ghanaian Banking Sector. Article of Monday, 30 April 2007
5. The changing face of banking in Ghana Friday 19th June, 2015