The document discusses Porter's Five Forces model as it applies to the banking industry. It analyzes the threats of new entrants (low due to high costs), power of suppliers (low-medium due to few suppliers), power of buyers (medium-high due to many buyers), threat of substitutes (low-medium due to few alternatives to traditional banking), and industry rivalry (high due to many competitors of similar size). It also lists trends in the industry like increased internet banking and mergers reducing costs. The document provides an analysis of the competitive forces in the banking industry.

1. Industry
Rivalry
Potential
Entrants
( Threat
Mobility )
Buyer
( Buyer
Power)
Substitutes
(Threat of
Substitutes)
Suppliers
( Suppliers
Power )

2. • Low/High ( exceptions ).
• Existing loyalty to major brands
• Huge investments
• Incentives for using a particular buyer ( such as frequent
shopper program )
• High fixed cost
• Scarcity of resources
• High cost of switching companies
• Government restrictions or legislation.
• There is virtually no chance of a new entrants significantly
affecting the major banks’ market share . The only place
that new entrants may have a chance in the industry is
through internet banking, because of its low cost.

3. • Low to medium
• There are very few suppliers of particular
product categories.
• There are almost no substitutes in some
product categories.
• Switching to another ( competitive ) product is
very costly
• The supplying industry has a higher
profitability than the buying industry.

4. • Because of the increasing amount of
technology internet banking will begin to
replace traditional banking, thus cutting
personal cost.
• Incorporating investment banking into the
banking industry as some major companies
are doing

5. • An increase in interest rates causing a decline
in bank activity.
• The collapse of the Fed leading to bank
failures, a repeat of the crash of 1929.
• A decline in the U.S economy leading to a fail
in the value of the dollar, thus causing an
instable economy.

6. • Medium to high
• Large number of buyers
• Purchases large volumes
• Concentration ratio is medium being
international
• Information is easily available to the customer
• Switching to another ( competitive ) product is
simple.
• The product is not extremely important to buyers
: they can do without the product for a period of
time.
• Customers are price sensitive.

7. • Low to medium
• Internet
• If substitutes are similar, it can be viewed in
the same light as a new entrant.
• Presence of companies like Western Union,
Pay Pal, XE.com
• This is not really an issue within the banking
industry, because they aren’t really any legal
alternatives, except buying a safe and
borrowing from a loan shark.

8. • A highly competitive market might result from :
• - many players of about the same size, there
are no dominant firm.
• - Little differentiation between competitors
product and services.
• - A mature industry with very little growth :
companies can only grow by stealing customers
away from the competitors
- Technologically advance companies
- Introduction a new products by competitor.

9. • The banking industry is continuing to
restructure and position it self :
For our changing economy as a result, many mega
mergers have occurred in recent years. Citicorp and
travelers Insurance agreed to merged in April 1998at
a value of $70 billion US dollars. Banks mergers are
usually consummated as a cost cutting measure but
also to compete with non bank providers of financial
services.

10. • Strengthen customer relationship by community
involvement.
• Communicate benefits of online presence clearly.
• Look for acquisition that are compelling strategically and
financially.
• Handle major international operations from India to gain
expenses benefit.
• Position it self as a global bank focusing on Indian
consumer benefit.
• Innovative products in emerging businesses like mortgage,
equity , consumer finance.

11. • www.businessball.com
• Tugher bansode (P904), Sumeet Gupta ( P920)
• Ashray Surekar, Uruti Mehta, Vineet Shahade at el 2011.
PRESENTED BY:
DAMAI YANTHI MARTADISASTRA
NAGARAYAN BALUSAMY
NGUYEN QUANG MINH
SHI YUAN LONG
PHAM THI NGOC TUYEN