Porter’s Five Forces Analysis of Sbi

Claessens, S. (2009). Competition in the Financial Sector: Overview of Competition Policies. Retrieved on 8/22/2013,

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Commonwealth bank competes with foreign banks, building societies, mutual banks and smaller regional banks. Growing innovation and technological advancements has lead to increased emergence of new competitors and competition within the Australian banking and financial services sector.

The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions

The sector offers a considerable barrier to new entrants due to the high capital required to establish a new bank. As banking is professional services type required high creditability, strong brand presence is the key obstacle for newcomers.

I- Bank and all of the surrounding banks have a homogeneous product established by similar functions; a homogeneous product is one that cannot be distinguished from competing products and has essentially the same physical characteristics (Alizon, Shooter & Simpson, 2010). There is a lot of competition in the Memphis banking arena, in the beginning I- bank was not in a position to dictate the price of products sold. However, they still must remain competitive in order to attract customers (Hymans, 1966). Again, being the 35th bank to open in Shelby County proves the field has room for another financial institution, but there are no barriers to the entry of a perfectly competitive market and no limitations on the exit of resources from a perfectly competitive market (Tailan & Liu,

Banks have been at the forefront of the financial system for as long as they have existed and have captured the attention of stakeholders on both controversial grounds as well as being undisputed with regards to the many helpful services they provide. JP Morgan & Chase is one such bank, surrounded by hostile news articles and excessive scrutiny but rightfully so as it has of recent been the topic of much controversy as turning a blind eye to the moral codes established by the Securities and Exchange Commission (SEC) and assisting Ponzi Scheme masterminds in swindling unsuspecting investors.

To maximize the amount of business from each customer, banks bundle banking products. If one holds more than one savings account and multiple loans, he often earns benefits of interest.

In terms of world markets our major banks are also strong and provide local market stability. The industry does see high barriers to entry but there are competing products and services offered from intermediaries such as mortgage brokers and other loan providers. These provide competition to banks to keep them slightly honest and reduce their competitive advantage.

In his article “The five competitive forces that shape strategy“, Michael Porter (2008) updates and extends his “five forces” framework he first introduced in 1979 and which has influenced the academic and business research for decades. He reaffirms that “THREAT OF ENTRY”, “THE POWER OF SUPPLIERS”, “THE POWER OF BUYERS”, THE THREAT OF SUBSTITUTES”, and “RIVALRY AMONG EXISTING COMPETITORS” are the forces that shape every single industry, and a thorough understanding of such forces help analyze everything from the intensity of competition to the profitability and attractiveness of any industry. The framework has two dimensions; the vertical dimension that connects

Extensive research has determined that the banking industry is in an unstable state. The industry’s profits have

Larger banks specialize in customer deposits due to the larger availability of liquidity present as a result of economies of scale and synergy; small banks tend to specialize in customer loans. To fund these operations, small banks have a great level of liabilities relative

The SBI Kohinoor Banjara branch received many account opening requests within a few days of its opening. In addition, it also broke even in

Private banking industry has changed in a very basic way, driven by many key factors such as: free competition systems, modern developments in information technology (in particular, developments of the internet), and changing demographics. Private banks now operate in an environment shaped by increasing and shifting regulations, and in markets influenced by the uncontrolled situations of the world economy and geopolitical issues.

been rapidly declining profitability of the traditional banking activities. Thus, in a bid to survive and