The Porter Five Forces Model Assessment Answer
Answer:
Introduction
Michael Porter developed Porter’s five forces model. It is a business tool or a framework that helps in examining the strength of the five forces that govern competition within industry. The five forces help in analyzing the level of competition within the companies in an industry. The main aim of developing Porters five forces is to help the firms achieve competitive advantage. The companies know the competitive position that they hold in the market. The five forces of Porters analysis are the bargaining power of supplier, bargaining power of buyers, threat of substitutes, threat of new entrants and industry rivalry (E. Dobbs, 2014).
Wells Fargo bank is an American international company that provides international banking and financial services to its customers. It is the world’s largest bank in terms of market capitalization and third largest bank in United States in terms of assets. The main competitors of the company are JP Morgan and chase, Prudential financial and ING group. Porter’s five forces are also known as Industry and competitive analysis (Wellsfargo.com, 2016)
Porters five forces model for Wells Fargo bank
Threat of New entrants:
Threat of substitute products:
Bargaining power of suppliers:
Suppliers have a great power in case of financial industry. Since Well Fargo is diversified company that is engaged in providing distinguishing financial services. The company is involved in providing various financial services, conventional banking and small and medium loans operations. The supplier power in case of banking sector is low in case of customer retention and high in case of determining the rates of interests and other prices. In case of a pure banking sector where the company is not involved in supplying diversified financial services the bargaining power of suppliers is almost negligent due to the lack of supply chain process. The infrastructural products such as machines used in the operations gives some powers to suppliers. Price discrimination does exist as the banks may charge higher interests rates from the people who can afford it (Montes-Stewart, 2013). The four major suppliers in case of banking sectors are capitals such as customer deposits, mortgages and loans, mortgage securities and loans from other financial institutions. The power of suppliers depends on the market where the power is said to fluctuate between medium to high.
Bargaining power of buyer:
Industry rivalry:
Conclusion
References
Christensen, C., Anthony, S., & Roth, E. A. (2013). Seeing what's next: Using the theories of innovation to predict industry change. Harvard Business Press.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Hyun, A., & Kang, H. (2015). Similarities And Differences Of Industry Leaders' Competitive Advantages. Leadership & Organizational Management Journal, 2015(2).
Keys to competitive analysis. (2016). Wellsfargoworks.com. Retrieved 25 July 2016, from https://wellsfargoworks.com/run/competitive-analysis
Mburu, P. G. (2015). Competitive strategies adopted by Wells Fargo (K) Limited to enhance competitive advantage (Doctoral dissertation, University of Nairobi).
Montes-Stewart, I. (2013). Strategizing for Corporate Social Responsibility: Wells Fargo Case. OSR, 6.
Porter's 5 Forces and the Banking Industry - The Banking Industry And The Internet. (2016). Sites.google.com. Retrieved 25 July 2016, from https://sites.google.com/site/bankingindustryandtheinternet/home/5-forces
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.
Wells Fargo - Personal & Business Banking - Student, Auto & Home Loans - Investing & Insurance. (2016). Wellsfargo.com. Retrieved 25 July 2016, from https://www.wellsfargo.com
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