Porterпїѕs Five Basic Forces of Competition - Analysis of the Banking Industry

Introduction

A number of the students in the class work in the banking industry and as such I have chosen to focus on the this industry for this discussion. I will analyses each of PorterпїЅs five basic forces of competition as described in CaponпїЅs book пїЅUnderstanding Organisational ContextпїЅ [1, pages 363 - 368] and apply these to the banking industry.

Over the last decade the way we bank has dramatically changed as banks move from a пїЅbricks and mortarпїЅ operation to a пїЅvirtual on-line operationпїЅ. Whilst most banks will probably never get rid of all their пїЅbrick and mortarпїЅ operations, there are some that have successfully started up with no shopfronts and yet they are successful. Banking is big business, everywhere in the world they are big and powerful, but as Keen observes пїЅbank offers basically the same product to the same customer baseпїЅ[2]. So what makes a consumer choose one bank over another? Not all banks make huge profits but banks position themselves to attract customers through product differentiation, pricing, marketing and promotion and this makes the difference and thus will be examined using PorterпїЅs five forces of competition.

Competitive