An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Unlike commercial banks and retail banks, investment banks do not take deposits. There are two main lines of business in investment banking. Trading securities for cash or for other securities, or the promotion of securities is the "sell side", while dealing with pension funds, mutual funds, hedge funds, and the investing public i.e. People who consume the products and services of the sell-side in order to maximize their return on investment, constitutes the "buy side".
Competitors in this field:
Bank of America
Wells Fargo Securities
PORTER’S FIVE FORCES MODEL OF COMPETITION
The nature of competition in the industry in large part determines the content of strategy, especially business level strategy .Based on the fundamental economics of the industry, the very profit potential of an industry is determine by competition interaction. Porter’s model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment.Especially, competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porter’s model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.
Porter’s Five Forces Model
RIVALRY AMONGST COMPETING FIRMS
Rivalry among competitors is very fierce in Indian Banking Industry.The services banks offer is more of homogeneous which makes the Company to offer the same service at a lower rate and eat their competitor market’s share.Market Players use all sorts of aggressive selling strategies and activities from intensive advertisement campaigns to promotional stuff. Even consumer switchfrom one bank to another, if there is a wide spread in the interest. Hence the intensity of rivalry is very high. The number of factors that have contributed to increase rivalry are. 1.
A large no of banks
There are many banks and non financial institution fighting for same result ,which has intensified competition. 2. High market growth rate
India is one of the biggest market place and growth rate in Indian banking industry is also very high. 3. Homogegeous product and services
The services banks offer is more homogeneous in nature which makes the company offer the same services at a lower rate which results eating into their competitor market’s . 4. Low switching cost
Costumers switching cost is very low, they can easily switch from one bank to another and very little loyalty exist . 5. Undifferanciated services
Almost every bank provides similar services. Every bank tries to copy each other services and technology which increase level of competition. 6. High fixed costs. High exit barriers
High exit barriers humiliate banks to earn profit and retain customers by providing world class services....
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