Industry Analysis

Topics: Bank, Banking, Banks of Malaysia Pages: 5 (1689 words) Published: March 7, 2013
1. Industry Analysis (80%)

The five force analysis is one of the most recognized frameworks for the business strategy. Porter, the guru of modern day business strategy, used theoretical frameworks derived from Industrial Organization economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industry that influence the way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Porter defined the forces which drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of the buyers, and the threat of substitute products or services. This describes the attributes of an attractive industry and thus suggests when opportunities will be greater, and threats less, in these of industries. The industry that I have chosen for my five force analysis is the banking industry. I have chosen CIMB Group as the organization of my choice. CIMB Group operates as a universal bank offering a full range of financial products and services, covering corporate and investment banking, consumer banking, treasury, insurance and asset management. CIMB Group offers products and services on a dual banking basis, giving customers a choice of both conventional and Islamic solutions. As a universal bank, it is able to serve everyone from all walks of life in Malaysia as well as throughout the region, including large regional corporations, domestic listed companies, entrepreneurial start-ups, high-net worth individuals, pensioners and children. Today, CIMB serves over eleven and a half million customers in over 1000 locations through over 37,000 staff. At present, its main markets are Malaysia, Indonesia, Singapore and Thailand, countries in which CIMB Group has full universal banking capabilities. CIMB Group's presence in 13 countries covers South East Asia and major global financial centres, as well as countries with which their South East Asian customers have significant business and investment dealings. In addition, CIMB extends its regional reach and range of products and services through strategic partnerships. Partners include the Principal Financial Group, Aviva plc, Sunlife Financial, Allianz Malaysia Berhad, Mapletree Capital Management, Bank of Tokyo-Mitsubishi UFJ, Standard Bank plc, Daewoo Securities, the Kanoo Group, Malaysia Airlines, International Currency Exchange, EDS, Pos Malaysia, 7-11, Singer Malaysia and many more. One of the five force is the competition among existing industry businesses. The competitors of CIMB Group are  Malayan Banking Berhad, Public Bank Berhad, Hong Leong Bank, RHB Bank, and AmBank Berhad. These organizations are the competitors of CIMB Group. These banks also compete in many ways such as their products and services. Maybank Banking Berhad is the main competitor of this bank. They have many business strategies to defeat CIMB Group. The competition in this industry is very high which can bring to higher level of advertising expense and powerful competitive strategy. Competitive rivalry is likely to be based on dimensions such as price, quality, and innovation. Technological advances help to protect companies from competition. This applies to products and services. Companies that are successful with introducing new technology are able to charge higher prices and achieve higher profits, until competitors imitate them. For example, Malayan Banking Berhad uses statement slip instead of bank book. This instead can be...
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