STATE BANK OF INDIA
Porter’s Five Forces Analysis
1. Competitive Rivalry: High
Top Performing Public Sector Banks
a. Andhra Bank
b. Allahabad Bank
c.Punjab National Bank
Top Performing Private Sector Banks
a. HDFC Bank
b. ICICI Bank
c. AXIS Bank
Top Performing Foreign Banks
b. Standard Chartered
c. HSBC Bank
The banking industry is highly competitive. The financial services industry has beenaround for hundreds of years and just about everyone who needs banking servicesalready has them. Because of this, banks must attempt to lure clients away fromcompetitor banks. They do this by offering lower financing, preferred rates andinvestment services. The banking sector is in a race to see who can offer both the bestand fastest services. 2.Buyer Power: High
With the emergence of larger number of players in the Banking Industry, the switchingcost of the buyer has gone done significantly. The onus is now on the effectiveness andspeed with which the services are provided to the customers. Financial institutions - byoffering better exchange rates, more services, and exposure to foreign capital markets -work extremely hard to get high-margin corporate clients. Options in the Auto FinanceSector also give the customers more power to decide upon the kind of financing.Introduction of specialized products for Women and Students etc also show that thebuyer power is high in this Industry.
3.Supplier Power: Low
The suppliers of capital do not pose a big threat, but the threat of suppliers takingaway the human resource. If a talented individual is working in a smaller regionalbank, there is the chance that person will be enticed away by bigger banks,investment firms, etc. 4.Threat of New Entrants: Low
Starting a bank in a country like India is not as easy as any other industry, but if anew bank is started that is mainly targeted on Niche Segments might pose a threatto SBI. The new entrants from a different country are always discouraged to takepart in the financial and banking sector by regulatory reforms limiting foreignpresence. Threat from other non banking financial services could also pose a threatespecially equity investment, insurance etc. Entrant of a larger player can cause adrastic effect on the not so strong name in banking or the bank with low income butwould not cause any significant affect on SBI. 5.Threat from Substitutes: Low
As you can probably imagine, there are plenty of substitutes in the banking industry.Banks offer a suite of services over and above taking deposits and lending money,but whether it is insurance, mutual funds or fixed income securities, chances arethere is a non-banking financial services company that can offer similar services. Onthe lending side of the business, banks are seeing competition rise fromunconventional companies. Sony, General Motors and Microsoft all offer preferredfinancing to customers who buy big ticket items. But these substitutes do not affectSBI due to its huge brand name and presence in the market.
1. Brand Name 2. Market Leader 3. Wide Distribution Network 4. Diversified Portfolio 5. Government Owned
1. Hierarchical structure 2. High Non Performing Assets 3. Lack of Modernisation
1. Increasing Trade 2. Growing Economy 3. Untapped market segments 4. Mergers with Associate Banks 5. Global Expansion
1. Consumer Expectations 2. Advent of MNC Banks 3. Employee Strikes 4. Pvt. Banks - Retail Banking
•Brand name: SBI Bank has earned a reputation in the market over the period of time (Being the oldest bank in India tracing history back to 1806).
•Market Leader: SBI ranks at 363 in 2009 Fortune Global 500 list, and ranked 150 in 2009 Forbes Global 2000. It is three times the second-largest public sector bank, and nearly two and a half times the size of its biggest private sector rival.
•Wide Distribution Network: Excellent penetration in the country with more than...
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