The Threat of new entrants: There is no real problem in the formation off new bank, and it is not even an unusual occurrence. It is also not unusual for an entity such as Merrill Lynch to offer ere bank like services to clients. The market is so large and so fragmented, that the significance off new entrant or even entrants is minute. If the concept of the combination of existing participants into what amount to “new entities” the importance of the concept changes, but only slightly. The “”new entity” is nothing more than a combination of formerly existing entities, and its immediate effect on the market wills probably me minimal.
Longer term, its increased size and financial strength may alter the market situation slightly. Bargaining power of customer: The bank is involved in import trade financing. Bulk importers of consumer durable, food gains industrial raw materials are its customers. The bank has financed in textile, garments, and SEEM and apparels sectors. The bank has a tread of choosing customer Trot Leverages groups . Nine Dank NAS TLS class customers In ten construction sectors involved in high-rise building, heavy construction and roads and high way construction. So, Customer bargaining power is high.
Bargaining power of suppliers : A bank has three suppliers of its product, money: 1 . Its depositors 2. The credit market 3. The central bank The first source, depositors, has no bargaining power whatever in reality. If they make time deposits the bank will set the price or interest rate it will pay. If they have a demand deposit the bank pays nothing or effectively nothing for the deposit. It is possible that there may be some v variation in services as a form of competition, but a demand account (DAD) is not subject to great variation and most customers simply want an account and don’t even know the exact terms of their account.
Larger clients, reparations, government agencies, and wealthy individuals are offered packages of services in what is actually a form of “market orientation” in current management terminology. The bank is still the dominant party, even with very large clients, but the client can make the threat of going to another bank, and if he/she/it is large enough, the threat may have some significance. There is a distinct element of competition for the business of large accounts, but even here it would be very difficult for any entity to offer anything significant that its competitors could not plicate almost instantly.
This part of the business becomes very much one of personalities and individuals as opposed to “marketing initiatives. ” The bank advertisements on CNN all focus on the quality of the individuals and services. They say in effect, “Our people are the best. ” The credit market as a source of supply of the raw material, money, is open to all at all times if they are qualified participants. The source of supply can be argued to be infinite. The Central bank is effectively the resource of last resort.
Apparently, at least for the moment, it will continue to supply equity to the banking system in virtually unlimited quantities at very reasonable cost. The threat of substitute products: For the most part there is no real threat of substitute products in the banking industry. It could be argued that a personal loan is a substitute for a mortgage, but in reality both are loans and the loan is taken out because the customer wants money. The same can be said of other bank products, and even institutions. A mortgage company is a substitute for a bank, but it is the same product offered by an alternative vendor.
There is a good chance the mortgage company is owned by a ann. holding company in any case. The only question is the origination of the loan. Bank transfers are more common in Europe than in United States banking practice. They serve approximately the same function as checks and some of the new Internet banking services are actually transfers, even in the states. There probably will be a continued evolution of products from paper to electronic in coming years. This is an area of potential competition, and probably innovation, but the final services, moving money from account A to account B will not change.