This presentation was made to understand the influence of porter's five forces on the industries. it includes a special reference of the banking industry through the analysis.

1. PORTER’S FIVE COMPETITIVE FORCES THAT SHAPE
ANALYSIS
SUBMITTED BY-
DIVYANSH KAUSHIK (501904011)
HIMANSHU MAHAJAN (501904017)
SAKSHAM NANDRAJOG (501904035)
SUBMITTED TO-
DR. PADMAKUMAR NAIR

3. THREAT OF NEW ENTRANTS
Threat of entry puts a cap on profit potential of an industry.When the threat is
high, holders of offices must hold down their prices or boost investments to
deter new competitors.
The threat of entry in an industry depends on the height of entry barriers-
• Supply side economies of scale.
• Capital Requirements.
• Demand side benefits of scale.
• Customer switching costs.
• Incumbency advantages indepndent of size.
• Unequal access to distribution channels.
• Restricitive government policy.

4. POWER OF SUPPLIERS
Powerful suppliers capture more of the value for themselves by-
• Charging higher prices.
• Limiting quality or services.
• Shifting costs to indutry participants.
A supplier group is powerful if:
 It is more concentarted than the industry it sells to.
 The supplier group doesn't depend heavily on the industry for it's
revenues.
 Suppliers offer products that are differentiated or there is no substitute for
what the supplier group provides.
 Industry participants face switching costs in changing suppliers.

5. POWER OF BUYERS
Powerful buyers capture more of the value for themselves by-
• Forcing down prices.
• Demanding better quality or services.
• Playing industry participants off against one another.
Buyers are powerful if they have negotiating leverage. A customer group has
negotiating leverage if:
 There are few buyers.
 The products of industry are standardized or undifferentiated.
 Buyers face switching costs in changing vendors.

6. THREAT OF SUBSTITUTES
 A substitute performs almost a similar function as an industry's product in
different form. For ex - Online shooping is a substitute for travelling to a
shop.
 When the threat of substitutes is high, industry profitability suffers.
Generally, substitute products or services limit an industry's profit potential.
The threat of an substitute is high if-
• It offers better performance price trade off to the industry's product.
• Buyer's cost of switching to the substitute is low.

7. RIVALRY AMONG EXISTING COMPETITORS
Rivalry among already present competitors takes place in many forms such
as-
• Price discounting.
• New product introductions.
• Advertising campaigns.
• Service improvements.
The rivalry is greatest if-
 The number of competitors is high.
 Industry growth is slow.
 Exit barriers are high.

8. Barriers to Entry
(LOW)
• Stringent rules and regulations
of RBI regarding licenses.
• the role of trust as a barrier to
entry for new banks, as
consumer are more likely to
allow one bank to hold all their
accounts and service their
financial needs.
Bargaining power of Buyer
(VERY HIGH)
• Customers have diverse
wants due to increasing
competition in the industry.
• Banks are now offering
customized products
according to the customer
requirements.
Threat of Substitutes
(HIGH)
• largest threats of substitution
are not from rival banks but
from non-financial
competitors
• Insurance , mutual funds and
fixed income securities
services are provided by non
financial competitors.
Bargaining power of
Suppliers (VERY HIGH)
• RBI is the only authority for
all actions through the
Monetary policy.
• RBI controls the circulation of
currency in the economy.
Inter-Organization Rivalry
(HIGH)
• Not much differentiation for
services offered due to
regulations of RBI.
• Banks are investing high in
their advertisements to gain
market share.