Hsbc Case Study

PORTERS FIVE FORCES ANALYSIS

Threat of New Entrants

According to Arline (2015), the difficulty for competitors to join the marketplace in the is examined by this force. If the competitor can join the marketplace easily, the risk of a business’s market share being depleted is also greater. A well-recognized brand and have absolute cost advantages are the barriers for new entrants to entry the market (Arline 2015).

THE ONE HIGHLITED YELLOW IS THE DEFINITION FOR 5 FORCES. NORMAL FONT COLOR IS THE 5 FORCES FOR CITIGROUP. BILLY IS DOING 5 FORCES FOR HSBC.

In this kind of industry may result a high profit which caused HSBC facing to several threats of market entry. For example, likes TESCO, the UK largest super-market had decided to involve in banking industry which sometime may break other organisation like HSBC. In order to overcome this, HSBC has created some entry barriers to strengthen their competitive advantage. Besides, HSBC also uses strong branding images to ensure the stability of loyalty from its customers so that HSBC will not loss their customers.

Citibank has a low threat of new entrants as the entry barriers associated with strict requirement, regulations and existing economies of scale. Furthermore, it requires a huge investment, high fixed cost and high costs of switching companies. Basically, new entrants have no chance to enter this industry except low cost business, internet banking (Bburkeconsulting 2009).

Threat of Substitutes

If a consumer can switch from business’s product or service to another competitors is a force of threat of substitutes. It examines the number of competitors, the quality of their product and the prices as well. Furthermore, competitors earning and profit can use to determine their ability to decrease their capital or costs more. This threat can be immediate and long-term (Arline 2015).

HSBC always observes and aware about the competitors’ new products and services in the future. This threat had make impacts to the profit of HSBC and hence the organization will work harder to ensure itself is on the top position. HSBC’s strategy is focusing on four segments which helped to fulfil the demands and needs of customers so that this can help to decrease the impact and influence from other services and products.

For Citigroup the threat of substitute is high. AS there many different services and financial banking institutions competing for the global financial market same as Citibank. However, Citibank has been operating for a long period of time and thus it earned a better reputation. The trust between Customers and Citigroup are earned in more countries than other bank. As others don’t build on that trust (Bburkeconsulting 2009).

Bargaining Power of Buyers

Pricing or quality of the power of the buyers can be seen from this force. If there is more seller then buyer, they can change from one business’s products or services to another option easily. When products are purchased in small amounts by buyers, the buying power is low (Arline 2015).

HSBC always satisfied its customers in order to gain the loyalty and satisfaction of the customers. HSBC’s strategies had helped the organization itself to rank in the banking sector in the world.