Fice Forces for Baking Industry

1. Poster’s five forces:

a. Bargaining of buyer power

Bank industry is a high buyer concentration industry, many people use bank service, such as deposit money, insurance and currency exchange. When Internet becomes changing people’s life, customer can easily obtain information through Internet, they can easily compare the price and service. Interest Rate and service charge is sensitive indicator for customer in bank industry, customer may due to those indicators to draw out all or a lot amount of capital from bank to bank/ other financial institution.

b. Bargaining of suppliers power (low)

In bank capital supplier, depositor also is capital supplier of bank, they will compare with other financial product to see whether draw out capital or not.

In computer equipment supplier, the concentration ratio of computer is high, many companies use IBM, but it doesn’t mean other computer companies are not good, such as Sun Microsystems, Fujitsu and Hewlett-Pack also provide similar computer equipment and solution.

In credit card supplier, credit card industry is a high concentration ratio industry, VISA, Master Card and American Express is the most popular credit card in the world

c. Threat of new entrance (high)

Many financial even non-financial organizations can easily entry to bank industry. They can use more little money to build a website; they can also integrate with other organizations. The switching cost of this behaviour become smaller than before and the advantage is larger than before also.

d. Threat of substitutes product

Internet makes many organizations can use smaller amount of money relatively to provide similar even same service, and the service charge become smaller. Customer will due to convenience, low cost and high efficiency to change