Aplication of Porters Forces Model in Microfinance
Universidad Panamericana | APLICATION OF PORTER’S FIVE FORCES MODEL IN THE MICROFINANCE INDUSTRY OF MEXICO | A strategic analysis of industry | | By Carlos Enrique Avelar González | 28/05/2010 |
Strategic Planning
Management and finance
School of Economics and Business
Universidad Panamericana
CONTENTS 1. Background 3 2. Problem definition 3 3. Research method 4 4. Scope of the study 5 5. Limitations of the study 5 6. Possible errors 6 7. Theoretical framework 7 8. Results 8 9. Conclusion 17 10. Bibliography 18
BACKGROUND
Given the widening gap of economic inequality in Mexico, microfinance has emerged as an effective alternative for fighting poverty and promoting economic development of poor and marginalized families. The favorable results of this tool in developing countries in recent decades have resulted in the creation of a high number of new institutions focused on meeting the financial needs of disadvantaged social sectors (Navajas & Tejerina, 2006).
Given the great expansion of microfinance in Latin America and in Mexico, a large number of entrepreneurs and investors have begun to see the sector as a new and profitable business opportunity, even though barely a few years ago microfinance were primarily considered a task for nonprofit associations.
The term microfinance can be understood as the provision of financial services for people who lack access to traditional commercial banking; users of these services are mostly poor people or people with low incomes. In this context, microfinance aim to make available all financial services offered by a bank to people with low financial resources. According to the Asian Development Bank microfinance can be defined as ‘the provision of a broad range of financial services Such as deposits, loans, payment
Strategic Planning
Management and finance
School of Economics and Business
Universidad Panamericana
CONTENTS 1. Background 3 2. Problem definition 3 3. Research method 4 4. Scope of the study 5 5. Limitations of the study 5 6. Possible errors 6 7. Theoretical framework 7 8. Results 8 9. Conclusion 17 10. Bibliography 18
BACKGROUND
Given the widening gap of economic inequality in Mexico, microfinance has emerged as an effective alternative for fighting poverty and promoting economic development of poor and marginalized families. The favorable results of this tool in developing countries in recent decades have resulted in the creation of a high number of new institutions focused on meeting the financial needs of disadvantaged social sectors (Navajas & Tejerina, 2006).
Given the great expansion of microfinance in Latin America and in Mexico, a large number of entrepreneurs and investors have begun to see the sector as a new and profitable business opportunity, even though barely a few years ago microfinance were primarily considered a task for nonprofit associations.
The term microfinance can be understood as the provision of financial services for people who lack access to traditional commercial banking; users of these services are mostly poor people or people with low incomes. In this context, microfinance aim to make available all financial services offered by a bank to people with low financial resources. According to the Asian Development Bank microfinance can be defined as ‘the provision of a broad range of financial services Such as deposits, loans, payment
Bibliography: Source: Microfinance Information Exchange (2010) Capital requirements: Capital requirements are different for each type of institution, while banks require high capital investments; the non-banks usually have significantly lower capital requirements Source: Westley (2007:p53). But investment requirements are not limited to minimum capital requirements; the microfinance institutions have significant investment requirements Source: Microfinance International Exchange (2010). As we can see, the five largest companies in the sector concentrate 56.10% of the market, and the 10 largest companies in the sector concentrate 61.50% of the market