Porter ‘Five Forces Analysis’ for the Banking Industry in Ghana
1. Undertake a Porter ‘Five Forces Analysis’ for an industry with which you are familiar (1000 words).
Introduction
This essay is aimed at analyzing Porter’s five forces for the banking industry in Ghana. It gives a brief introduction to the industry and provides a detailed application of the five forces to the industry.
Porter’s Five Forces Analysis in the Ghanaian Banking Industry
“Competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants and substitute products” (Porter 2008:79).Porter (2008:80) also mentioned that, “understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability”. These statements explain the underlying dynamics in relation to competition within the confines of parameters that determine the success or failure of any business entity.
The banking industry in Ghana has been selected for this analysis because in the opinion of writer, all five forces directly relate to the banking industry with an influence on profitability and growth. The industry has customers who are the main beneficiaries of products and services offered, suppliers who provide the industry with the necessary tools to ensure services could be delivered satisfactorily, threat of substitutes due to improvement and usage of innovative technology, rivals and threat of new entrants due to the high profitability of the industry.
There are currently 27 commercial banks, made up of both foreign and local banks(Bank of Ghana 2013) which are regulated by Bank of Ghana (BOG),the Central Bank and it ensures all banks comply with regulatory requirements and maintain a healthy level of competition.
In the mid 2000’s Nigerian Banks started investing in Ghana posing a threat to local indigenous banks. The competition however had an upside to it as it made the Ghanaian banks improve services, turnaround time(TAT) and even extend
Introduction
This essay is aimed at analyzing Porter’s five forces for the banking industry in Ghana. It gives a brief introduction to the industry and provides a detailed application of the five forces to the industry.
Porter’s Five Forces Analysis in the Ghanaian Banking Industry
“Competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants and substitute products” (Porter 2008:79).Porter (2008:80) also mentioned that, “understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability”. These statements explain the underlying dynamics in relation to competition within the confines of parameters that determine the success or failure of any business entity.
The banking industry in Ghana has been selected for this analysis because in the opinion of writer, all five forces directly relate to the banking industry with an influence on profitability and growth. The industry has customers who are the main beneficiaries of products and services offered, suppliers who provide the industry with the necessary tools to ensure services could be delivered satisfactorily, threat of substitutes due to improvement and usage of innovative technology, rivals and threat of new entrants due to the high profitability of the industry.
There are currently 27 commercial banks, made up of both foreign and local banks(Bank of Ghana 2013) which are regulated by Bank of Ghana (BOG),the Central Bank and it ensures all banks comply with regulatory requirements and maintain a healthy level of competition.
In the mid 2000’s Nigerian Banks started investing in Ghana posing a threat to local indigenous banks. The competition however had an upside to it as it made the Ghanaian banks improve services, turnaround time(TAT) and even extend
References: Porter, M.E. (2008) ‘The Five Competitive Forces that shape Strategy’. Harvard Business Review: 79-93. Bank of Ghana (2013) Licensed Banks, Representative Offices & Their Registered offices in Ghana as at March 2012. Available online at: http://www.bog.gov.gh/index.htm(accessed 02/01/2013). Ghana Stock exchange (2013) Press Releases & Events, Financial Statements. Available online at: http://www.gse.com.gh/index.htm(accesed on 02/01/2013). Modern Ghana (2012) BOG Exempts Existing Banks from New Capital requirement. Available online at: http://www.modernghana.com/news/430186/1/bog-exempts-existing-banks-from-new-minimum-capita.html(acessed on 02/01/2013). Modern Ghana (2012) Nigerian Banks Find Doing Business in Ghana Good to Resist. Available online at: http://www.modernghana.com/news/170663/1/nigerian-banks-find-doing-business-in-ghana-good-t.html(accessed on 02/01/2013). Camelot Ghana Limited (2011) Welcome to Camelot. Available online at: http://www.camelotprint.com(accessed on 05/01/2013). i-Broker (2011) New Minimum requirement for Savings & Loans. Available online at” http://www.ibrokerghana.com(accessed on 05/01/2013). Civichino, A. (August 2012) ‘Inside-out or Outside-in? Choose the Process that Suits your Style’. Spectrum: 14-15. Anon (2009) Marketing, Design and Operation, MN7201/D, Edition 2. Day, G.S. & Moorman, C. (2011) ‘An Outside-In Perspective to Strategy: Step Outside to See what’s Important’. Marketing Management: 22:29.