Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Porter’s Five Forces model of analyzing any industry marketplace first assesses the overall level of competition of the industry actors, the threat of substitutes, the bargaining power of consumers, the bargaining power of suppliers, and the threat of new entrants into the marketplace (Maverick, 2020). Clearly, the banking industry at present is intensely competitive. Even the most casual observer of a typical city, suburban, or even rural area will see many banks making offers to potential customers, spanning from free checking accounts, to low interest rates on refinancing mortgages, or higher rates on CDs (Maverick, 2020). There are many small and regional banks. Wells Fargo is one of four major banks in the United States—JPMorgan, Citibank, Bank of America are the others—with a national presence (Maverick, 2020).
For these four banks, competition is intensive, and there is also the threat of some substitute products, including credit unions and other investment firms that permit consumers to engage in most basic banking functions. There is also often very low transaction cost switching from bank to bank, although switching one’s direct deposit paycheck from one bank to another, or IRA, may be a hassle, and some investment products such as mortgages or CDs can likewise force a consumer to remain with a bank for a specific duration.
The new online banking environment makes it possible for people to have banking accounts at branches that are not even a presence in their area. It also makes it easier for consumers to compare rates of different banks, and choose the best one that suits their needs. Wells Fargo, in other words,...…significantly eroded many customers’ trust in the bank (Maverick, 2020).
The banking industry is unique in that consumers are effectively the suppliers of the bank in the form of revenue. Again, corporate clients and higher income investors can have a significant impact upon the bank’s future (Maverick, 2020). Employees would also be considered a supplier of necessary services to the bank. Although the economic environment may vary from location to location, bank employees can usually find work relatively easily at the locations of different rivals, at least at the lower levels of employment. Finally, in terms of the threat of new entrants, although this was considered relatively low, again, the presence of online money transfer firms substantially increases the likelihood of new actors entering the industry to challenge the four major firms, including Wells Fargo.…
Reference
Maverick, J.B. (2020). Analyzing Porter’s Five Forces on JPMorgan. Investopedia. Retrieved from: https://www.investopedia.com/articles/markets/020916/analyzing-porters-five-forces-jpmorgan-chase-jpm.asp
SWOT Analysis: Its Uses for Wells Fargo As noted by Giesen (et al., 2010), one of the most difficult things for any business to know is when and how to alter its core business model. Technology businesses such as IBM have been forced to do this, as the physical product lines on which they based their successes have become obsolete. The consequences of failing to innovate are dire, as seen when
Wells Fargo Fake Account Crisis A crisis is defined as the perception of an unprecedented event/incident that threatens shareholders’ valuable expectations in relation to economic, health, environmental, and safety issues (Coombs, 2014). Since organizations operate in a challenging and highly competitive environment, they are likely to undergo crises. An example of an organization that has experienced a crisis in the recent past is Wells Fargo. The company recently experienced a scandal
Wells Fargo Scandal The Wells Fargo Collateral Protection Insurance (CPI) Scandal occurred as a result of the banking firm placing CPI on accounts even though the account holders did not ask for it or want it. It resulted in customers paying unnecessary and higher fees over a period of time. Wells Fargo was sued and agreed to settle the case out of court for approximately $400 million without admitting fault (Top
For this reason, they have stepped out to pursue alternatives, especially foreign cars. On the contrary, as consumers become price oriented, they have minimal purchasing power because they are not buyers of large volume automobiles (Porter, 1985). 3.3 Threat of New Entrants It is extremely difficult for new entrants penetrate the auto industry because of the existing high level of brand loyalty. Nevertheless, the few popular overseas firms and entered the
Buying one brand of shampoo instead of another, for instance, is quite common. Rivalry, therefore, is high. Porter's value chain Porter shows how firms such as Procter & Gamble can create competitive advantages for themselves. He categorizes a company's activities in the following way: 1. Primary activities: (a) Inbound logistics -- receiving the incoming material, including the handling and inventory of their material; (2) operations -- P&G's suppliers forming this material into
In fact, many of them are more likely to make sure that as much space is provided when it comes to taking over the Internet. For example, these individuals want to make sure that they are likely to get what it is they want by having a Web presence. This means that they are going to do everything possible to have as many contacts as possible from off the