Porter’s five forces also known as P5F

 

Porter’s five forces also
known as P5F was created by Michael E. Porter in 1979, that is a strategy for
inspecting the engaging quality of an industry or organization.  This five forces helpful to find the industry
or organization strength and current competitive positions. Porter’s five
forces to understand whether the organization will be profited or not by using
strategic analysis and used to identify areas of strength, to improve
weaknesses and to avoid mistakes.

 

 

 

1.     
Rivalry among existing competitors (High)

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Customer switching cost is very low.

     
Newer and newer private and foreign firms
are opening their branch rapidly.

     
Providing undifferentiated services.

     
Bangladesh banking industries are getting high market growth rate.

 

2.     
Bargaining power of Buyers (Low)

     
Customers must obey to pay their loan
timely.

     
Customers have not powered to change the rules and regulation.

     
Customers have a chance to take various products and services with a fixed interest rate that is always set by the
bank.

 

3.     
Bargaining power of suppliers (low)

     
The bank always set the interest rate that
reduces the bargaining power of suppliers
or depositors.

     
Depositors or suppliers have low chance to
switch

     
Bangladesh Bank imposes the regulation
Branches do not gather all access power.

     
Head office has the power to control all the branches.

 

4.     
Threat of new entrants (low)

     
The new bank has to obey the government
rules and regulations as well as to face trouble for obtaining licenses that are a lengthy
process to start-up the new banking business. On the other hand, JBL already
obtained a marketplace.

     
The new bank needs high primary investment
and skills workforce.

     
Low customer reliability on the new bank but JBL has minimum loyalty to their
customer.

 

5.     
Threats of substitute products and
services (High)

     
Non-banking financial institutions (NBFI)
is a close substitute of banking in respect of raising funds for the customers
with the less formal procedure.

     
The post
office is also providing some service like fixed deposit facility, saving the account, recurring account etc. The interest
rate of savings account is higher than
banks. It is fully secured by the government so people who do not want to take
the risk for them post office saving is a
good substitute. 

     
Government bond also attracts savings from
the general public. It is less risky and more secure
as compared to savings in banks.

     
Mutual funds are also now proving as good
substitutes for banks. They assure for providing high return with less time in
comparison of banks. The administrative expenses are also very low as compared
to banks. Investment in Mutual funds is more flexible than investment in banks.

 

 

SWOT Analysis

Albert
Humphrey created The SWOT analysis, who led a research project during the 1960s
and 1970s at the Stanford Research Institute (now SRI International) for the purpose of to identify why corporate
planning failed. A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the strengths, weaknesses,
opportunities, and threats involved
in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person.  It includes determining the target of the business
wander or venture and distinguishing the inward and outer variables that are positive
and negative to accomplish that objective.

A SWOT analysis of a bank formally
evaluates the financial institution’s strengths, weaknesses, opportunities, and threats. This analysis identifies these
four main elements to help upper management better leverage its strengths to
take advantage of future business opportunities while better understanding its
operational weaknesses to combat threats to potential growth. A SWOT analysis
can also address many other scenarios, such as new business initiatives,
strategic planning, and decision-making,
marketing budgets or even advertising campaigns. As JBL is a second largest
leading commercial bank of Bangladesh the SWOT has analyzed.

 

     
Strengths

     
As a second largest commercial bank,
it has qualified and experienced manpower.

     
Branch location is favorable for
business and customer.

     
Community involvement.

     
Regulatory performance is strong and
positive.

     
Focus on better customer service.

     
A wide range of
diversified products lines for the
customers.

     
Bank has an interactive corporate
culture.

     
The interest rate is affordable.

     
The credit risk management is very
efficient.

     
Co-ordination and co-operation among
the staff.

 

     
Weaknesses

     
Lack of knowledge of customer profile.

     
Insufficient focus on quality
customer service and mortgage banking.

     
Lack of motivation for workers.

     
Low salary structure for the
employee.

     
The high-interest rate on
loan.

     
Lack of ATM booths service.

     
Technology and internet banking
system, not up-to-date satisfactory
level.

     
Shortage of skilled workforce.

 

 

     
Opportunities

     
Opportunity to expand geographically
within Bangladesh.

     
Expansion of new investment areas
with the innovative business idea.

     
The investment opportunity
is arising for export-import loans.

     
The bank shows a positive trend.

     
Scope for automation will open a big
door of opportunity.

     
In case of fund crises, the bank
gets support from the government.

     
The bank undertakes need-based training program.

 

     
Threats

     
Lack of client

     
The political instability
of the country.

     
Lack of Flexibility to adapt to
any change.

     
The continuing increase in non-bank
competitors offering similar services.

     
Continued deregulation and
globalization of services.

     
Increasing significantly Bad Debt and
non-performing loans.

     
Newly developed privatized and a foreign bank.

     
Loan recovery systems are very poor.

     
Policies are not practiced properly.

     
The economic downturn and
a high inflation rate of the country economically.