Porter ‘Five Forces Analysis’ for the Banking Industry in Ghana

3887 words 16 pages
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”.
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Although the services may not be as well structured, some individuals find it rather convenient for reasons such as presentation of less documentation, non-provision of collateral for borrowing, less cumbersome processes. Other examples are Savings and Loans Companies, Forex Bureaus, Mortgage Houses and Micro Finance Companies.
Competitive Rivalry
“High rivalry limits profits” (Porter 2008:85). Porter (2008) stated that it takes many familiar forms including price reduction, discounting, product innovation and service improvement.
Rivalry in the banking industry in Ghana is very high especially between the local banks and the foreign banks. Each firm tries to win the most customers and get them to stay loyal. These are usually achieved through forms mentioned above from Porter’s work.
Concentration of rivalry is greatest if competitors are numerous, industry growth is slow, the products is perishable and products and services are nearly identical (Porter 2008).
Conclusion
Although the Ghanaian banking industry is experiencing fast growth, there are many emerging substitutes, making customers powerful. Entry barrier is also low, allowing new entrants who are in turn competing for profits.

2. Strategically, which are the most important forces for organizations in this industry to consider, and why? (1000 words).

Introduction
This section aims at identifying the most important forces in the Ghanaian banking industry and explains why they are important.

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