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Porters 5 Forces of Competition
Porters 5 Forces of Competition
Porters 5 Forces of Competition
Porters 5 Forces of
Competition
Haroon Fareed
EMBA 2K18
Porter’s Five Forces Analysis
Like most of the banks operating in Pakistan, Allied Bank is also attempting to expand their
business and services to maximize returns for its stakeholders. Through the investigation of the
competition and entry in these markets, the sustainability of the bank can be identified. The
Porter’s analysis is used to measure the ability of the firms in performing in the Pakistani market.
Rivalry among the Existing Competitors – High (Net interest margin, ROE – if going down)
1. Very high Rivalry. (Price and service are only two factors that Banks compete on)
2. High operational costs. (much higher for newer entrants and small banks)
3. Public and Micro Finance institutions.
4. Strong regulator. (SBP)
There is a medium power among the suppliers of the bank who are definitely the people from
whom the banks raise funds (mainly depositors). The major source of funds of Allied like all
banks comes from the customers or depositors that are said to be their suppliers. In order to
attract the larger funds, the private banks offer high interest rate which is important for the
continuous sustainability of the bank.
Retail clients do not demand higher interest rates and do not move accounts frequently
Corporate clients seek highest return on their deposits and move accounts.
There is a high power among the people in terms of utilizing the products such as their cards,
loans and other services. The high power on the customers is gained because of the number of
banks operating in the market that offer similar services. However, Allied Bank is in advantage
because of the large branch network of 1350 plus branches, I-banking and ATM network. It is
amongst the top 5 (Big 5) banks of Pakistan.