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    The document analyzes the banking industry in Pakistan across several factors of industry attractiveness. It finds that: 1) Entry barriers into the banking industry are moderate, as capital requirements are high but economies of scale can be achieved. 2) Exit barriers are also moderate, as fixed costs of exiting make it difficult for firms to leave the industry. 3) Competitive rivalry is high due to aggressive competition among similar banks offering comparable products and services. 4) The power of buyers is moderate, as customers have some switching options but banking services are essential. 5) The threat of substitutes is moderate, as few close substitutes exist outside the banking industry. Overall,

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    The document analyzes the banking industry in Pakistan across several factors of industry attractiveness. It finds that: 1) Entry barriers into the banking industry are moderate, as capital requirements are high but economies of scale can be achieved. 2) Exit barriers are also moderate, as fixed costs of exiting make it difficult for firms to leave the industry. 3) Competitive rivalry is high due to aggressive competition among similar banks offering comparable products and services. 4) The power of buyers is moderate, as customers have some switching options but banking services are essential. 5) The threat of substitutes is moderate, as few close substitutes exist outside the banking industry. Overall,

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    80 views13 pages

    Banking Industry Analysis: Presented by

    Uploaded by

    jalilkhanbarozai
    The document analyzes the banking industry in Pakistan across several factors of industry attractiveness. It finds that: 1) Entry barriers into the banking industry are moderate, as capital requirements are high but economies of scale can be achieved. 2) Exit barriers are also moderate, as fixed costs of exiting make it difficult for firms to leave the industry. 3) Competitive rivalry is high due to aggressive competition among similar banks offering comparable products and services. 4) The power of buyers is moderate, as customers have some switching options but banking services are essential. 5) The threat of substitutes is moderate, as few close substitutes exist outside the banking industry. Overall,

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    of 13

    Banking industry analysis

    Presented by
    Umar Javaid
    Zain ul sadiqeen farhan
    Waqas wafeez
    Jaleel khan
    Threat of New Entrants/ Entry Barriers
    Factors HUFA MUFA Neutral MFA HFA comment

    Economies of scale 5 As much branches bank starts in any


    region their over all cost will be
    Capital required minimized
    To start a new bank a lot of capital is
    5
    required for getting the license and for
    maintaining statutory liquidity
    Access to 3 reserves
    distribution channels Almost all kinds of banking services
    are available without any special
    Expected retaliation network of distribution channels
    2 Retaliation is lower coz of large
    Differentiation number of competitors.
    4
    A new entrant have to adopt all
    product & services with new
    technology.
    Brand Loyalty
    There is no concept of brand loyalty in
    2 banks it is very easy to redeem a bank
    client into your own
    Experience Curve
    5 Experience labor available in the
    Govt. Action industry

    4 Currently government is not issuing


    any more licenses to banks to operate
    in Pakistan there are some legal
    restrictions

    4 3 8 15
    Factors HUA MUA Neutral MFA HFA Comments

    Specialized 5 Every firm have low


    Assets specialized assets
    initially
    Fixed Cost of 4
    Exit Firm cannot exit easily

    Strategic
    interrelationship 4
    Bank to bank
    financing/ mergers
    and acquisitions are
    common examples
    Government
    Barriers 1 Strict government
    restrictions
    1 0 0 8 5
    Average 14/4 = 3.5
    Competitive Rivalry
    Factors HUFA MUFA Neutral MFA HFA Comment

    Composition of 4 All kind of specialization is


    Competitors available.
    4 High Growth Rate
    Mkt. Growth rate
    Scope of
    1 Stiff & aggressive
    competition competition
    Fixed storage Almost Same cost
    3
    Cost

    Capacity Increase 4
    No restrictions on branch
    spreading

    Degree of
    Similar products & Services
    differentiation 3

    Strategic Stake 5
    All firm are interdependent
    1 6 12 5

    Average 24/7 = 3.42


    Power Of Buyer

    Factors HUFA MUFA N MFA HFA Comment

    Number of 5 Increasing in domestic


    Important buyers industry.

    Threat of Backward 5 No or very limited chances that


    integration a client can purchase a bank

    Product supplied 3 Providing undifferentiated


    products.
    Switching cost
    % of buyer’s cost Customer can easily switch
    1

    Profit earned by As much profit a customer


    1 earns it means the bank is
    buyer
    paying it, banks expenses are
    there earnings

    Importance to final
    2 Essential for the customer
    quality of buyers
    Product
    2 2 3 10

    Average 17/6 = 2.83


    Threat Of Substitute Product
    Factors HUFA MUFA N MFA HFA Comment
    Threat of 1 Customer will prefer always
    Obsolescence of new facilities and services
    Industry’s product

    Aggressiveness of 3 Almost all banks have


    substitute products same services and there
    in promotion are no close substitutes out
    of industry

    Customer cannot easily


    Switching Cost 5 switch due to high cost
    (from national bank closest
    to a city if a customer
    prefer askari bank outside
    area its switching cost will
    be very high)

    Perceived price/ Depend upon customer


    value 3 either they are price
    conscious or not
    1 9 5

    Average 15/4 = 3.75


    Overall Industry attractiveness
    Factors Unfavorable Neutral Favorable

    Entry Barriers 3.75

    Exit Barriers 3.5

    Rivalry among existing 3.42


    firms

    Power of buyers 2.83


    3.75
    Power of Suppliers

    Threat of substitutes
    2.5
    5.33 14.42

    Average 19.75/6 = 3.291

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