<p align="justify">State Bank of India (SBI) is multinational, public sector financial services and banking company in India. It is a government-owned entity with headquarters in Mumbai. It was found in 1806 as Bank of Calcutta, became Imperial Bank of India in 1921, and finally State bank of India in 1955. SBI has more than 420 million customers, 209,000 employees, 24,000 branches, and 59,000 ATMs. Its revenue was more than $46 billion in 2017. It is the 232nd largest corporation of the world as per Fortune Global 500 list of 2016. SBI deals in consumer banking, corporate banking, insurance, investment banking, private equity, mortgage and loans, and many other financial services. During its growth to become India’s largest bank it has acquired a number of other banks such as State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and others.<br />
Following is a detailed Porter Five Forces Model Analysis of SBI:
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<h2 align="justify">Competitive Rivalry – High</h2>
<p align="justify">The banking industry is one of the most competitive industries today. This industry has been in our society for centuries now and almost everyone in one way or another makes use of their services. The competitors of SBI include Andhra Bank, HDFC Bank, ICICI Bank, Citibank, and many others. The banking industry is no longer limited to just opening accounts or giving loans; it has become very versatile now. The competition is now about being innovative and attracting customers with different unique products to suit their needs. Every bank attempts to lure customers away from competitor banks. Customers want the best services at the lowest rates at the fastest pace. Thus, the competitive rivalry is very high for SBI.
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<h2 align="justify">Threat of New Entrants – Low</h2>
<p align="justify">The entry barriers of the banking industry are very high. It is not easy establishing a private bank in India at the national level. It takes a lot of time and huge investment. There are strict regulations by the regulating bodies. People do not trust new banks with their money. Marketing costs will also need to be incurred. A new bank launching itself only in a niche segment in a particular area has a chance of being successful. India’s banking sector regulatory reforms also limit the presence of foreign banks in India, further lowering this threat for SBI. Thus, the threat of new entrants is low for SBI.
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<h2 align="justify">Bargaining Power of Suppliers – Low</h2>
<p align="justify">The suppliers of SBI can be divided into two categories. First are those who supply materials like stationery and other required goods and the second category are the service providers i.e. the human resource (Goel, 2010). The suppliers of the first category pose no threat. SBI is a bulk purchaser making it ideal for a supplier. The suppliers are in large number making the switching cost of SBI very low. They cannot attempt to influence SBI. The second category can be attracted by other banks with better offers of employment. Banks are always on the lookout for talented employees. Overall, the bargaining power of the suppliers against SBI is low.
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<h2 align="justify">Bargaining Power of Buyers – High</h2>
<p align="justify">There are a lot of banking and financial service provider options for the customer. There switching cost is very low. All the services that SBI provides are also provided by a majority of the other banks. The competition is now on effectiveness and the speed of the services being provided. This is especially for high-margin corporate clients. Reduced service charges, higher currency exchange rates, and other facilities are being used to attract customers. SBI is not in a position to attempt to influence the customers or raise its service charges. Therefore, the bargaining power of the buyers against SBI is high.
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<h2 align="justify">Threat of Substitutes – Medium</h2>
<p align="justify">Besides banks, there are other financial institutes that provide many of the services such as loans, insurances, mortgages etc to customers. They are substitutes of banks and are also competing with them. In addition to these, many companies such as Microsoft, Sony, and General Motors offer financing solutions to customers who buy in bulk or buy big ticket items (Ganesh, 2013). However, due to the large size of SBI, these substitutes present only a mild threat against SBI.</p>
<h2 align="justify">References</h2>
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Ganesh, B., 2013. Strategic Management State Bank of India. [Online] Available at: <a href="http://www.managementparadise.com/balajiv.ganesh/documents/5982/strategic-management-state-bank-of-india/">http://www.managementparadise.com/balajiv.ganesh/documents/5982/strategic-management-state-bank-of-india/</a> [Accessed 19 July 2017].<br />
Goel, V.R., 2010. State Bank of India Strategy Analysis. [Online] Available at: <a href="https://www.scribd.com/doc/25961830/State-Bank-of-India-Strategy-Analysis">https://www.scribd.com/doc/25961830/State-Bank-of-India-Strategy-Analysis</a> [Accessed 19 July 2017].</p>
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