Blackrock is one of the American International assets management corporations. The Headquarter of the company is in New York. It was founded in 1988. It was founded by Robert S. Kapito. The company is operating in 30 different countries in the world and it has 70 offices in different locations. The company is dealing with a database of customers from 100 different countries. The main product of the company is asset management. It is owned by PNC financial services. The main subsidiaries of the company are Blackrock Institutional Trust Company, N.A. Blackrock Fund Advisors, Blackrock Group Ltd. [1]
The company is a public listed company. It is registered in New York Stock Exchange and traded as S&P 100 and S&P 500 component. The company is providing its services worldwide. The total number of employees who are working in this organization is 14,900 according to 2018 report. The company owns total assets of US$159.573 billion (2018). The total revenue of the company is US$14.198 billion (2018). The current stock price of the company is $498.61 per 14-Dec. [2] [3]
Threats of New Entrants
The financial service industry is one of the most volatile industries in the world. As the prime operations of the company are assets management, which shows companies also deal with risk. The startup cost is high. There are existing competitors which have brand identification, product differentiation, and brand loyalty as well. Similarly, the switching cost is low for the buyer which put pressure on all the organizations to do efficient pricing to retain and attract more customers. Legal procedures and all the documentation, it’s a long and complex process. As it is a capital intensive industry, so a large amount of capital is needed to run the day to day operations. When we specifically talk about the USA’s market, it is less volatile as compared to others but global economic change exerted a lot of pressure on this economy. It affects the economy as a whole. Therefore, keeping in mind all of these factors. We can say that threats of new entrant is low in this market.
Threats of Substitutes
When different products or services in the market meets the common customer needs the profitability of industry suffers. As there is a large industry that providing security to a large market. Every person needs security. There are several companies providing investment management services in the market. Every company is differentiating itself based on different values. Therefore, all of these factors shows that threats of substitute exists in this market.
Bargaining Power of Buyers
When there is more than one product in a market that can satisfy a common need. The buyer is willing to purchase from the customer which provides more value. In this case, the switching cost of the buyer is high. It means the buyer can easily switch from one seller to another due to any reason. Switching cost effects the profitability of businesses, so due to this factor companies try to be more efficient in pricing to become able to sustain in the market, to grow the market, etc. Therefore, all of these factors show that there is a moderate level of bargaining power of buyers exists in the market.
Bargaining Power of Suppliers
As this industry is capital intensive, so different financers are required to fulfill the customer’s need and to do day to day operations. Similarly different other suppliers are also needed and important because if they do not provide the raw material than a company may not be able to do any operations. As the number of firms is more as compare to suppliers it can also affect the market. Therefore, the bargaining power of the supplier exists in this industry where Blackrock is doing operations.
Competitive Rivalry
Competitive rivalry is also one of the factors that affect the profitability of businesses. As the number of firms are doing business in assets management field, it means more substitute in the market, it will put pressure on the company to lower the prices or to produce in large scale so that we can sale the product in cheap price. All of these eventually affect the market share of companies, due to which companies try to let down each other by different strategies. Therefore, in this market competitive rivalry exists where Blackrock is doing business.
References
1 Blackrock, 2019, about, [online], Available at: https://www.blackrock.com/corporate#section-6
2 Yahoo finance, 2019, Blackrock, Inc. (BLK), [online], Available at: https://finance.yahoo.com/quote/BLK/
3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2018, Blackrock, Inc. annual report 2018, [online], Available at: https://ir.blackrock.com/Cache/396937020.PDF?O=PDF&T=&Y=&D=&FID=396937020&iid=4048287