<p style="text-align: justify;">Skandinaviska Enskilda Banken AB, abbreviated as SEB AB, is a financial group owned by the Swedish Wallenberg family. The bank has transformed from its predecessors and is operating with its current corporate structure since 1972. It is headquartered in Stockholm, Sweden. The bank provides services to retail clients, corporate customers, and institutes. The bank&#8217;s primary business is providing banking services to its client base, in addition, SEB AB also has a life insurance business, and it owns Eurocard.</p>
<p style="text-align: justify;">It is the leading Nordic banking company, which values innovation and supports entrepreneurs through continued support. SEB AB has 4.4 million active customers, and it has 15,000 employees (SEB Group, 2021). Porter&#8217;s five forces model is used to assess the business and financial risk SEB AB is exposed to.</p>
<h2 style="text-align: justify;">Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The Swedish banking sector is intensely competitive, and the concentration in the sector is equivalent to the European average. It is due to the balanced presence of the small and large banks in the industry. The completive rivals of the SEB AB are Danske Bank, Swedbank and<br />
Svenska Handelsbanken. SEB AB has reported $7 billion in revenue and $1.7 billion in profits (Forbes, 2021). The bank&#8217;s operating profit for 2020 amounted to SEK 19.8bn with a return on equity of 9.7 percent (SEB Group, 2021).</p>
<p style="text-align: justify;">Danske Bank, a significant competitor based in Denmark, in the financial year 2020, has reported a revenue of $20.9 billion and profits of $617.5 million (Forbes, 2021). Svenska Handelsbanken, the most prominent Swedish bank, has reported $6.5 billion in revenue and earned a profit of $1.7 billion (Forbes, 2021). Therefore, the market is highly competitive.</p>
<h2 style="text-align: justify;">Threat of Substitutes</h2>
<p style="text-align: justify;">The threat remains moderate in the short term; however, its outlook changes with the longer horizon. The banking sector has evolved in terms of how business is done, but there is still a massive improvement. That is due to the data-intensive nature of the industry and the excess tedious processes. Fintech companies fill the void by taking on traditional companies by providing efficient services and reducing redundancy by leveraging technology.</p>
<p style="text-align: justify;">The Swedish fintech scene is vibrant and lively; some of the most valuable European companies, and the growth is partially attributed to the tech-savvy nature of Swedes (Anjou et al., 2021). However, traditional banks are responding well, improving good service quality, and are en route to be the most digitally leading country. Therefore, the threat remains low to moderate in the short term.</p>
<h2 style="text-align: justify;">The Threat of New Entrants</h2>
<p style="text-align: justify;">The threat of new entrants is considered to be low in the industry. There are industry-specific limitations such as established incumbents, high capital requirement, and regulatory framework. The new business faces difficulty penetrating the market and breaking even because of megabanks&#8217; presence. The Swedish bank SEB and Nordea Bank, headquartered in Finland, were the leading banks for large corporations in Sweden in 2021, with a market penetration rate of 84 and 81 percent, respectively (Norrestad, 2021).</p>
<p style="text-align: justify;">Lack of financing options also makes it challenging to meet the high capital requirements to start the business. Moreover, the industry is highly regulated, and there is a considerable compliance cost associated with it. Therefore, the threat is considered to be low to moderate.</p>
<h2 style="text-align: justify;">Bargaining Power of Buyers</h2>
<p style="text-align: justify;">The bargaining power of the customers is assessed to be high in the industry. It can be measured by assessing the buyers&#8217; concentration, state of competition, switching cost, and brand loyalty.</p>
<p style="text-align: justify;">Buyers&#8217; are not concentrated and, therefore, do not hold higher bargaining power. There is mild brand loyalty in the market that is primarily due to strong cultural values. Products are pretty similar in the industry; therefore, lack of differentiation and low switching cost makes it easier for clients to switch service providers. Low switching is one reason for customers&#8217; higher bargaining power (Vyas &; Raitani 2014). There are ample options to choose from; it yields consumers with higher bargaining power. Therefore, consumers have higher bargaining power.</p>
<h2 style="text-align: justify;">Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">Suppliers hold moderate bargaining power. The risk is considered high if there is a high forward integration risk, suppliers are concentrated, and the supplies are specialized. However, the risk of forward integration is low as suppliers cannot quickly move into the business. Other risks are weighted per specific factors. Human resources, significant supply for the business, are in abundant supply than demand.</p>
<p style="text-align: justify;">Institutional investors bring significant funds to the business, and their investment is industry independent. They are aware of their importance and therefore yield higher bargaining power. When suppliers know their importance, they can exercise higher bargaining power (Dess, 2006). Therefore, suppliers have moderate to high bargaining power.</p>
<h2 style="text-align: justify;">References</h2>
<p style="text-align: justify;">Anjou, M., Löfquist, J., Vinterskog, I. (2021). Sweden – a flourishing Fintech start-up scene in spite of regulatory hurdles. Available at: https://www.ibanet.org/article/69789E67-A676-43BD-917B-A407B2753257<br />
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. Internationaledition. London: McGraw-Hill.<br />
Forbes. (2021). Danske Bank. Available at: https://www.forbes.com/companies/danske-bank/?sh=768d68754242<br />
Forbes. (2021). SEB AB. Available at: https://www.forbes.com/companies/seb-ab/?sh=567bc8a15162<br />
Forbes. (2021). Svenska Handelsbanken. Available at: https://www.forbes.com/companies/svenska-handelsbanken/?sh=512b88ef31ff<br />
Forbes. (2021). Swedbank. Available at: https://www.forbes.com/companies/swedbank/?sh=5cdd90507501<br />
Norrestad, F. (2021). Leading banks for large corporations in Sweden in 2021, by market penetration rate. Available at: https://www.statista.com/statistics/454043/penetration-banking-for-large-corporates-sweden/<br />
SEB Group. (2021). SEB&#8217;s year-end report. Available at: https://sebgroup.com/press/news/sebs-annual-accounts-2020<br />
SEB Group. (2021). Who we are. Available at: https://sebgroup.com/about-seb/who-we-are<br />
Vyas, V., &; Raitani, S. (2014). Drivers of customers’ switching behaviour in Indian banking industry. International Journal of Bank Marketing.</p>