<div class="post">
<div class="body">
<div id="1e27e755-0cbc-46a6-a7d1-29edb21c0984" class="postBody" contenteditable="true">
<p align="justify">Macquarie Group (MG) is an international services company based in Australia. The Macquarie was formed in 1969 and is headquartered in Sydney, New South Wales. The company has a diverse portfolio of products they offer, including retail and business banking, wealth and assets management, commodity trading, and specialist advisory. The company has an enormous presence in the global financial services sector with operations in 32 markets. The company has strong foundations and business strategy; its resilient approaches to business and diversified portfolio enable it to remain profitable since its incorporation (Macquarie, 2021). The company plays a vital role in the community it is based in; they donate to the chosen charities and match their contributions. Since its inception, the Macquarie Group has contributed A$ 475 million (Macquarie, 2021). Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by the Macquarie Group in the financial services sector.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The global financial services sector is highly competitive as there are banks and institutes with massive capital operating in the sector. However, the Australian financial services sector is dominated by big banks, and the Government approach to stabiles the financial system after 2008 favored these banks. They gained ground and a competitive edge (Harper, 2012). MG&#8217;s significant competitors are National Australia Bank (NAB), Westpac Banking Group, and Bank of Queensland. In 2020, MG reported revenue and profits of $9.8 billion and $1.5 billion, respectively (Forbes, 2021). In the same year, Westpac banking group has reported $21.9 billion and a profit of $1.5 billion (Forbes, 2021). Bank of Queensland has performed well over the past year despite challenging circumstances; they have earned profits of $234 million and reported a revenue of $1.7 billion (Forbes, 2021). National Australian Bank, the largest bank in the continent, is ranked at 405th position in the Fortune Global 500 companies. The NAB has reported revenue of $26.9 billion and earned a profit of $259 million (Fortune, 2021). However, the state of competition remains oligopolistic for the companies operating in the Australian financial services sector.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes is assessed to be low in the short term. There are some generic barriers in the industry that keep this threat low. The industry is among the best-suited industries to be disrupted because of its data-intensive nature and century-old practices. The new financial technology companies are trying to disrupt the space by providing better services at a reduced price. The Australian fintech scene is proliferating, with 100 companies breaking out in 2020 (Pollari &; Teper, 2020). They are trying to leverage the digital space that has made online products more accessible and acceptable. However, their only disadvantage is that they offer one off product against the variety and range offered by the incumbents. Australian financial services firms are well established and have the financial power to acquire any startup that threatens their position. They are using this strategy to avoid eroding competitive advantage. Therefore, the threat remains low in the short term.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">Some generic barriers are associated with the financial services industry, such as intensive capital requirements, strict regulatory framework, and established incumbents. A significant barrier for new entrants is usually the high capital required to initiate operations in the banking sector and then subsequently maintain those operations; this is partially alleviated by the presence of the venture capital firms. Another deterrent is the high compliance cost for the regulatory environment. There is a strict compliance framework due to high consequences in case of any misdeed intended or unintended. Another discouraging factor is the presence of established incumbents in the industry. In Australia, the four major banks hold 75% of the market share in loans to small businesses, housing loans, personal deposits, and issuing credit cards (Chai &; Holley, 2021). Therefore, the threat of new entrants is moderate to low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Consumers usually have higher bargaining power in the financial services sector; however, they have limited or moderate bargaining power in Australia. Consumers&#8217; power is contingent upon certain factors such as their concentration, product differentiation, and availability of alternatives. The Australian banking market is relatively concentrated and is dominated by big banks that hold significant sway over customers and competitors (Davis, 2007). These banks hold a major market share. The newcomers are trying to leverage the technology to disrupt the services sector by providing better services at a better price to the consumer, thus providing consumers with more options. These incumbents are complacent due to lack of competition from the bottom and are unaware of main consumer pain points; if the buyers get more options, current banks will be forced to provide better services. However, due to a lack of competition, buyers can exert moderate to low bargaining power.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">Suppliers can exercise higher bargaining power depending upon the factors such as suppliers&#8217; concentration, their importance to the business, and the nature of products or services provided by the supplier. The primary sources of supply can be categorized into three categories: retail customers, institutional investors, and expert human resources. Retail consumers are aware of their importance to the business owing to the completion and available alternatives. However, in Australia, bank concentration reduces their bargaining power. The bloc investors only invest in matching their desired portfolio and requiring a high rate of return, therefore, having higher bargaining power. Supply chain risk increases if they over-reliance on a single source of supply or supplier has high importance (Dada, Petruzzi, &; Schwarz, 2007). Human resources do not pose a risk for bottleneck as there are more aspirants to work in financial services than the vacancies.</p>
<h2 align="justify">References</h2>
<p style="text-align: left;" align="justify">Chai, A., &; Holley, G., (2021). Australia: Increased competition scrutiny in the financial services sector by the ACCC. Available at: https://www.mondaq.com/australia/cartels-monopolies/1043234/increased-competition-scrutiny-in-the-financial-services-sector-by-the-accc?type=related<br />
Dada, M., Petruzzi, N. C., &; Schwarz, L. B. (2007). A newsvendor’s procurement problem when suppliers are unreliable. Manufacturing &; Service Operations Management, 9(1), 9-32.<br />
Davis, K. (2007). Banking Concentration, Financial Stability and Public Policy| Conference–2007.<br />
Forbes. (2021). Bank of Queensland. Available at: https://www.forbes.com/companies/bank-of-queensland/?sh=7ad4ef8c7ee5<br />
Forbes. (2021). Macquarie Group. Available at: https://www.forbes.com/companies/macquarie-group/?sh=5b33f08a29bd<br />
Forbes. (2021). Westpac Banking Group. Available at: https://www.forbes.com/companies/westpac-banking/?sh=2754a3602e49<br />
Fortune. (2021). National Australia Bank. Available at: https://fortune.com/global500/2017/national-australia-bank/<br />
Harper, I. (2012). Competition in Banking Finding balance between competition and stability. Available at: https://www2.deloitte.com/au/en/pages/economics/articles/competition-in-banking.html<br />
Macquarie. (2021). About. Available at: https://www.macquarie.com/hk/en/about.html<br />
Macquarie. (2021). About. Community. Availabale at: https://www.macquarie.com/hk/en/about/community.html<br />
Pollari, I &; Teper, D. (2020). Australian fintech landscape 2020. Available at: https://home.kpmg/au/en/home/insights/2017/08/australian-fintech-landscape.html</p>
</div>
</div>
</div>