Société Générale often known as SocGen is one of the famous multinational financial services and investment bank in France. The company is headquartered in Paris. The bank is known to be a universal bank. It has many divisions supporting the French networks, International retail banking, global transaction banking, investment banking, financial services, corporate banking, Securities services and asset management services. The bank is based on the integrated and diversified banking model. It combines the expertise and financial strength in innovation along with the strategies of growth. The group is aimed to be a trusted partner of customers and committed to positive transformation across globe (Societegenerale, 2019).
The Porter five forces model helps the company in analyzing the external factors and their impact. There are five forces which are;
• Bargaining power of suppliers
• Bargaining power of buyers
• Threats from the new entrants
• Threat from the substitute products
• Rivalry among the existing players.
These forces help the company in determining the new opportunities and threats to the company. It also helps in making quicker and effective decision and re-examine the strategies. Here is the detailed Porter five forces analysis of Société Générale;
Bargaining Power of Buyers
The bargaining power of the consumers in the banking industry is moderate. This is mainly because of the market of output. Consumers have low switching costs in the banking and financial services. It is necessary for the Societe generale to provide best financial services to the consumers in order to retain them. Moreover, corporate clients have to be dealt very carefully as the are the important customers of the bank. Consumers prefer high quality services in best possible prices. It is necessary for the bank to increase customer base in order to get high market share. The bank should have multiple options for each consumer (Mirgule, 2015).
Bargaining Power of Suppliers
The bargaining power of the suppliers in Société Générale is moderate. This is because of the major supplier of the bank is customers. As the cash is generated by the customers. There are other suppliers are budgetary foundation, national banks, and financial specialists. Suppliers are considered as the additional clients. Moreover, Société Générale maintains good relationship with its suppliers, as they are the main stakeholders of the bank. It is necessary for the bank to have effective supply chain network and distribution channel. Moreover, in financial services industry, relationship with suppliers are important to achieve the economies of scale (Dropbox, 2019).
Threats of New Entrants
Threats of the new entrants are high in the financial and banking industry. The entry in this industry require resource investment and substantial capital. The services in the financial industry is not very much differentiated, hence new entrants have to develop the brand name. Moreover, financial industry has very strict rules and regulations, which is important for the new entrants have to follow. Initial start-up capital is high. New entrants have to develop the distribution network and effective supply chain in order to provide best quality services. New entrants also have to compete with the existing competitors in the market (Hopkins, 2018).
Threats from the Substitute Products
Threats of the substitute products are high in the financial industry and banking industry. This is mainly from both domestic and international competitors. Banking industry does not mainly have any alternatives in the withdrawals and deposit areas. Moreover, there are non-financial companies who are entering in the market like insurance companies, mortgages companies etc. There are other non-banking companies offering the fixed income securities, loans, mutual funds, etc. it is necessary for the Société Générale to face less threat from loans and payments. The bank should also have efficient network and broad distribution channel in order to work with the changing customer preferences. (Hopkins, 2018).
Rivalry of Existing Players
The main competitors of Societe Generale are MLP, Guotai Junan Securities, United Capital Financial Advisers, and Ameriprise Financial. The bank face intense competition from them. The bank should increase customer base in order to maintain leading position in the industry. It is necessary for the bank to have differentiated services in order to retain consumers. The bank should also invest more in research and development to attract more consumers (Dropbox, 2019).
References
Dropbox, 2019. Five Forces Model Based Upon Michael E. Porter’s Work. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/Michael_E._Porters_Five_Forces_Model_E-Book_From_Wikipedia.pdf, [Accessed on: 24th December, 2019].
Hopkins, B. 2018. The Tale of Two Banks Societe Generale and Barings Porter Five Forces Analysis. [Online], Available at: https://www.case48.com/porter-case/48198-The-Tale-of-Two-Banks-Societe-Generale-and-Barings, [Accessed on: 24th December, 2019].
Mirgule, P. 2015. Porter five forces financial industry. [Online], Available at: https://www.slideshare.net/PrashantMirgule/porters-five-forces-financial-industry, [Accessed on: 24th December, 2019].
Societegenerale, 2019. About us; identity. [Online], Available at: https://m.societegenerale.com/en/about-us/identity, [Accessed on: 24th December, 2019].