China Everbright Bank- CEB is Chinese national joint-stock commercial bank. It is headquartered in Beijing. It is approved by China State council and People’s bank of China. The bank is listed in Shanghai stock exchange and Hing Kong stock exchange. The Bank has established a nationwide its network with around 1119 branches. Its outlets are covering around 115 cities in 30 provinces, municipalities and autonomous regions. The bank is following go global strategy and accelerated its operations for setting overseas institutions. The bank is involved in several social and environmental programs and develop its brand image over years (CEB, 2019).
The China banking industry is very competitive. The industry has both local and international banks. It is necessary for the CEB to analyze the competition level in the industry periodically. Porter five forces model will help the bank in decision making process. It gives the vision to companies towards new opportunities. Here is the detailed Porter five forces analysis of China Everbright Bank;
Bargaining Power of Buyers
It is not necessary that best quality services provider always have the bargaining power. In the banking industry, customers bargaining power is high to moderate. This is mainly because of medium to low switching cost. For banks in China, switching costs are high. Moreover, when consumers have broad range of choices, they prefer the one who provide best quality in low prices. Hence, CEB must attract consumers from all over the nation to keep its customer base maintained. It is necessary for the bank to provide new differentiated services before rivals to grab market share (UK Essays, 2018).
Bargaining Power of Suppliers
The bargaining power of the suppliers in banking industry is medium to high. This is mainly because when suppliers are few and buyers are more. The customers of the banks are major fund providers. Thus, every bank wants to attract more and more consumers. However, other suppliers of funds have strong bargaining power, but under the government set policies. The office supplies suppliers have no such bargaining power, as there are many suppliers of it in the industry. Despite of this, CEB maintains good relationship with its suppliers, which help them in cost cutting and high promotability (Murphy, 2018).
Threats of New Entrants
The threats from the new entrants in the banking industry is low, and so for CEB. This is mainly because Chines government has placed strict rules and regulations. The policies in the international and local banking industry is very tough, which restricts the new entrants to enter in the industry. However, the China Everbright is looking for expansion. Moreover, the big banks do not let the firms operate in industry and took over them to avoid competition. The high initial capital also restrict he firms in entering bank industry. But non-financial provider serves insurance services, mortgage etc to diversify the risks (Kumbhar, 2013).
Threats from the Substitute Products
Bank of China Everbright do not face direct threats from substitution. The bank does not face substitution in mainly withdrawal and deposit area. However, there are non-financial provider who enter in the market of insurance or loan etc, they become threat for banks. It is necessary for the CEB to diversify its operations in the global market. however, the bank believes in continuous innovation and provide technical services to engage customers. It is important for bank to increase the switching cost, so that customers will not look forward for alternatives (UK essays, 2018).
Rivalry of Existing Players
The competition level is intense in the China banking industry. This is mainly because of both domestic and international banks operating in China, like HSBC, bank of China etc. They set the bars high of quality and services. It is necessary fort the CEB to compete with them on the basis of product and service portfolio. The CEB should provide differentiated services, which makes its stand one out, and consumer prefer the bank over others (Kumbhar,2013).
References
CEB, 2019. About CEB. [Online], Available at: http://www.cebbank.com/site/gdywwz/CEB_Homepage/Bank%20profile/index.html, [Accessed on: 30th November, 2019].
Kumbhar, S. 2013. Porters five force strategy for Banking Industry. [Online], Available at: https://www.slideshare.net/SanjayKumbhar/porters-five-force-strategy-for-banking-industry, [Accessed on: 30th November, 2019].
Murphy, E. 2018. China Everbright Bank Porter Five Forces Analysis. [Online], Available at: https://www.essay48.com/term-paper/13903-China-Everbright-Bank-Porter-Five-Forces, [Accessed on: 30th November, 2019].
UK Essays, 2018. Five force analysis in banking sector. [Online], Available at: https://www.ukessays.com/essays/economics/five-force-analysis-in-banking-sector-economics-essay.php?vref=1, [Accessed on: 30th November, 2019].