Ecobank Industry Analysis

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2. INDUSTRY ANALYSIS This section gives an outline of the industry analysis in which Ecobank is competing in. Ecobank is competing as a commercial bank in the financial sector. This industry comprises of commercial banks, building socities, finance houses, venture capitalists, foreign exchange companies, savings banks, microfinance institutions and other money lenders. Grant (2010) assets that the industry in which an organisation is operating in, influences the competition and the profitability of that organisation. Market Structure for Ecobank  Monopolistic competition- characterised by quite a number of banks and other financial institutions offering the same products. 2.1 The Five Forces Model Porter (1998) stated that “the fundamental…show more content…
Bargaining power of suppliers (High) Suppliers are in the form of: Depositors, Mortgage loans, Mortagage securities The factors influencing this bargaining power are mostly: • Regulations by the Reserve bank. • Interest rates • Economic outlook • Rise in investment options or avenues. 2. Threat of new entrants (Low) The threat of new entrants is relatively low in the baking industry. The greatest barrier to entrance in the sector is the regulatory capital requirements. The capital required is too high and this results in a low threat of new entrance into the industry. Other factors which affect entrance into the industry are: • Government licencing and Reserve Bank of Zimbabwe regulations • High level of skilled manpower. • Economies of scale of existing banks 3. Bargaining power of Buyers (High) The intense competition which characterises the banking sector in Zimbabwe has given buyers (clients) a high bargaining power. The bank in such an environment has to increase customer loyalty through the provision of differentiated products. Factors which affect / influence the bargaining power of Buyers in this industry include: • Existence of bank’s competitors. • Multiple options/ alternatives to banking services such as ecocash,…show more content…
If the firm is to prosper within an industry, it must establish a competitive advantage over its rivals. Hence, this area of strategy is also referred to as competitive strategy. 2.4 What are the driving forces in the banking industry? 1. Technological advancement – the introduction of internet banking, mobile banking and the more recently launched Ecocash has brought in new ways of banking. This now means that banks now need to adjust also include these products in their product portfolios. In the case of Ecobank it offers retail internet banking, mobile banking though it is not yet launched in Zimbabwe and it also an Ecocash agent. 2. Regulatory changes – changes in regulation such as the increase in capital requirements held by the banks is also another driving force in the industry. In the case of Ecobank due to its large financial base it has already met the stipulated capital requirement threshold. 3. Globalization and financial deregulation – The issue of globalization were the world is now viewed as a global village had increased the level of competition in the banking sector. Globalization has an effect of offering foreign players an opportunity to also participate in the local

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