Report Regarding Banking Industry

Report

Regarding commercial banks environement and markets

From: Dragos Savulescu

- Student BZT 820, T5972690

To: Carol o'Leary

- Tutor -

Date: December 12, 2007

Pages : 12

Table of Contents

1. Executive Summary

2. Introduction

3. STEPLE Analysis

3.1 Social Factors

3.2 Technological Factors

3.3 Economic Factors

3.4 Political Factors

3.5 Legal factors

3.6 Environement factors

4. Michael Porter's Five Forces Analysis

4.1 Buyer Power

4.2 Supplier Power

4.3 Intensity of Competition

4.4 Threat of New Entrants

4.5 Threat of Substitute Products

5. Conclusions

6.1 Competitive Positioning

6.2 Competition Strategies

6. Market Outlook

Appendix 1: Banking Market in Romania

Appendix 2:

1. Executive Summary

External environement is full of contradictions for international commercial banks. Traditional brands experienced troubles and a crisysis into a particular market can affects businesses at the global level. New managing currents occur and power of executives starts to decline. Technology progress becomes one of the major influencing factors for banking industry development.

The report also contains an assessment based on STEPLE analysis, covering the relevant political, economic, social and technological factors that have implications for the development of the banking industry.

Additionally, the report evaluates the industry within the Michael Porter framework. It goes on to describe the competitive landscape.

This report presents emerging markets as a very attractive segment to play into, plenty of opportunities. Risks are major, potential benefits accordingly. A more detailed analyse has been done for CEE region and the conclusion : As far as from Western Europe is the market as the risk/benefits balance size is bigger. could be a definition for emerging markets.

2. Introduction

To state what the subject is about, I used the banking definition from Investor.com :

Banking=In general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit.

(source : http://www.investorwords.com/5413/banking.html).

In order to achieve the purpose of the assessment, I decided to use mainly the STEPLE model and 5 Forces analyse. Some elements from other models as Strategic Groups and Strategic Space were used when emerging markets were analyzed.

Although each question is approached in a separate iteration, I choose to consolidate the answers into a single document because the subjects are related.

It is obvious and beyond any question that Globalization is « the word », representing one of the main characteristics of banking sector starting from 90's.

As a personal opinion, I would like to state the financial services as the fourth major segment of the global segmentation of revenue (I used the same colour to underline the detachement of Financials from the III-rd sector).

IV Sector - Financials (banking, insurances, capital management)

III Sector - Services

Secondary Sector - Industry

Primary Sector - Agriculture

Fig. no 1

It seems much more comprehensive to me to convert this report into a ppt presentation.

Umbrella strategy model is the most common one used.

3. STEPLE analysis

3.1. Social factors

Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns,

As the main influencing social factors I pinpoint:

- Demographics distribution is changing - regarding people living in cities versus country side

- Lyfestyle changing, comprehensive knowledge and better understanding of personal objectives and personal financial situation

- Increase the need for financial planning and asset management

- Increasing web accesibility

- Employment

- Working Conditions

- Payment-System Changes (especially ATM usage and on-line payments)

First, from the point of view of financial sector development, people who have not been integrated into the formal financial sector because of low incomes, gender, ethnic identity or remote location often represent a large and potentially profitable market for institutions that can develop ways to reduce the