Deutsche Bank is the largest bank in Germany by total assets and employees. It operates as a universal bank with major operations in key financial centers. An analysis of Deutsche Bank using Porter's Five Forces model finds threats from new competitors, substitute products, and rivalry among existing firms to be key challenges. The bargaining power of customers and suppliers also presents risks due to industry concentration and buyer sensitivity to pricing.
2. Deutsche Bank
Deutsche Bank AG is the biggest bank by total
assets and number of employees in Germany.
The company, based in Frankfurt am Main,
operates as a universal bank and has major
operations in London, New York, Singapore and
Sydney.
With a market share of about 21 percent in
2008, it is considered the greatest currency
traders in the world.
Source: http://de.wikipedia.org/wiki/Deutsche_Bank
3. Deutsche Bank was founded on 10 March 1870
in Berlin
Website: www.deutsche-bank.de
Business Data in 2013
Balance sheet total: EUR 1,611.4 billion
98,254 employees (end of 2013)
Management
Board: Anshu Jain and Jürgen Fitschen
(Chairman)
Supervisory: Paul Achleitner (Chairman)
Source: http://de.wikipedia.org/wiki/Deutsche_Bank
5. Porter's Five Forces is the classic model of
strategic management.
The model provides a useful start for analyzing
the external environment and providing a
crucial set of inputs for strategic development
and implementation.
It builds up on the information gathered and it
will discuss what key challenges of an
organization is facing, the significance of these
challenges and how they might be overcome.
Source:
http://www.weltbild.de/3/17415388-1/ebook/strategic-analysis-deutsche-bank.html
http://www.manager-wiki.com/externe-analyse/22-branchenstrukturanalyse-qfive-forcesq-nach-porter
6. “Awareness of the five forces can help a
company understand the structure of its
industry and stake out a position that is more
profitable and less vulnerable to attack”
(Porter, 1979).
Porter’s Five Forces determine the strength
of the industry, competition and profitability
prospects. Companies must be flexible to
respond quickly to competition and market
changes and they can beat their competitors
only if they can establish a difference that
they can maintain.
Source: http://www.sanasecurities.com/porters-five-force-analysis
8. Bargaining Power of Customers
Buyer concentration to firm concentration ratio: Bank industry is a high
buyer concentration industry, many people use bank service, such as
deposit money, mortgage, loan, investment, insurance and currency
exchange.
When Internet becomes changing people’s life, customer can easily
obtain information through Internet, they can easily compare the price
and service.
Buyer price sensitivity: Interest Rate and service charge is a sensitive
indicator for customer in bank industry, customer may due to those
indicators to draw out all or a lot amount of capital from bank to
bank/other financial institution.
The German banking sector is developing from a seller's to a buyer's
market. The highly fragmented banking sector leads to strong
competition between institutions. Market transparency is greatly
increased by the Internet. The increased confidence of customers and
their improved knowledge of our products and services strengthen the
position of customers.
Source:
http://www.studymode.com/essays/Porter-5-Forces-Analysis-557940.html
http://www.wsm-in-banken.de/index.php/loesungen/kapitel-1
9. Bargaining Power of Suppliers
Bank capital supplier: Depositors are also capital supplier of
bank, they will compare with other financial product to see
whether they can draw out capital or not.
A far greater bargaining power has some effects to the
employees of banks and suppliers in the field of information and
communication technology (e.g. Bloomberg).
The more specialized suppliers, the greater the dependence of a
company.
the greater the delivery to a company, the greater the power of
suppliers.
the smaller the market/competition for the supplier's products,
the greater the power of suppliers.
Source:
http://www.studymode.com/essays/Porter-5-Forces-Analysis-557940.html
http://www.wsm-in-banken.de/index.php/loesungen/kapitel-1
10. Threat of New Competitors
A particular threat especially in the German banking
market are the banks and the online discount brokers,
passing through favorable terms due to leaner structures,
highly standardized products and lack of consulting
services in the market and are a competition with the
established banks.
the greater the economies of scale in production, the
lower the risk, since new entrants must wear either very
large or very high cost sales risks.
the stronger the regulatory authorities, the lower the risk.
the higher the barriers to entry (capital requirements), the
lower the risk.
Source: http://www.wsm-in-banken.de/index.php/loesungen/kapitel-1
11. Threat of Subtitute Products
the simpler the product, the higher the threat of substitute
products.
in the banking industry: risk substitution by plant products of
insurance companies, corporate loans, which are taken
directly from the capital market funds and certificates by
specialized companies.
Largest threat of substitution are not from rival banks but
from non-financial competitors, investors, and small co-operative
banks and borrowing avenues.
No real threat of substitute as far as deposits or withdrawals,
however insurances, mutual funds, and fixed income
securities offered by non-banking companies.
Source:
http://de.slideshare.net/SanjayKumbhar/porters-five-force-strategy-for-banking-industry
http://www.wsm-in-banken.de/index.php/loesungen/kapitel-1
12. Rivalry Among Existing Firms
In banking market, it often experiences exit barriers due to sunk costs.
Moreover, especially in Germany, there is strong competition for the
rigid, structured in three columns banking market, which is increasingly
located in the consolidation and facing the entry of other competitors
from other European countries.
Important action parameter of competition are price, quality and
innovation, which are used to distinguish the competitor's products and
offer added value to the customers.
many providers, or a few companies with the same market power
characterize the market.
Capacity expansion is greatly useful (economies of scale), since shifts
between supply and demand can only be compensated by price
reactions or reduction of the bid amount.
Source: http://www.wsm-in-banken.de/index.php/loesungen/kapitel-1
13. Value Chain Diagram of Deutsche
Bank
Source: http://is2.lse.ac.uk/asp/aspecis/20040088.pdf
14. The value chain is used to identify activities that
are core capabilities and sources of competitive
advantage as well as activities that are non-core
activities (Lamarque, 1999, 141).
Originally Porter (1985) developed a value chain to
define the different areas of value creation in the
producer goods industry. The value activities
defined by Porter for the producer goods industry
are not fully transferable to the banking industry as
the industrial value generation differs from the
production process of a bank (Canals, 1993, 197-
206; Lamarque; 1999).
The banking business is customer driven and
therefore the banking value chain starts from the
market side.
Source: http://is2.lse.ac.uk/asp/aspecis/20040088.pdf
15. The value process starts with advertising a newly
developed product or service to the market.
Secondly, the product/service is sold to customers,
e.g. the credit contract will be signed by the
customer.
In a third step the product will be provided to the
customer, e.g. the credit amount is paid to the
account of the customer.
Finally the corresponding transactions, like
payments, clearing & settlement transactions etc.
will be processed.
Source: http://is2.lse.ac.uk/asp/aspecis/20040088.pdf
16. Hamoir et al. (2002) and Steffens (2002) reflect this
process by differentiating the primary activities into
distribution, products and transactions/infrastructure.
The distribution part of the banking value chain consists of
marketing and sales activities.
The products part consist of funding, investment and
services.
Transaction/infrastructure of banking value consists of
payment, trading, clearing & settlement, and custody.
These primary activities are enabled by the supporting
activities infrastructure, technology and human resources
(Canals, 1993, 199; Porter, 1985). Additionally to these
three supporting activities, risk management plays a vital
role in banking and has to be added (Lamarque, 1999).
Source: http://is2.lse.ac.uk/asp/aspecis/20040088.pdf
