Supplier Power
Supplier concentration
Barriers to Entry
Absolute cost advantages
Proprietary learning curve
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Expected retaliation
Proprietary products
Bargaining Power of Buyers: The power of buyers is the impact that customers have on a
buying process of the products from a certain industry. In general, when buyers’ power is
strong, the relationship to the industry is near to what an economist terms a monopsony - a
Importance of volume to
supplier
Differentiation of inputs
Impact of inputs on cost or
differentiation
Switching costs of firms in the
industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases
in industry
Degree of Rivalry Threat of Substitutes
Exit barriers Switching costs
Industry concentration Buyer inclination to
Fixed costs/Value added substitute
Industry growth Price-performance
Intermittent overcapacity trade-off of substitutes
Product differences
Switching costs
Brand identity
Diversity of rivals
Corporate stakes
Buyer Power
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Buyer concentration vs.
industry
Substitutes available
Buyers’ incentives
market in which there are many suppliers and one buyer. Under such market conditions, the
buyer sets the price. In reality few pure monopsonies exist, but frequently there is some
asymmetry between a producing industry and buyers. The same case can as well be applied
to the service industry, as nowadays there is no pure-manufacturing or pure service
industry. The combination is the way forward. The only vital difference is the definition of
the ‘core product’. For instance much as we consider banks to be under the service industry,
physical properties like furniture, building, computers, etc are vital to make the service a
possibility.
Bargaining Power of Suppliers: A producing industry requires raw materials - labour,
components, and other supplies. This requirement leads to buyer-supplier relationships
between the industry and the firms that provide the raw materials used to create products.
Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw
materials at a high price to capture some of the industry's profits. In a service sector there is
no direct supplier of raw material. However the supply of supporting facilities like cheque
books, passbooks, internet banking, banking apps etc.

Rivalry among existing competitors: The banking industry is considered highly competitive.

The financial services industry has been around for hundreds of years, and just about
everyone who needs banking services already has them. Because of this, banks must
attempt to lure clients away from competitor banks. They do this by offering lower
financing, higher rates, investment services, and greater conveniences than their rivals. The
banking competition is often a race to determine which bank can offer both the best and
fastest services, but has caused banks to experience a lower ROA (Return on Assets).  Given
the nature of the industry it is more likely to see further consolidation in the banking
industry. Major banks tend to prefer to acquire or merge with other banks than to spend
money marketing and advertising.

Threat of substitute products: Some of the banking industry's largest threats of substitution
are not from rival banks but from non-financial competitors.
The industry does not suffer any real threat of substitutes as far as deposits or withdrawals,
however insurances, mutual funds, and fixed income securities are some of the many
banking services that are also offered by non-banking companies.
There is also the threat of payment method substitutes and loans are relatively high for the
industry.  For example, big name electronics, jeweller’s, car dealers, and more tend to offer
preferred financing on "big ticket" items.  Often times these non-banking companies offer a
lower interest rates on payments then the consumer would otherwise get from a traditional
bank loan.

Threat of new entrants: Despite the regulatory and capital requirements of starting a new
banks opened each year according to the RBI. With so many new banks entering the market
each year the threat of new entrants should be extremely high.  However, due to mergers
and bank failures the average number of total banks decreases by roughly 53 a year.  A core
reason for this is, what is arguably, the biggest barrier of entry for the banking
industry, trust.
Because the industry deals with other people's money and financial information new banks
find it difficult to start up. Due to the nature of the industry people are more willing to place
their trust in big name, well known, major banks who they consider to be trustworthy.
The banking industry has undergone a consolidation in which major banks seek to serve all
of a customer’s` financial needs under their roof.  This consolidation furthers the role of
trust as a barrier to entry for new banks looking to compete with major banks, as consumer
are more likely to allow one bank to hold all their accounts and service their financial needs.
Ultimately the barriers to entry are relatively low for the banking industry.  While it is nearly
impossible for new banks to enter the industry offering the trust and full range of services as
a major bank, it is fairly easy to open up a smaller bank operating on the regional level.