Application of Porter's Five Forces in Banking at Tanzania
APLICATION OF PORTER’S FIVE FORCES FRAMEWORK IN THE BANKING INDUSTRY OF TANZANIA: Determine, Develop and Deliver Competitively.
By Dr. Elisante Ole Gabriel (PhD) Head of Entrepreneurship Development Centre Faculty of Commerce Mzumbe University P O BOX 6 Dar es Salaam Tanzania elisante_gabriel@yahoo.com : Tel. +255-754-434412
Abstract: The banking industry of Tanzania has been growing fast during the last decade. There are so many things happening within the industry after the liberalization of the sector. The aspect of competition is now crucial for the operators who are within the banking industry. Porter’s Five Forces Framework is one of the strategic models used to assess the attractiveness of the industry (being service or manufacturing). This model is defined by the five key forces which are; Rivalry among the existing firms, Threat of new entrants, Threat of substitutes, Bargaining power of suppliers and bargaining power of customers. The banking industry of Tanzania has 22 full-fledged banks, 5 Regional unit banks, 5 Financial Institutions and 102 bureux de change operators. The rivalry among the existing banks, threat of new entrants and bargaining power of customers is found to be unfavorable forces to the industry. Threat of substitutes and bargaining power of suppliers are found to be favorable forces to the industry. The industry is therefore of two starts, hence not attractive. Those who are already in the industry need to operate competitively by using a differentiation strategy to win the confidence of the customers who have higher bargaining power. A good customer service is necessary. This can be achieved through synergy and Total Quality Management (TQM) approach. The forces are not and will never be static but dynamic, hence a need for the banks to be reviewing their strategies from time to time.
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Introduction: The banking Industry in Tanzania has tremendously changed its dynamics for the last one decade. Many banks have joined the
By Dr. Elisante Ole Gabriel (PhD) Head of Entrepreneurship Development Centre Faculty of Commerce Mzumbe University P O BOX 6 Dar es Salaam Tanzania elisante_gabriel@yahoo.com : Tel. +255-754-434412
Abstract: The banking industry of Tanzania has been growing fast during the last decade. There are so many things happening within the industry after the liberalization of the sector. The aspect of competition is now crucial for the operators who are within the banking industry. Porter’s Five Forces Framework is one of the strategic models used to assess the attractiveness of the industry (being service or manufacturing). This model is defined by the five key forces which are; Rivalry among the existing firms, Threat of new entrants, Threat of substitutes, Bargaining power of suppliers and bargaining power of customers. The banking industry of Tanzania has 22 full-fledged banks, 5 Regional unit banks, 5 Financial Institutions and 102 bureux de change operators. The rivalry among the existing banks, threat of new entrants and bargaining power of customers is found to be unfavorable forces to the industry. Threat of substitutes and bargaining power of suppliers are found to be favorable forces to the industry. The industry is therefore of two starts, hence not attractive. Those who are already in the industry need to operate competitively by using a differentiation strategy to win the confidence of the customers who have higher bargaining power. A good customer service is necessary. This can be achieved through synergy and Total Quality Management (TQM) approach. The forces are not and will never be static but dynamic, hence a need for the banks to be reviewing their strategies from time to time.
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Introduction: The banking Industry in Tanzania has tremendously changed its dynamics for the last one decade. Many banks have joined the
Bibliography: 18 Hamel, G and Prahalad, C.K (1994) Competing for the Future, Boston: Harvard Business School Press Varey, R J. and Gabriel, E. (2000) ‘How Can a Relational Strategy Contribute to Service Competition of Two Modes of Passengers Transport?’ 13th UK Conference for services marketing, University of Nottingham. 1 Standard Chartered Bank 2122140, 2122143 St/Garden Ave, (T) Ltd FAX: -2113770/2122157 DSM Stanbic Bank (T) TEL.: 2666430/2196400 Ltd MD: 2196301 FAX: 2666301 Ohio Street, DSM 3 Citi Bank (T) Ltd TEL.: 2117575, 2117601 Alli Hassin Mwinyi RD, FAX: 2113910, 2117576 DSM Federal Bank of TEL.: 2126000 the Middle East FAX: 2126006 (T) Ltd Samora Avenue, DSM MAY, 1995 4 JULY, 2003 5 6 MARCH, 1997 AUG National Microfinance Bank Ltd CRDB Bank Ltd TEL.: 2118785, 2116925/9, (2124048 MD) FAX: 2114058 TEL.: 2117442-7 FAX: 2116714 The Peoples ' Bank of Zanzibar Ltd TEL.: 2231118/2231120/ Stone-Town, 2133967 ZNZ FAX: 2231121 PHYSICAL LOCATION DATE OF OF HEAD OFFICE COMMENCE MENT OF BUSINESS Alli Hassin Mwinyi RD, DSM Samora Ave/ Ohio St, DSM AUG. 1997 12