Question 11 - BAPv5 discussion

Porter's Five Forces model is a technique for analysing the competitive forces that affect an organisation or industry. It helps to assess the attractiveness and profitability of an organisation or industry. Porter's Five Forces model consists of five forces: threat of new entrants, bargaining power of customers, bargaining power of suppliers, threat of substitute products and competitive rivalry. Therefore, option B is the correct answer, as these preliminary findings would be documented in the bargaining power of customers force of Porter's Five Forces model. Bargaining power of customers is the force that measures the ability and influence of customers to affect the price, quality and quantity of products or services offered by an organisation or industry. It depends on factors such as customer concentration, switching costs, differentiation and loyalty. An example of bargaining power of customers in this scenario is the market is saturated, customers have a lot of choice and it is easy for them to switch from one bank to another, which implies that customers have high bargaining power and can demand lower prices or better services from banks. Option A is not a correct answer, as these preliminary findings would not be documented in the threat of new entrants force of Porter's Five Forces model. Threat of new entrants is the force that measures the likelihood and impact of new competitors entering an organisation or industry. It depends on factors such as entry barriers, economies of scale, capital requirements and brand loyalty. An example of threat of new entrants in this scenario is an overseas bank launching a new bank in the UK, which implies that there is a potential threat of new entrants to the existing banks in the UK. Option C is not a correct answer, as these preliminary findings would not be documented in the bargaining power of suppliers force of Porter's Five Forces model. Bargaining power of suppliers is the force that measures the ability and influence of suppliers to affect the price, quality and quantity of products or services supplied to an organisation or industry. It depends on factors such as supplier concentration, switching costs, differentiation and dependency. An example of bargaining power of suppliers in this scenario is the suggested changes to the business structure will affect our relationships with suppliers, which implies that suppliers may have some bargaining power over the organisation or industry. Option D is not a correct answer, as these preliminary findings would not be documented in the threat of substitute products force of Porter's Five Forces model. Threat of substitute products is the force that measures the likelihood and impact of customers switching to alternative products or services that satisfy their needs or wants better than those offered by an organisation or industry. It depends on factors such as availability, price, quality and performance of substitute products or services. There is no example of threat of substitute products in this scenario.