Porter’s Five Forces of Bank of America
Bank of America is considered to be one of the world's largest financial institutions, involving the service of individual consumers, small and middle businesses and corporations in all kinds of banking, investing, asset administration and other financial products and services. The company provides a great convenience for the consumers in the United States, serving more than 59 million consumer and more than 6,100 retail banking offices. This bank also have more than 18,000 ATMs within America and banking system with more than 25 million users.
Bank of America serves different clients in more than 150 countries and owned relationships with those corporations, of which in the list of the U.S. Fortune 500 companies and Fortune Global 500. In late 2008, Bank of America has acquired Merrill Lynch, a long-standing, global investments and financial services firm. The global banking of bank of America is leading in within global environment.
Level of competition
As a matter of fact, competition in the financial sector of global banking of bank of America is very stiff in global market. The situation is further worsened by the consolidation of the financial industry, which leads to the creation of bigger and more diversified competitors. However, bank of America has a dedicated research team and a large pool of resources that enable the group to innovatively devise better means of staying ahead of the game.
Threats of substitutes
To some extent, there are no substitutes when referring to the financial services. This fact makes the threat of substitutes significantly low. However, bank of America operates on a high margin regime, which can be substituted by low margin products and services offered by rival companies.
Threat of new entrants
The entry of global banking system is relatively high in the financial field. The competitors are difficult to catch up with the investment size in global environment. It can be embodied in the cooperation with Chinese construction bank and the arouse of American global director enrolled in 13 international business leaders.
The threat of new entrants of bank of America in global banking is relatively low. This mainly results in the fact that significantly a large amount of capital and resources of global banking are required to set up the institution that would actively threaten the progress or success of bank of America in its global banking service. The good performance can be embodied in the score balance sheet in 2013.
Bargaining power of buyers
By globally diversifying its operations, bank of America has a larger market. This means that there are more clients and bank of America must meet the needs of the buyers in order to maintain and expand its market base. Since bank of America has established itself as a top-notch investor, its client has a higher bargaining power, especially in the global banking system in different countries.
Bargaining power of suppliers
The suppliers of bank of America owned a low bargaining power because the products and services provided by the suppliers to be associated with bank of America in global banking urge the best quality and reasonable price. By availing their products and services to bank of America, suppliers are guaranteed that whatever they are offering will be based on a large consumer. Therefore, they cannot bargain effectively since they rely on the long-term returns that will provide the convenience for the bank of America.