Commerce Bank – How Attractive Is the Industry; and Is the Company Capable of Competing Effectively in It?
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Commerce Bank
How attractive is the industry; and is the company capable of competing effectively in it?
What is the business?
Commerce bank is in the retailing banking business. The banks offer deposit and loan products. Deposit products allow for customers to store money with the bank in exchange for access to payment systems (checks and electric transfers), interest on their money, and bank service infrastructure (ATMs, branches, call centers and internet). Approximately 90% of these deposits were loaned out.
The customers for commerce include anyone who would like to store his money safely in a bank. Commerce customers generally need an institution that they could trust with their funds. Commerce has several ways and critical skills that it uses to meet its customers needs of trust. Commerce provides its customers with superior service. The have extended hours and greetings as well as mannerisms such as walking customers to their cars while its raining sends positive messages such as “I am always there for you”. The positive messages that commerce has its employees execute allow for the company to build a trustworthy brand which in turn attracts customers.
The company is very strong in its critical skills; in fact commerce seems to be a leader in customer service in retail banking. Mr. Hill of commerce states that customers of commerce not only like the bank but also love the bank. The company goes to the extent of spending money to enhance customer service, something that several of its competitors have been hesitant to do. Commerce bank has included several features such as training programs for its employees to be very customer-centric, instilling the penny arcade which allowed for companies to trade their coins for notes. In 2001 alone the penny arcades handled 750000 transactions.
What is the market structure and the companys position in it?
The market structure of commerce is perfectly competitive. Competitors strive to adapt to commerces basic service offerings and provide better rates. Essentially to preserve its key leading position in this perfectly competitive market, commerce bank has to continuously innovate, suggest new ideas to provide a better experience for its customers. Commerce bank through its retailtainment approach emphasizes on winning over customers by emphasizing the human side of service with advertising and marketing campaigns. Since branch managers know local customers better, in order for Commerce to maintain its number one market position, it should continue to encourage and to empower branch managers to whatevers necessary to satisfy their needs.
Industry analysis- the drivers of profitability
Due to the learning curve and brand loyalty that is common in the bank retailing industry the barriers of entry are relatively high. Capital requirements are also quite important in this market, in order to be a lender you must have adequate capital requirements as required by regulatory forces.
Suppliers do not essentially have a lot of power in the banking retailing market because suppliers do not play a great role in the sector and they could be easily substituted by other inputs.
Buyers do have some power because they entail the amount of market share; they hold the idea of brand identity for the products. The banks have to continuously differentiate to meet the needs of these buyers or else they may find substitute banks in the perfectly competitive market.
The threat of substitutes is a significant worry. Switching costs for customers in this market are considerably high due to brand loyalty however, if another brand supersedes one brand in several aspects these switching costs are substantially lowered.
The degree of rivalry for the industry is quite high because of the minimal differences and the pressure to adapt to competitive changes. Brand identity is very important in the market therefore this also adds to the degree of rivalry.
Is this an attractive industry for the company?
All in all the industry is fairly attractive for commerce bank. Commerce bank is somewhat a market leader in the industry therefore this is an attractive industry for the company.
Are the current Strategies Working
What are the current strategies for each of the strategic levels- the grand strategy, the competitive strategy and the functional strategies?
The grand strategy for commercial bank is happy customers. The bank uses its university to train employees to make them able to deliver high-quality customer service The company called the act of making customers happy as WOW!ing. Apart from using employees to provide excellent service the company also uses retailtainment for atmosphere enhancement, the use activities