How Does Porter's Five Forces Apply To Wells Fargo

Porter’s Five Forces is a strategic business plan used to assess the competitiveness of business to survive in a tough business market. The components of the Five Forces include the threat of new entrants, the bargaining power of suppliers, the bargaining power of customers, competitive rivalry, and availability of substitutes. The components of the Five Forces can be applicable to any business, but this paper will examine how the Five Forces apply to Wells Fargo. According to the Federal Deposit Insurance Corporation (FDIS), 215 new banks open each year, on average. But the threat of new entrants is low because of the high entry barriers restrict a lot of new banks from succeeding. If a new bank were to open near one of Wells Fargo’s 8,700 plus locations. Wells Fargo would have still had the advantage …show more content…
Banks negotiate with the customers, and the banks have all of power when it comes to getting what they want in a negotiation setting. Wells Fargo has control over the customer deposits, mortgage securities, and various loans. For example, to get a loan Wells Fargo requires recent pay stubs, W2s, and/or tax returns. Also drivers license, social security number, and a copy of the bill or purchase that requires the loan. Moreover, from the information that is needed in order to get a loan you also need to be approved and prove you can pay it back. Nevertheless, it makes sense that Wells Fargo requires this information because if anybody could get a loan Wells Fargo would go bankrupt really fast. Yet, with all of this supplier power there are some factors that affect bargaining power of suppliers such as interest rates, offshore operations, and rise in investments. But these factors, though could be potentially significant, are not something the banks stress about too much because banks are more convenient and practical than offshore