Banking Industry Analysis

Banking Industry Analysis Essay Graham MavarMgmt. 415 Sec 6Industry Analysis: BankingThe banking industry has come under increasing pessimism of late because of rising short and long-term interest rates. The banking industrys market capitalization made a substantial decline. Most investors are concerned with whether the industry can sustain continued profitability as a result of these factors. Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental aspect of any financial services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors over the past two years. Interest rates were low, credit quality was good, and inflation was low. These factors are usually predictive of the types of earnings banks should report. But good times cant continue because interest rate hikes cause reduced lending activity, damaged credit quality, and reduced values of bond portfolios. Porters Five Forces Analysis:1. Rivalry among competing sellers:The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of $70 billion. Bank of A merica and Nations Bank also agreed to merge shortly afterwards which became the largest bank in the United States. Bank mergers are usually consummated as a cost-cutting measure but also to compete with non-bank providers of financial services. Bank rivalries are very strong, and as weve seen many of the largest banks are merging to increase their power. In fact, Charlotte, NC is practically owned by Bank of America and First Union. 2. Potential entry of new competitors:There is virtually no chance of a new entrant significantly affecting the major banks market share. The only place that new entrants may have a chance in the industry is through Internet banking, because of its low cost. 3. Firms offering substitute products:This is not really an issue within the banking industry, because there arent really any legal alternatives, except buying a safe and borrowing from a loan shark4. Competitive pressures stemming from supplier and buyer bargaining power:I grouped these two categories together because in the banking industry the buyers are the suppliers and vice versa, so I might as well just discuss the situation as a whole. Interest rates are the single most important aspect of bank profitability they are the bargaining power. Most bank profits are derived from net interest income. This is interest income received on loans minus interest expense for borrowed funds. Interest rates determine the amount of money a bank can earn. Another measure is a banks net interest margin which is a banks net interest income divided by its average earning assets. This is a common measure of a banks ability to squeeze profits from its loans. When interest rates fall, they have a positive effect on a bank. First, net interest margin can expand. Second, the value of a banks fixed rate of investment portfolio is enhanced by declining rates, since a bond with a higher stated interest rate becomes more valuable as prevailing rates drop. Third, falling rates lower the cost of credit, which stimulates loan demand and reduces delinquency rates. Opportunities: 1. Because of the increasing amount of technology Internet banking will begin to replace traditional banking, thus cutting personnel costs. 2. Incorporating investment banking into the banking industry, as some major companies are doing, lets the bank increase profits and promote economic growth while improving company image. Threats:1. An increase in interest rates causing a decline in bank activity. READ: In Cold Blood: Death Penalty Essay2. A collapse of the Fed leading to bank failures, a repeat of the crash of 1929. 3. A decline in the US economy leading to a fall in the value of the dollar, thus causing an instable economy. From there the US banking system would be less secure in terms of dollar values that many people would move their money overseas into a more stable economic situation. Similar to the situation in many South American countries. (a little far-fetched, but possible)Key Success Factors:? Capability to use the internet for banking, investing, and general e-commerce? Size of company, name recognition, innovative local marketing? Best rates (loans, checking, savings, etc.)? The capability to have the fastest and simplest banking through design, innovation, and locationBusiness Reports

Reducing Emissions from Deforestation and Forest Degradation Research Proposal

Reducing Emissions from Deforestation and Forest Degradation - Research Proposal Example Despite of all these benefits, 100 million hectares of forests are air-purifying machines sequestrating world’s carbon dioxide. Sad thing is, these forests are being destroyed at an alarming rate. Both illegal export and domestic logging play the major role in the decrease of forests. Main reason of this huge mismanagement is the information gap in various Indonesian forests departments as well as absence of strict implementation of forest laws. That is why this research paper is so important because it will bridge this information gap by using ‘Qualitative Research Methodology’. Most forest data that these departments have is outdated or is limited. Data needs to be upgraded and properly archived with regular updating. The paper will look deep inside this matter and will spot specific loopholes and suggest various solutions to them by looking at various methods being used around the world to save and protect forests. An information centered approach will be used to suggest such solutions that will probably help curb illegal logging of priceless forests of Indonesia. Qualitative research method will provide suggestions that will look at both aspects where there is a need of compiling data on current forest boundaries as well as the need for recording changes in the boundaries of forests. Consequently this will be accomplished by proposing laws and various valuable guidelines for proper forestry care. Useful matrices will be provided in the research paper that will give guidelines to the planners and forest managers for collecting forest data and forest products manufacturing

Business Ethics and Law Assignment Example | Topics and Well Written Essays - 500 words

Business Ethics and Law - Assignment Example will imply that dangerous dumping need to be avoided by the cruising ships which have been the number one contributor to wasting the grey water in the sea and therefore, causing pollution. There are various recommendations that I can make for control of the current situation to ensure that no companies benefit from the seas at the expense of other people. One recommendation is that all the individuals and companies that use the sea in the cruising business should be charged according to the amount of waste they throw into the seas (Anonymous, n.d). This will ensure that a regulating body makes the treatment of the sea water so that there sea life can continue in a balanced ecosystem. All ship owners should be supervised to ensure that they are not risking the lives at the sea ensure by throwing either there human or the non human wastes into the sea at any point in time. This would help the beneficiaries of the sea like the swimmers, fishermen and others to get the benefit as users of the sea and this will help ensure that the fish and aquatic plants are prevented from poisoning. Clean sea water will ensure that the distribution and the population of the aquatic life is as per the natural condition. After the implementation of the cleaning of the waters, I would recommend that all sea cruisers be fitted with enough tanks to keep the non human wastes in them and release them at a treatment point. This will ensure that grey water will not have negative impact to the aquatic life and therefore, it will ensure the sea cruising companies are responsible on the way they react to the environment. The strategy would address the problem at its base and will ensure that there is fairness in using the sea by containing wastes of the environment. This will mean that people who depend on the sea will be able to use the sea for a longer time. This recommendation will extend the economic benefit to all he fishermen, because they will continue with their activities for a longer