MULUNGUSHI UNIVERSITY

OPEN AND DISTANCE LERNING

ODL

NAME:
COURCE NAME: STRATEGIC MANAGEMENT
COURCE CODE: BMG 461
LECTURER:
ASIGNMENT NUMBER: THREE (3).
DUE DATE: 30/10/2021
TASK (1) USE PORTER’S FIVE-FORCES MODEL TO EVALUATE
COMPETITIVENESS WITHIN THE ZAMBIA BANKING INDUSTRY.
(2) WHAT MAJOR FORECASTING TECHNIQUES WOULD YOU USE TO
IDENTIFY (1) ECONOMIC OPPORTUNITIES AND THREATS AND (2)
DEMOGRAPHIC OPPORTUNITIES AND THREATS? WHY THESE
TECHNIQUES ARE MOST APPROPRIATE?
TABLE OF CONTENTS
1.2. MAIN BODY......................................................................................................................2
1.2.1 Economic Opportunities and Threats................................................................................3
1.2.3 Demographic Opportunities and Threats..........................................................................4
1.2.4 Why these Techniques are most appropriate....................................................................5
1.4. CONCLUSION...................................................................................................................5

1.1 INTRODUCTION

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One of the strategic frameworks used to analyze the desirability of a business is Porter's Five
Forces Framework. This model is defined by five major forces: rivalry among current
companies, threat of new entrants, and threat of substitutes, supplier bargaining power, and
consumer bargaining power. Zambia's banking system now includes 19 fully-fledged
commercial banks (Bank of Zambia, 2020). Competitiveness among current banks, the
danger of new entrants, and client bargaining power have all been identified as negative
pressures for the sector.

The model tries to cover a wide range of critical strategic concerns. Many of the concerns
raised in the model, such as forces and their management, are applicable to Zambia's banking
sector, as well as any other service-oriented organization. The findings generated via the
application of this model should be given the value of the analysis time and that a continuous
review is required in order to avoid biased outcomes. A paradigm developed by Michael
Porter describes a financial system as being impacted by five factors (Porter, 1980). Porter's
forces model is an outside-in business unit planning technique that is used to assess the
attractiveness or worth of an industry structure, such as that of Zambia.

There are five primary competitive forces that are identified in the examination of the
competitive forces (Waarts, 1988). For starters, how simple or difficult is it for new entrants
to start competing and to recognize whatever obstacles do exist? This is the first of the three
questions. On the other hand, the threat of replacements, which has implications on how an
expensive product or service might be substituted, is a concern. To assess if buyers are
working together to boost orders, buyers' negotiating power is a third factor to consider. To
know if there are many or only a few potential suppliers, as well as whether there is
monopoly, we need to know the bargaining power of suppliers. Last but not least, there is
competition between the existing players. Strong rivalry amongst the existing players and to
determine if one player is particularly dominant or if all players are equal in strength/size.

1.2. MAIN BODY

Changes in the market, changes in client lifestyles, and improvements in technology or new
manufacturing processes can all lead to new opportunities. When a company executes a
strategy that competitors are unable to copy or find too expensive to mimic, it gains a
competitive edge. Only when rivals' attempts to copy the company's strategy have ended or
failed can an organization be certain that its strategy has resulted in one or more effective
competitive advantages. So we will look at how you may identify economic opportunities and

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threats, as well as demographic ones, in this academic piece of writing. In addition, it will
explain why these approaches are the most successful in terms of achieving the goal. Taking
into account economic opportunities and demographic threats is crucial. This will be
followed by the writing of a discussion, and a conclusion will be made based on the
discourse.

1.2.1 Economic Opportunities and Threats

External variables that might provide a company a competitive edge are known as economic
opportunities (McColl, 1990). An automobile company can increase its sales and market
share if a government lowers its tariffs, for example. Factors that have the potential to harm
an organization are referred to as threats (McDonald, 1996).

While this may be true, there is a technique we can use to assess Zambia's competitiveness in
the banking industry given both economic opportunities and risks. The
acronym SWOT stands for Strengths Weaknesses Opportunities and Threats.   It is a simple,
uncomplicated model that has been around for a long time since it helps offer direction and
acts as a framework for company strategies. An operation's strengths and weaknesses may be
determined by looking at the operation's doing well and not doing well (Suter, 1996). It helps
evaluate whether or not the information suggests anything that would aid the job in reaching
its objectives (strength or opportunity), as well as whether it represents a barrier that must be
overcome or reduced to obtain desired results once it is complete.
This is because it allows you to examine your professional approach from the previous year
at the beginning of the New Year and plan for what is ahead. One might be better prepared to
make judgments in the following months if they undertake an analysis at the beginning of a
new year. Just like we should see the doctor every year, SWOT analysis provides for at least
a once-yearly review of the company's problems (Suter, 1996).
SWOT analysis is a critical component of a company's strategic planning (Piercy, 1992).
Instead than focusing on one element of a firm, a SWOT analysis lets users consider both
internal and external variables. It is possible for banks to lower their risks of failing by
completing a SWOT analysis.
When banks use a SWOT analysis, they may design a strategy that gives them a competitive
edge by concentrating on their strengths while minimizing their weaknesses. In the same
way, it helps them achieve greater achievements in the future by taking into account their
opportunities and risks. You must know each of the four components of the SWOT analysis

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in detail in order to fully grasp what it is and how to use it effectively in the future
(McDonald, 1996).

1.2.3 Demographic Opportunities and Threats

These factors include age, gender, family income, marital status, job status, educational
attainment, ethnicity, and religious affiliation to characterize a target market's characteristics
(Violoncellos, 1990). Geographic, psychographic, and behavioural factors are also employed
to identify our target audience. In combination, banks may build a pretty comprehensive
image of target markets by geography, household status based on education and income,
lifestyles based on attitudes and beliefs, and spending habits based on usage patterns.

A target market's demographics changing or having the potential to change is a typical

indicator of prospective opportunities and threats (McDonald, 1996). Unexpected household
income increases, for example, might mean additional money to spend on leisure activities,
such as unexpected vacations. As the population ages, the need for geriatric items increases,
as does the necessity for upmarket cafeterias and banks in dominating towns. To put it
another way: if you disregard these developments, the same changes that provide future
opportunities might also pose future threats to banks.

When it comes to evaluating the competitiveness of the Zambian banking business, PESTLE
analysis is a key tool. The method is also widely employed for assessing international
marketing strategy and plans for both opportunities and threats (Janis, 1972). As a result,
opportunity and threat evaluations may now be classified in more flexible ways.
Demographic opportunities and dangers may be influenced by a wide range of external
variables, which may be beneficial in expanding our perspective.

These variables are categorized as PESTLE (Political Economic Social Technological Legal
and Environmental) (Heyer, 1992). Government laws and taxation are political considerations
that must be considered. Among the economic elements are the inflation rate and the growth
rate of the economy. For example, market segmentation is based on social variables, which
include demographic elements as well. Societal access to technology, including Internet
usage, is a technological element. There are legal variables that impact business transactions
include the laws and the legal system. Climate change and the extent to which environmental
concerns impact consumer patterns are examples of environmental factors.

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1.2.4 Why these Techniques are most appropriate

SWOT stands for Strengths Weakness Opportunities and Threats, whereas PESTLE refers to
the Political Economic Social Technological Legal and Environmental aspects that impact
company operations. SWOT and PESTLE analysis allow banks to perform comprehensive
analysis for establishing strategic plans in the working environment, which is why these two
approaches are ideal. Due to the fact that it is done in the early phases of planning,
individuals are able to see what they will be facing in the future. As an example, future
difficulties that may arise.

As a result of SWOT and PESTLE analyses, banks have a competitive edge over other firms.
What are the company's strengths and weaknesses in relation to its rivals may be determined
through a SWOT analysis. PESTLE analysis may also be used to assess potential
opportunities and risks that could influence the bank in the long and near term. Analysis of
external variables that impact banking business environment using PESTLE analysis is
possible (Noble, 1999).

On a yearly basis, most banks also do SWOT and PESTLE analyses to gather information on
the year (McDonald, 1996). A review and identification of upcoming possibilities and
dangers can be greatly aided by this. Also, yearly variations in environmental conditions may
be evaluated using this technique. Through this, we may also witness technological advances
and economic developments. This is done by using SWOT, PESTLE, and other analytics to
produce a systematic and complete assessment. The approach helps decision-makers become
more aware of potential changes and their potential influence on them.

1.4. CONCLUSION

Porter’s Five-Forces Model has been used to analyze competitiveness in the Zambian
banking industry, and relevant examples have been provided. There are also key forecasting
approaches in the paper that we would utilize to identify economic opportunities and threats,
demographic opportunities and associated risks - as well as the reasons why these forecasting
techniques are the most suitable.

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 REFRENCES

Bank of Zambia, (2020). The banking industry of Zambia. Lusaka: Insaka Press.

Heyer, S. J. (1992), “Rewiring the Corporation”, Business Horizons, 35, 3, pp. 13-22.

Janis, I. L. (1972), Victims of Groupthink: Psychological Studies of Foriegn Policy Decisions

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McColl, K. (1990), “Marketing Planning Practices in Australia: A Comparison across

Company Types”, Marketing Intelligence & Planning, 8, 4, pp. 21-29.

McDonald, M. (1996), “Strategic Marketing Planning: Theory, Practice and Research

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Noble, C. H. (1999), “Building the Strategy Implementation Network”, Business Horizons,

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