We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Porter’s 5 Forces Model & Investment Banking Crisis Essay Sample


Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Introduction of TOPIC

The ongoing investment banking crisis is hereby being addressed from Porter’s Five Model perspective. The five forces have somehow contributed to the current crisis. The open entry and exit from the competitive financial industry has continued to pressure existing firms to improve quality of services and products supplied to the market. This resulted to investment banks making serious blunders in their investments, especially in the mortgage sector. The rivalry from existing competitors had been developing products that attract each other’s clientele. The availability of many products and investment banks to choose from had given consumes more power over these companies. Problems in the investment banks resulted from the ongoing global credit crunch (Doran, 2007). The declining value of company shares resulted to companies finding themselves with low capital to continue operating; it is due to this reason that companies such as Lehman Brothers and Merrill Lynch filed for bankruptcy.

The remaining investment banks had to convert from their stand alone model as a measure of surviving the crisis. Like their counterparts in the larger financial industry, investment banks had been involved in reckless lending to mortgage consumers without adequate security; they relied on the then ever rising real estate prices as guarantee that money would be paid back. This is a mistake that will serve as a lasting lesson for the global financial industry. Given the grave impact of the current crisis on the American economy, the US government has provided a US $700 Billion to buy off the mortgage debts from the troubled institutions. The government has also supported moves of selling the affected firms to well capitalized banks such as Bank of America, Citi and JP Morgan Chase. The most noble idea has been converting investment banks (specifically Goldman Sachs and JP Morgan) to become deposit taking institutions, which would provide them with access to more stable source of capital (The Economist, 2008).


Doran J. (2007). Credit Crunch Hits Investment Banks. Retrieved September 26, 2008,

from, http://www.guardian.co.uk/business/2007/sep/09/money4

The Economist (2008). The Investment Bank. Retrieved September 26, 2008, from,


We can write a custom essay on

Porter’s 5 Forces Model & Investment Bankin ...

According to Your Specific Requirements.

Order an essay

You May Also Find These Documents Helpful

Investment banks

Investment banks play an important role in the lives of people who live in this new economic bubble. Investment banking is crucial because they carry out two constricting and often conflicting task in the financial industry. These Investment banks suffered Great depression during and after the economic crisis (2008). During the economic crisis, investment banks had to transform themselves to bank holding companies (BHS) do give the government money , as to help the government with some dept. issues. The housing bubble created in 2008 foreshadowed economic jeopardy that effected the main economic strategies which include strategies in understanding the economic world, to develop strong economic bonds between countries, and creating peace and success in the society. When the crisis started emerging, it created negative impact on people all over the world financially and emotionally. Where depts. Was rising, and huge financial companies were crashing. People always thrive to create...

Banking In Oman: Bank Muskat

The Omani banking sector mainly the product of a November 1974 banking rule set by the Central Bank of Oman (CBO) enforced by April 1974 .The law also helped the entry of foreign – owned banks and to allow growth in the number of local banks in the Sultanate . As of September 1992 there were twenty – one commercial banks in comparison with three registered banks in 1972. In addition there were three expert development banks: the Oman Development Bank (1977) the Oman Housing Bank (1977) and the Oman Bank for Agriculture and Fisheries (1981). However the Omani ba-nk market is the smallest in the GCC .Of the twenty –one commercial banks eleven are foreign owned and dealing mainly on financing trade. Ten are local banks working a very active market. Because of competition the government suggested to merges to strengthen them. The presumption is that five or six...

Deposit Mobilisation of Foreign Banks in India

Abstract The process of economic growth needs development of capital resources. Banking sector plays a vital role on distributing the money for the development of trade, industry are commerce. In simple words bank is an institution, which deals in money are credit. The paper deals with trend and growth of deposits of foreign banks operating in India. The study mainly based on secondary data. Statistical tools have been used like mean, percentage, CAGR ands Trend analysis. The study covers a period of 13 financial years from 1999 to 2011. The finding revealed that the foreign banks recorded increasing trend in mobilizing total deposits. But growth rate is fluctuating trend during the study period. Introduction Banks will have to play an important and larger role in proving support to economic development. According to proof Sayers, “Banks are institutions whose debts usually referred as ‘bank deposits’-are commonly accepted in final settlement of...

Popular Essays


Emma Taylor


Hi there!
Would you like to get such a paper?
How about getting a customized one?