SECU Credit Union External Analysis - Essay Sample in Marketing

The main aspects of SECU's external business environment are competitors, the economic landscape, consumer tastes, the regulatory environment, and technology. Understanding these elements is crucial to SECU in identifying the threats and opportunities that could have implications for the union. Porter's Five Forces Analysis is an important tool in understanding the union's competitors and their impact on the organization (E. Dobbs, 2014). Moreover, it provides a model that enables the union to analyze the industry in a way that takes into account the competitors' activities. The five key aspects that of the model that this paper is going to use to identify and evaluate potential opportunities and risks for SECU are a competitive rivalry, threats of new entrants, the threat of substitutes, bargaining power of suppliers, and bargaining power of customers.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Competitive Rivalry

According to E. Dobbs (2014), one of the keys to success for entities is their ability to understand their competitors' actions and marketing strategies. Although SECU is the largest credit union in Maryland, it faces competition from First Citizens Bancshares Inc, BB&T Corporation, and Bank of America Corporation that offer similar digital banking capabilities ("Cutting edge banking technology, more ATMs and convenient branches", 2018). Other rivals include card companies such as Visa and MasterCard and online platforms such as PayPal. Other companies such as Square, Xoom, and Stripe are aiming at simplifying the exchange of money between consumers (Sarvady, 2018).

The threat of New Entrants

The number of potential new entrants into a market varies considerably and is a crucial aspect for an entity to quantify. The main factors that influence the threat of entry mainly include regulatory policies, technology innovations, capital requirements, economies of scale, access to distribution channels, and the probability of retaliation by incumbents. Innovations in technology such as internet banking and virtual banking increase the threat of entry of new entrants who can leverage the existing financial service system and increase deposits or offer credit card products with little investment in tangible infrastructure (Sarvady, 2018). Additionally, SECU faces a threat of entry of new unions with more advanced proprietary credit scoring technology offering simpler functionality with a digital experience that appeal mainly to millennials. This threat is considerably high.

Threat of Substitutes

Substitutes refer to those products or services that meet a specific consumer need but are available in another market. SECU faces a significant threat of substitutes in the financial services sector. Already, it offers mobile banking apps for tablets and smartphones, mobile deposits, and online banking with Bill Pay that enables customers to pay for services online ("Cutting edge banking technology, more ATMs and convenient branches", 2018). Signing up for these electronic services is free unlike in competitors that make substitute services more expensive and consumer switching costs higher than SECU's products, which lowers the threat of substitutes. Nevertheless, the threat by recently launched products such as P2P payments, digital currencies, smart ATMs and mobile wallets is imminent (Sarvady, 2018).

Bargaining Power of Customers

The extent to which customers can affect the market depends on their level of concentration or how well organized they are. In the current digital era, technology shifts the bargaining power to end consumers. Technological dispensation in communication has empowered customers and today's customers are highly informed and technologically enabled (Mathew, 2018). SECU is no exception to this advancement. Its customers have been exposed ceaselessly to empowering technological advancements, consequently broadening the customer's reach.

Bargaining Power of Suppliers

Similarly, with the banking technologies being supplied by few manufacturers, the bargaining power of suppliers is considerably high. Without a modern payments infrastructure at its branches, the market is open for new players more disruption, while also speedily making the current systems redundant (Mathew, 2018).

References

E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Cutting edge banking technology, more ATMs and convenient branches. (2018). Secumd.org. Retrieved 4 April 2018, from https://www.secumd.org/about-us/about-secu/why-secu.aspx

Sarvady, G. (2018). Turmoil In Payments. Retrieved from https://filene.org/assets/pdf-reports/367_Turmoil_In_Payments_.pdf

Mathew, T. (2018). Impending Disruption in the Payment Marketplace - Should Retail Banks be Worried?. TCS BaNCS. Retrieved 4 April 2018, from http://sites.tcs.com/tcsbancs/insights/impending-disruption-payment-marketplace/