PORTER’S FIVE FORCES IMPACT ON THE PERFORMANCE OF COMPANIES IN THE BANKING INDUSTRY IN GHANA

Abstract

Despite the favorable climate in the banking sector of Ghana over the last decade, it can still be said of some to be poorly performing in relation to overall level of industry performance and wealth maximization. With the expected fluctuations in performance levels, ability to determine the competition nature and the resulting profitability of an industry is vital to the development of effective strategy in any industry. It is on this premise this study is designed to evaluate the Porter’s Five Forces model impact on banks performance using Eco-Bank Ghana, Barclays Bank Ghana and Fidelity Bank as the case study. The study was explanatory in nature. Primary data was collected through questionnaires from a sample size of 84 management staff. Responses received were analyzed using T-Test and Linear Regression analysis. Empirical findings suggested that, the Five Forces had contributed to the performance of banks in Ghana by impacting on competition and profitability of the industry as a whole. Even though all the five Forces had impacted on company’s performance, the bargaining power of supply had the most impact on the industry performance. It was therefore recommended that, Companies in the banking industry in Ghana must invest in finding new ways to energy supply rather than relying solely on ECG as major supplier and also invest in new product development since competition in the industry was on product/service innovation.