he industry environment that Wells Fargo is a part of is made up of threats of new entrants, supplier power, buyer power, and substitute products. When it comes to the threat of new entrants in the financial industry there is no threat for Wells Fargo. The financial industry requires a lot of capital and trust. Currently none of the industry has a lot of trust but they do have capital to make investments and decisions that a new entrant to the industry does not have. There is an extremely high entry barrier in the financial industry.
When it comes to supplier power, the supplier concentration is mainly related to capital in the financial industry. With capital being difficult to obtain, the suppliers do hold a lot of power over the financial industry. One of Wells Fargo’s advantages is that that they hold a large amount of capital and have the ability to invest and keep mortgages on their own portfolio.
Buyer power is high in the financial industry. The financial services industry is a service based industry, meaning if they do not please the consumer then they lose the customer. The products available by the financial industry are very similar. Although Wells Fargo puts a lot of effort into differentiating their product, the customer will go elsewhere if they feel as though they are not treated right. .
Rivalry among existing firms exists between Wells Fargo, and the three following competitors: US Bancorp, Bank of America and Citigroup, this being said there is a high degree of substitutes available to the end consumer The only problem with this rivalry is that even though Wells Fargo has a national brand, the competitors can switch to lower costs and the customer will switch in the financial industry. When it comes to product differentiation, Wells Fargo has put effort into differentiating their products from that of their competitors allowing them to keep a good reputation in comparison.