The Housing Development Finance Corporation(HDFC) Limited is a name that has been associated with the Indian housing sector for the last four decades. As pioneers in housing mortgages, it is a brand name that has been characterized by trust, solidity, both financial and managerial and sound principles. Since the day of its incorporation in 1977,HDFC has defined and set high standards in the housing finance sector.
PORTER’S FIVE FORCES
COMPETITION IN THE INDUSTRY (MEDIUM TO HIGH)
1. Though, HDFC is the leading financial corporation in the economy, it faces stiff competition in providing financial services to the Indian Market.
2. This competition does effect the long term profitability of the organization.
3. India has been one of the biggest marketplace which has led to rise in market growth rate of various financial corporation. This has increased competition too.
BARGAINING POWER OF CUSTOMERS (HIGH)
1. There is high bargaining power of customers due to large number of financial service corporation available to customers.
2. Now days, Switching cost and differentiation in services for customers is quite low which acts as a disadvantage for HDFC limited.
3. Customers have full information about the market due to digitalization which has made them sophisticated which is also a hindrance for the same.
THREAT OF NEW ENTRANTS (LOW)
1. Barriers to an entry in financial service no longer exist.
2. New entrants in Indian financial services brings innovation and new technology, which might put pressure on HDFC through lower pricing strategy, reducing costs and other techniques.
3. However HDFC has already established its customer base over these many years, which has made the competition difficult for a new entrant in the market for the financial services.
BARGAINING POWER OF SUPPLIERS (MEDIUM)
1. The power of suppliers in bargaining is considered moderate in the financial sector.
2. Few alternatives for suppliers like Treasury Bills, Bonds, and Commercial Paper etc.
3. However, Powerful suppliers in financial sector use their negotiating power along with better quality of supply to extract higher prices from the firms in competitive financial sector.
4. This can have an effect on the profitability of HDFC.
THREAT OF SUBSTITUTES (MEDIUM TO HIGH)
1. Competition in the Financial Sector is increasing rapidly.
2. Since financial sector offer similar services, there is a possibility that other financial corporation can have an edge over HDFC in the form of Credit unions, Investment houses and low rate of return over HDFC.
3. This can have a negative effect on HDFC`s financial position.
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