Porter's Five Forces Analysis of Meridian Credit Union

1 Review of Meridian Credit Union University Canada West MGMT 661: Strategic Management (HBD-Winter-24-04) Professor David Blair McAuley

2 A strategic framework called Porter's Five Forces model can be used to find and examine the five forces that influence an industry's profitability for a certain organization. (Alonso, 2023). Michael E. Porter created and published the Five Forces concept in 1979. This model can be used to identify and understand a number of factors that influence an industry's degree of attraction and competition. The five forces are:  Bargaining power of buyers  Bargaining power of suppliers  Threat of new entrants  Threat of substitute products or services  Competitive rivalry Meridian Credit Union is a financial institution is Ontario’s largest credit union and the second largest in Canada which provides banking and financial services. Below is an analysis of this organization using Porter's five forces. 1. Bargaining power of buyers: Meridian Credit Union has been in the business for over 75 years and has a strong customer base of more than 380,000 members. It faces competition from several banks and financial institutions. As such buyers would have moderate to high bargaining power if they are able to acquire similar services from competitors at better rates and prices and low switching costs or if Meridian fails to provide differentiated services. 2. Bargaining power of suppliers: Suppliers will have low bargaining power if Meridian reduces overdependency on suppliers. Also, since Meridian sources funds from deposits of its members or other sources in the market, the suppliers have relatively less say vis-à-vis other sectors. On the other hand, if suppliers operate from a specific area

3 wherein there are more suppliers than buyers, they can have slightly higher bargaining power. 3. Threat of new entrants: Considering the tight nature of the industry and the strict financial regulations, new entrants will find it relatively difficult to enter the market and serve as a threat to Meridian. Moreover, since Meridian offers several unique services to its customers, it is not likely that a new entrant would be able to cope with those needs. However, in case switching costs are low and there is reduced loyalty then a new entrant can prove to be a threat. 4. Threat of substitute products or services: All the existing financial institutions, such as banks and credit unions, can prove to be a threat if they come up with better and unique products for the customers. The most relevant would be services provided by digital banks. Since Meridian has a large base only in Ontario, customers may consider digital banking an option. Further, in case competitors provide better services at a lower cost, Meridian could face the heat of these services. 5. Competitive rivalry: To stay ahead of the competition, Meridian needs to not only maintain but also exceed the expectations of its customers. A strategic decision can be taken to invest in research and innovation. Since most existing financial institutions are its competitors, Meridian can raise the switching costs to shift to other organizations. They can also introduce loyalty programs that reward customers for long-term relationships.

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4 References: Alonso, T. (2023, July 13). Porter’s 5 Forces: Find Your Strategy Focus. Cascade. https://www.cascade.app/blog/porters-5-forces Meridian Fast Facts | Meridian Credit Union. (n.d.). Www.meridiancu.ca. https://www.meridiancu.ca/about-meridian/corporate/leadership/fast-facts Meridian reports strong financial results for 2022 and celebrates key social impact milestones | Meridian Credit Union. (n.d.). Www.meridiancu.ca. https://www.meridiancu.ca/about- meridian/media-and-news/meridian-announcements/meridian-reports-strong-financial- results-for-2022-and-celebrates-key-social-impact-milestones

Week 2

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