Financial Analysis of a Publicly-Traded Company Research Paper

Financial Analysis of a Publicly-Traded Company - Research Paper Example However, after conversion of preferred stock held by the US government into a common stock, US government is the largest stakeholder of the company to the tune of over $25 billion (Stempel, 2009). Q.2 Identify the five (5) forces of competition and how it impacts the company. Porter's five forces of competition describe Citigroup’s relative standing in the financial market and the impact these forces may crate on the company can be elaborated under the following heads (Porter, 2008). Threat of Entry from Other organizations Banking business requires huge resources and credibility to begin with and that will surely create an entry barrier for a new entrant. The economies of scale go in favor of the Citi as that helps Citi to provide the services to the consumers at affordable cost. There is always a moderate threat from overseas players to enter in the niche area of Citi. Supplier Power Citi is in the business of financial services. Deposit holders provide huge chunk of capital to the Citi. In most of the cases, they do not have any bargaining power as they are in millions scattered all around and individually too small to dictate any terms. Currently, money flows globally and forward and backward integration of the companies in financial service business can create some turbulent times to the Citigroup but that applies to all firms within the financial market. Buyer Power Being in the financial services business, retail buyers do not have any bargaining power as such and they need to buy as per the market offerings. It is true that business moves in favor of the market-driven company but buyers bargaining power in the financial sector is not substantial to tilt the scale against the companies in this sector. Institutional buyers are the informed buyers and they do possess bargaining power to a certain extent because they buy in bulk; however, that bargaining power is not always one-sided. Financial products are inherently complex in nature and buyers hav e limited capacity to understand them though they do get substitutes in the market. This factor is not likely to affect much to the company like Citigroup. Rivalry Factor There are numerous competitors in the financial services business in retail and the institutional sectors; however, brand equity is superb in case of Citi. Mergers and acquisition is a common phenomenon in the financial sector. Size of the corporation does matter and Citigroup is one of the giant in the financial sector business so that is always a plus point for the company. Usually, companies change the hands but do no prefer to exit completely as sector offers lucrative business opportunities in the long run. Product differentiation is always possible to carve a suitable niche for the company and Citi has been doing the same for several decades. Substitution Threats Due to numerous players in the financial service sector business, substitute products are always available and the consumers weigh them with all pro s and cons. Citi also faces the issue of