Porter’s Five Forces analysis model: Wells Fargo

Wells Fargo: Porter’s Five Forces analysis model

Wells Fargo is recognized for being one of America’s most leading companies delivering many financial services. When using Porter’s Five Forces analysis model, we are comparing functions in terms of opportunity and attractiveness. According to (Fernfort University, 2019) bargaining power of buyers and sellers, threat of new entrants, threat of new substitutes, and rivalry from competitors are Porter’s Five Forces model that will be used to analyze Wells Fargo.

Threats of New Entrants

Wells Fargo carries and sells secure differentiation products with excellent customer services; the risk of new entrants is weak. Relatively, there are difficult economies of scale for new entrants within the financial industry in which Wells Fargo operates. The threat of new entrants is creating a weaker challenge due to higher costs in production for the new competitors. The capital requirements are also high, thus creating a problem for the new competitors to establish outputs (Fernfort University, 2019). Wells Fargo can focus on the economies of scale and innovation to differentiate their products, therefore building a strong brand that fights new competitors.

Bargaining Power of Suppliers

There are many suppliers in the financial industry. Therefore, the sellers have minimal governance of prices, which makes this force weak (FernFort University, 2019). The suppliers fail to offer trustworthy products leading to weak bargaining power. The suppliers do not compete with other products, which makes suppliers concentrate on the product on hand. This brings potent force for the suppliers. Wells Fargo can adjust costs to challenge other suppliers or have several suppliers in various locations to ensure supply chain efficiency.


Bargaining Power of Buyers

            There are many numbers of suppliers than industry offering similar products. Therefore, the purchasers have fewer businesses to select from and less governance on prices making the bargaining influence of the purchasers weak (Fernfort University, 2019). The buyers lack a lot of alternative products due to higher product differentiation. This makes their power vulnerable within the industry. Wells Fargo can concentrate on differentiation as well as innovation to draw more purchases and a significant customer base through marketing efforts.

The Threat of Substitute Products or Services

There are limited firms offering services within the industry that Wells Fargo operates. The few substitutes within the industry are also facing low profits earning. Few substitutes are a threat to Wells Fargo since they also provide high-quality products. Wells Fargo company can focus on offering higher quality products at lower prices than its competitors.

Rivalry from Competitors

Rivalry among the competitors is weak since there are very few companies that operate within the finance industry, indicating Wells Fargo cannot make moves without being noticed. These include JP Morgan Chase, Citigroup, and Bank of America. On the other hand, the few competitors have significant market shares, meaning they will engage with competitive actions making the rivalry among the competitors strong within the same industry (Fernfort University, 2019). The products within the industry have a high differentiation, which makes it difficult for competing firms. This makes the rivalry weaker because the supply-demand balance is difficult. Wells Fargo should focus on the differentiation products to ensure that the activities of competitors have less influence because the consumers will seek unique items.


Contingency Leadership Model

The company is currently relying on the situational leadership model. Situational leadership considers where the mangers adopt various leadership styles concerning the situation as well as the development of the team members. This is an effective way since the direction can adapt to the needs of the team and set beneficial obligations for the whole company (Hansen, 2009). The style of leadership enables leaders to adjust their style according to the skill and behavior levels of the employees. For instance, employees may have low levels of motivation and inability to perform tasks, which requires the leader to direct the employees to get skilled. Skilled employees are motivated since they know how to perform tasks correctly. The leaders are also able to offer support based on the demands and needs of the employees to stay motivated. Tim Solan is Wells Fargo CEO, which makes him the strategic leader in the company. He needs to use strategic planning, which involves identifying opportunities and challenges employees faces every day. Through this leadership style, the company will be able to achieve tasks and develop the team, which will also increase productivity.

Leadership Model

Wells Fargo needs to change their leadership style to Laissez-faire leadership. Considerably, rather than a single leader making all the decisions within the company, this leadership style allows other team members to take part in implementing workplace solutions (Hyun and Kang. 2015). This approach enables followers to make decisions and set rules, thus giving employees more freedom. This style is essential in building a capable team since there are fewer standard procedures, creating a strong team that has the power for far-reaching strategic decisions.


Further Actions

Wells Fargo needs to focus on differentiation and innovation of products through the integration of new technology. To effectively implement the opportunities, Wells Fargo needs to conduct market research and focus on attracting new customers who will be seeking for unique products. Through innovation and product differentiation, the company will be able to retain and attract new customers with a strong brand. Innovative products, having patented technology, will facilitate the growth of the company.


Fernfort University. (2019). Wells Fargo & Company Porters Five Forces Analysis.

Hansen, M. (2009). Collaboration: How leaders avoid the traps, build common ground, and

reap significant results.

Hyun, A., & Kang, H. (2015) Similarities and Differences of Industry Leaders’ Competitive

Advantages. Leadership & Organizational Management Journal, 2015 (2).


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