Intensidad competitiva en el sector de las microfinanzas

UNIVERSIDAD PANAMERICANA

APLICATION OF PORTER’S FIVE FORCES MODEL IN THE MICROFINANCE INDUSTRY OF MEXICO
A strategic analysis of industry: ¿is microfinance profitable?

By Carlos Enrique Avelar González
28/05/2010

Strategic Planning Management and finance School of Economics and Business Universidad Panamericana

APLICATION OF PORTER’S FIVE FORCES MODEL IN THE MICROFINANCE INDUSTRYOF MEXICO

2010

CONTENTS
1. Background .................................................................................................. 3 2. Problem definition ....................................................................................... 3 3. Research method......................................................................................... 4 4. Scope of the study....................................................................................... 5 5. Limitations of the study ............................................................................... 5 6. Possible errors ............................................................................................. 6 7. Theoretical framework............................................................................... 7 8. Results.......................................................................................................... 8 9. Conclusion ................................................................................................. 17 10. Bibliography ............................................................................................... 18

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APLICATION OF PORTER’S FIVEFORCES MODEL IN THE MICROFINANCE INDUSTRY OF MEXICO

2010

BACKGROUND
Given the widening gap of economic inequality in Mexico, microfinance has emerged as an effective alternative for fighting poverty and promoting economic development of poor and marginalized families. The favorable results of this tool in developing countries in recent decades have resulted in the creation of a high number ofnew institutions focused on meeting the financial needs of disadvantaged social sectors (Navajas & Tejerina, 2006). Given the great expansion of microfinance in Latin America and in Mexico, a large number of entrepreneurs and investors have begun to see the sector as a new and profitable business opportunity, even though barely a few years ago microfinance were primarily considered a task fornonprofit associations. The term microfinance can be understood as the provision of financial services for people who lack access to traditional commercial banking; users of these services are mostly poor people or people with low incomes. In this context, microfinance aim to make available all financial services offered by a bank to people with low financial resources. According to the AsianDevelopment Bank microfinance can be defined as ‘the provision of a broad range of financial services Such as deposits, loans, payment services, money transfers, and insurance to poor and low-Income Households and, their Microenterprises’ (2000:p.2).

PROBLEM DEFINITION
Mexico has witnessed the unprecedented development of microfinance in the last decades, and despite the large increase in the numberof microfinance institutions in the country, there isn’t a systematic study about the level and intensity of competition in the sector and even less on how attractive is the sector to new investors (Microfinance Information Exchange, 2008). Large MFIs (Microfinance Institutions), as COMPARTAMOS bank and financiera independence, have achieved levels of profitability and growth that have led toacademic debate, COMPARTAMOS bank has managed to become one of the most profitable banks in the country by lending money to the Mexico’s poor (Malkin, 2008). The rapid growth and high profitability of COMPARTAMOS bank has provoked a debate about how attractive can be lending money to the poor (regardless of the moral implications that might have). There is a growing faction that believes that the...