Investment Banking at Thomas Weisel Partners Case Solution & Answer

 Investment Banking at Thomas Weisel Partners Case Solution

The company entered into health care industry and later on the company decided to make entry towards consumer products, energy, and real estate sector. The changed approach to run the business worked well as the company grew its assets, employee base, investors’ hub and cost efficiency. The company later on, after the strategic change in business, started to charge a spread of around 3% to 5% on mergers and acquisitions and other financial services, however, this range was variable and dependent on the size of the transaction. From the above discussion the company’s history and background can easily understand. In the next section, industry dynamics, challenges to the company and their alternative solutions will be discussed.

Industry Analysis

In this article, Investment Banking sector will be analyzed through the adequate framework, known as the Porter’s five force. This structure will allow the reader to examine the industry’s dominant features and growth prospects among the industry member. It will also make understanding of the critical success factors which are necessary to survive in the industry.
Porter’s Five Forces model underlines five main dimensions to understand a specific industry. These aspects include Barriers to Entry, Threat of substitutes, Bargaining Power of Buyer, Bargaining Power of Suppliers and degree of rivalry among the industry members. These issues will be discussed in detail in the next section.

Threat of New Entrants

There is a minimum chance of any company or group to enter in this arena since; the market is saturated and mature. There are fewer opportunities for growth, and the profitability of the field is getting low. Moreover, the new entrant will require time to learn the dimensions and specifications of the market which will not allow it to survive in this domain. On the other hand, there is an enormous capital required to enter the industry which small and medium sized companies cannot easily meet. Finally, it can be concluded that the sector members don’t have to worry about the new entrant since it’s no longer a threat.

Rivalry among the competitors

It can be seen that the degree of rivalry is very high in the industry since the competition is on low pricing and value-based services. Every member is trying to give more valuable services at lesser prices. Moreover, just because of this intense competition the industry is having a lot of mergers and acquisition. Therefore, it can be easily estimated that rivalry is very high in this industry. Furthermore, the switching cost of any service from one bank to another is very low for consumers since; there are no strategic alliance or long term contracts to bound customers.

Bargaining Power of Buyers

The power of the consumer is significantly high. Since there are numerous options for them to choose from and the rivalry to snatch the share of another competitor is a common thing in the industry. Moreover, the services of almost all the industry members are same, and every member is trying to give the most convenient services to its customers. Which increase the bargaining power of the client. However, there are no or very few ways to differentiate service from each other. So, it can be said that these services are like a commodity, not a specialty. In a nutshell, it can be summarized that the buyer has a significant bargain power over the industry members.

Bargaining Power of Suppliers

The provider for this arena are the investors, equity holders and other DFIs which are giving funds and investing in these companies’ ventures……………….

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