Their goal is to acquire competitive advantage within the mutual fund industry. They achieve competitive advantage when their firm is able to deliver the same benefits as their competitors, but drive home a better return for their clientele. Another consumer benefit that can help give a firm competitive advantage would be the ability to transfer funds within, without incurring transfer charges to the consumer. This enables the firm to create superior value for its customers and superior profits for themselves. .
The buyer's power plays a significant role in the succession of mutual fund firms. In the mutual fund industry, society tends to want to buy what works, and what pays back the largest returns. This possesses a potential backward integration threat. Consumers can pull out and purchase their stocks and bonds from another firm if they feel the other firm is getting a better return on the dollar. .
In the mutual fund industry, a supplier can play a significant role in supplier power. For instance, if a bank loans large mutual fund firm money to start or expand their organization, they will expect to get their money back with interest. If the firm is profitable, that task of paying back the money will not be a problem. If the firm is not profitable, they could possibly go bankrupt and lose all their clients. The telecommunications industry also plays a supplier role in the mutual fund industry. Without telecommunications, a mutual fund firm can't conduct their everyday business. In all actuality they could, but they would not be up to speed with society and the rest of the industry. Communications is a large role in everyday transactions, between their clients, banks, and with their competition. These supplies can exert an influence on the producing industry. Without them, firms can't compete in this market. .
The threat of substitutes should always be on the mind of mutual fund organizations.
