Ryan Muth

MNGT 481

Assignment 2
External Analysis of 1st Mariner Bank

Demographic Segment: According to recent Census data, the population is relatively

stagnant with a very slight decline. This is actually an improvement over previous years, when

Baltimore was losing large amounts of people each year. Banks will not be able to rely on an

increasing population to grow their customer base, and must look to increase their market share

by taking customers from each other. One segment that did increase size was Persons 65 and

over, which indicates an aging population. Baltimore also experiences relatively high rates of

poverty within the city, so it may be beneficial to target the surrounding county and portions of

the city not as impoverished. Sociocultural Segment: Access to the internet allows the average

consumer to evaluate all of their banking options from the comfort of their own home, without

any pressure. The consumer has much more power than in the past, because their sources of

information are much more reliable and accessible. Therefore in order to gain their business,

banks must be able to show that they offer the best possible services and experience for that

particular client. Political/legal Statement: As Baltimores population stagnates, the mayors

office has been working on several initiatives to increase the number of people moving to the

city, and limit the number leaving, with mixed results. In 2011, Mayor Stephanie Rawlings Blake

announced a plan to bring 10,000 families to the city, and in 2013 the property tax rate was

lowered as a part of that plan (Baltimore Sun). If the Mayors efforts prove successful, it will

mean a lot of new potential clients for 1st Mariner, of which many will be young families.

Technological Segment: With a growing number of people using both mobile and online

banking, the risk of a cybersecurity attack is always prevalent. Customers must be able to trust

their information and money will be safe from online attacks, and if a bank cannot guarantee that

they will lose those customers. Banks must also make sure their websites and apps are easy to
use, as more customers are using it instead of visiting a local branch (CBS News). Economic

Segment: Baltimore is a poor city, and shows no real signs of improving. Started by the exodus

of the manufacturing and steel companies who employed a large number of city residents, and a

decrease in the amount of freight that passes through the city each year, Baltimore has lost a

staggering amount of blue collar jobs it once relied on. This trend forced many who could afford

it to move out of the city, while those who couldnt were stuck living in poverty within the city.

The decrease in population has left large strips of land vacant or run down, and economic

recovery in those areas is a long way off (CNN). Banks need to focus on gaining customers in

the areas of the city not affected by the lack of blue collar jobs, and look to expand into the more

affluent surrounding county. Global Segment: With people and businesses across the world

being more connected than ever before, banks must be weary of non-local competitors moving

into their territory. The trend of banks merging and acquiring one another has increased the

occurrence of this, with a few massive banks controlling large amounts of the countrys money

(Motley Fool). In order to compete, smaller, regional banks must either innovate and offer a

better experience than the competitors, or work with other banks to achieve strategic goals.

Threat of New Entrants: Low. The banking industry is under very heavy regulation

from the federal government. It also requires a large amount of capital to start a bank, and people

are unlikely to join a bank they have never heard of before, due to a lack of trust. Buyer Power:

High. The buyers of the banks services have low switching costs, as most banks generally offer

similar services, and there are usually many banks operating relatively close to each other.

Supplier Power: High. The people and businesses who deposit their money with the bank are

the suppliers, and as long as their money isnt tied up in something that needs to mature, they can

move it to a different bank that will offer them a better rate. Threat of Substitute Services:
Medium. There is no real substitutes for customers who want to deposit or withdraw their

money, but for long term investments there are a number of options provided by non-banking

companies. Industry Rivalry: High. The banking industry is very competitive, with each bank

looking to offer the lowest rate possible to steal customers away from their competition. Banks

are also frequently acquired by their competitors, so they always be aware of what the

competition is doing.

Internal Analysis

1st Mariner generates value primarily through their operations and service. They offer

various lending and investment options, depending on the customers needs and wants, and also

financial consulting services, to help determine the best course of action for each individual

customer. Marketing and Sales also contributes, as 1st Mariner is taking steps so they are seen as

the Baltimore community bank. Technology development also plays a role as their customers can

use their mobile app and website to access their accounts. They also have 16 branches across

Maryland, and their customers have access to 16,000 ATMs, which is a difficult resource for a

competitor to imitate.

The difficulty 1st Mariner faces is that is still small compared to most other banks, and

that they must grow in order to absorb the cost of regulation, according to their president

(Baltimore Sun). If 1st Mariner is unable to grow by acquiring other banks or making strategic

alliances with them, then they will most likely continue to perform poorly.

Strategy

First Mariner is using a Focus strategy, as they are only concentrating on their business in

the Baltimore Area. They are seeking to gain an advantage through differentiation of their
services, but since they only operate in Baltimore and surrounding areas it is considered a Focus

strategy. The biggest issue they implementing this strategy is that Baltimore is a relatively poor,

and underpopulated city, and that there are already firms with large shares of the market. If 1st

Mariner wants to succeed with this strategy, they will need to find a way to identify and target

the lucrative customers the other banks already have, and find a way to convince them to switch

to 1st Mariner.
Appendix A

References:

QuickFacts Baltimore City, Maryland http://www.census.gov/quickfacts/table/SEX255214/24510

Baltimores Demographic Divide, Randy Yeip http://graphics.wsj.com/baltimore-demographics/

City Passes Latest Property Tax Break, Yvonne Wenger, http://articles.baltimoresun.com/2014-06-

04/news/bs-md-ci-city-taxes-20140604_1_tax-rate-baltimore-homeowners-tax-break

Mayors Goal: Bring 10,000 New Families to City in a Decade, Julie Scharper,

http://articles.baltimoresun.com/2011-12-06/news/bs-md-ci-srb-looks-ahead-20111202_1_property-

tax-rate-mayor-stephanie-rawlings-blake-new-families

More and More People Use Mobile Banking, Bruce Kennedy,

http://www.cbsnews.com/news/smart-phones-are-revolutionizing-consumer-banking-habits/

Baltimores Economy in Black and White, Jordan Malter,

http://money.cnn.com/2015/04/29/news/economy/baltimore-economy/

10 Biggest Banks In America, John Maxfield, http://www.fool.com/investing/general/2015/10/24/10-

biggest-banks-in-america-3q15.aspx

1st Mariner Bank, https://www.1stmarinerbank.com/personal/

1st Mariner Recovering and Hoping to Grow, One Year After Purchase, Carrie Wells,

http://www.baltimoresun.com/business/bs-bz-first-mariner-first-year-20150623-story.html
Appendix B:

Figures:
 Threat of New Buyer power Supplier Power Threat of Substitutes Industry Rivalry

Entrants Low/Medium

Low High Medium High

Strict Low Switching Can be high in No real substitutes Banks are always

Government Costs short term if for looking to poach

Regulation money cannot be deposits/withdrawals customers from

taken out each other

without penalty

Extremely High Many Available Very easy to Some other kinds of Banks also need

Startup Costs Banks move money businesses offer to acquire other

once account has financing for their banks to achieve

matured. specific industry. certain levels of

growth.
Part B

According to the Utilitarian view of ethics, the manager is not acting in an ethical manor. By

purchasing supplies from a firm that is owned by her sister, who charges higher than market prices, the

cumulative effects of her actions are negative, which means under utilitarian thinking, they are

unethical. When the manager purchases these goods from her sister, the only positive outcomes of her

actions are that her sisters company receives the business, the firm receives quality goods. However,

these positive outcomes are greatly outweighed by the negative. The first negative outcome is that all of

the other suppliers who offer the same goods are not give a fair chance to supply the business, and their

performance will suffer because of this, which may possibly have further negative effects on their

employees and other firms they do business with. Another negative outcome of these actions is that the

owner(s) of the purchasing firm are in effect having their money stolen from them. If this manager is not

buying the supplies they need from the source with the lowest cost, and is instead buying them from her

sisters firm, then the owners bottom line will suffer and this should be considered no better than

directly stealing from them. This kind of outcome can have a ripple effect throughout the company, and

the other employees there may not receive raises they deserve, and their pay may even be lowered or

jobs terminated. Overall, the negative outcomes of this action greatly outweigh the positives, and

through the utilitarian lens of ethics they should be seen as unethical.

If the supplier were to be dropped, one stakeholder that would be hurt by this action would be

the supplier themselves. They would no longer receive the business from this account, and their

financial performance would suffer as a result. This may lead to layoffs and other negative events for the

employees of this company.

Appendix A

Definition of Utilitarianism

o An ethical philosophy in which that happiness of the greatest number of people in the

society is considered the greatest good. According to this philosophy, an action is

morally right if its consequences lead to happiness (absence of pain), and wrong it leads

to unhappiness (pain). Since the link between actions and their happy or unhappy

outcomes depends on the circumstances, no moral principle is absolute or necessary in

itself under utilitarianism. (businessdictionary.com)

Appendix B

Reference

o What is utilitarianism? Retrieved from

http://www.businessdictionary.com/definition/utilitarianism.html