Environmental Opportunities: The UBS brand as an Advantage

In the financial services industry, environmental barriers are less tangible than, say, any manufacturing industry. Brand name recognition, though, transcends industry type, and the UBS name is not only widely recognizable, but also it is a respected name in financial services. With regard to the five forces model, a competitive model can be constructed for this industry, but prevention of entry and product variance(as applied to substitutes) is a difficult factor to manipulate to a company's advantage due to the incredibly wide variety as well as similarity of products that are offered by financial services companies.

The financial services industry, in recent years, has been extremely volatile and tumultuous, as the economy has faltered as a result of questionable investment practices among financial services companies themselves. In an industry already dominated by fierce competition among a wide variety of services and products, e.g. mutual funds, retirement products, etc, the loss of public trust hit the industry hard. But there was more a less an even distribution of profit reduction. So now, a company like UBS relies heavily on its reputation as distinguished firm for its assurance of continued success in a highly competitive and highly damaged industry.

In the financial services industry, different firms compete more on the performance of their products than on the basis of price, i.e. share loads and trading fees. Individual and institutional investors alike are more concerned with long term profitability of their investment products and are less concerned with the fees associated with their transactions. This may seem like a contradiction to what was previously stated about the similarity of the products offered by companies, but when I say similar products I mean product types and structure, not product performance.

As the financial services continues to recover, the threat of buyers will become less a source of competition for competing firms. Because of this fact, UBS can continue to direct its energy to research and less of its energy to product differentiation.