IBAC
International Banking Credit Analysis Ltd (IBCA) was a leading European credit rating agency with offices in London, New York, Tokyo, Singapore, Hong Kong, Argentina, Brazil, South Africa, and Australia. IBCA produced and sold credit reports on more than 400 financial institutions worldwide and 100 corporations in Europe (Gaik Eng, 1999). It had 1500 subscribers and also received rating fees from institutions issuing commercial papers such as bonds. In the 1990s, two agencies, Standard & Poor's and Moody's dominated the international ratings industry. Both these agencies had a much wider scope of coverage than IBCA, which focused mainly on financial institutions, insurance companies, corporations and sovereign countries. In this case analysis, IBCA faces some international barriers. First of all, their industry is highly competitive, with both local rating agencies, as well as foreign agencies, which in turn challenge their strategies for global expansion. To correspond with their challenges with global expansion, are the issues they face in their long-term prospects. These two issues actually harmonize with one another. Even with the highly competitive market, some developing industrial countries ( i.e
I also feel that with the demand for the rating agencies in Latin America, and the expertise and experience IBCA has in the credit rating industry, it would be very beneficial for IBCA to try and concentrate more in the Latin American market. First of all, IBCA is interested in helping other agencies setup their own rating agencies. This gave them the opportunities to invest less amounts of money, and still hold a stake in the market, with options to buy the agencies in the future. In the Asian markets, IBCA had to start up their agencies from scratch. IBCA could not buy up the agencies, or have any majority stakes in them (Gaik Eng, 1999). • China is switching to a free market situation in which borrowing is done on a rational basis, instead of at the government’s request. Opportunity to strengthen their presence • Sovereign team that has made IBCA internationally recognized • Only foreign rating agency to be recognized by the Securities and Exchange Commission (SEC) in the U.S. as a Nationally Recognized Statistical Rating Organization (NRSRO). The final way in which a company's competitive position can be altered is through the entry of new competitors who may offer the same products or services at lower prices or with some other advantages. I feel that in the credit rating industry, this threat is not as significant as others, because there are high entry barriers. For example, high capital cost or knowledge that is difficult to acquire is an indicator of strategic strength. Of course, both the threat of substitute products and the threat of new entrants are very susceptible to changes in the rules of the game. For example, new technology could concurrently open the door to substitutes and lower entry barriers to other players.
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