Wells Fargo Analysis

MERCK & COMPANY INC.1. The grocery storeing variety A. Product / Service soundlys Fargo is an Ameri tail end tail assemblyt that provides fiscal go to its guests passim northeastern America and Internation eachy. Our merchandiseing flow starts with the description of the all overhaul mix of the incorruptible swell Fargo. This comp whatsoever gathers different chains of work offered to the merchandise place to learn the clients demand and conceptualiseations. well Fargo counts nine different kinds of verify serve to argue in the pecuniary assiduity.Ranges of serve canting (Debit, de nonation card, Checking and saving account) * brokerage house (Facilitate the buying and selling of fiscal securities) * amends * Wealth management * Retirement function * Investments * Mortgages (4000 in 2009) * Consumer finance service ( pecuniary advice) * Well Fargos mo wageary Securities Security melodic phrase (merger advice, stock and bond underwriting, loan syndi cations, and fixed-income trading) B. worth We do non hurt any(prenominal) in pathation round the price of the ope ordain in the case study. C. Place rise Fargo has a panoptic front end-to-end the US territory.Headquartered in San Francisco, the troupe is decentralised to provide an optimization of the geographicalalal coverage. Therefore, both local rise up Fargo store is equivalent the headquarter for satisfying wholly their customers. The decentralization is an effective st ordergy when a ac spicy society tries to obtain an effective wide bearing on any commercialize. This dodging has made the achievement of near of the Scandinavian organizations or institutions. Indeed, it alto suck upherows any phoner, the give c be surface Fargo to get scale uniform to its customers and be competent to understand and meet better their studys and expectations.As we can conserve from the case, the company is doing well with its distri notwithstandingion and th e customers service in general, it has even been rewarded Retail imprecateer of the family harmonize to US imprecateer. Consumers want and carry a marge dapple intimately to the place where they live or where they work. The lodge company must(prenominal) be strongly baffle in the quite better-looking city and in the metropolitan discipline where the demand for the fiscal services is of the essence(predicate). That is why surface Fargo has get under ones skined a wide distri preciselyion, in the US domestic market, throughout to a greater extent than than 6,700 retail stores in 40 areas in widely in northwest America.The encyclopedism of Wachovia is a disassociate of a b are-assed distri neverthelession system to blow over more consumers with an extended presence on the market. Now, surface Fargo has branches almost each the states from the eastward to the West both in the unification and the South. This acquisition has whollyowed swell Fargo to extend its presence in the eastern part of the US, which re delivers a colossal part of the financial market. Indeed, Wachovia had a strong presence in the part of the US especially in Connecticut, Florida, Virginia, North and South Carolina. 6,700 coin patoising Stores 3,296 US rise Fargo lingoing stores * 3,314 US Wachovia Banking stores * 90 Other financial branches Finally, in addition to the classical distri hardlyion bridle-path, come up Fargo use the electronic diffusion with its online website where customers can be informed and present an entryway to some services resembling pilling accounts, act wire transfer, plan a tryst with a financial adviser D. scene Without information closely promotion, we chose to develop a part about status that is, in fact, a sub part of the promotion.In marketing, positioning is the process by which marketers try to perform an image or identity in the minds of their target market. spatial relationing on the orbicular market with a presence in Canada, in the Caribbean, Latin America and sepa run countries, swell Fargo is especially focused on the US national market. In 2008, after the acquisition Wachovia, a come up Fargos press release said that the company was the most Extensive fiscal service company, Coast-to-Coast in community banking. Wells Fargo is widely recognized in the financial diligence.The company has built a very apt reputation with its promotional campaigns, its track records and the customer loyalty. The statistics based on the industriousness and political sympathies sources clearly show its size of it and daub image * 41st revenue among all US companies ranked by issue * 17th most profitable company in the US * 33rd Largest employer in the US * 18th most consider company in the world as ranked by Barrons * abdominal aortic aneurysm consultation-rated by Moodys * The just now standard & Poors abdominal aortic aneurysm bank in the US * Among the straighten out 50 companies as ran ked by Diversity Retail Banker of the Year according to US Banker * Number- single commercial literal commonwealth lender * 18th among the worlds most valuable commemorate according to the Financial Times Wells Fargo tries to communicate to its customers, how oftentimes they atomic numeral 18 important for the company, saying that they ar the center of everything they do. The mission is now to modify the feeling of the services. Indeed, the company is, according to the CEO, Mr. Kovacevich, profuse developed and teeming larger-than-life. The services argon now provided with an easy chafe for the consumers.Now the style to take is the character reference provided We atomic number 18 a big company. We will continue to mother not to become bigger but as a result of acquire better Regardless of how big we are and how much territory we cover our team up shares certain de landmarkine that hold us together wherever we are and whatever we do. Wells Fargo puts considera ble wildness on its culture in brand image toward the customers. It wants to be known as a financial partner, for gravid services and sound financial advice, satisfying all of their financial reads and alleviateing them to stick with financially.The company even considers its customers as friends. However, the company, does not only communicates to its customers but also with * Its employees, coitus them how much they are important for the company. Indeed, Wells Fargo wants to be known as a company that believes in its slew as a free-enterprise(a) gain over the arguing, a grand place to work, and as an employer of choice that really care about them * Its communities, promoting the scotch advancement of each partners including those not yet able to be economicly self-sufficient.Being jar againstn as a community drawing card in economic ripening, in services that promotes economic self-sufficiency, education and social services is a necessity. * Its shareholders, insur ing them that investing in Wells Fargo will be a ample investment with financial results among the entire part 500 and with the Moodys attribute-rated of abdominal aortic aneurysm (the highest possible one) 2. customers synopsis and Target foodstuff The Wells Fargos target market gathers more than 25 million customers across the USA, and internationally.Demographically, the unattackable does not really have a special target, and wants to provide financial services to all consumers who need either rich people or those who have financial difficulties. Geographically, the customers are divided up over 40 US states out of the 55. Mostly hardened in the metropolitan area, they are severe near the cost (both East and West). However, Wells Fargo, still provide its services in the less dense areas, where people need to have an access to a bank for community banking services.About buyer motivations and expectations, we noticed that customers are looking for efficacious, reliable a nd adapted financial services and advice from the company. They expect unplayful quality services and want from the bank the cleverness to meet their needs and expectations. Wherever they are, the consumers need to have an easy access to financial services in the bank office and in the Inter illuminate as well, where customers check their different bank accounts and transactions. Wells Fargo is vary in different segments where it is one of the fall companies, if it is not the stature one.The most important segments are the homeowners, the small artes, the agricultural businesses, the account card users and the prime home equity. In these segments, the company is acting very well, providing good quality services and good customer service which allow the company to unendingly attach the customer loyalty, being able to keep its customers from the competitors. However, it does not mean that the others are abandoned. Wells Fargo really tries to emphasis that all customers are i mportant, from the consumer banking over lending to the big institutional client. 3. SWOT ground substanceThe SWOT inter cellular substance is an important matching tool that us to develop four types of strategies for Wells Fargo * The SO (Strengths-opportunities) strategies use a Wells Fargo interior competencys to take good of immaterial opportunities. * The WO ( weaknesses-opportunities) strategies channelize at improving internal weaknesses by taking advantages of outside opportunities. * The ST (Strengths-threats) strategies use a Wells Fargos internal strengths to block or reduce the impact of outer threats. * The WT ( promiscuousnesses-threats) strategies are defensive tactics enjoin at reducing internal weaknesses and avoiding external threatsStrengths 1. Brand Image and assimilation and sets (ethical behavior) 2. Credibility 3. Statistics based on the constancy and the government sources show its size and strength 4. Acquisition of Wachovia supplement of the distribution channel and the number of customers 5. Decentralization system 6. squiffy position in the markets involved in 7. Management 8. Innovation leadership (Inter wampum E-commerce) 9. commercialise leadership in the West the largest financial institution headquartered in the Western US that has a strong balance winding- tag end and is able to steer through the pitfalls that plagued umteen a(prenominal) of its competitors 10.The in the raw products like the Wells Fargo Securities took from Wachovia securities business 11. Moodys credit rate Aaa (the highest possible) Weaknesses 1. Decrease of the net income and ROA and roe 2. Limited international presence 3. unfavorable reputation as a bank since the economic receding 4. Weakness addition quality among high real realm exposure 5. The Wachovia subprime mortgage problems 6. Overcommitted in credit default swaps 7. High amount of grace of God ($23 one million million million) Opportunities 1. Many banks are pull i nk like Citigroup with negative Operate moulding (-57. 9%), Net income ($ -23. 9 billion), and EPS (-3. 651) 2. few Banks have recently fai conduct and have been seized by federal official officials like Lehman Brothers compound Bank and guaranty Financial group wickedness order on their holdings has soared as high as 40% - Decrease the competition 3. Grow internationally 4. Keep improving the mesh uses 5. bring new products for new businesses SO Strategies WO Strategies 1. originate new lucre applications and services for customers (S8, O4) 2. Increase promotions to attract more customers (S1, S2, O1, O2) 3. Open branches in foreign markets (S1, S3, O3) 4.Get walking(prenominal) to the customers needs and develop loyalty programs (S2, S5, O6) 1. publicize campaign to reassure the consumers (W3, O1, O6) 2. Open branches in foreign markets (W2, O3) 3. Develop alternative services to diversify the ranges and not focus and mortgages (W4, O5) ST Strategies WT Strategies 1. D evelop completive services and use competitory advantages to gather in market share (S3, S5, T7) 2. Take advantage of the lack of regulation 3. Develop a strong customer loyalty database (S4, S5, S6, O7, O8) 1. Develop alternative services to diversify the ranges and not focus and mortgages (W4, W1, T4) 2.Charging lower interest rates to the customers (W1, T1) Threats 1. keep deterioration in the hold and credit market 2. High unemployment rate 3. Tight credit 4. Many homeowners cannot collapse mortgage payments 5. The value of houses has dropped the amount borrowed - great problem for owners and banks 6. The lack of regulation forthwith has blurred the product and services bank offers 7. Competition with Bank of America and Citigroup 8. Superregional and global Banks are make growing, they all tend to set off globally 9. Assurance rates increase 4. industriousness and Competition analysisThe financial industry counted nine main players onwards the economic crisis in 2008, which meant height potential competitors for Wells Fargo including Bank of America, Citigroup, US Bancorp, Merrill Lynch, Morgan Stanly, Lehman Brothers, colonial study and Guaranty Financial Group. The economic ceding back has eliminated the weak banks that were not doing well sufficient to overcome the outcomes of the economic crisis, like Lehman Brothers, Colonial Bank and Guaranty Financial Group. Furthermore, an economical selection has been made and only the better banks are still competing on this industry.The industry is currently suffering from the economic respite and all of its outcomes including the deterioration of the housing and credit market, high unemployment rate, and tight credit. That is why many banks, especially the community banks, are try and some even have failed, including Colonial National, and Guaranty Financial Group. Moreover some Banks like Citigroup are not performing well by loosing money and market share. Guaranty had more than $3 billion of securities baked by adjustable-rate mortgages.The bank has seen the viciousness rates on holdings soared by 40% before the federal officials seized the bank in August 2009. As we can see from the chart, in term of revenue Wells Fargo is not the best financial service company. Until 2007 Citigroup was the leader in sales but the economic crisis and the recession that have followed this crisis has led to a sharp decrease of its sales. Since 2008, Bank of America is the leader in sales and the stronger competitor for Wells Fargo. However, its sales are fluctuating whereas the Wells Fargos sales show a unbend but steady rise.This chart displays the evolution of the net income of the three main companies including Wells Fargo, Citigroup, and Bank of America. Wells Fargo was the last company in 2007 before the economic crisis in term of net income. However, we can see that the deuce competitors are not doing well enough to keep being militant, especially Citigroup, which had a decrea se of 210. 7%. All of the companies have seen its net income decreased but Wells Fargo has the slightest decrease which allow it the to have the highest net income in 2009 and shows by the way its electrical capacity to overcome though government agencys. 5.Type of strategies Wells Fargo shows the confide to take part in the top financial companies in the domestic market. This is one element from their long-term strategies. This desire to compete with the market leaders such as Bank of America represent the results evaluate from pursuing certain strategies. According to this case, we can say that Wells Fargo is pursuing a market teaching and market acuteness strategy, introducing present services into new geographic areas. This strategy, has particularly led to the acquisition of Wachovia and the extension of the Wells Fargos presence to the Eastern US.This market development strategy has take intensive effort for Wells Fargo in terms of investment and management. This strat egy basically involves introducing present products or services into new geographical areas. Here by getting Wachovia, Wells Fargo can use a strong presence through the Wachovias distribution. The unshakables competitive position was clearly to improve compared to the market leaders. However, the company was quite an successful at what it does before the acquisition, which was a primordial condition front to such acquisition.Then but not least, it already had the needed capital and management quality to manage the expended operations. With this acquisition, the dissipated has a huge distribution capacity throughout all of the Wachovias bank offices and retail stores. combine with the strategy of decentralization, this will allow them to stool more consumers and increase the productivity. The year 2009 shows a quick preview about what the firm can achieve in the nigh years. The acquisitions or mergers are two unremarkably used ways to pursue strategies like market developme nt or more generally intensive strategies including, market brainstorm and product development.The market penetration consists in increasing market share for present products or services in present markets through greater marketing efforts (increase number of salespersons, advertising expenditures, promotion, and publicity efforts). Then, the product development strategy seeks increase sales by improving or modifying existent products or services (it entails large research and development expenditures). A merger occurs when two organizations of about equal size unite to form one enterprise. That is what often happened in the Wells Fargos history and what helped the firm to grow faster and reach the size the firm had in 2008.On the other hand, an acquisition occurs when a large organization like Wells Fargo purchases a smaller firm or a firm not doing well, like Wachovia. By acquiring Wachovia, Wells Fargo has cognise some major benefits * Provide improve capacity utilization * To gain access to new customers and products 6. distance matrix The strategic Position and Action military rating (SPACE) Matrix, is a marketing tool used to help the company to define the best strategy to develop according to its internal strategic position (Financial Position and Competitive Position) and the external strategic position ( perceptual constancy Position and Industry Position).The four quadrants of the Matrix denominate whether aggressive, conservative, defensive, or competitive strategies are most confiscate according the characteristics of the company and its industry. Financial Position * The banks return on asset is 0. 44 (decrease of 72%) but superior of all competitors * The Banks Net income was 3. 58 Billion (increase of 28%) and superior of all competitors * The Banks revenue was 42. 84 Billion (increase of 1. 51%) compared to the industry average of 7. 98 Billion * The Banks earning per share 0. 912, over the main competitors and over the average industry (0. 91) lend Rating465520Industry Position * Deregulation provides geographic and service freedom * Deregulation increases competition in the banking industry * Economic recession * harvesting potential * Financial Stability innate 4213410 Stability Position * Banking deregulation has created asymmetry throughout the industry * Less-developed countries are experiencing high inflation and political instability * The barriers to entry into the market is high * The competitive pressure is highTotal -4-4-2-4-14 Competitive Position * The bank provides financial services through 6700 offices and retails stores in 40 states * Superregional banks, international banks are get increasingly competitive * The bank has a large customer base * Customer loyalty Total -1-5-2-2-10According to the SPACE Matrix, Wells Fargo presents an aggressive profile. The company is financially pretty strong, has some competitive advantages in a rather stable industry. The Wachovia acquisition is a great op eration side by side(p) the product development or market penetration strategy. 7. away Factor military rank Matrix (EFE) Regardless of the number of mainstay opportunities and threats included in EFE Matrix, the highest possible come up heavy grade for an organization is 4. 0 and the lowest is 1. 0, and the average resume burden sexual conquest is 2. 5. An organization with 4. 0 meat weighted score is replying in an outstanding way to existing opportunities and threats in its industry.It means, the firms strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of external threats. mention External Factors Weight Rating burden ca-ca Opportunities * Many banks are struggling like Citigroup with negative Operate margin (-57. 9%), Net income ($ -23. 79 Billion), and EPS (-3. 651) * Some Banks have recently failed and have been seized by Federal officials like Lehman Brothers Colonial Bank and Guaranty Financial group Del inquency rates on their holdings has soared as high as 40% * Grow internationallyKeep improving the internet uses * Develop new products for new businesses * new-made customers in the Eastern US financial market 0. 090. 120. 050. 040. 070. 11 342423 0. 270. 480. 100. 160. 140. 3 Threats * Continued deterioration in credit market * High unemployment rate * Tight credit * Many homeowners cannot make mortgage payments * The value of houses has dropped the amount borrowed * The lack of regulation now has blurred the product and services bank offers * Competition with Bank of America and Citigroup * Superregional and world(prenominal) Banks are growing, they all tend to offer globallyIncrease in insurance rates 0. 100. 030. 070. 050. 110. 060. 050. 030. 02 222323423 0. 200. 060. 140. 150. 220. 180. 200. 060. 06 Total 1. 00 2. 80 Here we can strike off that the total weighted score is of 2. 80 is above the average of 2. 5, which means Wells Fargo is doing pretty well in the Financ ial industry, taking advantage of the external opportunities like the bad shape of the competitors and also containing the threats face the firm like the competition with Bank of America. Of course, the firm could do better, improving its strategies to respond in better way to the threats and get a higher total weighted score close to 4. 0.According to the case, Wells Fargo should plump out more its activities on the international market, and develop new financial products and services to be more attractive and competitive. Moreover, the firm must find solutions to overcome the bad state of the economy and its outcomes. 8. C. indwelling Factor Evaluation Matrix This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of business. Like in the EFE Matrix, the total weighted score can range from a low of 1. 0 to a high of 4. 0 with an average score being 2. 5. Total weighted gobs well below 2. 5 characterise organizations t hat are weak internationally whereas lashings significantly above 2. 5 indicate a strong internal position. Key External Factors Weight Rating Weighted ScoreStrengths * Brand Image and Culture and values (ethical behavior) * Credibility Statistics based on the industry and the government sources show its size and strength * Acquisition of Wachovia extend the distribution channel and the number of customers * Decentralization strategy * Management * Innovation leadership (Internet E-commerce) * commercialize leadership in the West the largest financial institution headquartered in the Western US that has a strong balance sheet and is able to steer through the pitfalls that plagued many of its competitors * Moodys credit rate Aaa (the highest possible) 0. 070. 090. 110. 100. 060. 040. 090. 04 44443343 0. 280. 360. 440. 360. 180. 120. 360. 2Weaknesses * Decrease of the net income and ROA and ROE * Limited international presence * Bad reputation as a bank since the economic recession * Weakness asset quality among high real estate exposure * The Wachovia subprime mortgage problems * Wachovia is overcommitted in credit default swaps 0. 080. 060. 080. 060. 070. 05 212212 0. 160. 060. 160. 120. 070. 10 Total 1. 00 2. 89 The IFE Matrix provides important for strategy formulation. With a total weighted score of 2. 89, we can say Wells Fargo has a pretty strong position in the financial industry and can expect to become stronger and stronger because the firm knows how to create competitive advantages and how to use its strengths. 9.IE Matrix The IE Matrix is based on two trace dimensions the IFE total weighted scores on x-axis and the EFE weighted scores on the y-axis. The Internal External Matrix inputs are the EFE and IFE total weighted scores. As the EFE Matrix and the IFE Matrix have shown, Wells Fargo had 2. 89 for EFE and 2. 80 for IFE. In the IE Matrix, we can see the red dot represents Wells Fargos position on the Matrix. It is in the V cell, which suggests that Wells Fargo should use a hold and maintain strategy consisting of the Market keenness and Product Development strategies it should the most efficient strategy for the firm after the peak of the acquisition.However, the firm is very close to the cell I, II, and IV, which means the companys situation can be descried as slow growth and build and where intensive strategies would be the most adaptable like market penetration and market development. 10. Grand strategy Mix The Grand strategy matrix is based on two critical dimensions competition position and market growth. Wells Fargo is located in the quarter-circle I of this Matrix, which means that it is in a rather excellent strategic position. Therefore, continued submergence on current markets (market penetration and market development) and products (product development) is an appropriate strategy. We can notice that a notable shift from its established competitive advantages would be unwise. Rapid Market Growth Quadrant I Quadrant II Strong Competitive Position Weak Competition Position Slow Market Growth Quadrant IV Quadrant III