ISM 158
• Lecture 3
• Charles Schwab Case
Fig 1.7 Strategic Alignment Model
Ideally, all four quadrants align
to create value
Opportunities
• Can IT change basis for competition?
• Can IT change balance of power among
buyers and supplyers?
• Can IT build or reduce barriers to entry?
• Can IT increase or decrease switching
costs?
• Can IT add value to existing products
and services or create new ones?
Risks
• Can emerging technologies disrupt
current business models?
• Are we too early or too late to exploit IT
opportunity?
• Does IT lower entry barriers?
• Does IT trigger regulatory action?
Fig 1.8 Analyzing Disruptive
Technologies
Fig 1.9 Analyzing Cash Flow Curve
Questions
Case Overview: Charles Schwab
• Decision making under rapidly changing
environment
• Technology providing large opportunities
and risks
• Regulatory environment changing at
same time
Outline for discussion
• Background/history of company
• Main issues at time of case
• Any updates since case?
Company History
• Discount Broker 1975 – 1994
• Multi-channel online broker 1995-1999
• Strategic Transition 2000-2002
– What are the differences?
– What were strengths and weaknesses in
each period?
Financial Services 1980’s
Charles Schwab Discount Broker
Case: Charles Schwab
Time of case
Charles Schwab
Charles Schwab
US Trust Acquisition
Examining the Numbers
• Calculating
– Return on Assets
– Return on Equity
– Profit Margins
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Questions, Survey, Break
Student Presentation
• Johan Stenberg
Between case and now
Financial Services Market Today
Schwab Private Client
US Trust – State Street
Extending to other Financial Products
Schwab Equity Ratings
Research Offerings
Schwab Capital Markets
2004 follow up
Schwab Personal Choice
Still struggled
Charles Schwab
More Recently
• Very strong 2006
• Recent sale of US Trust Announced
Stock Price History