Bank of America Strategic Analysis (PPT - r
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Scott Blamey | Seth Griffin | Quinn Makins | Becky Rule | Darryl Thompson Burger King Proctor and Apple Gamble CNN McDonalds LexisNexis IHOP Ferrari Disney Alcoa FedEx Hyatt Trader Joes Microsoft MTV Jim Henson Company General Electric Company All State Wikipedia Sports Illustrated Morgan Stanley Blamey | Griffin | Makins | Rule | Thompson Johnson and Johnson Hewlett Packard Agenda Suzann Moore History Agenda Industry Analysis Suzann Moore Corporate Level Strategy History Internal Analysis Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Business Level Strategy Focus Questions Summary & Questions Agenda Suzann Moore History Suzann Moore Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy Focus Questions Summary & Questions Change Management Executive in the Global Transition, Quality & Change Delivery organization Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History History Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Industry Analysis Industry Structure • • • • • Industry Structure Industry Life Cycle 5 Forces Most Admired Key Attributes Corporate Level Strategy Internal Analysis Fragmented Consolidated Low Profitability High Profitability Perfect Competition Monopolistic Competition Blamey | Griffin | Makins | Rule | Thompson Oligopoly Monopoly Business Level Strategy Focus Questions Summary & Questions Agenda Suzann Moore History Industry Analysis Industry Life Cycle Maturity (present) • • • • • Industry Structure Industry Life Cycle 5 Forces Most Admired Key Attributes Corporate Level Strategy Internal Analysis Business Level Strategy Market Size Growth (1800s+) Focus Questions Summary & Questions Development Introduction (300–400 AD) (ancient times) Time Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Industry Analysis 5 Forces • • • • • Industry Structure Industry Life Cycle 5 Forces Most Admired Key Attributes Corporate Level Strategy Risk of Entry Internal Analysis Business Level Strategy Bargaining Power of Suppliers Rivalry Among Established Firms Threat of Substitutes Blamey | Griffin | Makins | Rule | Thompson Bargaining Power of Buyers Focus Questions Summary & Questions Agenda Suzann Moore History Most Admired Megabanks Industry Analysis Rank Company Overall Score • • • • • Industry Structure Industry Life Cycle 5 Forces Most Admired Key Attributes 1 Bank of America 6.69 Corporate Level Strategy 2 J.P. Morgan Chase 6.53 Internal Analysis 2 Credit Suisse Group 6.53 Business Level Strategy 4 Wells Fargo 6.38 Focus Questions Summary & Questions 5 Deutsche Bank 6.03 6 ING Group 5.63 7 BNP Paribas 4.89 Source: CNNMoney.com Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Key Attributes Nine key attributes of industry reputation Industry Analysis Rank • • • • • Industry Structure Industry Life Cycle 5 Forces Most Admired Key Attributes Innovation 1 Social responsibility 1 Internal Analysis Quality of products/services 1 Business Level Strategy People management 2 Focus Questions Corporate Level Strategy Summary & Questions Quality of management 2 Long-term investment 2 Use of corporate assets 4 Financial soundness 4 Global competitiveness Source: CNNMoney.com Blamey | Griffin | Makins | Rule | Thompson 10 Suzann Moore History Industry Analysis Horizontal and Vertical Integration Corporate Level Strategy • Horizontal and Vertical Integration • BofA/ML Merger • Diversification Strategies • Global Strategy 2005 Acquisition of Work, Inc. Internal Analysis Business Level Strategy 2004 Acquisition of FleetBoston Horizontal Integration Advantages • Reduced competition Disadvantages • Subject to Anti-trust legislation • Potential overvaluing of acquired firm Blamey | Griffin | Makins | Rule | Thompson 2007 Acquisition of LaSalle Bank Vertical Integration Advantages • Increased revenues • Increased controls Disadvantages • Higher bureaucratic costs Focus Questions Summary Questions Suzann Moore History Industry Analysis Bank of America • Gives Bank of America greater access to global Merrill Lynch markets Merger • Fits well with current diversification strategy Corporate Level Strategy • Horizontal and Vertical Integration • BofA/ML Merger • Diversification Strategies • Global Strategy Internal Analysis Business Level Strategy Focus Questions Summary • Shattered market value of Bank of America + Blamey | Griffin | Makins | Rule | Thompson Questions Suzann Moore History Industry Analysis Diversification Strategies 2003 Corporate Level Strategy 7% Asset Management Internal Analysis Business Level Strategy 24% Global & Corporate Investment Banking Focus Questions Summary Questions 69% Consumer & Commercial 17% Banking Global Markets 2003 Dominant Business Strategy Percent of Revenue Blamey | Griffin | Makins | Rule | Thompson • Horizontal and Vertical Integration • BofA/ML Merger • Diversification Strategies • Global Strategy Suzann Moore History Industry Analysis Diversification Strategies 2009 Corporate Level Strategy • Horizontal and Vertical Integration • BofA/ML Merger • Diversification Strategies • Global Strategy 11% Deposits Internal Analysis 14% Home Loans 24% Global Card Services Business Level Strategy Focus Questions Summary Questions 15% Global Wealth 19% Global Banking 17% Global Markets 2009 Related Diversification Strategy Percent of Revenue Blamey | Griffin | Makins | Rule | Thompson Suzann Moore History Industry Analysis Global Strategy • Enacted through Merrill Lynch merger • Merrill Lynch & Bank of America brands have country-specific treatment Corporate Level Strategy • Horizontal and Vertical Integration • BofA/ML Merger • Diversification Strategies • Global Strategy Internal Analysis Business Level Strategy Focus Questions Summary • Learning curve for Bank of America—how to best capitalize on Merrill Lynch’s global presence Blamey | Griffin | Makins | Rule | Thompson Questions Agenda Suzann Moore History Industry Analysis Firm Effects Corporate Level Strategy Internal Analysis Resources • Firm Effects • Competitive Advantage Building Blocks • Competitive Advantages • SWOT Analysis • Corporate Culture •Global Network •Brand Name •Industry Expertise Business Level Strategy Core Competencies •“One Stop Shop” •Responsiveness •Innovation Strategy Activities Capabilities • Integrating “One Stop Shop” Change • CrossSelling •Cross Selling • Global Footprint •Operational Efficiency Blamey | Griffin | Makins | Rule | Thompson Competitive Advantage Focus Questions Summary & Questions Agenda Suzann Moore History Competitive Advantage Building Blocks Internal Analysis • Firm Effects • Competitive Advantage Building Blocks • Competitive Advantages • SWOT Analysis • Corporate Culture Quality Competitive Advantage Innovation • Online Banking • Mobile Banking • Ranked #1 in Industry Blamey | Griffin | Makins | Rule | Thompson Corporate Level Strategy • Economies of Scale • Six Sigma • Operations Focus Responsiveness • Global Footprint • Diverse Products • Change Management Industry Analysis Efficiency • TQM • Process Improvement • Ranked #1 in Industry Business Level Strategy Focus Questions Summary & Questions Agenda Suzann Moore History Industry Analysis Competitive Advantages Corporate Level Strategy Brand Awareness Availability Internal Analysis • Firm Effects • Competitive Advantage Building Blocks • Competitive Advantages • SWOT Analysis • Corporate Culture Resources Business Level Strategy Focus Questions Summary & Questions Innovation Blamey | Griffin | Makins | Rule | Thompson Service Offering Agenda Suzann Moore History SWOT Analysis Industry Analysis Strengths Weaknesses Corporate Level Strategy Size U.S. Asset Allocation Internal Analysis Diverse Products Mortgage Defaults Management Strained Resources • Firm Effects • Competitive Advantage Building Blocks • Competitive Advantages • SWOT Analysis • Corporate Culture Business Level Strategy Focus Questions Summary & Questions Opportunities Threats Merrill Lynch Clients Emerging Markets Government Regulation Fewer Competitors Volatile Credit Market Consumer Perception Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Corporate Culture Industry Analysis ResultsOriented • Fast Paced • Dynamic • Pay for Performance Diversity • Numerous Awards • Values Broad Experience • Acquisitions Corporate Level Strategy Internal Analysis • Firm Effects • Competitive Advantage Building Blocks • Competitive Advantages • SWOT Analysis • Corporate Culture Business Level Strategy Focus Questions Summary & Questions Values • Philanthropy • Leadership • Teamwork Ethics • Code of Ethics • Employee Conduct • Risk Consciousness Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Industry Analysis Economic Value Created Corporate Level Strategy Internal Analysis Business Level Strategy Price to Consumer Value Captured by Consumer (Economic Value Created) Value Captured by Provider (Profit) • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Service/Equipment Costs (Expenses) Typical Bank Blamey | Griffin | Makins | Rule | Thompson Bank of America Agenda Suzann Moore History Competitive Strategy Industry Analysis Corporate Level Strategy Cost Leadership Lower Prices Internal Analysis Differentiation Higher Value Business Level Strategy • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Lower Expenses Service Differentiation Operational Improvements Innovation Agenda Suzann Moore History Differentiation Strategy Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Differentiation Positioning Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning • Innovation Approach • Future Technologies • Bank of America’s Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Innovation Approach Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Future Technologies Industry Analysis Mobile Banking Corporate Level Strategy Internal Analysis Business Level Strategy Proximity Transactions Online Intra-Banking Predictive Service (Intelligent Cross Selling) Blamey | Griffin | Makins | Rule | Thompson • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Agenda Suzann Moore History Bank of America’s Business Level Strategy Leverage Innovation Competency Industry Analysis Corporate Level Strategy Internal Analysis Differentiation Strategy Raise Perceived Value Business Level Strategy • • • • • • • Economic Value Created Competitive Strategy Differentiation Strategy Differentiation Positioning Innovation Approach Future Technologies Bank of America’s Business Level Strategy Focus Questions Summary & Questions Drive Down Costs Competitive Advantage Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Focus Questions Industry Analysis What rate of growth should Bank of America target going forward? Corporate Level Strategy Internal Analysis Business Level Strategy Where should Bank of America focus to achieve that level of growth? How should Bank of America change its brand image, domestically and abroad, in terms of recent mergers and negative press? Should the role of the consumer/retail banking within the Bank of America business model change? Blamey | Griffin | Makins | Rule | Thompson Focus Questions • Megabank Revenues and Net Income • Bank of America Net Income • Global Card Services Performance Summary & Questions Agenda Suzann Moore History Seek growth in Net Income In millions Revenue and Net Income of US Banks $140,000 Industry Analysis $120,000 Corporate Level Strategy Internal Analysis $100,000 Business Level Strategy $80,000 Focus Questions • Megabank Revenues and Net Income • Bank of America Net Income • Global Card Services Performance $60,000 $40,000 $20,000 Summary & Questions $2005 2006 2007 2008 $(20,000) $(40,000) Blamey | Griffin | Makins | Rule | Thompson Bank of America revenue Bank of America Net Income Chase Revenue Chase Net Income CitiGroup Revenue CitiGroup Net Income Wells Fargo Revenue Wells Fargo Net Income 2009 Agenda Suzann Moore History In millions Projected Net Income Industry Analysis $25,000.00 Corporate Level Strategy $20,000.00 Internal Analysis $15,000.00 Business Level Strategy Focus Questions • Megabank Revenues and Net Income • Bank of America Net Income • Global Card Services Performance $10,000.00 $5,000.00 Summary & Questions $- 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 10% annual net income growth goal from 2010-2015 15% annual net income growth goal from 2016-beyond Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Industry Analysis $35,000 Global Card Services Performance Corporate Level Strategy $30,000 Internal Analysis $25,000 Business Level Strategy In millions $20,000 MBNA Purchase $15,000 Focus Questions • Megabank Revenues and Net Income • Bank of America Net Income • Global Card Services Performance $10,000 $5,000 Summary & Questions $2005 2006 2007 2008 2009 $(5,000) $(10,000) Global Card Revenue Global Card Services Net Income Divest from Global Card Services • Sell least profitable regions, maintain Bank of America branded CC while relinquishing ownership of card debt • $5.5 Billions in potential savings Blamey | Griffin | Makins | Rule | Thompson Agenda Suzann Moore History Focus Questions Industry Analysis What rate of growth should Bank of America target going forward? Corporate Level Strategy Internal Analysis Business Level Strategy Where should Bank of America focus to achieve that level of growth? How should Bank of America change its brand image, domestically and abroad, in terms of recent mergers and negative press? Should the role of the consumer/retail banking within the Bank of America business model change? Blamey | Griffin | Makins | Rule | Thompson Focus Questions • Megabank Revenues and Net Income • Bank of America Net Income • Global Card Services Performance Summary & Questions Agenda Suzann Moore History Summary Industry Analysis History Corporate Level Strategy Internal Analysis Industry Analysis Business Level Strategy Focus Questions Corporate Level Strategy Internal Analysis Business Level Strategy Focus Questions Blamey | Griffin | Makins | Rule | Thompson Summary & Questions Agenda Suzann Moore History What would you like to know? Industry Analysis Corporate Level Strategy Internal Analysis Business Level Strategy Focus Questions Summary & Questions Blamey | Griffin | Makins | Rule | Thompson Appendices • Sustaining Change • Matrix Structure • Mark to Market Sustaining Change Establish Accountability and Governance • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle Focus on Long-Term Value Make Business Case a “Living Document” Blamey | Griffin | Makins | Rule | Thompson • Core Values Appendices • Sustaining Change • Matrix Structure • Mark to Market Matrix Structure • Current Derivative Trading Revenue Advantages Blamey | Griffin | Makins | Rule | Thompson Disadvantages • Proposed Derivative Trading Revenue • Derivative Trading Revenue Flexibility to move employees between projects Creates conflicts of interest between functional departments and lines of business Autonomy for employees to experience variety of projects Considerable time to form teams and develop norms and values Flattens the organizational hierarchy Difficult to coordinate projects where employees have multiple bosses • Value Creation Cycle • Core Values Appendices • Sustaining Change • Matrix Structure • Mark to Market Mark to Market • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle • Core Values Blamey | Griffin | Makins | Rule | Thompson Appendices • Sustaining Change • Matrix Structure • Mark to Market Current Derivative Trading Revenue Blamey | Griffin | Makins | Rule | Thompson • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle • Core Values Appendices • Sustaining Change • Matrix Structure • Mark to Market Proposed Derivative Trading Revenue Blamey | Griffin | Makins | Rule | Thompson • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle • Core Values Appendices • Sustaining Change • Matrix Structure • Mark to Market Derivative Trading Revenue • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle • Core Values Blamey | Griffin | Makins | Rule | Thompson Appendices • Sustaining Change • Matrix Structure • Mark to Market Value Creation Cycle • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle • Core Values Blamey | Griffin | Makins | Rule | Thompson Appendices • Sustaining Change • Matrix Structure • Mark to Market Core Values Doing the Right Thing Trusting and Teamwork • Current Derivative Trading Revenue • Proposed Derivative Trading Revenue • Derivative Trading Revenue • Value Creation Cycle Inclusive Meritocracy Winning Leadership Blamey | Griffin | Makins | Rule | Thompson • Core Values Spring 2010
