E *TRADE
Financial
Corp.-2004
Presented by:
Megan Dow, Kristin Belanger, and
Angèle Bourgoin
Overview of E*TRADE
Presentation
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Overview of E*Trade
History
Stocks
Stock Information
Goals and Objectives
The Two Divisions
• Banking
• Brokerage
BCG
Their Mission and Vision
Statement
New Mission and Vision
Statement
External Opportunities and
Threats
• CPM
• EFE
Internal Strengths and
Weaknesses
• IFE
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Analysis
• SWOT Matrix
• SPACE
• IE Matrix
• Grand Strategy Matrix
Key Ratios
Different Strategies
• QSPM
Decisions
Implementation
Evaluation
Update!
References
Overview of E*Trade
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E*Trade Financial Corp. or
• E*Trade is active in 10
known as E*Trade Group
other countries
Inc. (changed name later
• Germany
on) in an online brokerage
firm that trades equities,
• Australia
keeps portfolios updated
• Canada
and obtains market
• New Zealand
information.
• Denmark
E*Trade receives
commission from each trade
• Hong Kong
E*Trade offers 15,200 ATM
• Japan
Machines
• Korea
E*Trade is becoming a
• Sweden
complete financial support
by offering every service
• United Kingdom
you need in your financial
life.
History
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Founded by Bill Porter, a
physicist & inventor in
1982.
There was an opportunity
to capitalize on
potentially discount
brokerage so Bill Porter
came up with the idea
that allows individuals to
use their own personal
computers to invest, and
this would pay less that
traditional brokerage
fees.
In 1992 the company
became E*Trade
Securities Inc. and began
offering online investing
services through AOL and
CompuServe.
• 1996
• There was an increase in
E*Trade services by them
launching
www.etrade.com website.
• In August the Company
went public (IPO) and had
another stock offering 1
year later when Porter
handed the company over
to Christos Cotsakos.
• Cotsakos has over 20
years of senior
management
experience at Federal
Express and A.C.
Neilson
• Under new guidance E*Trade
became a global leader in
online personal financial
services with branded web
sites around the world.
History Continued
• 2000
• E*Trade bank introduced
the first purchase of
Telebanc Financial (now
E*Trades Financial) an
online bank with more
than 100,000 deposits.
• E*Trade bought Card
Capture Services (now
E*Trade Access) the
operator of 9,000 ATM’s
across the U.S.
• E*Trade acquired
Canadian firm VERSUS
Technologies; a provider
of electronic trading
services.
• The International Capital
announced plans to offer
IPO to European Investors
• 2001
• E*Trade entered consumer
leading business when
acquired online mortgage
originator Loans Direct
(now E*Trade Mortgage).
• E*Trade Mortgage had
3,400 employees at
the end of 2003 which
was only down 5
employees from 2003
• 2003
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revenues increased to
$2008 Million and net
income increased to $203
Million.
Info about ET
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Traded on NYSE under symbol ET
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Before 2/15/01 traded on Nasdaq under
EGRP
The option symbol is ET plus 2 letters
indicating month & strike price.
The first IPO 8/96 net proceeds 46.4
million
The secondary IPO 8/97 net proceeds
188.8 million.
Goals and Objectives
• Goals
• To provide financial solutions to retail and institutional
customers globally.
• “In the Internet economy, the only competitive
advantage is speed. We’ve got to move quickly and
powerfully with one another to achieve our goals. We
must operate in a global context always ready to adapt
to emerging opportunities. We thrive on chaos. We feel
empowered to act quickly and adjust as often as
needed. And if we fail, we learn from it and restart in
the direction of our goals. We are risk-takers.”
• Objectives
• Offers retail investing, trading products, services with
automated order placement and limit equity, futures,
options, exchange-traded funds, bond orders; real-time
streaming quotes, commentary, and news; advanced
trading platforms, for traders, personalized portfolio
tracking and access to more than 7,000 mutual funds.
Divisions of ET
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Banking
• Includes the
E*Trade Bank
• Access to 15,200
ATM’s
• VERSUS Technology
• TIR Holding Limited
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The service center
for institutional
investors, comprises
the Global &
Institutional
segment
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Brokerage
• Cash accounts or
also called a margin
account, with or
without the options
trading feature.
• Has E*Trade
Securities and
E*Trade Clearing as
protection agencies
within the division
BCG
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Due to unforeseen circumstances the
financials for both Banking and
Brokerage divisions do not exist. The
revenue for both divisions is
combined into one. Without the
required information we were unable
to actually do a BCG. Thank you for
your understanding. 
Their Mission Statement
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Using technology to set the standard for
innovation, service, and value for investors
seeking more control over their investments.
E*TRADE’s rich suite of products and services can
be customized to reflect a customer’s unique
needs and interests, including portfolio tracking,
free real-time quotes, market news, and research
available 24 hours a day, seven day a week.
Customers can assess their E*TRADE accounts
virtually any time anywhere around the world.
Their Vision Statement
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E*TRADE’s vision is “to empower selfdirected investors to make informed
investment decisions and take control of
their financial future with anytime,
anywhere access to the world’s major
investment markets.”
New Mission Statement
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E*TRADE provides is an online brokerage firm for anyone and
everyone concerned with their financial freedom, it allows you to
trade equities, create a portfolio, get market information any day
at anytime around the world, and much more. With our
technology to set the standard to be innovative, service and
control over the investors investment, this will help us grow as a
company in becoming a complete financial support business
offering every service you need in your financial life, while making
our customers, stockholders and employees happy. We help the
communities through non-profit partnership, volunteer work, and
increase financial literacy in the neighborhoods. In becoming more
profitable, we set ourselves apart from tradition brokerage firms,
we have huge discount brokerage fees to help customers be more
affordable.
New Vision Statement
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To become the a leading and complete
financial support and execution portal for
individuals, by diversifying and offering
every service you need in your financial
life, with access to your accounts anytime,
anywhere in the whole world.
Key External Factors
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Opportunities
Commission revenues
increased, declining volatile
stock prices
Business’s turn to E*TRADE
because of other unethical
business’s, gaining
customers
Stock markets have
remained turbulent
Excited market overseas,
slightly better
Expanded into new
business’s
2nd largest market share in
the industry
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Threats
U.S economy may fall back
into recession
Lowered interest rates
Geopolitical fears
Numerous corporate scandals,
investor confidence
Aggregate pretax profits, fell
33%
Investment Services Industry
fell 24%
Market for electronic financial
services are growing rapidly,
more competitors
EFE
KEY EXTERNAL FACTORS
WEIGHT
RATING
WEIGHTED
SCORE
Opportunities
1. Commission Revenues Increase
0.10
4
0.40
2. Gaining Customers because other unethical business's
0.10
3
0.3
3. Stock markets remained turbulent
0.05
2
0.10
4. Excited market overseas
0.10
2
0.20
5. Expanded into different business's
0.10
4
0.40
6. 2nd largest market in the industry
0.10
4
0.40
1. U.S may fall back into a recession
0.10
3
0.30
2. Lowered interest rates
0.05
2
0.10
3. Geopolitical fears
0.05
1
0.05
4. Numerous corporate scandals, investor confidence
0.10
2
0.20
5. Aggregate pretax profits, fell 33%
0.05
3
0.15
6. Investment Industry fell 24%
0.05
3
0.15
7. Market is growing rapidly, more competitors
0.05
2
0.1
TOTAL
1.00
Threats
2.85
CPM
E*TRADE
Critical Success factors
Weights
0.0 to 1.0
Ratin
g
1 to 4
Weighted
Score
Schwab
Rating
1 to 4
Weighted
Score
Ameritrade
Rating
1 to 4
Weighted
Score
Market Share
0.17
3
0.51
4
0.68
2
0.34
Financial Position
0.17
3
0.51
4
0.68
2
0.34
Customer Loyalty
0.15
3
0.45
3
0.45
2
0.30
Global expansion
0.15
4
0.60
3
0.45
3
0.45
Organizational structure
0.13
2
0.26
3
0.39
3
0.39
Customer service
0.15
3
0.45
4
0.60
3
0.45
Management experience
0.13
3
0.39
3
0.39
2
0.26
Advertising
0.12
3
0.36
2
0.24
3
0.36
TOTAL
1.0
3.02
3.20
2.55
Key Internal Factors
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Strengths
Rich suite of products
financial services on the
internet
Access to accounts 24/7, 7
days a week
Discount on brokerage fees
Located and have access
throughout the world
ATM’s located around the
world
You can do your financial
services yourself in your
home
Incurred $227 million to
restructure its operations
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Weaknesses
Does not have as many
services as a traditional
brokerage firm
Distribution of money,
expenditures
Revenue is falling
Regaining the investors
confidence back
IFE
KEY INTERNAL FACTORS
WEIGHT
RATING
WEIGHTED
SCORE
Internal Strengths
1. Rich suite of products
0.05
3
0.15
2. Access to accounts 24/7, any day
0.10
4
0.20
3. Discount on brokerage fees
0.15
4
0.60
4. Located and have access through the world
0.10
4
0.40
6. ATM's located around the world
0.10
4
0.40
7. You can do your financial service in your home
0.05
3
0.15
8. Incurred $227 million to restructure its operations
0.15
4
0.60
1. Does not have many services like traditional firms
0.05
2
0.10
2. Distribution of money, expenditures
0.15
1
0.15
3. Revenue is falling
0.05
1
0.05
4. Regaining the investors confidence back
0.05
2
0.10
Internal Weaknesses
TOTAL
1.0
2.90
SWOT
SPACE
IE Matrix
Grand Strategy Matrix
Key Ratios
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Rev: 1.63B
Market cap: 11.24 B
Return on assets: 1.18%
Return on equity: 15.86%
REV. per share: 4.388
Total Debt: 17.39 B
Total debt to equity: 5.114
Operating Cash: 568.77M
Different Strategies
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Acquire other firms in order to
diversify the services offered to
clients
To restructure the internal
organization of E*Trade in order to
compete with competitors
QSPM
Decisions
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Restructurization of the internal
aspect of E*Trade
• QSPM numbers signify this
Implementation
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Distribute the money throughout the
company
Include everyone involved with
E*trade to put suggestions where the
company needs to be reformed
Short term
Long term
Evaluation
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Re-evaluating the strategic plan
Financials for money flow
Quarterly reports
Competitors
Work on any suggestions that
continue to appear
Update!
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As of this year E*Trade is 5th in the
Top Investment Brokerage Firms
References
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http://www.etrade.com
http://finance.yahoo.com
Strategic Management Concepts and
Cases