Bank of America Strategic Analysis (PPT - r

Report
R. 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

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