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Bank of America

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merica Corporation. Assessment of the external environment of the financial services sector; an internal/external assessment of B of A.; a strategy assessment; and recommendations to the Bank of America on how to maintain and strenghen its competitive position.

Paper Introduction: strategic Management analysis bank of america Introduction The report presents the findings of a strategic management analysis ofBank of America Corporation a financial services company that participatesin most facets of the financial services sector Bank of America is anationwide financial services company in the United States and the companyis the country's third largest banking company when measure by totalassets behind CitiGroup in first place and J P Morgan Chase in secondplace Hoover's Inc This report begins with an assessment of the external

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Reliability in Service|.2 |3 |.6 |4 |.8 |3 |.6 ||Delivery | | | | | | | ||2. 8 |4 |.32 ||customer acquisition system | | | ||6. High-level of consumer awareness|.1 |4 |.4 ||3. Strong and effective online |human resources management ||customer acquisition system | ||6. Bank of Americaranks somewhat ahead of J.P. High-level of consumer awareness |operational efficiency ||3. Michael Porter (1995) pointed out that rivalry among existingcompetitors can become intense as each competitor attempts to improveindustry position through the use of price competition, advertising,product introductions, and increased customer service.Chart 1Porter's Five-Forces Model of Competition[pic] The Five Forces model is closely associated with the value chainconcept (Porter, 1995). Moving from concept to reality can be hard. Financial Executive, 2 (9), 1 -11.Porter, M. The IFE assesses theeffectiveness of a firm's efforts to improve in areas of weakness andcapitalize in areas of internal strength. The growing demand for |. Northwestern Financial Review, 19 (5), 17-19.Hoover's, Inc. At the center of this model are thecompetitive forces created by the strategic actions of rival firms within amarket. 5 |4 |.2 ||States economy is characterized by | | | ||spotty growth | | | ||4. Below financial services norms in||2. The strategy and objectivesrecommendations for Bank of America are based on the preceding analysespresented in this paper. . (2 5, March). The external factors evaluation for Bank of America is presented inChart 6. The sum of the weighted scores is the EFEscore. This section of thereport includes assessments of the several levels of the company'sstrategy, as well as recommendations for changes in the company's strategicfocus. The assessment of the financial services industryin relation to the Five Forces Model is summarized in Chart 2.Industry Life-Cycle Analysis The financial services industry is diverse and complex. The opportunities and threats of SWOT analysis are the keyfactors evaluated in an EFE. (2 4, December). The final section of this report includes a strategy assessment andstrategic recommendations for implementation by Bank of America to maintainand strengthen the company's competitive position. 5 |3 |.15 ||5. G. (2 3, July/August). | ||Bargaining Power of Suppliers | | |? The spheres of a firm's external environment are asfollows: (a) economic; (b) social; (c) cultural; (d) demographic; (e)environmental; (f) political; (g) legal; (h) technological; and (i)competitive. Performance of United States ||access |economic is characterized by spotty ||4. Technology also provided the players in theindustry with the tools to create new financial services and to seek newways to link existing customers with additional financial services. Review (Federal Reserve Bank of St. Theresults of the competitive profile matrix analysis indicate that Bank ofAmerica must continue to monitor its strategic performance, and that Bankof America must be prepared to modify strategy as required in order to meetcompetitor responses to changes in the market.SWOT Analysis The SWOT analysis for Bank of America is presented in Chart 5. While the capability of a firm to respond tothe external opportunities and threats is a function of a firm's internalstrengths and weaknesses, the EFE does not measure strengths and weaknessesdirectly. Operational |.14 |4 |.56 |4 |.56 |4 |.58 ||Productivity | | | | | | | ||Total |1. (4th ed.). The strengths and weaknesses of SWOT analysisare the key elements evaluated in an IFE. In an economic context, the spotty economy in the first half of thefirst decade of the 21st century has not been helpful to the financialservices industry. (2 5, April 14). IFE scores above the mean score of 2.5 indicate internal strength.IFE scores below the mean score of 2.5 indicate internal weakness. The intersection offirm's internal and external performance ratings indicates the appropriatetype of strategy for a firm to follow. Flattened by the curve. Such events and conditions arelargely beyond the control of a firm; therefore, a firm seeks to minimizethreats in the external environment while maximizing opportunities throughits responses. Bank of America's EFE score of 3.5 provides a basis for rating thefirm's external performance Excellent. Technological |.14 |4 |.56 |4 |.56 |4 |.58 ||Competitiveness in IT | | | | | | | ||6. |chart 4 - competitive profile matrix: Bank of America || |Bank of America |CitiGroup |J.P. Financial services customer loyalty. -to-1.99). The Competitive Profile Matrix for Bank of America ispresented in Chart 4. Overview, 1. This section of the report includes an external factorsevaluation (EFE), an internal factors evaluation (IFE), and an internal-external (I-E) matrix assessment. Best practices (considered within the context of functional analysis) arebenchmarking levels in an industry (Brauer, 2 5). Efficiency in Service |.19 |4 |.76 |4 |.76 |3 |.57 ||Delivery | | | | | | | ||3. The six analyses areas follows: a PEST analysis, a Five-Forces Model analysis, an industry life-cycle analysis, a competitive analysis, a functional analysis, and a SWOTanalysis.PEST Analysis At the political level, the financial services industry is affected bydemands from the federal government in the United States for access tosensitive customer information. Finance Week, 49-5 .Cetorelli, N. Gold standard. (2 5). The threat of continued high |.15 |4 |.6 ||energy costs that, in turn, | | | ||threaten future economic growth | | | ||3. The widening distortion in income distribution is leading to anincrease in size of the population segment that can make effective use offinancial planning and investment services. The performance of the United |. High-Quality, |.14 |4 |.56 |3 |.42 |3 |.42 ||Responsive Customer | | | | | | | ||Service | | | | | | | ||5. Breadth of Financial |.19 |4 |.76 |4 |.76 |4 |.76 ||Products Offered | | | | | | | ||4. New York: The Free Press.Porter, M. A mean life cycle statusfor the financial services industry, however, can be determined. ||Intensity of Rivalry | | |? Bank of America is anationwide financial services company in the United States, and the companyis the country's third largest banking company when measure by totalassets, behind CitiGroup in first place and J.P. (2 5, April). | |3.8 | |3.86 | |3.57 | Because the competitive strengths among the top three participants inthe financial services industry are so comparable, no one competitor has aclear, unassailable advantage over either of the other competitors. The social environment in the United States is the source of bothopportunities and threats for participants in the financial servicesindustry. Positive consumer perceptions |2. Theextent to which IFE scores exceed the mean IFE score of 2.5 indicates thelevel of internal strength or internal weakness for a company. Internal-External Assessment This section of the report includes three analyses. While the release of such information islegal in many instances, such release nevertheless is viewed by many bankcustomers as a breach of confidentiality. The total of all factor weights must equal 1. 5 |4 |.2 ||high-level financial services | | | ||2. Louis), 85(4), 135-147.Hilgert, J. The sluggish economy, however, has createdopportunities (depending on one's perspective) for further consolidation inthe financial services sector as an increasing number of strugglingcompetitors qualify as takeover targets (Shilling, 2 5). The factors required for success in an industryare the same for all competitors; therefore, the company seeks tocapitalize on its strengths, while minimizing the effects of itsweaknesses. The competitive performance levels, however, are very closeamong the three largest competitors in the financial services industry. Increasing gap between rich and ||(facilitating online banking) |poor (reduces market size in some || |segments of industry) |EFE The EFE assesses the effectiveness of a firm's responses to conditionsand events in its external environment. -to-2.99), and (c) Low (1. TheExcellent-Excellent I-E intersection indicates that the firm should followa Grow and Build strategy. Competing for market leadership |1. New York: The Free Press.Shilling, A. Participants in the financialservices industry must exercise care to comply with the law, while notengendering consumer wrath through the release of information undergovernmental pressure when such information release is not mandated by law. TheSWOT factors provide the framework for the external factors evaluation(EFE) and the internal factors evaluation (IFE). In turn, the EFE and the IFE for the company provide the basisfor the I-E Matrix evaluation for Bank of America. Factor weights are multiplied by factor ratings to obtainweighted scores for each factor. Problems exist in relation to |. The competitive advantage of nations. The EFE rating of 3.5 rating places Bank of America in the high-performance range.|Chart 6: External factors evaluation: bank of america ||Key External Factors |Factor |Response |Weighted || |Weight |Rating |Score ||Opportunities ||1. The Grow and Build strategy type includes thefollowing appropriate strategic actions for a firm to implement: (a) expandaggressively; (b) seek control over distributors and/or suppliers; (c)capitalize on strengths; and (d) acquire competitors. | |3.38 |I-E Matrix The I-E Matrix analysis develops a cross-evaluation of a firm'sinternal and external performance. | |3.5 |IFE The IFE deals with factors that an organization can largely control.The key functional areas included in an IFE are as follows: (a) management;(b) marketing; (c) finance; (d) operations; (e) research and development;and (f) information systems. (1995). TheEFE and the IFE for Bank of America are linked to the SWOT analysis for theCompany. The EFE and IFE assessments provide thebasis for a firm's internal and external performance ratings. Each factor included in the IFE matrix is assigned both a weight and arating. Morgan Chase ||Critical Success Factors |Factor |Response |Weighted |Response |Weighted |Response |Weighted || |Weight |Rating |Score |Rating |Score |Rating |Score ||1. There is increasing competition |.15 |3 |.45 ||in global integrated financial | | | ||services | | | ||2. (2 5, March 7). The Company's IFE score of 3.38provides a basis for rating the firm's external performance Excellent. E. The company's functional strategies are compatible with the company'sbusiness strategy, and, in turn, the business strategy is compatible withBank of America's grand strategy. Accessed on the Internet on 2 5- 4-22 at: http:// premium.hoo…...

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