BUS 499 Assignment 3 – Business-Level and Corporate-Level Strategies

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Business-Level and Corporate-Level Strategies

BUS 499 Assignment 3

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BUS499 Business Administration Capstone

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Business-Level and Corporate-Level Strategies

Introduction

The Bank of America is popular because it is an international investment bank that also provides financial services. It was founded in 1904 by Amadeo Giannini, an American Italian who commenced it as the bank of Italy who later changed it into the Bank of America after it gains popularity. The concept of this bank began as a way to provide loans to immigrants, farmers as well as middle-class citizens. Over the years it has faced losses but still comes up as the leading investment bank with outstanding digital services. It is a proud sponsor of NASCAR, MLB, and the annual Chicago marathon. This paper will therefore, investigate the business and corporate-level strategies of the Bank of America that guide its long-term success and how these strategies relate to the competitive environment. 

Business-Level Strategies

It either has intensive and generic strategies that enable it to gain a competitive advantage and retain its brands for years. For instance, a cost leadership strategy allows them to have low costs while running their financial services. It is an effective way of maximizing their profits by optimizing their services fees that attract consumers since it benefits both parties. It may not be the best provider in terms of cost, but this strategy is efficient for commercial and investment banking as well as wealth management. On the other hand, the intensive strategies include market penetration, product development as well as market development. These strategies ensure that the bank is providing many financial services to their current market while attracting more clients. Market penetration has given the bank a competitive advantage since it has branches in different states in America and about 36 countries outsides the United States. 

Market penetration

I believe that this strategy is the best strategy for the long-term success of the bank. Market penetration ensures that the bank has more financial services to sell to their market. Also, it allows them to innovate their current products to ensure that they retain their consumers. This bank has sponsored many organizations and also has its football stadium for corporate social responsibility. It has been running for more than a hundred years now and remains one of the most trusted financial and investment banks in the world. It is known for sponsoring Hispanic and black students to allow them to study or gain knowledge and skills that can be transferred from a company to another. In America, the wealth gap between different races is very evident such that it seems like specific can only be done by blacks of Hispanics. Therefore, the Bank of America has financial services to community colleges that encourage these two races to get access to quality education where they can access skills that they can benefit from for decades. Besides, it is providing financial services to Khan Academy, a free global tutoring website that allows students from all over the world to get help with their academics. 

Market penetration refers to getting a product or service accepted in the market. It is looking for untapped potential and implementing strategies that will ensure the company gains the market share as well as grows revenue through vibrant sales. It measures how much a company’s products or services are being utilized while comparing that to the total market. For instance, the coronavirus pandemic has resulted in systemic racism, racial inequality, or injustice due to a tough economic crisis. It has invested about $1Billion in reducing racial inequality by working on its goals to provide affordable housing, access to healthcare, job, and employment skills as well as resources needed to support small businesses. 

It invests about $3billion annually in technology to ensure that its consumers enjoy easy and convenient ways to access their vast financial services (Maiorescu, 2020). For instance, it has excellent online customer service as well as an easy user interface on the mobile banking platform. It makes it the leading retail depositing bank since it has received over $635B. The bank is very consumer-oriented, and that is why they aim to keep up with technology trends to ensure that the consumers easily access their service. The future of most institutions is in how flexible they are to adapt to the fast-growing innovations to satisfy their consumer needs.

Technology also comes with its fair share of challenges, therefore, the bank is also investing in cybersecurity to ensure that it protects its intellectual property as well as confidential consumer information. It tries to avoid another instance of the financial crisis by investing in constant research to identify potential threats and mitigating them before they cripple bank operations. Therefore, market penetration ensures that the bank is always considering the consumers before expanding or innovating the current financial services. 

Corporate level strategies

Cost leadership 

It refers to a company or organization presents itself as the cheapest service provider or manufacturer since it helps them gain a competitive advantage. This strategy may prove difficult for some companies to adopt since it requires them to look for ways to reduce the cost of their products or services. However, once a company has gained a reputation in terms of cost, not only does it attract more consumers but may also control the price of these products or services on the market. It is responsible for developing as well as maintaining detailed financial models that are incorporated in evaluating various financial initiatives. It has been conducting in-depth research that has ensured that the brand remains relevant and acceptable to its consumers. For instance, although it was involved in the 2008 economic crisis, industry research has allowed it to attract researchers and investors who ensure that the major decisions or investments have to follow a strict legal procedure. This strategy requires the bank to have proper communication channels with senior executives to ensure that financial projects are prioritized accordingly.

The Bank of America has been registered on the New York Stock Exchange because it is a leading financial institution that serves consumers within American and thirty-five countries outside the United States. Cost leadership has also been attained through its diverse client base such as serving individuals, small entrepreneurs to large corporations. Its financial services are curated to suit their customer base since through investment banking, trading, wealth management, managing assets as well as risks in products and services. Not only does it have improved technology to make banking convenient for their consumers, but also many business center outlets where they can visit and get appropriate services. It maximizes its profits by having strategies such as reduced service fees that benefit its consumers by making it easy for them to choose their diverse products and services.

Since the Bank of America is a large organization, it constantly needs to conduct a SWOT analysis to ensure that as much as they want to provide the most attractive costs to their consumers, it does not come at an expense of the banks. Risk management is therefore very crucial, and it is only managed through thorough research. Studying competitors and understanding consumer needs is essential in implementing the best strategies that ensure cost leadership through high differentiation and focus.

Competitive environment

JPMorgan Chase and Company 

It was formed in 2000 as a merger between JPMorgan and Chase Manhattan Bank. We can easily tell that it is the largest American bank by looking at its total assets. Besides, according to Forbes magazine 2020, it was ranked as the world’s third-largest corporation. It has been made great through mergers and acquisitions of companies such as Bear Stearns, Bank One as well as Washington Mutual (Kumar, 2019). It provides diverse commercial as well as investment banking services in about 100 countries. It operates within consumer and community, commercial as well as corporate and investment banking. Asset management is highly prioritized since it is only through asset management that clients are more confident in banking with JPMorgan Chase and Company. Besides, by 2019 its annual earnings per share were $10.72. Also, its assets and total deposits were more compared to those of the Bank of America. 

In 2008, the Bank of America acquired Merrill Lynch that helped build its wealth management as well as investment banking business (Fraser, 2020). Currently, the Bank of America is the largest provider of wealth management. Therefore, since both banks aim to provide diverse financial services such as investment banking and asset management, differentiation ensures that they attract and retain consumers. For instance, the Bank of America is a preferred bank compared to its competitors since it has non-interest bearing deposits. JPMorgan is the leading bank in America since it is the biggest lender for the oil industry, it also has a huge credit card sector. 

It stands out because it has effective strategies that allow it to operate despite the crisis. For instance, it generated about $4.7Billion in profit during the pandemic. Besides, it has set aside enough revenue to cover loan losses. On the other hand, the Bank of America has managed to gain a competitive advantage through investing in operations efficiency. The Bank of America may not be the best leading bank in America, but I believe that it could get to where JPMorgan is through investing in technology and innovations (Fleiss, 2019). I prefer the Bank of America since it has an even mix of investing and consumer banking, and this is convenient for its diverse consumers. Having effective access to their financial services makes it easy for consumers to purchase or conduct business without worry. In the future, I believe that the Bank of America will have stable banking services such that even when there is a global economic crisis, they still sustain their consumer base. 

Market Cycles

Depending on the market condition and cycle, studying competitors is made easy. The market cycle either has slow, fast, or standard cycles. For instance, if it is challenging getting into a market, commencing a new franchise within this market, or whether there is market instability, the cycles could vary. In a slow market, competitors study the strengths and weaknesses of other companies, for instance, their copyrights, patents, or their marketing strategies. Copyrights ensure that their unique identities cannot be imitated since they could cripple the bank. Slow cycles are less violent as compared to fast markets because economic crisis affects their profit-making ability (Jarboe, 2020). Therefore, in slow cycles, financial institutions could launch new strategies to keep up with the competition. For instance, the Bank of America could collaborate with a technology company to boost operations efficient services for its consumers. However, in fast cycle markets, the financial institutions are protected by patent or copyright to ensure that their products, services, or strategies cannot be imitated. 

Conclusion

The Bank of America has vast financial services just like JPMorgan among other competitors. However, both banks are differentiated by the way they deliver services to their users. Also, they have strengths and weaknesses that set them apart from each other. Therefore, before an individual, company or entrepreneur decides to use either bank, they need to do extensive research. Although JPMorgan is efficient even in crisis and has effective strategies to manage their risks, I still believe that the Bank of America has strategies that are promising in the long-term. Operation efficiency is all consumers want when seeking a financial institution. 

References

Fleiss, S., & Viceira, L. (2019). Sustainable Investing at JP Morgan Private Bank.

Fraser, J. (2020). The Path to the Top: Influencers on the Success of Natural Resources Investment Banking at Bank of America Merrill Lynch (Doctoral dissertation, Syracuse University).

Jarboe, A. J. (2020). CM Member of Bank of America Merrill Lynch Challenge.

Kumar, B. R. (2019). Mergers and Acquisitions by Bank of America. In Wealth Creation in the World’s Largest Mergers and Acquisitions (pp. 259-270). Springer, Cham.

Maiorescu-Murphy, R. D. (2020). Online Diversity Communication at Bank of America. In Corporate Diversity Communication Strategy (pp. 55-68). Palgrave Macmillan, Cham.

  




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