Strategy management

1. Together we’ll go far

2. CONTENTS
I. Business overview
II.External Environment
III.Internal Environment
IV.Recommendations

3. I.

4. I. BUSINESS OVERVIEW
Establishment
Founded in San Francisco in 1852
 Henry Wells and William Fargo
Primary services: banking and
express delivery

5. Mission statement
“Our Product: SERVICE. Our value-added: FINANCIAL
ADVICE. Our competitive advantage: OUR PEOPLE”
(Kovacevich).
I. BUSINESS OVERVIEW

6. I. BUSINESS OVERVIEW
Achievements
Years Events
1852 Wells Fargo founded in San Francisco
1888 Wells Fargo releases ‘ocean to ocean’ service
1923 Wells Fargo mergers with Union Trust Company
1960 Wells Fargo is acquired by American Trust Company shifting the focus
to banking but keeping the Wells Fargo name.
1998 Wells Fargo mergers with Norwest making them the 7th largest bank in
the U.S.
2009 Wells Fargo mergers with Wachovia

7. I. BUSINESS OVERVIEW
Wells Fargo & Wachovia
 31/12/2008: Wells Fargo acquired Wachovia
• The fourth largest bank in the US
• The third largest U.S. full-service
brokerage firm based on financial
advisors

8. Four largest bank in the US
I. BUSINESS OVERVIEW

9. I. BUSINESS OVERVIEW
Core services
Banking Online banking, business banking,
wholesale banking,…
Mortgage Home equity, mortgage
Credit Debit & Consumer Credit Cards, Personal
Credit Management, Auto Dealer Services,..
Insurance Wells Fargo insurance, Rural Community
Insurance Services
Investment Retail Brokerage, Wealth Management,
Retirement, Capital Markets,…

10. I. BUSINESS OVERVIEW
Business strategy
Wells Fargo has a two- pronged strategy:
 Employs its national scope and depth of
technology utilization
 Continuously develop its reputation as a
sustainable, trustworthy financial service provider

11. II.

12. II. EXTERNAL FACTORS
1. Economic
REMOTE ENVIRONMENT
• Global Financial Crisis (2008-2009)

13. II. EXTERNAL FACTORS
1. Economic
REMOTE ENVIRONMENT

14. II. EXTERNAL FACTORS
2. Political
REMOTE ENVIRONMENT
• Term Auction Facility (TAF) in December 2007
• Economic Stimulus Act of 2008 in February 2008
• Reduction in the target federal-funds rate in
April 2008
• Troubled Asset Relief Program (TARP) in
September 2008
• Emergency Economic Stabilization Act of 2008
(The "Bailout Plan“) in October 2008

15. II. EXTERNAL FACTORS
2. Political
REMOTE ENVIRONMENT
• Wall Street Reform in July 2010
– New oversight power
– Unwinding powers

16. II. EXTERNAL FACTORS
3. Social
REMOTE ENVIRONMENT
• Sustainability

17. II. EXTERNAL FACTORS
3. Social
REMOTE ENVIRONMENT
• Uncertain times

18. II. EXTERNAL FACTORS
4. Technological
• New technologies
• New devices
• New experiences
REMOTE ENVIRONMENT

19. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT

20. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Threat of New Entrants LOW
• Startup cost: 1 million $; capital required: 12-
20 $
• Legal process to open a bank is much more
complicated
• December 2013, Bird-in-Hand was the first
federally approved startup bank in nearly three
years since Dec 2010.

21. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Power of Suppliers HIGH
• The Fed

22. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Power of Buyers HIGH
• Too many suppliers
• Low switching cost (0 – 100 $)
• 7 working days to switch

23. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Availability of Substitutes. MEDIUM
• Insurances
• Mutual funds
• Virtual currency

24. II. EXTERNAL FACTORS
Michael Porter’s Five Forces
INDUSTRY ENVIRONMENT
Competitive Rivalry HIGH
• Considered as a high competitive industry
• There are 6,799 banks in the US (FDIC, 2014)

25. III.

26. SWOT ANALYSIS

27. III. INTERNAL ENVIRONMENT
Strengths
 Strong brand name:
• The Well Fargo bank is ranked as one of
the most valuable in the world
• 19th on the Fortune 500 list in 2010
• Among the world’s most respected in
Barron’ 2010
• Ranked#1 in Newsweek, 2009

28. III. INTERNAL ENVIRONMENT

29. III. INTERNAL ENVIRONMENT
Strengths
 Wide distribution network:

30. III. INTERNAL ENVIRONMENT
Strengths
 Wide distribution network:

31. III. INTERNAL ENVIRONMENT
Strengths
 Diversified product and service

32. III. INTERNAL ENVIRONMENT
Strengths
 Diversified businesses
CHECKING AND SAVINGS
• Checking
• Savings
CREDIT OPTIONS
• Credit card
• Loan and Lines of credit
BUSINESS SERVICE
• Payroll
• Insurance
• International Business Service
• Verification of Deposit
• Merchant service
• Retirement
• Expand Employee Benefits
• Well Fargo HSAs for Small
Business

33. III. INTERNAL ENVIRONMENT
Strengths
 Cross-selling

34. III. INTERNAL ENVIRONMENT
Strengths
 Technology
• Offering baking through all electronic channels:
Quicken, Money, Prodigy and the internet
• First large bank to launch mobile banking service
• The only of the 5 largest US banks to earn a gold rating
for mobile banking services.
• In future: offering alerts: overdraft alerts, or check and
deposit clearing alerts.

35. III. INTERNAL ENVIRONMENT
Strengths
 Social Responsibility
• Wells Fargo believes that if the
communities are doing well, then
its business will do well in turn
• In 2013, donating $275.5 million
to 18,500 nonprofits
• 1.69 million team member
volunteer hours.
• Encompassing the areas of
education, human services,
community development, art and
culture, civic services, and
environmental issues.

36. III. INTERNAL ENVIRONMENT
Weaknesses
 Limited international presence
• Small fraction of its $81 billion annual revenues from
operation outside the US
• 2% of staffs are based outside the US

37. III. INTERNAL ENVIRONMENT
Weaknesses
 Weakening asset quality among high real
estate exposure
 Dealing with the banking reputation

38. III. INTERNAL ENVIRONMENT
Opportunities
 Technology enables offerings

39. III. INTERNAL ENVIRONMENT
Opportunities
 Growing immigrant population
• More willing employees
• Highly-diversified work environment

40. III. INTERNAL ENVIRONMENT
Opportunities
 Acquisition of Wachovia
• Adopting learning from Wachovia in defining mass
affluent customer strategy – key to capturing
more share of deposit and investment.

41. III. INTERNAL ENVIRONMENT
Opportunities
 Expansion in other countries

42. III. INTERNAL ENVIRONMENT
Threats
 Rising of online scams (frauds)

43. III. INTERNAL ENVIRONMENT
Threats
 Increase in regulatory restrictions
Changing certain
business model
Reducing
revenues
Affecting
business
operation
Increasing cost

44. III. INTERNAL ENVIRONMENT
Threats
 Competitors

45. III. INTERNAL ENVIRONMENT
Threats
 Inflation rate
 Exchange rate
 Price wars

46.  Unique product
 Rich supply of material
 Operating near key material
 Good image for helping
local farmers
 Only come in one package
(330ml)
 New, unfamiliar to
customers
 Customers concern for
health
 Juice market is still growing
 Customers now favor
Vietnamese’s products
more.
 Fierce competition
S W
O T
SWOT Summary

47. IV.

48. IV. CHALLENGES & RECOMMENDATIONS
1. Credit rating
• Lower to AA- in light of the 2008 financial crisis
However, still be only US bank to earn Moody’s highest
credit rating in 2007
Attractive customer  attract low-cost deposits
• Not to be taken for granted
 deal with an increasing number of bad commercial and
consumer loans

49. 1. Credit rating
First quarter in 2010:
• Wells Fargo: non-accruing
loans increased 11%
• Other major bank: non-
accruing loans decrease
 Less attractive to investors
IV. CHALLENGES & RECOMMENDATIONS

50. 2. Diversified products
• Meet all of its customer’s financial needs
 Leave itself open to smaller
• Being all things to all customers
 In danger of losing focus
• Trying to gain market share
 Expose to more risks and competition
 Limited capital in resource allocation and
investing in R&D
IV. CHALLENGES & RECOMMENDATIONS

51. 3. Wall Street Reform
• Limit growth potential
• Forced to sell off or spin off
• Lose economies of scale advantage
IV. CHALLENGES & RECOMMENDATIONS

52. Recommendations
• Provide the best service delivery and value
added options.
• Provide ongoing training to staff and
management
• Evaluate and innovate current marketing plan
• Increase R&D budget
• Benchmark financials against three major
competitors
• Implement post contact surveys for customer
contact positions
IV. CHALLENGES & RECOMMENDATIONS

53. THANK YOU