STRATEGIC MANAGEMENT

CSEB3101
GROUP 1
WELLS FARGO
CORPORATION
PRESENTED BY :
AMANINA BT MOHAMMAD ASRI CEB 120002
NORASYIDAH BT RAMLI CEB 120044
ZURHANIM BT AMER AZIDEN CEB 120070

PRESENTED TO :
DR. TEY LIAN SENG
INTRODUCTION
Wells Fargo is a stable and long term company providing financial products such as
banking, mortgages, credit cards, insurance, and investment services to consumers
and business client.
Wells Fargo has been in business since 1852.
Their first office opened in San Francisco during the gold rush.
The stage coach was used to transport gold and other valuables.
Wells Fargo helped establish the Great Overland Mail service continuing to use the
stagecoach but also adding steam ship, rail road, pony rider, and telegraph.
From their humble beginnings they expanded from California to the rest of the
nation.
CORE PRODUCT
BANKING MORTGAGE CREDIT INSURANCE INVESTMENTS
Online
ATM
Business
Wholesale
Government
and
Institutional
Home equity
Mortgage

Debit &
consumer
credit card
Personal credit
management
Auto dealer
service
Education
financial
service
Well Fargo
insurance
Rural
community
insurance
service
Retail
brokerage
Wealth
management
Retirement
Norwest equity
& venture
partners
Lowry hill
Capital markets

We want to satisfy all our customers financial needs and help them
succeed financially
Our Product: SERVICE. Our value-added: FINANCIAL ADVICE. Our
competitive advantage: OUR PEOPLE
VISION
MISSION
EXTERNAL OPPURTUNITIES &
THREATS
WELLS FARGO
OPPURTUNITIES
Historically
Low Rates
Emerging
Markets
Acquisitions
Dividend increased to
$0.34 per share
Wachovia Acquisition
Securities
THREATS
Competition
Government
Regulations/Changes
Rising Rates/Inflation
Bank of America
Citigroup

The interest rates
are down but the
unemployment
rates are up and
so are
foreclosures
Mortgage Reform
Tighter Leash for Financial
Firms
Breakup Authority
PORTERS FIVE FORCES
Requires high capital to enter
the industry
Hold a large amount of
capital and have the ability to
invest and keep mortgages on
their own portfolio
High degree of substitutes
available to the end consumer.
Products available by the
financial industry are very
similar leaving the buyer lots of
other options if they are not
happy with the current one.
J.P. Morgan Chase,
Bank of America and
Citigroup.
FIRMS COMPETITORS AND STRATEGIES
1) J.P Morgan Chase
JPMorgan Chase is an American multinational banking and financial services
holding company. It is the largest bank in the United States. It is a major provider
of financial services and the world's third largest public company based on a
composite ranking.

Strategies
Aspire to be the best
Consistently delivering the best products and services in a cost-effective way
Innovate, test and learn
Create powerful brands that carry a commitment of quality and integrity

Execute superbly
Demand and maintain strong financial discipline
Design and maintain the best systems and operations
Eliminate waste and bureaucracy

Built a great and winning culture
Operate with the highest standards of integrity
Train and retain great managers
Be open and honest




2) Bank of America
Bank of America is an American multinational banking and financial services
corporation headquartered in Charlotte, North Carolina. It is the second largest
bank holding company in the United States by assets. As of 2013, Bank of
America is the twenty-first largest company in the United States by total revenue.
In 2010, Forbes listed Bank of America as the third biggest company in the world.

Strategies
Digging deeper with customers
Extending product lines
Investing in research and development


3) CITIGROUP

Citigroup is an American multinational banking and financial services
corporation headquartered in Manhattan, New York City. Citigroup was formed
from one of the world's largest mergers in history by combining the banking giant
Citicorp and financial conglomerate Travelers Group in October 1998. As of
2008 it was the third largest bank holding company in the US by assets.
Strategies
Enhance its position as a leading global bank for both institutions
and individuals, by building on its unique global network, deep
emerging markets expertise, client relationships and product
expertise.
Position Citi to seize the opportunities provided by current trends
(globalization, digitization and urbanization) for the benefit of
clients
Further its commitment to responsible finance
Strengthen Citis performance-including gaining market share with
clients, making Citi more efficient and productive, and building
upon its history of innovation

FIRMS MAJOR STRENGTHS
AND WEAKNESSES
STRENGTHS
Wide distribution network
Wells Fargo doesn't just deal with one type of business or country. They specialize
in mortgage, retirement, banking, investments, and lines of credit in not just
America, but other countries as well. Different countries or locations around the
world have different characteristics. Those characteristics do not always match,
therefore, a company can lower their risk by investing in part of the world with low
correlations. The lower the risk, the better.

Diversified earnings distribution across segments
Diversified earnings create equal distribution of the wealth earned by Wells Fargo,
allowing for increased internal profit and income.
The biggest US home lender
Well Fargo recently originated over $89 billion of mortgages in the third quarter,
which was more than JPMorgan, and Bank of America . They currently originate
one in every four mortgages in the U.S. Wells Fargo is the number one home
loan originator, small business lender, commercial real estate lender, used car
lender, and have the highest number of branches in the United States.
Cross selling
A key part of Wells Fargo's business strategy is cross-selling, the practice of
encouraging existing customers to buy additional banking products. They use
their major competitive advantage of cross-selling all their products to keep the
highest retention and loyalty among
its competitors. They cross sell on average 3 to 4 products to new customers and
on average overtime, consumers have over 6 products.
WEAKNESSES
Limited international presence
Due to the European financial crisis ,this could prove to be a major downfall in
the long term. The acquisition of Wachovia did enhance their global position but
it is nowhere near competitive when compared to Citigroup or JPMorgan Chase
in particular.
Large exposure to real estate
The housing market is very distressed and is expected to stay this way for the
next 2-3 years if not longer. Wells Fargo will experience quarterly losses. This
will most likely negatively impact common stock dividends, repurchase of
common stock, and the ability to grow the business.
Low brand loyalty
In todays society, with so many other large scale competing banks, getting brand
loyalty from individuals can be complicated. Many people have accounts in
more than one bank, and several individuals change from bank to bank
depending on offers they are given at different times.

FIRMS FINANCIAL CONDITION

Competitor: Bank of America

Market capitalization :
- The total dollar market value of all of a company's outstanding shares.
- calculated by multiplying a company's shares outstanding by the current
market price of one share
Companies Market cap (B)
Wells Fargo 130.52
Bank of America 151.06
Industry average 19.63
Revenue :
- income that a company receives from its normal business activities, usually
from the sale of goods and services to customers



Companies Revenue (B)
Wells Fargo 42.84
Bank of America 62.09
Industry average 7.98
Earnings per share :

- The portion of a company's profit allocated to each outstanding share of
common stock


Companies EPS
Wells Fargo 0.912
Bank of America 0.597
Industry Average 0.91

Return on assets (%) :
- ROA gives an idea as to how efficient management is at using its assets to
generate earnings.
- ROA figure gives investors an idea of how effectively the company is
converting the money it has to invest into net income


Companies 2008 2007 2006
Wells Fargo 0.44 1.55 1.73
Bank of America 0.22 0.94 1.44
Return on equity (%) :
- The amount of net income returned as a percentage of shareholders equity.
- Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
- ROE is useful for comparing the profitability of a company to that of other
firms in the same industry.

companies 2008 2007 2006
Wells Fargo 4.79 17.12 19.52
Bank Of America 1.80 11.08 16.27
Price earning (%) :
- A valuation ratio of a company's current share price compared to its per-share
earnings.
- high P/E suggests that investors are expecting higher earnings growth in the
future compared to companies with a lower P/E.

companies 2008 2007 2006
Wells Fargo 14.6 12.7 14.3
Bank of America 10.7 12.5 11.6

FIRMS EXISTING STRATEGIES AND
OBJECTIVES

corporate strategy
- continue to be the premier financial institution while expanding and adapting to the market
- maintaining an ethical lending perspective while keeping their competitive advantage.
- Use a differentiation strategy in order to continue to service a broad spectrum of customers.
- Unlike most banks, Wells Fargo does not heavily segment the market with the aim of attracting only
good customers. It believes that all customers can be good, it is just a matter of how the relationship
is handled.
OBJECTIVES
Long-Term Objectives

Expand through mergers and acquisitions
- Review current market for opportunities
- Increase growth
- Gain Market Power

Increase market share
- Increase marketing
- Provide value added services
- Research and Development /Innovation

RECOMMENDATION
Objective
Continuous merges and acquisition
Strategy
Focus on marketing
Reasons
Positive impact on previous acquisition
Wells Fargo has a history of being able to maintain and manage change, this
skill is critical to the success of the diversification plan.
COMPARISON
AND RECOMMENDATION

Review current
market for
opportunities
Increase growth
Gain Market
Power

Focus on marketing

The firm plans
Recommended
IMPLEMENTATION
How to implement
Improvise the online system by making a simple and easy
to understand home page
Provide video explanation for online transaction

POSSIBLE PROBLEMS AND SOLUTIONS
The problems
Lack of communication
Not clear about information given
How to avoid or solve
Assigning new officer in dealing with customer problems
Instead of customer goes to the bank, bank comes to the
customer

REFERENCES
David, Fred R. (2013), Strategic Management: Concepts and Cases, 14
th
Edition, New Jersey: Prentice-
Hall International.
Kovacevich, R. (n.d.). About Us . Retrieved Jan 18th, 2010, from Wells Fargo Bank:
http://www.chamberorganizer.com/glendalechamber/mem_72962855
Rind, C. (2011, Jan 17). Wells Fargo SWOT Analysis. Retrieved March 20, 2011, from Free SWOT:
http://www.freeswotanalysis.com/swot-analysis-of-banking-sector/162-wells-fargo-swot-analysis.html
Wells Fargo. (n.d.). Our Values: What we stand for. Retrieved Jan 18th, 2010, from Wells Fargo:
https://www.wellsfargo.com/invest_relations/vision_values/6
Wells Fargo. (2010). Wells Fargo Today. Retrieved March 20, 2011 from Wells Fargo:
https://www.wellsfargo.com/downloads/pdf/about/wellsfargotoday.pdf
Wells Fargo . (n.d.). Our Vision: Where we're going . Retrieved Jan 18th, 2010, from Wells Fargo:
https://www.wellsfargo.com/invest_relations/vision_values/3
Wells Fargo. (1998, Nov 2). News Release. Retrieved Jan 18th, 2011, from Wells Fargo:
https://www.wellsfargo.com/press/merger19981102
Wells Fargo. (2011, Mar 15). News Release. Retrieved March 20, 2011, from Wells Fargo:
https://www.wellsfargo.com/press/2011/20110315_Japan




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