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    Strategic Management: Jpmorgan Chase & Co

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    Bea Garcia
    JPMorgan Chase & Co. is the largest bank in the US with over $2.3 trillion in assets. The document analyzes JPMorgan's vision, mission, strengths, weaknesses, opportunities, and threats. It finds that while JPMorgan has a strong position domestically, it lags competitors in its international presence and should expand further abroad, particularly in Latin America and Europe. The strategic recommendations include increasing customers in Latin America, forming mobile payment alliances, and divesting underperforming business segments to address weaknesses and threats in the challenging banking industry environment.

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    Strategic Management: Jpmorgan Chase & Co

    Uploaded by

    Bea Garcia
    126 views16 pages
    JPMorgan Chase & Co. is the largest bank in the US with over $2.3 trillion in assets. The document analyzes JPMorgan's vision, mission, strengths, weaknesses, opportunities, and threats. It finds that while JPMorgan has a strong position domestically, it lags competitors in its international presence and should expand further abroad, particularly in Latin America and Europe. The strategic recommendations include increasing customers in Latin America, forming mobile payment alliances, and divesting underperforming business segments to address weaknesses and threats in the challenging banking industry environment.

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    JPMorgan Chase & Co. is the largest bank in the US with over $2.3 trillion in assets. The document analyzes JPMorgan's vision, mission, strengths, weaknesses, opportunities, and threats. It finds that while JPMorgan has a strong position domestically, it lags competitors in its international presence and should expand further abroad, particularly in Latin America and Europe. The strategic recommendations include increasing customers in Latin America, forming mobile payment alliances, and divesting underperforming business segments to address weaknesses and threats in the challenging banking industry environment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    126 views16 pages

    Strategic Management: Jpmorgan Chase & Co

    Uploaded by

    Bea Garcia
    JPMorgan Chase & Co. is the largest bank in the US with over $2.3 trillion in assets. The document analyzes JPMorgan's vision, mission, strengths, weaknesses, opportunities, and threats. It finds that while JPMorgan has a strong position domestically, it lags competitors in its international presence and should expand further abroad, particularly in Latin America and Europe. The strategic recommendations include increasing customers in Latin America, forming mobile payment alliances, and divesting underperforming business segments to address weaknesses and threats in the challenging banking industry environment.

    Copyright:

    © All Rights Reserved
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    of 16

    Strategic Management

    Case Report

    JPMorgan Chase & Co.

    Prepared by:
    Bilal Ahmed Siddiqui (ID- 9331)
    Muhammad Danish (ID- 5588)

    Presented to:
    Sir Abdul Mujeeb Farooqi
    JPMorgan Chase & Co.

    Abstract

    JP Morgan Chase & Co. is a financial company and its headquarter is


    located in New York City.
    They serve in more than 60 countries with the workforce of over
    240,000. Considered many to be the largest bank in the USA, JPM
    reported total assets in 2012 of over $2.3 trillion and is a Dow Jones
    Industrial Average 30 member.

    JPM operates in two broad segments, 1) JP Morgan and 2) Chase. JP


    Morgan brand focuses on large corporations, governments and
    institutional investors; the Chase brand focuses on consumers and
    smaller businesses.

    About 80% of the JPM’s $100 billion in revenues is derived from


    businesses in the USA, leaving only $20+ billion being derived from
    foreign markets, with Europe/Middle East & Africa accounting for
    around 67% of foreign revenue. JPM enjoyed modest growth in 2012
    especially in its Consumer & Community Banking in overseas markets.
    This segment reported a 71% increase in sales to $10.6 billion in 2012.
    However, JPM’s Corporate and Private Equity segments in both USA and
    foreign markets reported decreases in sales of 128% and 353%
    respectively in 2012 – so the company does need a clear strategic plan
    for the future.
    Vision Statement

    JPMorgan Chase, we want to be the best financial services provider


    worldwide. Because of our great heritage and excellent platform, we
    believe this is within our reach.

    Mission Statement
    JP Morgan Chase tries to be the number one choice for governments,
    institutions, small businesses and consumers for all of their banking
    needs. At JPM, they pride ourselves on Consumer & Community
    Banking, where they feel they are the best in the world. They are
    consistently redeveloping their selves and moving resources around to
    provide the maximum return for the shareholders. Their mobile
    platforms are used extensively by customers globally. JMP hires only the
    most experienced financial advisors and believe good ethics is good
    business. They strive to be great community citizens everywhere they
    operate.

    External Audit
    Opportunities:

    a) Growing customer base for asset management and investment bank


    services in Latin America, Asia, Africa and the Middle East.
    b) USA small businesses are continuing to develop and recover.
    c) Customers prefer to do banking businesses face to face when it
    comes to applying for credit cards, seeking financial advices, and
    getting loans.
    d) Bank of America is laying off about 36K people.
    e) The USA government filed a civil lawsuit seeking $1 billion in
    damages for misrepresenting the quality of home loans sold to
    Fannie Mae and Freddie Mac.
    f) Smart phone providers such as Apple and Android may wish to form
    an alliance with banks to help facilitate the usage of mobile phone
    payments.
    g) Unemployment rate is improving, as a result qualifying more people
    for home loans.
    h) More and more consumers prefer online banking and smartphone
    banking.

    Threats:

    a) Banks are viewed like commodities to many potential customers.


    b) Bank of America and Citigroup are two large domestic
    competitors.
    c) Foreign banks have yet to enter the USA market on a wide scale.
    d) Increase in online banks such as Ally and ING Direct are
    advertising heavily and marketing no fees on many products
    where brick and mortar banks are increasing fees.
    e) Low interest rates have helped to squeeze profits from banks.
    f) The Dodd Frank Wall Street Reform and Customer Protection Act
    signed by President Obama, is expected to greatly increase the
    fees all financial intuitions pay.
    g) Mobile payments over smartphones and Near Field
    Communications (NFC) are expected to greatly erode into credit
    card usage.
    h) In 2012, around 25% of homes are in a delinquent state, 4.7
    million homes.
    i) Percent of Americans owning checking accounts dropped from 92
    to 88% between 2010 and 2011 and the number owning a credit
    card dropped from 74 to 67%.
    j) The Federal Reserve Board established the Consumer Financial
    Protection Bureau, which has placed restrictions for lenders on
    credit cards, mortgage loans, student loans, and auto loans.

    Competitive Profile Matrix

    Based on the factors in the CPM, JPM is out performing both major rivals
    Citigroup and Bank of America. An area where JMP lags significantly
    behind is on geographic range of markets serviced. One factor not
    considered because all their firms above are relatively the same was
    fees. Many online banks such as Ally and E-Trade can offer services with
    much lower fees or no fees at all to customers.

    EFE Matrix
    JPM is addressing external issues slightly above average with a score
    of 2.58. A key area JPM needs to focus on is entering more foreign
    markets. Currently JPM only serves 60 international markets, while
    rivals Citigroup and Bank of America serve over 150 each. The threat
    of foreign banks increasingly doing business in the USA is also a risk
    factor moving forward.

    Internal Audit
    Strengths:

    a) Largest bank in the USA with $2.3 trillion in assets and operations in
    over 60 countries.
    b) Increased clients in Brazil, China, and India from 200 to 800 between
    2008 and 2012 and expected to increase to 2,000 by 2017.
    c) Significant focus on USA small businesses providing $17 billion of
    credit in 2011 alone; added 1,200 relationship mangers and business
    bankers from 2009 to 2012.
    d) Acquired Sempra in 2011 to become one of the top three firms in the
    world in commodity dealings.
    e) Continue to add physical branches across the country while
    competitors are removing branches.
    f) Provides detailed segment data for 7 different businesses.
    g) Controls 12.3% of bonds in the USA, making JPM the largest holder
    among all banks.
    h) JPM focuses heavily doing business with small businesses.
    i) International Consumer & Community Banking segment reported a
    71% increase in revenues in 2012.

    Weaknesses:
    a) Many in upper management have dual titles.
    b) Heavy reliance on the USA with over 80% of 2012 revenues derived from
    the USA up from 75% in 2011.
    c) Less than 4% of Investment Bank revenues derived from Latin America.
    d) Poor judgment in lending has resulted in JPM continued mortgage losses
    expected.
    e) $48 billion in goodwill on the balance sheet.
    f) Domestic Corporate/Private Equity reported $4 billion in revenues in
    2011 and -$1 billion in 2012 for a net change of -128%.
    g) International Corporate/Private Equity experienced a -353% decrease in
    revenues from 2011 to 2012.
    h) Domestic Consumer & community banking segment reported only a 9%
    increase in revenues in 2012.
    i) London Whale ethical issues plague JPM.

    Net Worth Analysis (in billions)

    JPM is worth slightly more than Citi, yet has substantially higher net income
    in 2012. Both JPM and Citigroup are actually valued at a discount as
    stockholders’ equity is higher than shares outstanding x share price.
    IFE Matrix

    JPM is doing slightly above average on addressing internal issues as indicated by


    the 2.68 score. A major weakness of the firm is that they only have operations in
    60 nations while competitors Citigroup and Bank of America have business
    operations in over 150 nations. However, the company remains the largest in the
    USA based on assets and net worth. JPM should expand further into Latin
    America and Europe.

    SWOT Analysis:
    SO Strategies

    1. Continue with plans to increase customer base in Latin America to 2,000


    by 2017 (S2, S9, O1).
    2. Form an alliance with Apple or Samsung to help facilitate mobile phone
    payments (S1, S8, S9, O6, O8).
    3. Allocate $200 million through 2015 to develop new relationships with
    small businesses in the USA (S5, S8, O2, O4, O7).

    WO Strategies
    1. Spend $300 million in Europe for customer acquisitions (W2, O1).
    2. Spend $100 million in Latin America to acquire new customers,
    especially in the investment bank segment (W2, W3, O1).
    3. Divest both the domestic and international Corporate/Private Equity
    segments (W6, O1, O2, O6).

    ST Strategies
    1. Spend $200 million on advertising in the USA to attract more small
    business customers (S1, S3, S5, S8, T1, T2, T9).
    2. Increase free checking and feeless products for customers who have a
    checking account with Chase (S1, S5, T1, T2, T3, T4,T9).
    3. Spend $2 billion by 2015 to increase stake in bonds and commodity
    financial instruments (S4, S7, T4, T7, T9, T10).

    WT Strategies
    1. Divest both the domestic and international Corporate/Private Equity
    segments (W6, T5, T8, T10).
    2. Spend $500 million to develop a better statistical model for predicting
    whom (and whom not) to lend to and at what interest rate (W4, W6,
    W7, T5, T8, T10).

    Grand Strategy Matrix

    JPM is located in Quadrant IV of the Grand Strategy Matrix based on its


    strong competitive position and slow market growth of the industry. The
    banking industry is facing more governmental regulation, ease of entry of
    online competitors, and a climate of low interest rates. As a result, banks
    are forcing higher fees on consumers to make up for lost revenues, and
    overall the industry has experienced negative sales growth over the last 5
    years of around 3% compared to the SP 500 average of positive 3%. JPM
    should divest areas of their business that deal with private and corporate
    equity, rethink its strategy of adding more branch offices, and focus more
    on commodities and bonds.

    The Internal-External (IE) Matrix:


    Services Offered 2012 Revenues (in Percent
    millions) Revenues
    (1) Consumer &Community $60,556 50%
    Banking
    (2) Corporate & Investment 42,732 35
    Banking
    (3) Commercial Banking 9,471 8
    (4) Asset Management 11,649 10
    (5) Corporate/Private Equity (3,234) (3)
    Totals $121,174 100%

    JPM overall is in the hold and maintain cell of the IE Matrix. Corporate/Private
    Equity should be divested and an expansion of the bonds and commodities found
    in the Corporate & Investment Banking division should be expanded. While
    Consumer & Community Banking has the largest total revenues, it is unclear what
    margins are obtained from this division. Increased competition from online banks
    may soon weight heavily on this division.
    QSPM
    The QSPM reveals that increasing global presence, especially in Latin
    America, Europe, and Asia, is a more attractive strategy than marketing
    further to small businesses in the USA. This makes intuitive sense, since
    80% of all revenues in 2012 were derived from the USA.
    Recommendations

    1. Carry on with plans to increase customer base in Latin America to 2000


    till 2017.
    2. Form an association with Apple or Samsung to help facilitate mobile
    phone payments.
    3. Spend $300 million in Europe for customer attainments.
    4. Spend $100 million in Latin America to acquire new customers,
    especially in the investment bank segment.
    5. Divest both the domestic and international Corporate/Private Equity
    segments.
    6. Increase free checking and feeless products for customers who have a
    checking account with Chase.
    7. Spend $2 billion by 2015 to increase stake in bonds and commodity
    financial instruments.
    8. Spend $500 million to develop a better statistical model for predicting
    whom and whom not to lend to and at what interest rate.

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