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Business Level and Corporate Level Strategies
Wells Fargo is a multinational financial and banking enterprise, which is American based. Its head quarter is found in San Francesco in California. Wells Fargo is considered in United States as fourth biggest bank in term of assets and is considered as largest bank in term of market capitalization. Wells Fargo is on second number when regarded in terms of its deposits, debit card and home mortgage services. In United States it is declared as 23rd biggest enterprise in 2011. This bank is rated by Sap as AAA. Wells Fargo has many mini-branches and has a lot of customers. There are a number of financial services that are offered by this bank. It deals with three different segments of a business. These segments are community banking, wealth, wholesale banking, retirement and brokerage (Wells Fargo, 2014).
Business level strategy in Wells Fargo
Behind the success of every business there is a hold of a good strategic management. Wells Fargo is using two kinds of business level strategy. One is an operational level and other is a on level of human resource. Wells Fargo has differentiation strategy for running its excellent business. It offers many outstanding services that make it different from other banks and more successfully. In its operational level strategy, Wells Fargo has such plans are made that are used to day to day operations of bank and policies are established that how competitive advantage can be produced in Wells Fargo. Wells Fargo is considered as a bank that is not very attractive but very profitable. Wells Fargo strategy only is described in two words. Slow and steady. This bank has not much level of risks. This bank is cons indeed as boring bank but this dreary bank stayed when there was a subprime crisis. Then this bank has become as an attractive bank for many investors (Roberts, Dowling, 2002).
Strategy of Wells Fargo is cross-selling that is considered as most important strategy for its operational level. Whenever there is a talk about the success of Wells Fargo Enterprise cross-selling strategy is offern a tremendous credit for its success. In the eye of Wells Fargo cross selling can be defined as the process in which customers are offered such services and products that they are needed to help the people to make them financial succeeded. This strategy is backbone of its operations. The life cycle of Wells Fargo with its customers is started with a client. Then client and bank is engaged in primary relationship, after this more value and purchases is offern to make client more valuable and then client is invovled with Wells Fargo in lifetime relation. For Wells Fargo cross-selling strategy is crucial as it seemed more attractive and cheaper to maintain the relationship with old clients for life rather than searching for a new customer. Customer’s loyalty and relation with a bank improves day by day and become very active. This thing causes an increase in revenue from every client. In a long and profound relationship between the bank and a client then bank can quickly earn more profit with the same customer without spending money on searching or attracting of new customer (Ndofor, Sirmon, He, 2011).
Wells Fargo is the bank that is very successful in cross-selling strategy when compared to other competitors like JP Morgan, Citibank, Bank of America and even financial select sectors of SPDR are less successful at cross-selling. Wells Fargo wants to maintain its competitive advantage and this is possible by increasing the number of total cross sold products. Wells Fargo offer a variety of financial services products while another competitor bank offers very few commercial products to their customers. Wells Fargo sells its financial products via only one channel that offer strong and powerful competitive edge to Wells Fargo. Wells Fargo gains its competitive advantage by giving its low cost for deposits. All the banks get their funds from depositor’s fund therefore cost of deposit is crucial for the success of any bank. Wells Fargo maintains a low rate for depositor’s cost. There are two main forms of deposits. One is an interest bearing and other is demand taking deposits. We see that 27% of the funding for Wells Fargo bank comes from the demand deposits that are mostly free and done have any cost for the bank. Other competitor banks have a low level of demand deposits that is a biggest competitive advantage for Wells forgo over other banks. Wells Fargo has a highest level of cost margin by achieving the one factor from following two.
Charge high-interest rate on loans
Offer low-interest rate on deposits
We have seen that strategy of low-cost deposit offers competitive advantage to the bank. High-interest rate margins depicts the fact about the bank that the bank can earn more profits by providing loans and bank can have a sustainable cushion for its loan.
For any bank it is very necessary that it offers proper channels for transactions. Wells Fargo offers different channels by adopting a use of new technology. The ATM facility and other services like: online banking offer competitive advantage. Any bank offering these facilities while cutting its cost down. Wells Fargo achieved this policy, therefore, it had competitive advantage over other by adopting this strategy (Bower, Joseph, Hout, 1988).
Wells Fargo has future plan policy about fee income. It will charge fee and earn revenue from investments, brokerages, insurance and brokerages business. In this area Wells Fargo has opportunity to grow. Risk management for any business is crucial and when any business has a good strategy about lowering risk than it can get a competitive advantage over others. We can see that with time number of non-performing loans for Wells Fargo Bank is decreased but still as compared to competitor banks of bank of America and JP Morgan non-performing loans of Wells Fargo is still more. There is an excellent management about risk but it can be proved more. There is a space for improvement in an area of risk management. Wells Fargo is considered as best capitalized banks among all its peer banks. It does not have any shortfall of capital that offers a competitive advantage over others. It is necessary to every bank that a bank that it has a specific amount of capital for any unplanned situation. It is required by regulatory authority that if any bank wants to increase its loan book then the bank must increase its capital. Wells Fargo is the best bank in this term and it is only bank that do not have any shortfall of capital and meet the leverage ratio of 5% that is kept as base by regulatory authority. Other competitor banks like JP Morgan always need additional capital to meet this requirement of leverage ratio. The safe and good strategy of Wells Fargo Bank keeps the bank on competitive advantage over other banks (Roberts, Dowling, 2002).
Corporate level strategy
Human level plans are come under the corporate level strategies and these strategies are related to the interaction of bank and its employee. For any successful business it is crucial that an organization has a good strategy for its main asset that is human capital. People in any organization can be a real competitive advantage for any business and Wells Fargo offer a lot of importance to their employees. In Wells Fargo team-work is given a value and rewarded. Diversity in work-place is considered very vital for success of Wells Fargo. At Wells Fargo strategy about the human resource lies at top priority of the bank.
Wells Fargo offers much importance to their employees and as a result of this employees always come up with modern and healthy ways of serving the customers. For Wells Fargo bank all the data on human resource and its relation to the strategy is available while other banks don’t have much widely data. In a long-term this data can be helpful when making strategies for human resources (Ndofor, Sirmon, He, 2011).
Future goals are set by every organization and setting the proper future goals can help the organization for making proper strategies. The primary vision of Wells Fargo is to satisfy the financial needs of the customers. The vision is very broad and to reach their vision Wells Fargo have to make such strategies at their corporate level that will help to achieve the goals of bank. For an establishment of any banking strategy it is very necessary it long term goals are kept in mind. Wells Fargo wants to improve its customer relation more and aim to enhance the financial products to number eight per customer. This thing will increase the strength of a business and in a long run reduce the costs of the bank. For proper corporate level strategy, the bank will use the existing product development strategy. As now Wells Fargo has a big name in a banking industry so by making developments into existing product Wells Fargo can make its success long lasting (Bower, Joseph, Hout, 1988).
Competitive Environment of Coca Cola
The competitive environment is crucial for the development of any industry in the market. It has many merits that provide the security and regulatory prices in the markets for the end customers. The Wells Fargo has to face an intense competitive environment. The economic recession period is in the industry and due to it the enterprise has to face double the challenge than the original ones. The enterprise is performing real Wells in the lackluster environment of economic state. The enterprise has a number of prominent competitors in the market and the market share of the enterprise has been increasing day by day. It is dealing in the mortgage origination of a lucrative nature that provides the enterprise with a competitive edge. The servicing of the market is another feature of the enterprise. The enterprise is gaining the profits on the low-cost deposits as compared to its competitors the enterprise is providing the contraction in the net interest margin. However, the competitors of the enterprise have a powerful strategy for the distribution of the funds as compared to the Wells Fargo. The comparison between the enterprise and its competitors reflects no certain amount of difference in the activities and strategies adopted except their unique selling propositions. The promotional activities of offering the products with less interest and low cost are providing the competitive edge. It empowers the customer and provides security for speculation of the prices (Wells Fargo, 2014).
Wells Fargo has adopted the product development strategy in order to excel the competitors in a much better way. Owing to it, the enterprise is offering a vast number of competitive deals for the mortgages. It is helping the enterprise is maintaining its success in the industry. However, the competitors are also developing the products to keep pace of the increasing competition. The pricing technique of the competitors of the Wells Fargo is very impressive and gaining an edge. The difference in the packages of the loans and mortgages and other financial services are varying from enterprise to enterprise. The market is changing trends due to drastic economic conditions of the world. Owing to it, the Wells Fargo is getting itself a benefit by offering the gains of low costs (Roberts, Dowling, 2002).
Slow Cycle or Fast Cycle Market
The cycle, in which, there is a problem in imitating the capabilities and resources in the preparation of the product in known as the slow cycle. The slow cycle the pressure of the competitive market effects is not present. The enterprise that is operating under the head of the slow cycle market strategy is enjoying the perks of being the monopoly of the sector mostly. A very little of competition is found in the slow market cycle (Ndofor, Sirmon, He, 2011).
The market in which the enterprise is stable to a number of years is known as the fast cycle market. The Wells Fargo is using the strategy of the fast cycle and is not the follower of the slow cycle. It is due to the reason that the enterprise has maintained as a high position in the market presently as compared to the past. The enterprise is kept on introducing new deals for the customers and more financial services in order to maintain the pace with the growing competitive market. Apart from it, the slow cycle leads the enterprise towards the monopoly position. It is the time of the recession of the industry. In order to keep itself in the competition it is crucial for the enterprise to go for the new strategies and continues growth.
The Wells Fargo is using the strategies according to the needs of the market. The enterprise has to penetrate into the market at first place and then hold to the position on the permanent basis. The Wells Fargo is getting stronger and stronger and enjoying the more shares of the industry. The enterprise has considered the importance of the efficient financial services and products of the market and adopted the product development as its strategy. The leadership of the enterprise is taking an innovative approach and the management has focused on the sheer competition of the industry. The development of the competitive environment in the fast cycle strategy of the market, the enterprise is urging at performing better and better. There is an extensive product portfolio of the Wells Fargo (Wells Fargo, 2014).
Bower, Joseph L., and Thomas M. Hout. "Fast-cycle capability for competitive power." Harvard Business Review 66.6 (1988): 110-118.
Ndofor, H. A., Sirmon, D. G., & He, X. (2011). Firm resources, competitive actions and performance: investigating a mediated model with evidence from the in‐vitro diagnostics industry. Strategic Management Journal, 32(6), 640-657.
Roberts, P. W., & Dowling, G. R. (2012). Wells Fargo Continues To Eat Up The Competition. Strategic management journal, 23(12), 1077-1093.
Wells Fargo, (2014). 2014 Insurance Market Outlook. Retrieved on 12 February from: https://wfis.Wellsfargo.com/insights/clientadvisories/Documents/MC-7466_2014InsuranceOutlook_FNL.PDF
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