Strategic Analysis of Charles Schwab Student`s
StrategicAnalysis of Charles Schwab
StrategicAnalysis of Charles Schwab
CharlesSchwab Corporation is a public limited company based in America. Itwas started in 1971, under the initial commander corporation.However, the name changed two years later and had its headquarters inSan Francisco, California, US. The company majors in banking andbrokerage services. Presently, the company is one of the biggestbrokerage institutions around the world, and highly famous due thediscounts it offers for his clients. The firm provides services forpersons and organizations that do online investing. It further,provides a platform for electronic trading for the purchase and saleof financial securities. That encompasses the sale of preferredstocks, exchange traded funds, common stocks, and fixed incomeinvestments. In a nutshell, Schwab is a distributor and manufacturerof financial services that focus on a central base for customers andinvestments advisors who provide services to them. The organizationhas the vision and values, strategic focus, competitive advantages,and corporate structure that it needs to remain a leader in theindustry (Hill,Jones & Schilling, 2014).This paper, therefore, aims to do a strategic analysis of the CharlesSchwab Corporation. That entails discussing the vision, values,mission, and strategic objectives. Further, it assesses corporategovernance, stakeholder management, and culture. Also, a descriptionof the value chain is given. The paper further, identifies the corecompetencies, essential resources, and any competitive advantages.Lastly, the article aims to assess the financial position, and thatincorporates the ratio/trend analysis for the firm compared to theindustry.
Morethan four decades past, Charles Schwab instituted the company with arich vision-“to provide the most useful and ethical financialservices in the world. ” It is instructive to note that the visionis supported by a set of solid values and that, helps it work towardsachieving its goal (Hill,Jones & Schilling, 2014).The values include being fair, empathetic and responsive in servingdelivery to our clients. Next, the firm strive to respect andreinforce the staff and to inculcate the spirit of teamwork. Further,we aspire always to earn and be worthy of the trust of our clients.Also, to work relentlessly to innovate what we do and how we do thejob. That ensures the growth of our aspiration of becoming the topleader in financing and brokerage services across the United Statesand the world.
Thefirm is by far riding on its mission to ensure it achieves the bestfor both its clients and the business. That is “to provide the mostuseful and ethical financial services in the world” (Hill,Jones & Schilling, 2014).The corporation is transparently working on its central mandate,values, identity, and the principal business goals of the firm. It isgeared towards empowering private investors to take charge of theirfinancial lives. That is done by ensuring they are far from the hugecosts and fights of the old brokerage businesses.
Thegroup is currently working its key competencies defined by thewell-articulated strategic goals. The company’s strategic goals aremany and varied. They include, first, to grow and maintain ourdifferentiation as the organization that delivers the most ethicaland useful services in the universe, with a particular focus onindividual investors and advisors who provide advisory services tothem (Hill,Jones & Schilling, 2014).That will ultimately lead to a turnaround culture and wholly capturemajor businesses. Secondly, to improve the firm’s financialperformance through enhancing the profit delivered by customers,simplifying and streamlining the organization and expanding thereturns realized on the capital invested. Next, to bring togetherpeople and technology to provide high value, uncomplicated investing,trading, and banking and distinct financial services. Finally, to addproducts where we can give greater customer value, grow ourprofitability, and work on mitigating our cyclicality.
CharlesSchwab cooperation rides on a healthy culture corporate governance,and ethical decision-making processes in manner business are carriedout. The company is headed by a board of directors who are theultimate decision making authorities in the firm with exception tothe matters about the stockholders. The board of overseers is electedby the stakeholders. The Executive Council, led by the CEO, ismandated and accountable for routine business operations of thecompany (Hill,Jones & Schilling, 2014).The board selects a chairperson from among its members. Differentcommittees are immediately on the board of directors. The differentpanels are in-charge of diverse sectors, and that include monitoringoperations, strategy development, finance performance, regulatoryoversight, CEO evaluation, succession, and annual performanceappraisal.
Stakeholdermanagement is key the Charles Schwab company. Successful managementof the stakeholders ensures that the project requirements arealigned. Further, it helps understand tolerance for risks, andmitigate issues that could otherwise cause a delay for the project.There are some stakeholders within the firm. The project managersleverage the relationships of stakeholders and further, formcoalitions that nurture the success of a project. Evaluations of thestakeholders are periodical to ensure efficient service deliverywithin the business entity.
Accordingto Hill,Jones and Schilling (2014), Schwabhas a comfortable, open, welcoming corporate culture. Peers andreports, both up and down the chain, maintains stable interpersonalrelationships. It is recognized within Indianapolis and Denver as theplace for the employee-friendly workplace. For more than forty years,the firm is still committed to making people rethink investing, andas a result, the company seeks forward-thinking, optimistic andself-driven individuals that passionately champion the goals ofclients. Schwab promotes an inclusive and significantly collaborativework environment. The company is premised on transparency, trust, andintegrity. The Schwab`s service culture equally extends tocommunities through philanthropy and volunteerism supported byCharles Schwab Foundation and Charles Schwab Corporation.
Thevalue chain is crucial in assisting in the evaluating how a providercan deliver a unique value. That calls for the thought of eachsegment as an activity of creating value. Charles Schwab did disruptthe market for stockbrokers by offering a whole fresh valueproposition. It is not that Charles provided separate benefits it isthat it magnified the importance of certain features over the others.While the investors may value services, Schwab investors gravitatedto a low-cost alternative that redefined the cost-benefit tradeexecution. Clients of this kind offered a sizeable enough market thatSchwab was capable of carving out a sustainable business.
Hill,Jones and Schilling (2014) asserted thatthe company realized that it was becoming more of a technologycompany than a brokerage premised on some resources IT was consuming.The firm, then, began to fast address and seize upon itsdifferentiator. After a value chain analysis, they realized that theprimary activity was client service and support. In the line ofrealigning the focus of the company to support its principalactivities, the firm began to unearth the value endowed within itsenterprise.
Thecompany runs on specific essential skills that make it efficientlydeliver on its mandate. That include differentiated business andbroad portfolio of products that controls the volatility of businesscycles. Next, it has solid asset-liability management practices. Thatgives a competitive advantage over its competitors. Further, it has apioneering leadership in offering discount brokerage and a particularfocus on customer satisfaction levels that greatly assists in thegrowth of the business (Hill,Jones & Schilling, 2014).The firm employs approximately 13600 employees. That alone providesthe business with a great footage to wade off competition. The largeworkforce efficiently managed and divided into sufficient degrees ofhierarchy assist the organization to maintain its standard andentertain all the individuals with the utmost pleasure, to ascertaintheir satisfaction.
CharlesSchwab successfully leveraged its core competency in brokerageservices by the communication of its customers through the usage ofthe internet, offices, telephone, and financial advisors (Hill,Jones & Schilling, 2014).
Schwaboffers a variety of resources products to training and advisoryservices. Some of the resources are available regarding options. Theyinclude options tools and research that assists in making wittytrading decisions and that encompasses options chains, optionsstrategy finder, options chains among others. Another line of thealternative resource include Option education that helps currentstarters or seasoned traders, and that is achieved through onlineworkshops, special events, and prerecorded seminars. They assist insharpening investors strategies. Options Support is a resource thathelps with multiple orders (Hill,Jones & Schilling, 2014).
Productresources include stocks, options, and futures. Next, Mutual FundMarketplace that incorporates money market funds, index funds, andOneSource. Other resources include managed accounts, Annuities andterm life insurance, bonds and treasures, and certificates ofdeposits (Hill,Jones & Schilling, 2014).
Themain competitors in the market include A.G Edwards, CIGNACorporation, and Citigroup Inc. Charles Schwab has a distinctive setof competitive advantages that make it uniquely able of winning andcontrolling the marketplace. First, the broad product line at asuperior value. The customers enjoy a wide array of productofferings. That include stock, options and futures, managed accounts,annuities and term life assurances amongst others. Next, it has anational brand name. The brand name of an individual of prominentpersonality and easy to pronounce. The name also resonates well withthe complete spectrum of investors. The company is fully recognizedfor the comprehensive services offered to self-directed clients.Also, its ability to combine people and technology in its uniqueways. That incorporates first, providing several distributionchannels whereby customers can visit one of the over of offices oraccess Shwab through online, telephone and wireless channels (Hill,Jones & Schilling, 2014).
Schwabmaintains being an online leader whereby 88% of the trade isdelivered through online placements. Second, Schwab builds scalableproduct and service offering while it maintains a competitivestructure of the costs. Pieces of Advice are offered through thebranch network, online tools, and call centers. The web-enabledtools, internal marketplace website, and Shwab Equity Ratings providesolutions for investment advisors. The actively trading investorspossess access to large tire order entries, routing and managementtechno through the Schwab and Cyber Trader. The ability of thecompany to develop a full-choice firm focused on the privateinvestors has made the firm a leader in gathering assets. Further,Shwab is supported by a robust insider ownership. That ensures acareful evaluation of activities and ensures it achieves its coremandate. Leveraging our competitive advantages to win the workplaceimplies collecting and retaining client assets via long-termassociations (Hill,Jones & Schilling, 2014).
Ratio/TrendAnalysis Compared to Competition/Industry
Thecompany progressively monitors its pricing about that of thecompetitor. That assists the firm to adjust trade commission ratesperiodically, interest rates on deposits and fees for advisoryservices, loans, and structures to enhance its competitive position.
Comparedto the results of its competitors, Schwab Charles reported theincrease in total revenue in the last quarter of 2016 by 16.62%yearly. A majority of its competitors are hit by the contraction inreturns by -9.97%, documented in the comparable quarter. Further, thecompany registered a net margin of 26.7% which is a higherprofitability than its competitors. Schwab Charles Net income in thefourth quarter of 2016 grew year by year by 25.48%, slower than itscompetitor’s revenue growth of 69.82 (Hill,Jones & Schilling, 2014).
Themarket for quality specialists and other personnel in the firm ishighly competitive. Competition is intense for financial consultantsthat build and maintain a company-customer relationship. The companywades off competition in this line by attracting new employees andretaining the existing personnel while managing compensation costs(Hill,Jones & Schilling, 2014).
Equally,the company faces specific threats since the entire world isundergoing a recession because of which there is a decrease in theaggregate demand, growing competitors and a decline in investment.That might cumulatively reduce the profitability ratios of thebusiness (Hill,Jones & Schilling, 2014).Despite all these, the competition may not be a series threat sincesuch organizations operate based on their individual portfolios, andfor Schwab Corporation, the collection is highly enriched.
Itis censoriously noted that Charles Schwab is a well-endowedorganization operating under an enriched portfolio. The investmentinsight and expertise of the business can assist one gain anadvantage with a balanced picture of the market while utilizing theadvanced stock research tools and resources. The firm has asignificant positive image in the sight of US population, and as suchpeople tend to prefer Schwab for its brokering needs. The business,therefore, needs to explore and invade more markets. Further, thereis a number of the aging population, and as such, there is need toopen an opportunity for retirement services.
Hill,C. W., Jones, G. R., & Schilling, M. A. (2014). Strategicmanagement: theory: an integrated approach.Cengage Learning.
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