The Bank of America Corporation is a financial and banking services multinational company with its headquarters in Charlotte, North Carolina. Officially renamed Bank of America in 1998, the bank is now said to be the second largest bank in the United States with a close association with the Fortune 500 companies both in the United States and the entire globe . Initially, the Bank of America was separate from the Nations Bank, however in 1998, the Nations Bank was acquired Bank of America taking the name. After the 1998 acquisition of the name, the bank would embark on an aggressive expansionary strategy by acquiring other financial and banking services companies such as the Fleet Boston Financier and MBNA . In 2008, the bank further increased its portfolio by acquiring the much troubled lender Countrywide Financial. As the credit crunch crisis soared, the Bank of America would consider taking over the vulnerable financial mortgage giant Merrill Lynch .
The massive expansion of the bank has resulted in mixed results in terms of reporting profits and losses. The takeover of MBNA and Fleet Boston was quite a success with high profits reported. On the other end, the takeover of the trouble financial institution during the credit crunch has led the bank into troubled waters. Merrill Lynch and Countrywide financial has resulted in losses and litigation suits with high unexpected losses. All in all, the Bank of America has continued to maintain a fairly stable balance sheet with an operation spanning 150 countries. According to its 2010 results, Bank of America has its revenues as the third largest non-oil company in the United States only surpassed by General Electric and Wal-Mart . Therefore, there is satisfactory argument that the Bank of America is one of the most successful establishments in the world. This research paper reviews efforts and measures taken by the bank in meeting such success. The paper will analyze reports, newspaper article and company statements in understanding measures taken by the bank in attaining such plausible results. Further the research paper will provide a SWOT analysis and a review of its corporate governance and social responsibilities.
Company Vision and Mission and Its Impacts on Overall Success
The vision and mission of the Bank of America is rather clear and precise. According to the company website, the company’s vision is to strive to become the world’s finest financial services provider globally . To attain such a visionary and ambitious goal, the company has established operations in over 40 countries serving clients in more than 150 countries. In the same regard, becoming the best in the world means becoming the best in the United States. Therefore, in the US the company serves over 57 million consumers depositing about 12 percent all deposits in the country . The company has also extended its services to online based operations in order to serve the 30 million active users at their own convenience.
A second vision of the bank is to ensure a strong, diverse and successful global workforce . The company aims at targeting a talented and diverse workforce that would be committed to the company values and principles. The company has since attained this and has a global workforce distributed across its global operation. In ensuring that a global workforce is present in the company, the management has established a global diversity and inclusion council that ensures that the employees represent a global nature of business.
Other goals and visions of the company that has directed its achievements include the goal to meet the expectation of shareholders, employees and government regulations. To this end, the company has been seeking continued growth in order to achieve the expectation of the shareholders. Either, the company has been seeking to provide the best benefits and incentives in order to foster growth and commitment to the bank.
Forces of Competition
Just like any other banking institution, the Bank of America faces several forces of competition. One of the key areas of competition is presented by fellow banking institutions. Some of the major players in the banking industry that present the greatest challenges include Citigroup, Wells Fargo and JPMorgan Chase . In banking service, Citigroup present perhaps the most formidable competition for the Bank of America. Such competition is referred to as the competitive rivalry within an industry.
The second factor of competition for the bank is presented by targeting large corporate clients. Referred to as the bargaining power of the supplier, big corporations and establishments that intend to make the bank their financial services provider present a great section for competition. Such clients prefer specific services and therefore a major section for competition.
A third factor of competition that the bank faces is in the efficiency of the operations within the bank. The bank has to identify methods and means that ensure customer satisfaction other disgruntled customers will find reasons to shift to other financial institutions.
Risk management is also another factor for competition for any bank. A bank that does not manage its risk may find itself reporting huge amounts of losses. A loss reporting bank reduces its competitive edge in the market.
The final factor of competition is the credit ratings that a bank is rated. Credit ratings are particularly important in allowing the bank access to key credit facilities in order to meet the expectation of the customers. In a case where a bank is downgraded in terms of credit ratings, then the bank will not be able to suffice bigger customers.
Strengths, Weaknesses, Opportunities and Threat (SWOT) analysis of the Bank
The strengths of Bank of America is in the fact that in terms of credit ratings, capitalization, asset valuation and breadth of operation, the bank is best placed as the prime financial services firm. Thus the bank can serve any customer in any location in the globe.
One of the greatest weaknesses the Bank of America suffers is in the law suits and litigation against the bank. In June 2012, a court process established that the newly acquired division Merrill Lynch was in greater losses and may continue to report losses for the foreseeable future .
One opportunity that the Bank of America has the chance of exploiting is in the international market. The growth of China, Malaysia, South Korea and the Gulf of Arabia present a great business opportunity for the bank. The recent investment in the Construction Bank of China prove the existence such opportunities in Asia and emerging economies.
Threats to the bank exist in several. They include risks such as credit risk, liquidity risk, compliance risk, reputational risk and operational risk. Other threats include credits rating and financial crises such as the recent credit crunch.
Strategies based on the SWOT analysis
Strategies to Improve Competitiveness
There are several strategies that the bank has employed in maintaining a competitive edge and meeting company goals. Some of the strategies that the company has adapted include adhering to a customer–driven business model, providing the best work place for its employees, extensive risk management strategies and properly managed internal efficiency . Other strategies that the bank has employed include continuous improvement of the balance sheet and ensured deliverables to the shareholders.
Communicating Above Strategies to Stakeholders
The strategies suggested above involve a wide variety of stakeholder of whom the primary stakeholders are the shareholders, employees and the customers. In order to communicate business model such as the customer-driven model, proposed by the strategy, an intensive marketing campaign will be required. With strategies that affect internal operations such as internal efficiency, the management has the responsibility to communicating this to the employees with measures of implementation.
The Bank of America has taken measures to ensure that corporate governance is within the expected performance. One of the mechanisms that have been employed by the bank is the use of Code of Ethics that ensure compliance to set standards and procedures. The other mechanism that has been employed is the use structures and policies to guide the management in decision making and in running the organization.
Evaluation of Leadership
There is evidence to the fact that the leadership at the Bank of America is doing a great job at effectively running the company. In the reporting the first quarter results of the year 2012, the company reported increased profits amidst reduced revenues . This is a direct suggestion that internal efficiencies in the company has greatly improved. In addition, revenues in the troubled unit Merrill Lynch have changed for the better doubling the revenue in that division of the business.
The bank of America has been involved in several programs that support efforts and programs for the wellbeing of the American community. One such program is the free home for veteran of the United States injured in battle. The bank is seeking to provide over 1000 thousand homes to veteran of the military . To do this, the bank will be donating to nongovernmental organizations concerned with providing home for such citizens. Other social welfare projects include efforts curb climate change by providing solar rooftops for citizens and other nonprofit endeavors. Such efforts place the company in better standings with the American community cementing its customer base.
In conclusion, Bank of America has grown to become a formidable banking institution in the United States. The next frontier for the bank is working towards an international image by massive and aggressive investment in developing regions such as Latin America, Africa and Asia.
Bank of America. (2012, Aug 24). Bank of America to Donate 1,000 Properties for Injured Veterans, First Responders. Retrieved Sep 6, 2012, from http://newsroom.bankofamerica.com: http://newsroom.bankofamerica.com/press-release/residential-mortgage/bank-america-donate-1000-properties-injured-veterans-first-respon
Bank of America. (2012). Corporate Governance. Retrieved Sep 6, 2012, from bankofamerica.com: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-govhighlights#fbid=Nx0zdncYgVt
Bank of America. (2012). What Guides Us. Retrieved Sep 6, 2012, from bankofamerica.com: http://about.bankofamerica.com/en-us/our-story/our-operating-principles.html#fbid=rwrBgimvx2p
Bank of America. (2011). What’s next for Bank of America? 2011 Annual Report. Charlotte: Bank of America Corporation.
Carlson, M., & Mitchener, K. J. (2005). Branch Banking, Bank Competition, and Financial Stability. Retrieved Sep 6, 2012, from www.federalreserve.gov: http://www.federalreserve.gov/pubs/FEDS/2005/200520/200520pap.pdf
The New York Times . (2012, June 21). Bank of America Corporation. Retrieved Sep 6, 2012, from nytimes.com: http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html