The corporation was founded in 1874 and is now based in Charlotte, the north of Carolina, with Mr. Brian T. Moynihan aged 53 as the chief executive officer. He is well informed and experienced director of press and also a member of executive committee (Johnson, 2000). The banking corporation provides both financial and banking services to its customers in the United States and also the whole world, at large. The services reach all type of customers, the middle-market entrepreneurs, corporations and operate internationally.
The company is segmented in such a manner that it provides saving accounts for customers in various fields of transactions, for example, money market saving accounts and traditional ones. They also extend their management to provide investment products and accounts (Bank of America Corporation, 2013). Lending of services is also a major undertaking in the company, they issue debit and credit cards to the citizens of the United States and, by doing so, they create affinity products that are co-branded, which allows a wide range of people to lend products.
One of the strengths of Bank of America is that it is the biggest banking corporation in the country. Furthermore, its customers enjoy innovative products and services. This has made it to record a tremendous growth in the recent past, thereby, creating an edge in the market against its competitors (Bay, 2011).
The major weakness occurs through legal expenses when the Bank faces court cases that force it to bear mortgages that were defaulted. It is the move that constrains its earnings.
The bank enjoys an enormously huge customer base. A huge market segment gives it an edge and the leading role over its competitors (Bay, 2011). It also offers wealth supervision, in addition to consumer, as well as Hispanic banking.
Just like any other institution in the financial sector, Bank of America faces threats from instability in fiscal markets. The bank has a relatively big number of credit card customer operations than its competitors and, therefore, faces a threat of defaults in financial and residential loaning (Johnson, 2000).
Porter's Five Forces Model
Power of Buyers
There are two types of customers in the banking industry. These are single customers and corporate ones. In both cases, there is a very high switching cost from one bank to another (Moria, 2011). Therefore, once customers have enrolled for services from Bank of America, there is a very low likelihood they will move to another bank.
Power of Suppliers
Although suppliers of products and services may not have a strong negotiating power, they may be lured by other banking institutions. Suppliers of computer technology and gadgets for use in the bank and credit cards suppliers have a relatively low bargaining power because there are many companies offering these services (Bank of America Corporation,, 2013). For instance, there are many companies, such as Dell, IBM, among others, that provide computers and computer services to banks.
There is high start-up cost for a banking business. This implies that the threat of new entrants in the market is low. Barriers include creation of a strong brand, as well as credibility and integrity for the new entrants. There are alternative means of providing financial and banking solutions, such as Paypal, Western Union money transfer services, among others. Most of these substitute products and services are offered online and, therefore, customers may prefer using them to the conventional banking system (Bay, 2011). This implies that there is a high threat of substitute product.
The Bank of America faces relatively low competition because of its large customer base. Also, as already addressed above, there are high switching costs, as well as start-up costs for banking businesses (Johnson, 2000).
The Bank of America employs a customer-focused approach, which has enabled it to provide holistic solutions to its customers. According to this strategy, the bank management listens to the needs and preferences of its customers and clients, thereby, being able to respond effectively to their requests. This approach aims at providing more solutions to the customers than what their competitors could offer (Bank of America Corporation, 2013). The bank offers the supreme monetary solutions in the world to their customers, employees and shareholders. The Real estate consumer segment, on the other hand, offers variety of products and services, which include negotiable rate and mortgage loans; this allows the citizens to purchase from their homes. In global banking, the mobile banking is undertaken online through the Internet. Customers all over the world easily access their accounts anywhere at any time. Time factor is considered and the transactions are simple and convenient (Bank of America corporation, 2013).
The company reaches its customers through 5700 banking centres and a total of 17,750 ATMs. The company makes use of mobile banking to reach its customers online. The network is intact to cater for the many customers. Bill payment is scheduled in advance and the set up recurs monthly plus the payment history attached to every bank statement (Bank of America Corporation, 2013). They also set up mobile and an email alert to help the customers to keep track of recent account activity, as well as offer paperless statements which make the activity faster.
Issues and Challenges Affecting the Company
Just before the shareholders deal was approved, the American top officials realised that the Merrill’s losses were far much higher than they expected. They decided to keep the issue a secret, which casted them 20 billion taxpayer bailout in the beginning of year 2009. Towards the end of October 2012, the federal government laid accusation to court claiming that the bank defrauded the government by initiating mortgage schemes that strained the government finances .This complain wasted the bank over 1billion dollars (The New York Times, 2013).
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In developing markets, where many citizens did not have bank accounts, moving money around became a challenge. Especially when retail banking outlets were scarce. The bank took advantage of that and introduced mobile network banking system which allowed individuals to move funds simply by sending a text message, and then going to one of the thousand local agents to redeem (The New York Times, 2013).
A late entrant to the wireless telecom industry by other countries helped to solve competitors issue in a rapidly growing market forcing customers to look at a completely new business-driven infrastructure that allows rapid implementation and delivery of new services. To overcome the banking challenges, the bank saved valuable research time, increased confidence on sales calls, and got the competitive edge to win more business with Hoover's Industry Report (Moria, 2011). Proprietary editorial analysis synthesizes hundreds of sources into an easy-to-digest format, so that the company quickly understood a client's business challenges. Insight into critical business issues, industry trends and opportunities, and financial benchmarks is an integral part of each report, by doing so, the bank recovered from the losses (Moria, 2011).
Opinions and Recommendation
If I could be in a position to drive this company, I would implement these few strategies to the competitive advantage and achieve growth in the Bank of America. The company should extend its management and get involved in the advisory and support of the economy of the country. In order to catch up with its competitors, the Company should make use of the senior banking executives with proven expertise in successfully achieving good results in sales and services (The New York Times, 2013). The operational excellence comes as a result of its ability to transcend multiple line of business and establish strong community ties capable of working in diverse multi cultural environment to improve financial performance.
These strategies have many institutions to remain as the icon of the whole world in financing. If only the companies could apply these strategies, the world would be the best place to live and the growing population can find something to possess.