Internal Analysis: Value creation functions of the company – Strength: ? Adopted discount brokerage model. ? Empower investors and customers by giving them required information and tools for making decisions about securities investment. ? Keeping company’s cost low to offer deep discount. ? Personal relationship with the clients they could trust. ? Competitive and visionary leadership of Schwab. Weakness: ? Non-transparent customer base of independent financial advisor.
But letter this weakness turned up in opportunity. ? For raising the fund, Schwab sold the company to BOA, which was wrong move by him, but letter he buyout the company and went public with IPO for fund. ? By 1990, Schwab, although a discounter, was by no mean the lowest-price discount broker. ? Segmentation of traditional brokerage business and new eSchwab ( online real time trading business) which led to several key issues regarding the customer satisfaction, employee satisfaction, higher cost etc. ut after analyzing the situation, the new decision was made to combine all electronic business into one – Schwab. com ? The new service “Private Client Service” revealed the lacking expertise and qualification of the branch employees to give financial advice. Had to hire higher salaried expert employees which at the end add no more value than just using the prepackaged information. ? Vacillating strategic leadership of the new CEO – Pottruck.
Business – level Strategy: ? Instead of employing financial analysts and researchers for investment research, provided clients with the third party research reports ? Customer centric approach ? Early move into technology enabled trading – online trading – helped cut cost dramatically ? Product innovation – like eliminating the fees to maintaining and managing IRA accounts, Schwab One Account. ? First move into making of branched network of the company. Innovative compensation plan tied with the satisfying customers and achieving efficiency, instead of commission based old scheme. ? Implemented financial advisory services ? Acquisition of mutual fund company to move into mutual fund market and provided the technology enabled infrastructure to make it hassle free, which led the company on third position in direct mutual fund distribution?
Acquisition of U. S. Trust, and launched a new Schwab Private Client service for consultative advice to private customers. The acquisition of Soundview Technology group turned up as huge mistake which raised the operating cost of Schwab. After return of the Charles Schwab as a CEO again, the Soundview Tech Group was sold. Reduced the work force, closed underperforming branches and removed the unnecessary cost about $600 million and reemphasized the traditional mission of Schwab company. ? U. S trust was also sold to BOA as sticking to company’s mission. ? Put major focus on company’s retail banking business as a part of the strategy to further emphasize its mission.