Q.1 With regard to your competitors, perform an analysis of the Market commonality & resource similarity your company shares with your main competitors.
The Bank of America Corporation (BAC) is a financial organization that operates in US local market and the international market. The company’s market includes individual consumers, corporations and governments, and enterprises that are in need of banking and financial services. The company competes with other financial institutions for the local and global market in providing services such as banking, financial and risk management, investing and asset management. Essentially, BAC has the same market with institutions that offer banking and non-banking grants throughout the US and in global markets. It shares its market with companies that provide Card Services, Deposits, Global Banking, Consumer Real Estate Services and International Commercial Banking among others (James, Bessie and Marquis 29). BAC’s main challengers include the Citigroup Inc, JPMorgan Chase & Co. (JPM) and Wells Fargo & Company (WFC). In terms of market capital BAC has about 119.96B, Citigroup has 125.06B, JPM has 181.00B and WFC has 183.00B. In the number of employees, BAC has about 267190, Citibank has 259000, JPM has 258965 and WFC has 269200 workers (Johnston and Moira 36). Furthermore, BAC and its competitors have similar technologies including advanced IT platforms.
How the identified situation serves to drive awareness, motivation and ability as it pertains to the firm’s competitive behavior
From the evaluation, it is apparent that there is a high degree of market commonality and resources similarly which has the potential of affecting BAC’s competitive behavior. In respect to awareness, BAC maintains a good track of the activities of its competitors because the authority over the market is distributed nearly heavenly in the industry. The company is keen to evaluate the marketing strategies adopted by its competitors at any time and the probable consequences of such actions (James, Bessie and Marquis 47). Considering that the competitors are influential, BAC may be obliged to respond to competitive actions. Indeed, the company has often adopted some strategies with the intention of counteracting the challenge from its competitors. In order to maintain the leading position, BAC must ensure that it services are competing successfully in the market at any time. Consequently, the company conducts extensive market evaluations to ensure that decisions are informed by the most recent statistics (Johnston and Moira 59).
Furthermore, the company is cautious of the degree of shared interdependence that emanates from market commonality and resource similarity. This is because withdrawal of some partners may affect the company’s activities considerably. The company is sensitive to mutual interdependence to reap the benefits of the relationship. BAC effort of merging with Merrill Lynch indicates its strategy of capitalizing on benefits of market commonality. The practice was motivated by the consideration that engaging Merrill, a prominent service provider in the financial industry would increase the company’s authority. This strategic move enabled BAC to command the financial industry in America (Hitt, Ireland and Robert 134).
Although BAC has high potential of responding to a competitor’s attack, the company is lowly motivated in taking actions. This is because some actions or extensive rivalries are likely to result to destructive consequences to both companies. BAC has high ability of executing competitive actions. Initially, the company is a leader in the market and its overall resources outweigh those of competitors (Hitt, Ireland and Robert 134). BAC prime competitive resources include its finance and high skilled employees. For example, the company has adequate capital, which it can use to respond to competitors’ challenges. Moreover, the company’s diverse workforce and excellent technology enable it to adjusting to changes comfortably. The company has also excellent IT framework that has improved its services extensively (Grant 58). This is a competitive advantage because an effective system has enhanced the customer’s satisfaction make them prefer BAC to other service providers. Indeed, the company has constantly benefited from this strategy because some of its competitors lack the capability of producing services that can match their standards. With large reserve of resources, the company is highly flexible and has strong ability of adopting competitive actions.
- 2 For your company, describe your Diversification Strategy
The diversification strategy in BAC aligns with the concepts of Low Levels of Diversification. BAC operates under a dominate-business corporate-level diversification scheme. The organization gets more than 95% of its return from a single business. It obtains it revenue from its core business, the finance management business. Particularly, BAC gets its returns from activities such as banking, financial and risk management, investing, and asset management (Grant 20). The company has concentrated its activities within the fields of finance and its management. However, businesses operating under the company share technology, product and distribution linkages. The company has utilized a single-business strategy while working in comparatively few product markets. BAC has used its reputable brand in diversifying its activities. In the year 2008, BAC obtained $50 billion takeover of the Merrill making it the world’s largest firm in financial services (Johnston and Moira 42). The amalgamation of Merrill investment banking activities and the BAC’s banking activities established an extensive presence of the company in corporate financial services. Essentially, the combination of the BAC’s retail banking presence with Merrill’s large network of stockbrokers established a broader platform for wealth management activities in US (Grant 68). This strategy has provided the company with a comparative advantage that has enabled it to outweigh its competitors especially in banking and financial management business.
Grant, Robert M. Contemporary Strategy Analysis and Cases: Text & Cases. Hoboken, N.J: Wiley, 2010. Print.
Hitt, Michael A, R D. Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization : Concepts. Mason, OH: South-Western, 2007. Print.
James, Marquis, Bessie R. James, and Marquis James. The Story of Bank of America: Biography of a Bank. Washington, D.C: Beard Books, 2002. Print.
Johnston, Moira, and Moira Johnston. The Tumultuous History of the Bank of America. Washington, DC: BeardBooks, 2000. Print.