FACULTY OF BUSINESS & ACCOUNTANCY

(ACADEMIC YEAR: 1/20/34)

PMS3393 STRATEGIC MANAGEMENT

PREPARED FOR: DR. ZAHARUZAMAN BIN JAMALUDDIN

PREPARED BY:

NAME MATRIC ID
FAEZZAHNUR FATEEN EZZATEE BINTI AZIZI 4183005241
JAYAMALANI D/O SANDRA SEGARAN 4181003341
KIRAN RAM S/O PONNIAH 4182000041
SARANYAH D/O NADARAJAN 4183001961
SRI SARASWATHY A/P SANDRA RAJU 4181002751

DATE OF SUBMISSION: 9th JULY 2020

1
 TABLE OF CONTENTS

INTRODUCTION 3

THE INTERNAL AUDIT CHAPTER 6 -CLO 2 4-12

FINANCIAL STUDIES
INCOME STATEMENT 4
BALANCE SHEET 5-6
RATIO: CALCULATION & CONCLUSION 7-8
INTERNAL FACTOR EVALUATION(IFE) MATRIX 9-12

THE EXTERNAL AUDIT CHAPTER 7 -CLO 2 13-18

COMPETITIVE PROFILE MATRIX (CPM) 13-14

TABLE & CONCLUSION
EXTERNAL FACTOR EVALUATION (EFE) MATRIX 15-16
PORTER 5 FORCES (TABLE) 17-18

STRATEGIC GENERATION AND SELECTION CHAPTER 8- CLO 3 19-25

SWOT MATRIX ANALYSIS 19-21

SO STRATEGIES
WO STRATEGIES
ST STRATEGIES
WT STRATEGIES
STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX 22-23
CALCULATIONS FP, SP, CP, IP
SUGGESTION FOR STRATEGIES 24
BCG MATRIX 25
TABLE OF QUADRANT

STRATEGY IMPLEMENTATION CHAPTER 9 – CLO 3 26

MAJOR ISSUE AND RECOMMENDATIONS

REFERENCE 27

APPENDIX 28-29

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 INTRODUCTION

JPMorgan Chase & Co. is one of the oldest, largest and best-known financial institutions in
the world. The firm's legacy dates back to 1799 to present time at the Manhattan Company; the
firm’s earliest predecessor was chartered in New York City.

JP Morgan Chase & Co. A financial holding company, founded on December 1, 2000. A
leading global financial services company and one of the largest banking institutions in the United
States. The current Chairman and Chief Executive Officer is Jamie Dimon, and the company has
operations worldwide and is a leader in investment banking, financial services for consumers and
small businesses, commercial banking, financial transaction processing and asset management.
Under the J.P. Morgan and Chase brands, the company serves millions of customers in the United
States and many of the world’s most prominent corporate, institutional and government clients. The
Consumer and Community Banking segment serves consumers and businesses through personal
service at bank branches and through automated teller machine, online, mobile, and telephone
banking. The Corporate and Investment Bank segment offers a suite of investment banking, market-
making, prime brokerage, and treasury and securities products and services to a global client base
of corporations, investors, financial institutions, government and municipal entities.

The Commercial Banking segment delivers services to U.S. and its multinational clients,
including corporations, municipalities, financial institutions, and non-profit entities. It also provides
financing to real estate investors and owners as well as financial solutions, including lending,
treasury services, investment banking, and asset management. The Asset and Wealth Management
segment provides asset and wealth management services. The company was founded in 1968 and
is headquartered in New York, NY.

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1.0 THE INTERNAL AUDIT (CHAPTER 6)-CLO 2
I. Financial Studies
1.1 Income Statement

2012 2011 Remarks

$ in million $ in million

Revenues 97,031 97,234

Cost of goods sold (3,385) (7,574)

Gross profit 93.946 89,660 Increased

Non-interest expenses (64,729) (62,911)

Earnings before interest and tax 28,917 26,749 Increased

Interest expenses 0 0

Earning before tax 28,917 26,749 Increased

Income tax expense (7,633) (7,773)

Net Income 21,284 18,976 Increased

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1.2 Balance Sheet

2012 2011 Remarks

$ in million $ in million

ASSETS

Non-current assets

Net Loans 711,860 696,111

Property/Plants/ Equipment, Total-net 14,519 14,041

Goodwill, Net 48,175 48,188

Intangible 9.849 10430

Long term Investments - -

Other long-term assets - -

Total non-current assets 946,111 934.379 Increased

Current assets

Cash and Due from banks 53,723 59,602

Other Earning Assets, Total 1,358,307 1,271,811

Total current assets 1,413,030 1,331,413 Increased

TOTAL ASSETS 2,359,141 2,265,792 Increased

EQUITY

TOTAL EQUITY 204,069 183,573 Increased

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LIABILITIES

Non-current liabilities

Total long-term debt

Deferred income tax 0 0

Minority interest 0 0

Other liabilities 61,262 66,718

Total non-current liabilities 61,262 66,718 Decreased

Current liabilities

Accounts payable 195,240 202,895

Payable/Accrued 0 0

Accrued expenses 0 0

Total deposits 1,193,593 1,127,806

Other bearing, liability 0 0

Total short-term borrowing 392,762 362,048

Other current liabilities 61,262 322,752

Total current liabilities 2,093,810 2,015,501 Increased

TOTAL LIABILITIES 2,155,072 2,082,219 Increased

TOTAL EQUITY AND

LIABILITIES 2,359,140 2,265,792 Increased

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1.3 Ratio Calculation

Financial Ratio 2012 2011 Remarks

Liquidity Ratio

1. Current Ratio

(Current assets / Current 1,413,030 / 1,331,413 /

liabilities) 2,093,810 2,015,501 Increased
= 0.675 times =0.661 times
2. Quick Ratio

(Current assets minus inventory / 1,413,030 - 14,519 / 1,331,413 - 14,041 /

Current liabilities) 2,093,810 2,015,501 Increased
= 0.668 times =0.654 times

Leverage Ratio

1. Debt-to-total asset ratio

61,262/2,359,141 66,718/2,265,792
Total debts =2.6% =2.94% Decreased
X 100
Total assets

2. Debt-to-equity ratio

Total debt 61,262/ 204,069 66,718/ 183,573

=0.3 times =0.36 times Decreased
Total stockholders’ equity
3. Times interest earned ratio

Profit before interest and taxes

28,917/ 11,153 26,749 / 13,604
Total interest charges =2.59 times =1.97 times Increased

Activity Ratio

1. Inventory Turnover
97,031 / 14,519 97,234 / 14,041
(Sales / Inventory of finished =6.683 times =6.925 times Decreased
goods)

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 2. Total Assets Turnover
97,031.0/ 2,359,141 97,234.0/2,265,792
(Sales / Total assets) =4.11 times =4.29 times Decreased

Profitability Ratio
1. Return on Total Assets (ROA)

(Net income / Total assets)

21,284 / 2,359,141 18,976 / 2,265,792
=0.90% =0.84% Increased

Growth Ratio

1. Sales growth ratio

Sales1 – Sales0 (97,031- 97,234/ (97,234 - 102,694/

X 100 97,234) X 100 102,694) X 100 Increased
Sales0 = -0.21% = -5.32%

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1.3.1 RATIO CALCULATION’S CONCLUSION
Liquidity ratio refers to the ability of a company to meet its short-term financial obligation as they
come due. Both the current ratio and quick ratio of JP Morgan &Chase has increased in 2012 which
are 0.675 times in 2012 and 0.661 times in 2011 for current ratio while 0.668 times in 2012 and
0.654 times in 2011 for quick ratio. It indicates that JP Morgan & Chase may have difficulty meeting
its current obligations. If JP Morgan & Chase has good long-term prospects, it may be able to
borrow against those prospects to meet current obligations.

Leverage ratios have used to determine company financing methods and its ability to meet financial
obligations. In 2012, JP Morgan & Chase’s, debt-to-total-assets ratio and debt to equity has slightly
decreased which is 2.94% in 2011 while 2.6% in 2012 and 0.3 times in 2012, 0.36 times in 2011.
However, times interest earned ratio have increased where 2.59 times in 2012 and 1.97 times in
2011 which means the company presences less of risk to investors. Furthermore, these also indicate
that the JP Morgan & Chase is getting less dependent on debt to finance its business.

Activity ratios are used to gauge the ability of a company to convert various assets, liabilities, and
capital accounts into cash or sales. In 2012, JP Morgan & Chase’s, inventory turnover and total
assets turnover are decreased which is 6.925 times to 6.683 times and 4.29 times to 4.11 times. The
low inventory turnover shows that the company has weak sales in 2012 compared to 2011.

Profitability ratios measure the company’s ability to generate earnings relative to sales, assets, and
equity. In 2019, JP Morgan & Chase shows significant increase in return on assets (ROA) which is
0.90% in 2012 while 0.84%% in 2011. This shows that JP Morgan & Chase doing a good job of
increasing its profit with each investment it spends.

Growth ratios refer to the percentage change of a specific variable within a specific period. In 2012,
JP Morgan & Chase, sales growth ratio has shown increased to -0.21% from -5.32%. This means
the company can provide high dividends for shareholders even though the ratio is in negative, but
compared to previous year it doing well.

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ii. Internal Factors Evaluation (IFE) Matrix

CONSTRUCT AN INTERNAL FACTOR EVALUATION (IFE) MATRIX

A summary step in conducting an internal strategic-management audit is to construct an Internal
Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major
strengths and weaknesses in the functional areas of a business, and it also provides a basis for
identifying and evaluating relationships among those areas. Assign a 1-to-4 rating to each factor to
indicate whether that factor represents a major weakness (rating = 1), a minor weakness (rating =
2), a minor strength (rating = 3),or a major strength (rating = 4)Note that strengths must receive a 3
or 4 rating and weaknesses must receive a 1or 2 rating. Ratings are thus company-based, whereas
the weights in step 2 are industry-based. Multiply each factor’s weight by its rating to determine a
weighted score for each variable. Sum the weighted scores for each variable to determine the total
weighted score for the organization. Regardless of how many factors are included in an IFE Matrix,
the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being
2.5. Total weighted scores well below 2.5 characterize organizations that are weak internally,
whereas scores significantly above 2.5 indicate a strong internal position.

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 Internal Factor Evaluation Matrix

Key Internal Factors Weighted

Weight Rating
Score
Strengths:

1. Largest bank in the USA with $2.3 trillion in assets and operations 0.08 4 0.32
in over 60 countries.
2. Controls 12.3% of bonds in the USA, making JPM the largest 0.04 4 0.16
holder among all banks
3. Provided $19 billion of credit to small business in the U.S. in 0.03 3 0.09
2014.
4. Increased clients in Brazil, China, and India from 200 to 800 0.08 4 0.32
between 2008 and 2012 and expected to increase to 4,000.
5. Acquired Sempra in 2011 to become one of the top three firms in 0.04 3 0.12
the world in commodity dealings.
6. Significant focus on USA small businesses providing $17 billion 0.05 4 0.2
of credit in 2011 alone; added 1,200 relationship mangers and
business bankers from 2009 to 2012
7. International Consumer & Community Banking segment reported 0.05 3 0.15
a 71% increase in revenues in 2012.
8. Continue to add physical branches across the country while 0.05 4 0.2
competitors are removing branches.
9. One of the oldest and most established financial institutions in the 0.03 3 0.09
United States, found in 1799.
10. JPM focuses heavily doing business with small businesses 0.05 3 0.15
Total Weighted Score of Strengths (TWSS) 0.50 1.8
Weaknesses:

1. Cyber terrorist gathered more than 80 million accounts 0.05 3 0.15

2. Heavy reliance on the USA with over 80% of 2012 revenues 0.06 3 0.18
derived from the USA up from 75% in 2011.
3. International Corporate/Private Equity experienced a -353% 0.03 3 0.09
decrease in revenues
4. Less than 4% of Investment Bank revenues derived from Latin 0.06 1 0.06
America.
5. Decreased its employees by 7,500 due to mortgage decline 0.07 2 0.14

6. Poor judgment in lending has resulted in JPM continued 0.05 2 0.10

mortgage losses expected
7. London Whale scandal cost $920 million in penalties 0.07 2 0.14
8. Domestic Corporate/Private Equity reported $4 billion in 0.03 2 0.06
revenues
9. Illegal profit sharing resulted in $6 million fine 0.04 3 0.12

10. International Corporate/Private Equity experienced a -353% 0.04 3 0.12

decrease in revenues from 2011 to 2012.
Total Weighted Score of Weaknesses (TWSW) 0.50 1.16
Total 1 2.96

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Conclusion: As we know the highest possible total weighted score for an organization is 4.0 and the
lowest possible total weighted score is 1.0. The average total weighted score is 2.5. A total weighted
score of 4.0 indicates that an organization is responding in an outstanding way to existing
strengthens and weakness

Here we see that the total weighted score is 2.96 which is higher compared to the industrial average
weighted score of 2.5. Therefore, it can be said that this particular company have a good weighted
score.

As for further analysis, Total Weighted Score of Strengths (TWSS) will be divided with Total
Weighted Score of Weaknesses (TWSW).

1.8
= 1.5517
1.16

From the calculation above, the figure 1.5517 is slightly greater than 1 (1.5517 > 1) which can be
concluded that JP Morgan & Chase is effectively utilizing its strengths as advantage to overcome
its weaknesses.

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2.0 THE EXTERNAL AUDIT (CHAPTER 7) -CLO 2

➢ COMPETITIVE PROFILE MATRIX (CPM)

The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and its particular
strengths and weaknesses in relation to a sample firm’s strategic position. The weights and total
weighted scores in both a CPM and an EFE have the same meaning. However, critical success
factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths
and weaknesses, where 4 = major strength, 3 = minor strength, 2= minor weakness, and 1 = major
weakness. The critical success factors in a CPM are not grouped into opportunities and threats as
they are in an EFE. In a CPM, the ratings and total weighted scores for rival firms can be
compared to the sample firm. This comparative analysis provides important internal strategic
information.
Weight JPMorgan Bank of America Citigroup
Chase CO

Branch location 0.10 3 4 3

ATMs 0.09 4 3 4

Services Offered 0.11 4 2 2

Revenue 0.10 3 1 4

Return on equity 0.10 4 4 3

Employees 0.12 2 3 2

Amount of goodwill 0.11 4 2 3

Company worth 0.08 3 1 2

Stock Price 0.19 4 4 4

performance

Total 1.00 3.56 2.67 3.00

4 Competitive Profile Matrix

3 Citigroup
2 3.56
2.67 3 Bank of America
1
JPMorgan Chase CO
0
JPMorgan Chase CO Bank of America Citigroup

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Conclusion: The highest possible total weighted score for an organization is 4.0 and the lowest
possible total weighted score is 1.0. The average total weighted score is 2.5. From the above CPM
result, the three companies are doing good because the three company’s total weighted score is
above the average total weighted score which is 2.5.

JP Morgan Chase score is 3.56, and it’s the highest score in this tables we can say company is in
very good condition. The moderate score is Citigroup. The lowest score is 2.67 that is the Bank of
America. JP Morgan & Chase has its major strength in many critical success factors in term of
employee, quarterly operating revenue growth, operating margin, EPS, and expenses.

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 ➢ EXTERNAL FACTORS EVALUATION (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
Assign a rating between 1 and 4 to each key external factor to indicate how effectively the firm’s
current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above
average, 2 = the response is average, and 1 = the response is poor. Ratings are based on effectiveness
of the firm’s strategies. Ratings are thus company-based, whereas the weights in Step 2 are industry-
based. It is important to note that both threats and opportunities can receive a 1, 2, 3, or 4.
Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest
possible total weighted score for an organization is 4.0 and the lowest possible total weighted score
is 1.0. The average total weighted score is 2.5. A total weighted score of 4.0 indicates that an
organization is responding in an outstanding way to existing opportunities and threats in its industry.

External Factor Evaluation Matrix

Key External Factors Weight Rating Weighted
Score
Opportunities:
1. Growing customer base for asset management and investment bank 0.05 3 0.15
services in Asia, Latin America, Africa and the Middle East.
2. USA small businesses are continuing to grow and recover. 0.09 4 0.36

3. Many customers still prefer to do banking business face to face 0.03 3 0.09
when it comes to applying for a credit card, seeking financial
advice, and getting a loan.
4. Bank of America is laying off 36,000 people. 0.06 2 0.12
5. The USA government filed a civil lawsuit seeking $1 billion in 0.01 2 0.02
damages for misrepresenting the quality of home loans sold to
Fannie Mae and Freddie Mac.
6. Smart phone providers such as Apple and Android may wish to 0.1 3 0.3
form an alliance with banks to help facilitate the usage of mobile
phone payments.
7. Unemployment rate is improving, as a result qualifying more 0.08 3 0.24
people for home loans.
8. More and more consumers prefer online banking and smartphone 0.02 4 0.08
banking.
9. Growth in the commercial industry. 0.04 3 0.12
10. Global investment banking and brokerage prospects. 0.07 3 0.21
Total Weight Score of Opportunities (TWSO) 0.55 1.69

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Threats:
1. Bank of America and Citigroup are two large domestic 0.02 2 0.04
competitors
2. Banks are viewed like commodities to many potential customers 0.05 3 0.15

3. Foreign banks have yet to enter the USA market on a wide scale. 0.04 2 0.08

4. Increase in online banks such as Ally and ING Direct are 0.03 3 0.09
advertising heavily and marketing no fees on many products
where brick and mortar banks are increasing fees
5. Internet creates more vulnerabilities (American Banker) 0.07 2 0.14
6. Local community banks lead in fastest growing banks in US. 0.06 4 0.24

7. More people are paying off their credit cards and leaving them in a 0.08 3 0.24
dormant state.
8 Mobile payments over smartphones and Near Field 0.03 2 0.06
Communications (NFC) are expected to greatly erode into credit
card usage.
8 Percent of Americans owning checking accounts dropped from 92 0.06 3 0.18
to 88% between 2010 and 2011 and the number owning a credit
card dropped from 74 to 67%.
9 The Federal Reserve Board established the consumer Financial 0.01 3 0.03
Protection Bureau, which has placed restrictions for lenders on
credit cards, mortgage loans, student loans, and auto loans
Total Weighted Score of Threats (TWST) 0.45 1.25
Total 1 2.94

Conclusion: We know that highest total weighted score for an organization is 4.0 and the lowest
weighted is 1.0. the average weighted score is 2.5. The total score 4.00 indicates that an organization
is reacting in an outstanding way to existing opportunities and threats in its industry.

The EFE Matrix calculated above shows the EFE weighted score of 2.94, which is above 2.5 and
indicates a strong position of JP Morgan & Chase on its external.

As for further analysis, Total Weighted Score of Opportunities (TWSO) will be divided with Total
Weighted Score of Threats (TWST).

1.69
= 1.352
1.25

From the calculation above, the figure 1.352 is greater than 1 (1.352 > 1) which can be
concluded that that JP Morgan & Chase is effective in taking advantage of its existing opportunities
to minimize the threats components from its external condition.

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 ➢ 5 PORTER’S FORCES

FORCES DETAILS (REASON) INDUSTRY

HIGH/
PROFITABILITY
LOW HIGH/LOW
Rivalry between existing LOW • JPM earned an all-time HIGH
Competitors record increased in net
income among banks
rivalry.
• The oldest financial
institutions in the world.
• JPM hedge fund unit is one
of the largest in the USA
compared to its competitors
Potential entry of new LOW • JPM competes with literally HIGH
competitors hundreds of banks but a few
key rivals are Bank of
America and Citigroup.
• JPM has higher revenue per
employee and earnings per
share (EPS) than Bank of
America or Citigroup.
• JPM has high customer
loyalty because it is an
oldest company in the
market and also highly
reputed one.
Threats of New HIGH • Bank of America is the LOW
Substitutes second largest U.S bank,
trailing only JPM and is the
largest bank according to
number of employees.
• Wells Fargo provides
banking, insurances,
investments, mortgage
consumer and commercial
finance through more than 9
000 stores.
• The online banks rates more
than 30 online banks in term
of having low fees, low
interest rates, excellent
technology and great
customer service.

Bargaining Power of LOW • Switching costs for HIGH

Consumers customers are low.

17
 • The threat of backward
integration is high.
• Customers are more
concentrated than sellers.
Bargaining Power of the LOW • well-educated buyers LOW
Suppliers • no threat of forward
integration
• low switching costs
.

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3. STRATEGIC GENERATION AND SELECTION (CHAPTER 8) -CLO 3
I. SWOT MATRIX ANALYSIS
Opportunity SO Strategy
1. Growing customer base for
asset management and
investment bank services
in Asia, Latin America,
Africa and the Middle
East.
Strength
1. Largest bank in the USA
with $2.3 trillion in assets
and operations in over 60
countries
2. Controls 12.3% of bonds in
the USA, making JPM the
largest holder among all
banks.
3. Provided $19 billion of
credit to small business in
the U.S. in 2014.
4. Increased clients in Brazil,
China, and India from 200
to 800 between 2008 and
2012 and expected to
increase to 2,000 by 2017.
5. Acquired Sempra in 2011
to become one of the top
three firms in the world in
commodity dealings.
6. Significant focus on USA
small businesses providing
$17 billion of credit in 2011
alone; added 1,200
relationship mangers and
business bankers from
2009 to 2012
7. International Consumer &
Community Banking
segment reported a 71%
increase in revenues in
2012.
8. Continue to add physical
branches across the country
while competitors are
removing branches.
9. One of the oldest and most
established financial
institutions in the United
States, found in 1799.
10. JPM focuses heavily doing
business with small
businesses
1. Focus towards the plan to
increase customer base in
Asia, Africa, Middle East,
and Latin America to 2000
by 2017. (S4, S9, O1)
19
Weakness
1. Cyber terrorist gathered
more than 80 million
accounts
2. Heavy reliance on the
USA with over 80% of
2012 revenues derived
from the USA up from
75%
3. International
Corporate/Private Equity
experienced a -353%
decrease in revenues
4. Less than 4% of
Investment Bank revenues
derived from Latin
America.
5. Decreased its employees
by 7,500 due to mortgage
decline
6. Poor judgment in lending
has resulted in JPM
continued mortgage losses
expected
7. London Whale scandal
cost $920 million in
penalties
8. Domestic
Corporate/Private Equity
reported $4 billion in
revenues.
9. Illegal profit sharing
resulted in $6 million fine
10. International
Corporate/Private Equity
experienced a -353%
decrease in revenues from
2011 to 2012.
WO Strategy
1. Divest both the domestic
and international
Corporate/Private Equity
segments (W6, O1, O2,
O6).
 2. USA small businesses are 2. JPM should form an 2. Spend $100 million in
continuing to grow and alliance with Android and Latin America to acquire
recover. IOS to help facilitate new customers, especially
3. Many customers still mobile phone payments. in the investment bank
prefer to do banking (S1, S7, S10.O6, O8) segment (W2, W3, O1).
business face to face when
it comes to applying for a
credit card, seeking
financial advice, and
getting a loan.
4. Bank of America is laying
off 36,000 people.
5. The USA government filed
a civil lawsuit seeking $1
billion in damages for
misrepresenting the quality
of home loans sold to
6. Smart phone providers
such as Apple and Android
may wish to form an
alliance with banks to help
facilitate the usage of
mobile phone payments.
7. Unemployment rate is
improving, as a result
qualifying more people for
home loans.
8. More and more consumers
prefer online banking and
smartphone banking.
9. Growth in the commercial
industry.
10. Global investment banking
and brokerage prospects.

Threats ST Strategy WT Strategy

1. Bank of America and
Citigroup are two large
domestic competitors
2. Banks are viewed like
commodities to many
potential customers
3. Foreign banks have yet to
enter the USA market on
a wide scale.
4. Increase in online banks
such as Ally and ING
Direct are advertising
heavily and marketing no
fees on many products
where brick and mortar
banks are increasing fees.
5. Internet creates more
vulnerabilities (American
Banker)
1. Spend $200 million on
advertising in the USA to
attract more small business
customers (S1, S6, S8,
S10, T1, T2).
2. Increase free checking and
feeless products for
customers who have a
checking account with
Chase (S1, S8, T1, T2, T3,
T4).
20
1. Divest both the domestic
and international
Corporate/Private Equity
segments (W8, T8, T10).
2. Spend $500 million to
develop a better statistical
model for predicting
whom (and whom not) to
lend to and at what interest
rate (W6, W8, W10, T5,
T10).
6. Local community banks
lead in fastest growing
banks in US.
7. More people are paying
off their credit cards and
leaving them in a dormant
state.
8. Mobile payments over
smartphones and Near
Field Communications
(NFC) are expected to
greatly erode into credit
card usage.
9. Percent of Americans
owning checking accounts
dropped from 92 to 88%
between 2010 and 2011
and the number owning a
credit card dropped from
74 to 67%.
10. The Federal Reserve
Board established the
consumer Financial
Protection Bureau, which
has placed restrictions for
lenders on credit cards,
mortgage loans, student
loans, and auto loans

21
 II. STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
The SPACE matrix is a management tool used to analyse a company. It is used to determine what
type of a strategy a company should undertake. Its four-quadrant framework indicates whether
aggressive, conservative, defensive, or competitive strategies are most appropriate for a given
organization. The axes of the SPACE Matrix represent two internal dimensions financial position
[FP] and competitive position [CP]) and two external dimensions (stability position [SP] and
industry position [IP]).

Internal Strategic Position External Strategic Position

Financial Position Num. Value Stability Position (SP)(y) Num.
(FP)(y) Value
Liquidity 3 Barriers to entry into market -6
Cash Flow 6 Competitive Pressure -6
Leverage 3 Rate of Inflation -2
Return on Investment 4 Technological Changes -5
Working Capital 6 Demand Variability -2
Average Total 4.4 Average Total -4.2
Competitive Position Industry Position (IP)(x)
(CP)(x)
Market Share -4 Growth Potential 1
Customer Loyalty -4 Resource Utilization 4
Control over suppliers and -7 Profit Potential 2
distributors
Service Quality -2 Ease of entry into Market 5
Technological know-how -3 Financial Stability 2
Average Total -4 Average Total 2.8

22
 FP(Y)

Conservative +7- Aggressive

+6-

+5-

+4-

+3-

+2-

+1-
(-1.2,0.2)
CP -7 -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7 IP(X)

-1-

-2-

-3-

-4-

Defensive -5- Competitive

-6-

-7 -

SP

a. Axis x = IP + CP
= 2.8 + (-4)
= -1.2

b. Axis y = FP + SP
= 4.4+ (-4.2)
= 0.2
Equation= (-1.2,0.2)

The SPACE matrix shows that JP Morgan falls on the conservative. The plotting indicates that JP
Morgan is a financially strong firm that has achieved competitive advantages in a growing and
stable industry.

23
Suggestion for strategies

As it falls in the conservative quadrant, the suggested strategy would be focus on existing products
or services and cherish those things. Secondly, JPM also can focus on developing or improving new
services to satisfy customer needs. Lastly, JPM also can-do potential product or market
penetration/product penetration through expansion. Other than these, some of the strategy that they
can focus on are market development, product development and diversification.

24
 III. BCG Matrix
BOSTON CONSULTING GROUP (BCG) MATRIX
RELATIVE MARKET SHARE POSITION

High Medium Low

High
INDUSTRY SALES GROWTH RATE

Commercial Banking
Consumer and Community Banking
(CCB)
Question Marks
Stars
I
II
Medium

Asset Management
Corporate and Investment Banking
Cash Cows Dogs
ement
III IV
Low

In Boston Consulting Group Matrix of JP Morgan, the star represents the Consumer and Community
Banking (CCB) since in this product of JPM have the largest market share compared to other
products and the CCB is competing in a fast-growing industry. CCB is also a business segment that
provides services to retain customers and communities. It includes branch banking, cards, home,
education, auto loans, and other similar products for retail clients

Cash cows signify the Corporate and Investment Banking because this product is competing in a
slow growing industry but give a large market share to JPM.

The question mark represents the Commercial Banking since its gives JMP a low market share
though this product competes in a high growth industry.

25
Lastly dogs it signify the Asset Management this product has a weak market share and also
competing in a low growth industry.

4. STRATEGY IMPLEMENTATION (CHAPTER 9) - CLO 3

i. Major issue and recommendation.

1. Increase the firm’s global presence through an aggressive international plan. (Page
455)
❖ Focus towards the plan to increase customer base in Asia, Africa, Middle
East, and Latin America to 2000 by 2017.
2. Expansion of online business through mobile phone. (page 461)
❖ JPM should form an alliance with Android and IOS to help facilitate mobile
phone payments.
3. Focus on improving customer base. (page 462)
❖ Spend more money in Latin America to acquire new customer base especially
in the segment under investment bank.
4. Offer benefits for existing customers. (page 458)
❖ Provide free checking and give gift products for those customers who have
checking account with Chase.
5. Focus on buying more financial instruments. (page 455)
❖ Invest more money to increase the stake in bonds and commodity financial
instruments.
6. Develop a statistical model. (page 462)
❖ Develop a statistical model in order to identify to whom to lend and to whom
not to lend and at what interest rate.

26
 References
1. Cable News Network. . (2919). cnn business. Retrieved from
https://money.cnn.com/quote/profile/profile.html?symb=JPM

2. CFI Education Inc. (2015 ). cfi. Retrieved from Boston Consulting Group (BCG)
Matrix: https://corporatefinanceinstitute.com/resources/knowledge/strategy/boston-
consulting-group-bcg-matrix/

3. David, F., & R.David, F. (2017). Strategic Management .

4. kasi, a. (2019, march 25). Porter analysis. Retrieved from

https://www.porteranalysis.com/porter-five-force-analysis-of-jpmorgan-chase/

5. wikipedia. (2020,, June 29). J. P. Morgan. Retrieved from

https://en.wikipedia.org/wiki/J._P._Morgan

6. Wikipedia contributors. (2020, june 29). J.P. Morgan & Co. Retrieved from The
Free Encyclopedia:
https://en.wikipedia.org/w/index.php?title=J.P._Morgan_%26_Co.&oldid=965115
315

27
 FACULTY OF BUSINESS AND
ACCOUNTANCY APRIL 2020 SEMESTER –
SESSION 1/20/34

PMS 3393 STRATEGIC MANAGEMENT RUBRIC

DETAILS

CONTENT MAR KS FLL

MARKS
1 THE INTERNAL AUDIT (CHAPTER 6) - CLO 2
i. Financial Studies
Income statement 3
Balance sheet 3
Ratio: calculation 6
Ratio: calculation - conclusion 4
ii. Internal Factors Evaluation (IFE) Matrix
IFE Table 6
2 Conclusions (2m x 2 conclusions) 4

2 THE EXTERNAL AUDIT (CHAPTER 7) – CLO 2

i. Competitive Profile Matrix (CPM)

Table 6
Conclusion 4
ii. External Factors Evaluation (EFE) Matrix

Table 6
2 Conclusions (2m x 2 conclusions) 4
iii. Porter 5 Forces (Table)

1 mark each for the correct H/L on both column @ 5 10

forces = table 10 mark
TOTAL MARKS FOR CLO 2

28
3 STRATEGIC GENERATION AND SELECTION
(CHAPTER 8) – CLO 3
i. SWOT Matrix Analysis
2 SO strategies (1m x 2 strategies) 2
2 WO strategies (1m x 2 strategies) 2
2 ST strategies (1m x 2 strategies) 2
2 WT strategies (1m x 2 strategies) 2

ii. Strategic Position and Action Evaluation

(SPACE) Matrix

Calculations FP; SP; CP & IP (1m x 4 position) 4

Graph 2
Suggestion for strategies 2

iii. BCG Matrix

Table for each quadrant (1m x 4 quadrant) 4
Conclusions @ each quadrant (1m x 4 quadrant) 4

4 STRATEGY IMPLEMENTATION (CHAPTER 9) – CLO 3

i. Major issue and recommendations. 10

TOTAL MARKS FOR CLO 3

TOTAL MARKS 90