EULOGIO “AMANG” RODRIGUEZ

INSTITUTE OF SCIENCE AND TECHNOLOGY

Nagtahan, Sampaloc, Manila

A Strategic Paper
Presented to the
Faculty of the College of Business Administration

In Partial Fulfilment
of the Requirements for the
Degree of Bachelor of Science in Entrepreneurial Management

Prepared by:

___________________________

May 2021

i
 CERTIFICATION
________________________________________________________________

In partial fulfilment of the requirements for the Degree of Bachelor of Science in

Entrepreneurial Management. This Strategic Paper Presentation entitled Senteur
Inc., has been accomplished and submitted by the following proponents:
(names of students)

Who are hereby recommended for acceptance and approval for oral
examination:

PROF. RONALD DOROTEO

Adviser

________________________________________________________________

PANEL OF EXAMINERS
Approved and Accepted during an oral examination held on __________ with a
rating of _______________%

______________________ ______________________

______________________
DR. WILLY O. GAPASIN
Dean, College of Business Administration

Accepted as partial fulfilment of the requirements for the Degree of

Bachelor of Science in Office Administration

ii
 ACKNOWLEDGEMENT

With boundless love and appreciation, the researchers would like to

extend their gratitude and appreciation to the people who helped them bring this

study into reality. The researchers would like to extend their profound gratitude to

the following:

Our dear professor, Dr. Aguida V. Cabreros, for his unwavering support,

consistent guidance, ample time spent, advices, constructive comments,

suggestions and critiquing that helped them bring this study into success;

We deeply thankful to our parents and professors who helped and inspires

us to completing this project.

To our friends and colleagues, who shared to us their support and ideas

that help us from start to finish.

Last, to our God, who gave us the Knowledge, Wisdom and Strength for

us to enjoy and live our Lives happily, even though there are many hindrances

that we are encountering but still he always shows that there is always a

Rainbow to hold on and hope for.

The Researchers

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 DEDICATION

We dedicate this project to God Almighty our creator, our source of

inspiration, wisdom, knowledge and understanding. He has been the source of

our strength throughout this study.

We also dedicate this work to our family and friends who encouraged us

all the way and whose encouragement has made sure that we give it all it takes

to finish that which we have started.

Lastly, we dedicate our study to the benefit of the future students of

Entrepreneurial Management who will be using are study and all to those

respondents that has been asking for this kind of questions.

This question may enhance their curiosity about what was really

happening in the purchasing industry that also has connection to the celebrity

endorsers as we finish study as well as the survey, we will assure that this may

help those people and the business industry as well.

The Researchers

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 TABLE OF CONTENTS

PAGE

Title Page i

Approval Sheet ii

Acknowledgement iii

Dedication iv

Table of Contents v

Chapter I – Company Background 1

A. Background of the Study 2

B. Executive Summary 3

1. Type of Business 3

1.1 Nature 4

1.2 Vision 4

1.3 Mission 2

Chapter II – Business Environment 7

A. Internal Analysis 7

1. Strength 1

2. Weakness 1

3. Opportunities 2

4. Threats 3

B. External Analysis 7

1. Political Factors 2

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 2. Environmental Factors 2

3. Social Factors 4

4. Technological Factors 2

Chapter III – Industry Analysis 11

A. Marketing Mix (4 P’s) 11

1. Product 12

2. Price 22

3. Place 22

4. Promotion 23

B. Benchmarking 12

C. Value Chain 12

D. Balanced Scorecard

Chapter IV – Financial Analysis 11

A. Income Statement 11

B. Balance Sheet 12

C. Cash Flow 12

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 CHAPTER I

Company Background

American Express Company, American financial corporation that primarily

issues credit cards, processes payments, and provides travel-related services

worldwide. Headquarters are in New York.

American Express Company: headquarters

American Express Company: headquarters

Brookfield Place, including 200 Vesey Street (centre), headquarters of the

American Express Company, in New York.

American Express Company (QUICK FACTS)

DATE: March 18, 1850 - present

HEADQUARTERS: New York City

RELATED PEOPLE:

 William George Fargo

 Sanford I. Weill
 Henry Wells
 Kenneth Chenault
 Lou Gerstner

AREAS OF INVOLVEMENT:

 Insurance
 Investment

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A. Background of the Study

The original company was founded on March 18, 1850, through the

consolidation of three companies active in the express transport of goods,

valuables, and specie between New York City and Buffalo, New York, and points

in the Midwest: (1) Livingston, Fargo & Company (formerly Western Express),

founded in 1845 by Henry Wells and William G. Fargo, later of Wells Fargo fame;

(2) Wells & Co. (formerly Livingston, Wells & Co.), cofounded by Wells in 1846

and under his ownership at the time of the merger; and (3) Butterfield in &

Wasson, founded by John Butterfield and James D. Wasson. American Express

was at first an unincorporated association of investors headed by Wells as

president and Fargo as secretary. By the end of the American Civil War, its

business had so flourished, with some 900 offices in 10 states, that it attracted

competition in 1866 in the formation of Merchants Union Express Company. For

two years the two companies engaged in cutthroat competition and, on the verge

of financial exhaustion, finally merged on November 25, 1868, to form the

American Merchants Union Express Company, with Fargo succeeding as

president. The company was renamed American Express Company in 1873.

On Fargo’s death in 1881, his younger brother, James Congdell Fargo

(1829–1915), became president and guided the company for the next 33 years,

introducing such innovations as the American Express Money Order (1882) and

the American Express Travelers Cheque (1891), and opening the first European

2
office in Paris (1895). International expansion continued with the opening of

offices

in other European countries, including England (1896) and Germany (1898), and

in the early 1900s the company began offering services in Argentina, Brazil,

China, Japan, Egypt, and India. When the U.S. federal government nationalized

the express industry in 1918, thereby consolidating all domestic express

operations in the American Railway Express Company (see REA Express, Inc.),

American Express turned almost wholly to its banking operations and its

relatively new travel services, which had been launched in 1915.

The classic American Express green charge card was introduced in 1958.

From the 1960s through the ’80s, American Express diversified its holdings by

acquiring companies in areas such as investment banking, insurance, and

publishing. It purchased Fireman’s Fund Insurance Company in 1968 (spun off in

1985), Shearson Loeb Rhoades, Inc., a leading brokerage firm, in 1981 (sold in

1993), and Investors Diversified Services, Inc., a large Minneapolis-based

insurance, mutual fund, and financial advisory concern, in 1984 (spun off in 2005

as Ameriprise Financial, Inc.

American Express is a leading issuer of personal, small business, and

corporate credit cards. The company’s travel-related offerings include traveler’s

checks, credit cards, corporate and personal travel planning services, tour

packages, and agencies for hotel and car-rental reservations. By the early 21st

century, American Express operated in more than 40 countries. The company

3
also had a publishing division, which produced such magazines as Travel &

Leisure and Food & Wine. However, it was sold to Time Inc. in 2013.

B. Executive Summary

American Express is established in 1850 as a U.S express delivery

service, American Express has remained a leader for generations by embracing

both innovation and tradition. As their company has grown and evolved,

sometimes reinventing our business outright, they have never strayed from the

customer-service ethos and values on which the company was built – trust,

security, integrity, quality, good citizenship, respect and customer commitment.

1. Type of Business

1.1 Nature

The American Express Company (Amex) is a multinational

financial services corporation. The company was founded in

1850 and is one of the 30 components of the Dow Jones

Industrial Average. The company's logo, adopted in 1958, is

a gladiator or centurion whose image appears on the

company's well-known traveler's cheques, charge cards, and

credit cards.

1.2 Vision

Provide the world’s best customer experience every day.

1.3 Mission

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 Become essential to our customers by providing

differentiated products and services to help them achieve

their aspirations.

CHAPTER II

Business Environment

Business environment is the sum totals of all factors external to the

business firm and that greatly influence their functioning. • it covers factors and

forces like customers, competitors, suppliers, government, and the social,

cultural, political, technological and legal conditions.

A. Internal Analysis

SWOT analysis is a vital strategic planning tool that can be used by

American Express managers to do a situational analysis of the company. It is an

important technique to understand the present Strengths (S), Weakness (W),

Opportunities (O) & Threats (T) American Express is facing in its current

business environment.

The American Express is one of the leading companies in its industry.

American Express maintains its dominant position in market by critically

analyzing and reviewing the SWOT analysis. SWOT analysis an immensely

interactive process and requires effective coordination among various

5
departments within the company such as – marketing, finance, operations,

management information systems and strategic planning.

The SWOT Analysis framework helps an organization to identify the

internal strategic factors such as -strengths and weaknesses, & external strategic

factors such as - opportunities and threats. It leads to a 2X2 matrix – also known

as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix

helps the managers of the American Express to develop four types of strategies:

SO (strengths-opportunities) Strategies

WO (weaknesses-opportunities) Strategies

ST (strengths-threats) Strategies

WT (weaknesses-threats) Strategies

The core purpose of SWOT matrix is to identify the strategies that a firm can use

to exploit external opportunities, counter threats, and build on & protect American

Express strengths, and eradicate its weaknesses.

Step by Step Guide to American Express SWOT Analysis

1. Strengths of American Express

As one of the leading companies in its industry, American Express has

numerous strengths that help it to thrive in the market place. These

strengths not only help it to protect the market share in existing markets

6
but also help in penetrating new markets. Based on Fern Fort University

extensive research, some of the strengths of American Express are –

 Strong Free Cash Flow – American Express has strong free cash

flows that provide resources in the hand of the company to expand

into new projects.

 Strong Brand Portfolio – Over the years American Express has

invested in building a strong brand portfolio. This brand portfolio

can be extremely useful if the organization wants to expand into

new product categories.

 Successful track record of developing new products – product

innovation. Successful track record of integrating complimentary

firms through mergers & acquisition. It has successfully integrated

number of technology companies in the past few years to

streamline its operations and to build a reliable supply chain.

 Automation of activities brought consistency of quality to

American Express products and has enabled the company to scale

up and scale down based on the demand conditions in the market.

 Strong dealer community – It has built a culture among distributor

& dealers where the dealers not only promote company’s products

but also invest in training the sales team to explain to the customer

how he/she can extract the maximum benefits out of the products.

 Good Returns on Capital Expenditure – American Express is

relatively successful at execution of new projects and generated

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 good returns on capital expenditure by building new revenue

streams.

2. Weakness of American Express

Weakness are the areas where American Express can improve upon.

Strategy is about making choices and weakness are the areas where a

company can improve using SWOT analysis and build on its competitive

advantage and strategic positioning. Organization structure is only

compatible with present business model thus limiting expansion in

adjacent product segments.

 High attrition rate in work force – compare to other organizations

in the industry American Express has a higher attrition rate and

have to spend a lot more compare to its competitors on training and

development of its employees.

 Investment in Research and Development is below the fastest

growing players in the industry. Even though American Express is

spending above the industry average on Research and

Development, it has not been able to compete with the leading

players in the industry in terms of innovation. It has come across as

a mature firm looking forward to bring out products based on tested

features in the market.

 The company has not been able to tackle the challenges

present by the new entrants in the segment and has lost small

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 market share in the niche categories. American Express has to

build internal feedback mechanism directly from sales team on

ground to counter these challenges.

 The marketing of the products left a lot to be desired. Even

though the product is a success in terms of sale but its positioning

and unique selling proposition is not clearly defined which can lead

to the attacks in this segment from the competitors.

 Financial planning is not done properly and efficiently. The

current asset ratio and liquid asset ratios suggest that the company

can use the cash more efficiently than what it is doing at present.

 Not very good at product demand forecasting leading to higher

rate of missed opportunities compare to its competitors. One of the

reasons why the days inventory is high compare to its competitors

is that American Express is not very good at demand forecasting

thus end up keeping higher inventory both in-house and in channel.

3. Opportunities for American Express

The market development will lead to dilution of competitor’s advantage

and enable American Express to increase its competitiveness compare to

the other competitors.

 Stable free cash flow provides opportunities to invest in adjacent

product segments. With more cash in bank the company can invest

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 in new technologies as well as in new products segments. This

should open a window of opportunity for American Express in other

product categories.

 Organization’s core competencies can be a success in similar

another products field. A comparative example could be - GE

healthcare research helped it in developing better Oil drilling

machines.

 Opening up of new markets because of government agreement

– the adoption of new technology standard and government free

trade agreement has provided American Express an opportunity to

enter a new emerging market.

 The new taxation policy can significantly impact the way of doing

business and can open new opportunity for established players

such as American Express to increase its profitability.

 New environmental policies – The new opportunities will create a

level playing field for all the players in the industry. It represents a

great opportunity for American Express to drive home its advantage

in new technology and gain market share in the new product

category.

 New customers from online channel – Over the past few years

the company has invested vast sum of money into the online

platform. This investment has opened new sales channel for

American Express. In the next few years, the company can

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 leverage this opportunity by knowing its customer better and

serving their needs using big data analytics.

 New trends in the consumer behavior can open up new market

for the American Express. It provides a great opportunity for the

organization to build new revenue streams and diversify into new

product categories too.

4. Threats American Express Facing

 Rising pay level especially movements such as $15 an hour and

increasing prices in the China can lead to serious pressure on

profitability of American Express.

 New technologies developed by the competitor or market

disruptor could be a serious threat to the industry in medium to long

term future.

 Changing consumer buying behavior from online channel could

be a threat to the existing physical infrastructure driven supply

chain model. Shortage of skilled workforce in certain global market

represents a threat to steady growth of profits for American

Express in those markets.

 Imitation of the counterfeit and low-quality product is also a

threat to American Express’s product especially in the emerging

markets and low-income markets. New environment regulations

under Paris agreement (2016) could be a threat to certain existing

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 product categories. Liability laws in different countries are different

and American Express may be exposed to various liability claims

given change in policies in those markets. The company can face

lawsuits in various markets given - different laws and continuous

fluctuations regarding product standards in those markets.

B. External Analysis

External analysis, also called environmental analysis, is the process by which

businesses objectively asses the changes made to their industry and broader

world that could affect their current business operations. Companies do this to

ensure they can adapt to changes and continue to succeed within an industry.

1. Political Factors

Political factors play a significant role in determining the factors that can

impact American Express Company's long-term profitability in a certain

country or market. American Express Company is operating in Credit

Services in more than dozen countries and expose itself to different types

of political environment and political system risks. The achieve success in

such a dynamic Credit Services industry across various countries is to

diversify the systematic risks of political environment. American Express

Company can closely analyze the following factors before entering or

investing in a certain market.

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Political stability and importance of Credit Services sector in the country's

economy.

 Risk of military invasion Level of corruption - especially levels

of regulation in Financial sector. Bureaucracy and interference in

Credit Services industry by government. Legal framework for

contract enforcement Intellectual property protection Trade

regulations & tariffs related to Financial Favored trading

partners Anti-trust laws related to Credit Services

 Pricing regulations – Are there any pricing regulatory mechanism

for Financial Taxation - tax rates and incentives Wage legislation -

minimum wage and overtime Work week regulations in Credit

Services Mandatory employee benefits Industrial safety regulations

in the Financial sector. Product labeling and other requirements in

Credit Services.

2. Environmental Factors

Different markets have different norms or environmental standards which

can impact the profitability of an organization in those markets. Even

within a country often states can have different environmental laws and

liability laws. For example, in United States – Texas and Florida have

different liability clauses in case of mishaps or environmental disaster.

Similarly, a lot of European countries give healthy tax breaks to companies

that operate in the renewable sector.

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Before entering new markets or starting a new business in existing market

the firm should carefully evaluate the environmental standards that are

required to operate in those markets. Some of the environmental factors

that a firm should consider beforehand are –

 Weather

 Climate change

 Laws regulating environment pollution

 Air and water pollution regulations in Credit Services industry

 Recycling Waste management in Financial sector

 Attitudes toward “green” or ecological products

 Endangered species

3. Social Factors

Society’s culture and way of doing things impact the culture of an

organization in an environment. Shared beliefs and attitudes of the

population play a great role in how marketers at American Express

Company will understand the customers of a given market and how they

design the marketing message for Credit Services industry consumers.

Social factors that leadership of American Express Company should

analyze for PESTEL analysis are –

 Demographics and skill level of the population.

 Class structure, hierarchy and power structure in the society.

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  Education level as well as education standard in the American

Express Company’s industry.

 Culture (gender roles, social conventions etc.)

 Entrepreneurial spirit and broader nature of the society.

 Some societies encourage entrepreneurship while some don’t.

Attitudes (health, environmental consciousness, etc.)

 Leisure interests

4. Technological Factors

Technology is fast disrupting various industries across the board.

Transportation industry is a good case to illustrate this point. Over the last

5 years the industry has been transforming really fast, not even giving

chance to the established players to cope with the changes. Taxi industry

is now dominated by players like Uber and Lyft. Car industry is fast moving

toward automation led by technology firm such as Google & manufacturing

is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but

also the speed at which technology disrupts that industry. Slow speed will

give more time while fast speed of technological disruption may give a firm

little time to cope and be profitable. Technology analysis involves

understanding the following impacts –

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 Recent technological developments by American Express

Company competitors.

 Technology's impact on product offering.

 Impact on cost structure in Credit Services industry.

 Impact on value chain structure in Financial sector.

 Rate of technological diffusion.

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 CHAPTER III

Industry Analysis

Industry analysis is a tool that facilitates a company's understanding of its

position relative to other companies that produce similar products or services.

Understanding the forces at work in the overall industry is an important

component of effective strategic planning

A. Marketing Mix (4 P’s)

The marketing mix has been defined as the "set of marketing tools that the

firm uses to pursue its marketing objectives in the target market. The 4 P’s of

marketing are the key factors that are involved in the marketing of a good or

service. They are the product, price, place, and promotion of a good or service.

1. Product

American Express has a wide diversity of products. They have a huge

range of cards. American Express make sure that the customers are

happy with their services. These services are the base of the product

strategy in the marketing mix of American Express. They have both

international and national card services for the customers. They have the

options of gift cards, traveler’s cheque, travel insurance, financial services

and they also pays the bills. The company also looks into the financial

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matters of the clients. The corporate financing part is one of the star areas

of American Express. They take great care to manage the money of their

clients and provides B2B payment solutions for the large ended business.

American Express not only looks into the money matters but also helps in

managing the non-monetary assets of its clients. Having a great relation

with their customers is a way of making their product stand out in the

competitive market. People are also awarded points for each transaction

they make. American Express make sure that these points can be used in

the selected countries all over the world.

2. Price

The American Express brand is one of a kind providing personalized

services to the customers. This has a great effect in the minds of the

people. But we know that with great services we have a price to pay.

American Express make sure that the prices are worth the services which

the people have on offer. This is the base of the pricing strategy in its

marketing mix. Most of the people accept American Express’ card. But a

few don’t as the price is a bit high with respect to the other competitors.

They charge a bit high in comparison with their rivals who are also

competing in the market. But mainly it is not as much as it sounds to be.

We find that the difference is mainly because of the different business

models. The price in this sector is very competitive, but American Express'

service is more important to people. This is why we find that the people

18
are preferring the company’s product even though they are slightly over

priced. The overpriced scenario is mainly for the customized services they

provide.

3. Place

American Express has no fixed demographic barrier. They have made

their presence felt all over the world. We find that the company has

transcended its national boundaries. The places it reached is phenomenal.

The corners of the world are covered by American Express. The people

are using this opportunity to make their life easier. The way the company

is looking into the matters of expansion also says a lot about their interest

in reaching out to people. The card is powerful and, in most cases, is

accepted all over the world. We find that the petty issues are being looked

after by American Express. They make sure that their customers have no

problem with their cards were ever they go. The help in converting the

data to useful information so that they can manage the customer base

more efficiently.

4. Promotions

The promotion of American Express is out of the box. They believe in the

service they provide to the people. They make sure that their services are

trustworthy and secure. This makes sure that the services are apt and

they are efficient. Once the company has made its presence felt in the

19
 market, we find that they are looked forward for the trust and security

which they

provide to the people. The area where they specialized requires a lot of

trust from the people. The point system on using the company’s card is

also a bonus for the people. We find that these points are used by the

people in certain areas which are really lucrative. This also includes the

ticket purchasing of the airplanes. It is difficult to identify any particular

activities which the company runs. American Express also makes sure

that they create personalized experience for the customers. This in a way

is efficient way of promoting them through the word of mouth.

B. Benchmarking

Benchmarking is a process of measuring the performance of a company's

products, services, or processes against those of another business considered to

be the best in the industry, aka “best in class.” Benchmarking is a way of

discovering what is the best performance being achieved – whether in a

particular company, by a competitor or by an entirely different industry.

SWOT ANALYSIS OF J. P. MORGAN CHASE and WELLS FARGO

Step by Step Guide to J.P. Morgan Chase SWOT Analysis Strengths of J.P.

Morgan Chase – Internal Strategic Factors As one of the leading firms in its

industry, J.P. Morgan Chase has numerous strengths that enable it to thrive in

20
the market place. These strengths not only help it to protect the market share in

existing markets but also help in penetrating new markets. Based on Fern Fort

University extensive research –

Strengths of J.P. Morgan Chase

 Good Returns on Capital Expenditure – J.P. Morgan Chase is relatively

successful at execution of new projects and generated good returns on

capital expenditure by building new revenue streams.

 Strong dealer community – It has built a culture among distributor &

dealers where the dealers not only promote company’s products but also

invest in training the sales team to explain to the customer how he/she

can extract the maximum benefits out of the products.

 Reliable suppliers – It has a strong base of reliable supplier of raw

material thus enabling the company to overcome any supply chain

bottlenecks.

 Strong Free Cash Flow – J.P. Morgan Chase has strong free cash flows

that provide resources in the hand of the company to expand into new

projects. Successful track record of developing new products – product

innovation.

 High level of customer satisfaction – the company with its dedicated

customer relationship management department has able to achieve a high

level of customer satisfaction among present customers and good brand

equity among the potential customers. Automation of activities brought

21
 consistency of quality to J.P. Morgan Chase products and has enabled the

company to scale up and scale down based on the demand conditions in

the market.

 Strong distribution network – Over the years J.P. Morgan Chase has built

a reliable distribution network that can reach majority of its potential

market.

Weakness of J.P. Morgan Chase

 Internal Strategic Factors Weakness are the areas where J.P. Morgan

Chase can improve upon. Strategy is about making choices and

weakness are the areas where a company can improve using SWOT

analysis and build on its competitive advantage and strategic positioning.

There are gaps in the product range sold by the company. This lack of

choice can give a new competitor a foothold in the market.

 Limited success outside core business – Even though J.P. Morgan Chase

is one of the leading organizations in its industry it has faced challenges in

moving to other product segments with its present culture. Not highly

successful at integrating firms with different work culture. As mentioned

earlier even though J.P. Morgan Chase is successful at integrating small

companies it has its share of failure to merge firms that have different

work culture.

 Days inventory is high compare to the competitors – making the company

raise more capital to invest in the channel. This can impact the long term

22
 growth of J.P. Morgan Chase The company has not being able to tackle

the challenges present by the new entrants in the segment and has lost

small market share in the niche categories. J.P. Morgan Chase has to

build internal feedback mechanism directly from sales team on ground to

counter these challenges. The profitability ratio and Net Contribution % of

J.P. Morgan Chase are below the industry average. Not very good at

product demand forecasting leading to higher rate of missed opportunities

compare to its competitors. One of the reason why the days inventory is

high compare to its competitors is that J.P. Morgan Chase is not very

good at demand forecasting thus end up keeping higher inventory both in-

house and in channel.

Opportunities for J.P. Morgan Chase

 External Strategic Factors Lower inflation rate – The low inflation rate

bring more stability in the market, enable credit at lower interest rate to the

customers of J.P. Morgan Chase. Government green drive also opens an

opportunity for procurement of J.P. Morgan Chase products by the state

as well as federal government contractors. The new taxation policy can

significantly impact the way of doing business and can open new

opportunity for established players such as J.P. Morgan Chase to increase

its profitability. The new technology provides an opportunity to J.P.

Morgan Chase to practices differentiated pricing strategy in the new

23
 market. It will enable the firm to maintain its loyal customers with great

service and lure new customers through other value oriented propositions.

 Opening up of new markets because of government agreement – the

adoption of new technology standard and government free trade

agreement has provided J.P. Morgan Chase an opportunity to enter a new

emerging market. The market development will lead to dilution of

competitor’s advantage and enable J.P. Morgan Chase to increase its

competitiveness compare to the other competitors.

 New environmental policies – The new opportunities will create a level

playing field for all the players in the industry. It represent a great

opportunity for J.P. Morgan Chase to drive home its advantage in new

technology and gain market share in the new product category. New

trends in the consumer behavior can open up new market for the J.P.

Morgan Chase . It provides a great opportunity for the organization to build

new revenue streams and diversify into new product categories too.

Threats J.P. Morgan Chase Facing

 External Strategic Factors Liability laws in different countries are different

and J.P. Morgan Chase may be exposed to various liability claims given

change in policies in those markets. Rising pay level especially

movements such as $15 an hour and increasing prices in the China can

lead to serious pressure on profitability of J.P. Morgan Chase New

technologies developed by the competitor or market disruptor could be a

24
 serious threat to the industry in medium to long term future. Growing

strengths of local distributors also presents a threat in some markets as

the competition is paying higher margins to the local distributors. As the

company is operating in numerous countries it is exposed to currency

fluctuations especially given the volatile political climate in number of

markets across the world. Rising raw material can pose a threat to the J.P.

Morgan Chase profitability. Changing consumer buying behavior from

online channel could be a threat to the existing physical infrastructure

driven supply chain model.

 The company can face lawsuits in various markets given - different laws

and continuous fluctuations regarding product standards in those markets.

Limitations of SWOT Analysis for J.P. Morgan Chase Although the SWOT

analysis is widely used as a strategic planning tool, the analysis does

have its share of limitations. Certain capabilities or factors of an

organization can be both a strength and weakness at the same time. This

is one of the major limitations of SWOT analysis

Strengths of Wells Fargo

 Wells Fargo’s Strengths Global Presence: Operating globally is a major

strength since the company gets access to a deeper pool of potential

customers. Wells Fargo operates globally from America to Europe, the

Middle East, Africa, and Asia.

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 Strong Financial Position: Having immense financial capability allows

companies to acquire all they need to compete more effectively. Wells

Fargo has been strengthening its financial position since 2018.

 Part of the Big Four: The US banking sector is dominated by the four

largest financial institutions consisting of JPMorgan Chase & Co., Bank of

America, Citibank, and Wells Fargo as the nation’s fourth-largest bank.

Members of the big four influence policymaking immensely

 Leadership in SME Lending: Small and medium enterprises are drivers of

economies from Asia, Africa, America, and Europe. Wells Fargo has

captured this segment and enjoy all benefits of vast financial resources

that flow in and out of the US SME sector.

Variety of Services: The bank offers a wide variety of segment-specific

services that cater to the entire market. It offers banking, loans, insurance,

merchant services, online banking services, investing, and so on catering

to all three segments: personal, commercial, and small industries.

 Valuable Brand: Since it was founded, Wells Fargo focused on working for

small and medium businesses and journeyed with them to the peak of

their respective.

 This enabled the bank to build a highly valuable brand and is ranked the

42nd most valuable brand Exemplary Performance: Wells Fargo is one of

the high performing banks and recently received an “outstanding” rating

for community lending.

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Wells Fargo’s Weaknesses

 Major Scandal: In 2016, it emerged that Wells Fargo’s employees opened

millions of accounts using the names of customers without their consent to

meet sales quotas. The bank eventually agreed to pay a $3 billion fine as

settlement.

 Missed Opportunities: As punishment for the fake account scandal,

Federal Reserve capped how many loans Wells Fargo could give out. The

bank reached its limit quickly during the distribution of PPP with most of its

small business clients missing out on billions in aid.

 Aging Systems: For years, Wells Fargo has struggled to update its antique

banking systems, which is making it harder for the bank to satisfy

regulators. Also, the old systems break down more often hampering key

operations and inconveniencing their customers.

 Negative Publicity: Even the most loyal customers can migrate to

competitors if their bank is accused of exploiting relief aid for profit during

a crisis. Wells Fargo is under investigation for its distribution of PPP

intended to help small businesses affected by the pandemic. The bank

has to put in some effort to regain their trust or risk losing them to

competitors.

 High Operation Costs: With billions of dollars either lost due to aging

machines or being paid as settlement, Wells Fargo’s self-inflicted wounds

have increased its operating costs. This undermines profitability and long-

term sustainability.

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Wells Fargo’s Opportunities

 Strengthen C&1 Lending: Even though the bank is a leader in SME

lending, it can also strengthen and regain its leadership of commercial and

industrial (C&I) lending. It was the largest C&I lender but lost market share

and leadership of the sector to competitors.

 Expand Operations in Emerging Economies: Wells Fargo has offices in 13

locations only across EMEA and does not cater to retail or small business

customers outside the US. The bank can expand its operations in Africa

and Asia to exploit opportunities for growth.

 Diversify Portfolio: The banking sector is extremely volatile to a wide range

of complex and overlapping issues. The risk of going bankrupt is much

higher than in other sectors. Wells Fargo can protect its interest by

diversifying into stable and growing industries.

 Focus on Smaller Towns: Having captured and dominated most major

cities across the world, Wells Fargo can grow by focusing on providing its

services in smaller towns.

Wells Fargo’s Threats

 Global Recession: With the devastation and destruction of economies with

millions of jobs wiped off, a severe global recession is already evident in

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 many countries across the world. Global recession can adversely affect

Wells Fargo as customers default on their loans and mortgages.

 Public Perception: It is very difficult to regain the public’s trust once it has

been lost. With so many scandals dogging Wells Fargo, the bank can lose

most of its customers along with billions of dollars in deposits in case of

even unproven allegations.

 Global Pandemic: The stability and success of the banking sector rely

heavily on businesses and ordinary individuals. Well, Fargo’s profits

dropped by 89% after the job losses and collapse of small businesses due

to the pandemic led to the accumulation of unpaid loans. Capped Loans:

As part of the punishment for the fake account scandal, the Federal

Reserve limited Wells Fargo’s lending abilities.

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30
Wells Fargo (4P's)

Product

 sells its products under 5 broad categories, and each of these serves as

separate product lines. All of its products are sold under the brand name

of.

 sells products with a lot of variety available, which allows customers to

select the product variety that best suits them.

 sells products that are highly differentiated, with various features offered to

customers that competitors don’t offer. Its products are therefore

considered to be unique.

 Its products are perceived to be of higher quality than that of competitors.

Therefore, customers are willing to pay a higher price for these.

 sells products that are famous for its traditional design that is also practical

for customers to use.

Price

 The current pricing strategy to set the price level that follows is a

competitive based pricing strategy. This is because the data on

competitors is easily available due to a large number of competitors that

exists within the industry.

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  It also takes costs into consideration to set prices for a few products for

which either information is not available on competitors, or are costlier to

make,

 sells its products at a higher price than competitors. This is because it

offers more features, and the high price makes up for these.

 It currently uses product bundle pricing as well, where products are

bundled together and sold at prices lower than the total of individual items.

 It also uses an optional product pricing strategy for certain products,

where it offers a price for the base product and separate prices for the

accessories that come along with it.

 It charges a greater price for the products it sells online. This is because

delivery costs have been included in the price of the product.

 has fixed the prices of the final product. Channel members; retailers and

wholesalers, buy the product at a lower price and earn through their own

margins.

Place

 sells its products through two marketing channels. The first is where it

sells directly to its customer through its online website. The second is

where it sells to wholesalers who then sell to different retailers located all

over the country. These then sell to its customers.

 has its products present on over 500 retailers throughout the country. It

follows an intensive marketing strategy where it tries to include its

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 products on as many retailers as possible. This ensures that its products

are available to customers easily in different parts of the country.

 has a substantial amount of online sales with frequent traffic on its

websites. In order to run its online operations, has partnered with

numerous delivery service providers in order to provide timely deliveries.

 It follows an omni-channel distribution system where it has integrated its

online and offline stores to allow customers easy access to its products.

 has a network of over 500 suppliers that provide it with the raw materials

needed for production. It has developed a close working relationship with

its suppliers allowing the company to work with them to innovate and

introduce new and attractive features on its products.

Promotion

 uses multiple media channels to promote its products. It uses traditional

media, which includes an advertisement on television and radio. This is

beneficial due to its large reach and ability to attract a large number of

people. It uses online and social media advertising, which is cheaper and

beneficial due to the increasing usage of the internet.

 It advertises on various social media platforms with a focus on YouTube,

Facebook and Twitter due to the high monthly usage of these. It has over

one hundred thousand likes or customer following on these pages, which

are exposed to frequent content uploaded by undergoes various sales

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 promotions taking part in various trade exhibitions and events around the

year. Hi Promotions budget for the year.

JPMorgan Chase (4P's)

Product

JP Morgan Chase provides investment banking and financial services to

customers, small businesses as well as some of the biggest corporate and

government clients. These are covered its in marketing mix product strategy. The

businesses that use the JP Morgan Chase brand: Institutional Asset

Management, Investment Banking, Investment Management, Markets & Investor

Services, Treasury Services, Private Banking, Wealth Management & Brokerage.

These services by JP Morgan are provided to investors, financial institutions,

corporations, municipal entities and government. In the capital market the bank

provides services such as advise on corporate structure and strategy. It helps

corporates in raising capital in debt and equity markets. JP Morgan Chase also

facilitates as loan origination and syndication which is the process of getting

different lenders to finance the loan. Consumer Businesses under the Chase

brand: Credit Cards, Small Business, Home Loans and Home Equity Line of

Credit, Auto Finance, Education Finance, Retirement & Investing, Personal Bank

Accounts, Merchant Services. JP Morgan Chase Bank offers a full range of asset

classes including equity, private equity, fixed income, cash liquidity, real estate,

hedge funds, and currency.

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Price

JP Morgan Chase provide different kinds of services for which they charge

different prices.JP Morgan Chase follows competitive pricing and Interest rates

are quite low. The bank charges a brokerage percentage on the various services

it provides, therefore for large businesses make larger profits for the bank. In the

credit card segment JP Morgan Chase cut prices to remain competitive, major

competitors being Citigroup Inc, Paypal Inc and Square Inc. This covers the JP

Morgan marketing mix pricing strategy.

Place

JP Morgan Chase has several service channels through which it serves its

consumers and businesses. Personal services are provided at bank branches

and through automatic teller machines (ATMs). The bank has 5,300 branches

and around 15,500 ATMs. JP Morgan Chase also has other channels such as

online, mobile and telephone banking. In online mode customers can create their

accounts where they can have access to all their savings balance, loan, credit

card and other information.

•These services can also be accessed by phone, consumers can also make

payments online and through phone.

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Promotion

JP Morgan Chase has a very strong brand name and most clients come to

this bank because of its long standing reputation. Main marketing at JP Morgan

Chase is done through client relation. The bank has very good relations with its

clients. The company tries to take care of all financial needs of the client. The

bank has “Chase at Work” program in which employees visit clients and give

personalised services improving the relationship. The company also have referral

programs in which clients are rewarded for getting referrals. JP Morgan Chase is

using social media for its promotion. Online adds are used and the company site

also acts as a promotional channel in which various services are advertised. The

company also has a Facebook page.

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C. Value Chain

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Primary Activities

The primary value chain activities of American Express are directly involved in

producing and selling the product to targeted customers. Analysis of primary

value chain activities can improve the performance of American Express as

explained below.

1. Inbound Logistics

It is important to develop strong relationships with suppliers as their support is

necessary to receive, store and distribute the product. Without analyzing the in-

bound logistics, American Express can face various challenges in product

development phases. Analysis of in-bound logistics requires a company to focus

on every aspect of transformation from raw material to finished product. Some

examples of inbound logistics are retrieving raw material, storing the inputs and

internally distributing the raw material and components to start production.

2. Operations

The importance of analyzing operational activities raises when raw material

arrives, and American Express is ready to process the raw material into the end

product and launch it in the market. Some examples of operational activities are

machining, packing, assembling and testing. Equipment repair and maintenance

also falls into this category. It includes both- manufacturing and service

operations. Analysis of operational activities is important for improving

productivity, maximizing the efficiency and ensuring the competitive success of

American Express. The increased productivity can help American Express to

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achieve consistent economic growth, increase profitability and set a powerful

basis for competitive advantage.

3. Outbound Logistics

Outbound logistics include the activities that deliver the product to the customer

by passing through different intermediaries. Some outbound logistics activities

are material handling, warehousing, scheduling, order processing, transporting

and delivering to the destination. American Express can analyze and optimize the

outbound logistics to explore competitive advantage sources and achieve its

business growth objectives.

Because, when outbound activities are timely managed with optimal costs and

product delivery processes put a minimum negative effect on the quality, it

maximizes the customer satisfaction and increases growth opportunities for the

firm. American Express should pay specific importance to its outbound value

chain activities when its offered products are perishable and require quick

delivery to the end customer.

4. Marketing and Sales

At this stage, American Express will highlight the benefits and differentiation

points of offered products to persuade the customers that its offering is better

than competitors. Only producing a high-quality product at affordable costs and

distinctive features cannot create value until American Express invests on the

marketing and sales activities. The sales agents and marketers play an important

role here.

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Some examples of American Express's marketing and sales activities are- sales

force, advertising, promotional activities, pricing, channel selection, quoting and

building relations with channel members. The company can use the marketing

funnel approach to structure its marketing and sales activities. The marketing

strategies can either be push or pull in nature, depending on the American

Express’s business objectives, brand image, competitive dynamics and current

standing in the market.

Effective and wisely integrated marketing activities can develop the brand equity

of American Express and help it stand out from the competition. However,

American Express must avoid making false commitments about product features

that cannot be fulfilled by the production department. It indicates the need to

ensure coordination between different value chain activities.

5. Services

The pre-sale and post-sale services offered by the American Express will play an

important role in developing customer loyalty. The modern customers consider

post-sale services as important as marketing and promotional activities. The

power of negative e-WOM due to poor support service cannot be undermined in

the current technologically advanced era. The company must analyze its support

activities to avoid damaging brand reputation, and instead use it as a tool to

spread positive word of mouth due to quick, timely and efficient support services.

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Secondary Activities

The support activities play an important role in coordinating and facilitating

the primary value chain activities. American Express can also benefit from

analysis of its support activities as explained below.

1. Firm Infrastructure

The firm infrastructure denotes a range of activities, such as- quality

management, legal matters handling, accounting, financing, planning and

strategic management. Effective infrastructure management can allow American

Express to optimize the value of the whole value chain. American Express can

control the infrastructure activities (or commonly called overhead costs) to

strengthen the competitive positioning in the market.

2. Human Resource Management

American Express can analyze human resource management by evaluating

different HR aspects, including- recruiting, selecting, training, rewarding,

performance management and other personnel management activities. The

effective HR management can allow American Express to reduce competitive

pressure based on motivation, commitment and skills of its workforce. The

company can also achieve its cost minimization objectives by analyzing hiring

and training costs with their relative return. The heavy dependence of American

Express on employees' talent will increase the importance of this value chain

support activity.

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3. Technology Development

In a modern, technological advanced era, almost all value chain activities depend

on technological support. The technological integration in production, distribution,

marketing and human resource activities requires American Express to realize

the importance of technology development. It can be divided into product and

process technological development activities. Some examples are- automation

software, technology-supported customer service, product design research and

data analytics.

4. Procurement

The procurement in value chain denotes the processes involved in purchasing

the inputs that may range from equipment, machinery, raw material, supplies,

raw material and other items necessary for producing the finished product. Due

to its linkage with multiple value chain activities, American Express should

carefully consider its procurement activities to optimize the inbound, operational

and outbound value chain.

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 CHAPTER IV

Financial Analysis is on the other documents, file name Financial

Analysis.

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