Case Study

MERRIL LYNCH in JAPAN
Presented to: Dr. Himanshu Mohan Presented By: Karnica Ghildiyal Kaushik Das Gupta Sandeep Yadav

Later in 1997. starting with the 1980s. it acquired the leading manager of mutual funds in United Kingdom. Merrill Lynch purchased Smith New Court. expanded internationally. Merrill Lynch.About Company y Merrill Lynch is an investment banking business and the y y y y world¶s largest underwriter of debt and equity. the largest stock brokerage in Great Britain. Mercury." Merrill Lynch¶s investment banking operations has had a long global reach and is looking to reside in Japan. its international presence was limited to the investment banking side. but starting from 1990s it offered all its services. In the beginning. . with a dominant presence in London and Tokyo. In 1995.

joined him. Merrill's friend. Lynch. Lynch & Co. Lynch & Co In its early history. Edmund C. and in 1915 the name was officially changed to Merrill. opened for business at 7 Wall Street in New York City A few months later. the company purchased Pathé Exchange. Merrill. 1914.History of Company   The company was founded on January 6. when Charles E. made several successful investments y In 1921. which later became RKO Pictures. Merrill & Co. .

A. purchasing a controlling interest in Safeway. y In 1940.Contd« y In 1926. E. A. Pierce.8 trillion in client assets. and Cassatt & Co. the firm made its most significant financial investment at the time. and was briefly known as Merrill Lynch. the firm merged with E. y The firm went public in 1971 and became a multinational corporation with over US $1. operating in more than 40 countries around the world . transforming the small grocery store into the country's third largest grocery store chain by the early 1930s. y The company became the first on Wall Street to publish an annual fiscal report in 1941. and Cassatt. Pierce & Co.

and included checkwriting capabilities and a credit card. which enabled customers to sweep all their cash into a money market mutual fund. y . 2007. the company introduced its Cash Management Account (CMA). Merrill Lynch reported a $9. y On November 1. after being criticized for the way he handled the firm's risk management and the subprime mortgage crisis. 2008.24 billion in unexpected losses. Merrill Lynch CEO Stanley O'Neal left the company. y On January 17. which resulted in about US $2.7 billion write down of assets associated with subprime mortgages. y Fortune magazine called it "the most important financial innovation in years.Contd« In 1977.83 billion fourth quarter loss incorporating a $16.

Merrill Lynch reported a net loss of $1.Contd« y On April 17. y On January 22. 2009 Merrill Lynch was acquirede by Bank of America and became . 2008.97 billion for the first quarter of 2008. Merrill responded to its losses by raising capital through the sale of preferred shares.

and 83% of Fortune Global 500.  Co serves client in more than 150 countries and had relationship with 99% of U.  Co .000 ATM¶s and award wining online banking with more than 25 million active users. investing asset management and other financial and risk management products and services. small and middle market business and large corporations with full range of banking.About  BOA. Provides unmatched convenience in the united states serving more than 59 million consumers and small business relationships with more than 6. ML is one of the world¶s largest financial institutions serving individual consumers. . Fortune 500 co. more than 18.100 retail banking offices.S.

private banking and retail brokerage. y A global leader in wealth management.000 financial Advisors and approximately $2.After the Acquisition y It becomes the largest brokerage in the world. y Bank of America owns approximately 34% of the economic interest in Black Rock. . an independent publicly traded investment management firm. with more than 15.2 trillion in Client Asset.

the case study analyzes Merrill Lynch's future in Japan.Introduction of Case Study This case study analyzes the risks and benefits for a company to go international. In closing. Using the time frame from the 1980s to 2002. The author provides a background study on Merrill Lynch and discusses the rate of change in the international capital market. paying attention to how Merrill Lynch took advantage of this. using Merrill Lynch as an example. . studying the risks and benefits of their strategy. and it's suitability for Merrill Lynch. The case study speaks of the Japanese market in particular. the paper examines what kind of market would be suitable for such a strategy and how macroeconomic events can influence a business.

y In 1998 there are some relaxation on the regulations. . y Bankruptcy Yamaichi Securities.Facts of Case y In 1980 started a private client business in Japan but met with limited success because of restrictive regulations. y Joint Venture with Sanwa Bank.

Questions .

does Merrill Lynch's strategy of expanding internationally make sense? Why? . Given the changes that have occurred in the international capital markets during the past decade.Question 1.

Question 2. What factors make Japan a suitable market for Merrill Lynch to enter? .

Question 3. Pay close attention to the timing and scale of entry and the nature of the strategic commitments Merrill Lynch is making in Japan. What are the potential benefits associated with this strategy? What are the costs and risks? Do you think the tradeoff between benefits and risks and costs makes sense? Why? . Review Merrill Lynch's 1997 reentry into the Japanese private client market.

Question 4. was the Japanese expansion a costly blunder or did the company simply get hit by macroeconomic events that were difficult to predict and avoid? . The collapse in stock market values in 200102 resulted in Merrill Lynch's Japanese unit incurring significant losses. In retrospect.

Do you think Merrill Lynch should continue in Japan? Why? .Question 5.

Sign up to vote on this title
UsefulNot useful