Bank of America Acquires Merrill Lynch: Who Pays? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Bank of America Acquires Merrill Lynch: Who Pays?
This case tells the story of Bank of America, a single cog in the financial machine that survived a major crisis in 2008, though its repercussions continue to be felt in the industry and in the global economy more generally. The mechanics of the financial crisis are examined as well as the part played by Bank of America and Merrill Lynch. While seemingly better positioned than its competitors and able to acquire Merrill Lynch, Bank of America leaders engaged in a number of questionable practices that brought it under ethical and then legal scrutiny.
Swot Analysis of "Bank of America Acquires Merrill Lynch: Who Pays?" written by Robert Crawford, N. Craig Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merrill Lynch facing as an external strategic factors. Some of the topics covered in Bank of America Acquires Merrill Lynch: Who Pays? case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Bank of America Acquires Merrill Lynch: Who Pays? casestudy better are - – wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, there is backlash against globalization, increasing government debt because of Covid-19 spendings,
technology disruption, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Bank of America Acquires Merrill Lynch: Who Pays?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bank of America Acquires Merrill Lynch: Who Pays? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merrill Lynch, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merrill Lynch operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Bank of America Acquires Merrill Lynch: Who Pays? can be done for the following purposes –
1. Strategic planning using facts provided in Bank of America Acquires Merrill Lynch: Who Pays? case study
2. Improving business portfolio management of Merrill Lynch
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Merrill Lynch
Strengths Bank of America Acquires Merrill Lynch: Who Pays? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merrill Lynch in Bank of America Acquires Merrill Lynch: Who Pays? Harvard Business Review case study are -
High brand equity
– Merrill Lynch has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merrill Lynch to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Merrill Lynch has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Bank of America Acquires Merrill Lynch: Who Pays? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Merrill Lynch has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Bank of America Acquires Merrill Lynch: Who Pays? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Diverse revenue streams
– Merrill Lynch is present in almost all the verticals within the industry. This has provided firm in Bank of America Acquires Merrill Lynch: Who Pays? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Merrill Lynch digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merrill Lynch has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Leadership & Managing People industry
– Bank of America Acquires Merrill Lynch: Who Pays? firm has clearly differentiated products in the market place. This has enabled Merrill Lynch to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Merrill Lynch to invest into research and development (R&D) and innovation.
Learning organization
- Merrill Lynch is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Merrill Lynch is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bank of America Acquires Merrill Lynch: Who Pays? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Merrill Lynch has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Bank of America Acquires Merrill Lynch: Who Pays? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Merrill Lynch is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Merrill Lynch is one of the most innovative firm in sector. Manager in Bank of America Acquires Merrill Lynch: Who Pays? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Merrill Lynch
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merrill Lynch does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Bank of America Acquires Merrill Lynch: Who Pays? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bank of America Acquires Merrill Lynch: Who Pays? are -
Low market penetration in new markets
– Outside its home market of Merrill Lynch, firm in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Bank of America Acquires Merrill Lynch: Who Pays?, in the dynamic environment Merrill Lynch has struggled to respond to the nimble upstart competition. Merrill Lynch has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Merrill Lynch 's lucrative customers.
Need for greater diversity
– Merrill Lynch has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merrill Lynch is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bank of America Acquires Merrill Lynch: Who Pays? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Merrill Lynch has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Merrill Lynch has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Bank of America Acquires Merrill Lynch: Who Pays?, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Merrill Lynch has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Bank of America Acquires Merrill Lynch: Who Pays? should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays?, it seems that the employees of Merrill Lynch don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays?, is just above the industry average. Merrill Lynch needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Bank of America Acquires Merrill Lynch: Who Pays? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Bank of America Acquires Merrill Lynch: Who Pays? are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merrill Lynch in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Merrill Lynch in the consumer business. Now Merrill Lynch can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merrill Lynch can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Bank of America Acquires Merrill Lynch: Who Pays?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Merrill Lynch can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merrill Lynch is facing challenges because of the dominance of functional experts in the organization. Bank of America Acquires Merrill Lynch: Who Pays? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Merrill Lynch can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Learning at scale
– Online learning technologies has now opened space for Merrill Lynch to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Merrill Lynch has opened avenues for new revenue streams for the organization in the industry. This can help Merrill Lynch to build a more holistic ecosystem as suggested in the Bank of America Acquires Merrill Lynch: Who Pays? case study. Merrill Lynch can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Merrill Lynch can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Merrill Lynch to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merrill Lynch can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Merrill Lynch has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merrill Lynch can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Bank of America Acquires Merrill Lynch: Who Pays? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays? are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Merrill Lynch business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Bank of America Acquires Merrill Lynch: Who Pays?, Merrill Lynch may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Consumer confidence and its impact on Merrill Lynch demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Merrill Lynch.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Merrill Lynch is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Merrill Lynch in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Merrill Lynch
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Merrill Lynch.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merrill Lynch with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Merrill Lynch high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merrill Lynch can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Merrill Lynch needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Merrill Lynch can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Weighted SWOT Analysis of Bank of America Acquires Merrill Lynch: Who Pays? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Bank of America Acquires Merrill Lynch: Who Pays? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Bank of America Acquires Merrill Lynch: Who Pays? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Bank of America Acquires Merrill Lynch: Who Pays? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Bank of America Acquires Merrill Lynch: Who Pays? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Merrill Lynch needs to make to build a sustainable competitive advantage.