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 - – there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , 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 -
Superior customer experience
– The customer experience strategy of Merrill Lynch in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Merrill Lynch are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Merrill Lynch in the sector have low bargaining power. Bank of America Acquires Merrill Lynch: Who Pays? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merrill Lynch to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Merrill Lynch has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bank of America Acquires Merrill Lynch: Who Pays? Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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 -
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.
Slow decision making process
– As mentioned earlier in the report, Merrill Lynch has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Merrill Lynch even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As Bank of America Acquires Merrill Lynch: Who Pays? HBR case study mentions - Merrill Lynch takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Merrill Lynch supply chain. Even after few cautionary changes mentioned in the HBR case study - Bank of America Acquires Merrill Lynch: Who Pays?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merrill Lynch vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Merrill Lynch needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Merrill Lynch is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Merrill Lynch needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merrill Lynch to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Merrill Lynch has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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 -
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.
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.
Using analytics as competitive advantage
– Merrill Lynch has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Bank of America Acquires Merrill Lynch: Who Pays? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merrill Lynch to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Merrill Lynch can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bank of America Acquires Merrill Lynch: Who Pays? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merrill Lynch can use these opportunities to build new business models that can help the communities that Merrill Lynch operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Better consumer reach
– The expansion of the 5G network will help Merrill Lynch to increase its market reach. Merrill Lynch will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Merrill Lynch can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merrill Lynch can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Bank of America Acquires Merrill Lynch: Who Pays? .
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Merrill Lynch needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Merrill Lynch has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Merrill Lynch needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
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 .
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.
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.
Regulatory challenges
– Merrill Lynch needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
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.