Business Strategy: Analysis of JP Morgan

This report analyzes the business strategy of JP Morgan, including a PESTLE and SWOT analysis. It also examines the competitive position of the organization using Porter's Five Forces model.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PESTLE and SWOT analysis of JP Morgan................................................................................3
Analysing the competitive position of the organization..............................................................6
PART B..........................................................................................................................................10
Strategic business plan...............................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is a combination of actions or set of decisions that are taken and
performed by the business to achieve business objectives and to secure a competitive position in
the market. It is a roadmap that provides direction to the business in accomplishing the goals.
Business strategy do not remain the same as it keeps on changing with time. In this report, J.P.
Morgan is taken as an organization. It is a multinational banking corporation with large presence
in UK. It provides wide range of services such as investment banking, treasury services and
trade, security services, asset management, private banking etc. This report covers influence of
environmental factors over the organization and its business strategies and analysing the
competitive environment and position of the business. It also includes a strategic plan that can be
used to achieve strategic objectives with appropriate strategies.
PESTLE and SWOT analysis of JP Morgan
PESTLE stands for political, economic, social, technological, legal and environmental
factors. It is the best strategic business method used by many organizations to analyse, examine
and track macroeconomic elements which impact on profit margin and growth. Here, this
framework is used in context of JP Morgan a leading global financial services company and one
of the biggest banking institution in UK, with number of operations across the world.
Political factor-
Political components heavily impacted JP Morgan operations negatively, as the UK
government continues to develop and implement unpleasant regulations on financial sector
(Downing, 2019). The rules and instructions formed by the authorities are strict that affect
business procedure and activities, organization cater financial services, changes in banking
regulations affect operations of firm. United States government has complex financial regulatory
framework that features a myriad of federal regulatory agencies. Chances in these rules create
difficulty for JP Morgan which is not suitable for long term profitability.
Economic factor-
Changes in inflation rate, gross domestic product, foreign exchange rate, current stage of
economic, unemployment and interest rate are the economic factors. These elements that affect
JP Morgan share and profit margin include but not limited to: the housing market become a
buyer’s market because interest rates in UK are extremely low in comparison to last few years

that impact on organization business operations and services that they provide to its consumers
worldwide. Profitability on loans also decrease due to low interest rates (Lewin, 2017).
Social factor-
Changes in culture, attitudes, values and belief are social factors that impact on business
and its functions within specific industry. Some extent, educational background to people are
different from other that create difficulties for company to communicate with them. Differences
between company and its target market based on educational background bring challenge to
relate to and draw in target segment effectively. It creates barriers for company to understand the
actual needs of people and also make issues for consumers to comprehend the banking policies.
Technology factor-
Clear communication and interaction with consumers is the most important thing for JP
Morgan, that help to retain people with them for longer and build loyal customers base.
Technology advancement is one of these factor that impact on firm positively as it helps to make
effective relationship between JP Morgan and its clients. Modern technological ear with effective
techniques of marketing in UK, will support to generate awareness about services of business
within marketplace. They help of gain attention of people and build strong image of company in
market which is quite beneficial for them.
Legal factor-
Health and Safety laws, discrimination and intellectual property laws impact on JP
Morgan employment structure positively. It helps to make their hiring effective and beneficial
for business growth. Discrimination law of UK, such as Equality Act 2010, is good for
employees who are working since for so long in firm. Organization always treated their staff
fairly and provide same opportunities for growth regardless of age, ethnicity, disability and
orientation. This law strengthens the relationship between workers and superiors, and helps to
create positive environment around work area.
Environmental factor-
The concern of government and consumers towards environmental sustainability raise
more than previous years. Government put pressure on company to support and contribute in
CSR, it will help to gain good market share in financial service sector effectively.
SWOT-

It refers to the study considered by firms to determine their capabilities, internal
weaknesses, external opportunities and threats that impact on its business operations.
Strength-
The strength of JP Morgan is company's diversified revenue streams, they generate
revenue from its business operations in community banking and consumers, asset management,
corporate or private equity interest, commercial banking, non-interest income and investment
banking (Ge, 2019). They keep well-balanced portfolio which makes organization less risk
adverse. Diversified revenue stream provide firm many benefits such as income visibility across
economic and business cycles. JP Morgan is successful company, they known for reorganizing
firms to make them more stable and profitable as well as gaining control of them. They lead
market in commercial banking and financial services. Capital and Liquidity position of
organization are really very strong.
Weakness-
IT infrastructure of JP Morgan is one of the weakness that impact directly on its
operations and productivity (Ahmad, Mishra and Daly, 2018). Infrastructure of company in UK
is not sufficient in maintaining their systems. It impacts negatively on profit margin and
operational efficiency.
Opportunities-
Mobile banking market is one of the biggest opportunity that JP Morgan will take in
order to generate revenue and gain attention of consumers. Mobile banking sector will help firm
to keep operations costs relatively low because people will still be capable to conduct business
without having to place a pressure on operation prices. While implementing mobile banking
system in their business structure, organization will be able to retail its potential consumers for
longer period. This service allows people to conduct financial transactions remotely by using
mobile applications or device that help to save time. Other, opportunity that company will take is
the growing credit card market, it spread all around the world, especially in UK, firm has
potential to be benefited by this progress as well.
Threat-
Uncertainty of economic growth in UK is one of the biggest threats for JP Morgan and
financial services industry. In 2013, the economy of this country was estimated to grow at
around 1.9%. Slower growth of economy creates uncertainty in market and makes people more

conservative about their business decisions. Organization could lose many business chances
when economic growth will not improve at favourable rate, it impacts negatively.
Analysing the competitive position of the organization
It is important for the organization to analyse the organization's industry structure and to
do this Porter's Five Forces model is used which is based on the insight that organization should
meet its opportunities and threats based on its corporate strategy (Ardley and McIntosh, 2019).
Analysing the competitive edge helps in comparing the competitive forces on the business. A
detailed analysis is carried out below.
Porter's Five Forces Model
This model identifies and analysis forces that changes the shape of every industry and
helps in determining the strengths and weaknesses of the of the business. It helps in formulating
plan to achieve business success. This model was proposed by Michael E. Porter in 1980. This
model is widely used to analyse the industry structure and corporate strategy of a company. A
detailed analysis of it is stated below.
Competitive rivalry from existing players (Moderate): This force refers to the
competition in the existing market and how it can impact the organizations business strategy.
The number of competitors in which J.P. Morgan operates are very few but most of them are
large in size which means organization cannot make move without getting noticed. Some of its
competitors are Wells Fargo, HSBC and Citigroup (Shokeen, 2016). All the organizations will
enter into competitive actions to gain market position and become market leaders. Also, the fixed
costs are high in the industry J.P. Morgan operates which makes companies to push to its full
capacity, consequently this forces becomes even more stronger. J.P. Morgan deals with the
competition in three ways. It continuously tries to distinguish itself from the competitors based
on heritage and experience, it aims at offering low cost and cutting edge services. J.P. Morgan
usually acquires small banks to reduce its potential competition. So, overall the competition from
rivals is moderate for J.P. Morgan.
Threat of new entrants (Low): It refers to force with which a new firm could enter the
market. Any company that attempts to enter the market and compete directly on the same level
with J.P. Morgan or any other major investment banking company it has to face many problems
or challenges (Rothaermel, 2016). The primary challenge will be the amount of capital required
to enter the market. Even if a new company enters the market it will require lot of time to build

its brand identity. Also, the government rules and regulations also makes it difficult to meet the
legal requirement before a new firm set up its business. Therefore, all these points make this
force weaker.
Bargaining power of customers (High): This industry is highly influenced by the
bargaining power of buyers. This force is usually a threat when number of buyers are less and
losing even one customer is adversely impact the business. But if the customer base is large then
losing one or two customer will hardly have any impact on the business. Individual consumers
have a little bargaining power as a loss of one account would have minimal impact on the
organization. But in together, the power is stronger because of high net worth individuals and
corporate clients as these clients have high bargaining power. Also, losing these accounts and
sources of revenue will adversely affect the profitability of J.P. Morgan. The organization is
continuously making efforts to make the switching cost for consumers higher by providing them
attractive offers. So, the bargaining power of buyers is high for J.P. Morgan even if measures are
taken to control it.
Bargaining power of suppliers (Less): It refers to the power supplier has to drive the
change in price of the product and services. It analysis the power and control supplier has to raise
the price or reduce the quality of product or services provided. This force has a great impact on
the profitability of the business (Porter’s Five Forces. 2016). The major suppliers of J.P. Morgan
are employees who provide resources of labour and depositors who provide resources of capital.
The number of suppliers in the industry are many and the products these suppliers provide are
standardized and less differentiated which makes the switching cost low. This results in making
J.P. Morgan switching to different suppliers which also means that suppliers have less control
over prices. All these factors make bargaining power of suppliers a weaker force.
Threat of substitute products (High): This force refers to the similar product or
services available in the market that can be substituted with the company's product and services
at a lower price. These substituted product and services are mainly for price sensitive customers
(Hashim, 2017). This threat has increased in the banking industry as companies outside this
industry has also started providing specialized financial services which were earlier provided by
only banks. For example, payment processing and transfer services provided by Apple pay,
PayPal and other online peer to peer lenders such as lenderclub.com. These substitutes have
highly affected J.P. Morgan and other major competitors in the industry. J.P. Morgan is trying to

reduce the prices of its products and services below than the substitute products available to
reduce the rate of substitution.
From the above conducted Porter's Five forces analysis, it can be said that current
position of the J.P. Morgan is mainly affected by the bargaining power of customers and the
increasing threat of substitution from small service providers. So, these are the threats and
opportunities that are available to J.P. Morgan to take competitive advantage.
VRIO Analysis
It is an analytical technique used in evaluating the organization's resources and the
competitive advantage associated with it. This method has four dimensions: valuable, rare,
imitable and organization (Rockwell, 2019). It was developed by Jay B. Barney for analysing
the resources which includes financial resources, human resources, any material and non-
material resources. For this model to be effective, it is required that company should know and
understand its resources completely.
Resources Value Rarity Imitability
Financial resources  The financial
resources are
highly valuable
which helps in
investing into
external
opportunities
and dealing
with the
threats.
 The financial
resources of
J.P. Morgan
are rare which
can be
possessed by
only few
companies.
 It is difficult to
imitate the
financial
resources of
J.P. Morgan as
these resources
are acquired
through profits
earned over the
years
(Johanson,
2019). So, new
entrants and
competitors
will require to
have similar
profits to

accumulates
these financial
resources.
Employees  The employees
of the J.P.
Morgan are
also valuable
resources as
most of its
workforce is
highly trained
which leads to
increased
output for the
organization.
The employees
of the
organization
are loyal and
retention level
of J.P. Morgan
are high.
The employees
of the
organization
are also rare
resource as
they are highly
trained and
skilled which is
not the same in
case of other
firms
(Bovolenta,
2019)
 The employees
of the
organization
can easily be
imitated as
competitors
can provide
training to
employees to
enhance the
skills. Other
companies can
also hire the
employees of
J.P. Morgan by
offering better
compensation.
So, employees
of J.P. Morgan
can provide
temporary
competitive
advantage.
After conducting VRIO analysis, it is identified that financial resources and distribution
network of J.P. Morgan can provide competitive advantage. Also, there is a temporary
competitive advantage for employees as competitors can hire the employees of J.P. Morgan by

providing them extra benefits. Currently, the company is having a strong position to face the
challenges and compete with its competitors.
PART B
Ansoff Matrix
This tool is used for identifying, analysing and planning the strategies for growth. A
detailed analysis of the same is drawn below.
Market Penetration: In this strategy, the J.P. Morgan focusses on increasing the sales of its
existing product in the existing market which also helps in increasing the market share.
Product Development: In this strategy, J.P. Morgan focusses on introducing new product in the
existing market which involves huge research and development.
Market Development: In this, J.P. Morgan used to enter into the new market with the existing
product which can be geographically or new customer segments etc.
Diversification: In this strategy, J.P. Morgan enters the new market with the new set of product.
This strategy requires huge investment and extensive research..
After analysing the Ansoff matrix, it is recommended that J.P. Morgan should implement
market penetration strategy as it is implementing new system in its existing market with the
existing range of products and services and the only objective of doing this is to attract more
customers and increase its revenue and it also does not require much investment unlike other
strategies.
Strategic business plan
Company Overview
J.P. Morgan is a major global bank and financial service provider company. It provides
commercial, retail and different types of investment banking services. It is the premier financial
institute in UK. The firm focusses on three pillars, that is, workforce readiness, financial
empowerment and economic development. Currently, the purpose of the organization is to
introduce Artificial Intelligence in its business operation to meet with changing technological
needs.
Mission and Vision
The mission of the organization is to enable more people to contribute and share in the

rewards of the growing economy. It believes in reducing inequality and creating shared
prosperity which can be done by collaborating business, government and other organizations in
the regions that power economic growth.
The vision of the organization is to become world-class financial services company.
Objectives
 To integrate Artificial intelligence in the business.
 It can be measured by implementing it in its all offices in UK.
 To identify all the necessary resources are available.
 To gather the funds, skills, expertise required to achieve this objective.
 To identify the time within which objective is accomplished.
Pestle Analysis
Political factor: The BFSI companies are facing many problems after the Brexit declaration.
The change in UK-EU trading arrangements would have a significant impact on the J.P.
Morgan business model and structure. Also, the client reaction with respect to the change will
also impact the operating strategy of the business.
Economic factor: The major economic factor that may impact the business is the low rate of
interest which is making feasible for consumers to take loan but the same is adversely impacting
the J.P. Morgan and other businesses as profitability of the organization is reduced.
Social factor: Lack of awareness about the benefits of financial services and poor education
level of the people is the major social problem that J.P. Morgan is finding difficult to deal with.
This creates a barrier to clearly understand the actual needs of the people.
Technological factor: Technological innovation is the factor that can positively impact the
business. The two major technological change is increasing usage of blockchain technology and
emergence of artificial technology in BFSI sector. Implementing these technologies will attract
customers and creates brand image.
Legal factor: J.P. Morgan has to legally comply with all the laws in relation to data privacy and
security and risk associated with it which is a major concern of every organization. This
strengthens and build trust among its workers and customers and creates a positive
environment.
Environmental factor: J.P. Morgan is affected by the rising concern over sustainable
environment. But it will positively impact the business as it will help in gaining market share.

Tangible and tactical strategies
 The organization should start its implementation at the top level of the organization and
then slowly adopting it to other levels of the organization.
 J.P. Morgan should focus on the small incremental returns at the starting and while
building an AI driven culture, organization can exercise activities to maximize the
opportunities.
 Organization should form a new team with members having expertise in handling AI
and manage the overall process.
 It is recommended that organization should involve the stakeholders at all stages of
development so that everyone is aware of the change that is going to take place and
prepare themselves for the same.
 It should also integrate AI with the mobile apps of the company which is very trending.
This provides a personalized touch to the customer which will help in enhancing the
customer experience.
Measure and evaluation
There are different types of methods that can be used in measuring and evaluating the
performance of the business plan. The three widely used method that can be implemented by
J.P. Morgan is stated below.
Benchmarking: It is the process in which performance of the organization's products, services
and processes are compared with the other companies in the same industry. It helps in
identifying the gaps and internal opportunities for improvement. It is five step process. First is
benchmarking the product or services (Porter, 2019). Second is determining the best in class
company to which company wants to benchmark against and the company needs to be from the
same industry. Third is gathering the data of the company based on its performance. Fourth step
is comparing the information gathered of both the organization and identifying the gap in the
performance. The last step is adopting the relevant actions. So, this method can be implemented
by J.P. Morgan to measure and evaluate its performance and take corrective actions as and
when required. This process will help in meeting with the competitors and give tough
competition.
Key performance indicators: KPIs are the key elements of a business plan which are required
to be achieved in order to attain success (Micheli and Mura, 2017). These are mainly outcome

based. The key performance indicators that can be used for measuring success are number of
new clients, average time for conversion, growth in revenue, net sales, number of customers
retained, increase in market share, employee satisfaction level etc. So, organization's usually set
a target to measure the actual performance with the standard and then identifying the gap
between the two and the reason for the same and then immediate and appropriate actions are
taken to control the situation and get back on track to achieve the goals. For knowing that
Artificial Intelligence is successfully implemented it is important for J.P. Morgan to measure
the outcome based on the key performance indicators after its introductions.
360-degree feedback: This system takes into consideration opinion, feedbacks and assessments
of employee performance. This method can also be used in evaluating the customers experience
about the new system (Karkoulian, Assaker and Hallak, 2016). The time to time feedback can
be taken from the customers to know the views and opinions of the customers, what is the
positive and negative thing felt by the customers and improvements required in the system. This
will help in identifying the areas that requires more attention and improvement. This process
can be carried out continuously to get regular updates which can provide useful insight to the
business.
All the above discussed methods for measuring performance should be used by J.P.
Morgan as each method has its advantages which will help in evaluating the performance from
various angels and it will also help in meeting with the objectives successfully.
CONCLUSION
From the above analysis, it can be summarized that business strategy of the organization
is affected by different business environmental factors which can be favourable and
unfavourable. For analysing these factors, Pestle and Swot analysis is carried out which has
helped in identifying the factors that may impact J.P. Morgan and its overall business strategy.
To know the competitive position of the business Porter's five forces model and VRIO analysis is
applied on J.P. Morgan which has helped in identifying the opportunities and threats related to
the business and areas to work upon. Based on the analysis, business strategic plan is formulated
with the objective of introducing Artificial Intelligence in the organization which is one of the
factor impacting the business operation. It also includes the strategies and tactics that can be
followed by J.P. Morgan to attain the objective efficiently and effectively.

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