Wells Fargo PESTEL, Porter's 5 Forces, Value Chain, SWOT and Competitor Analysis

This presentation provides a detailed analysis of Wells Fargo using PESTEL, Porter's 5 Forces, Value Chain, SWOT and Competitor Analysis. It also suggests approaches to address the issue of unethical approach of the employees by accessing banking details of customers.

CASE ANALYSIS

ells Fargo PESTEL analysis
Politic
al
Economi
c
• Financial Crisis
has been one of
the most
influential factor
that have
impacted the
company in 2007-
08
Soci
al
• Sustainability
was one of the
key areas for the
customer
• Global recession
period has
brought a
uncertainty
among the
customers
Technolog
y
• New Innovation
such as advanced
ATM, Debit and
Credit Card
Security of the
customer is one
of the major
factor that have a
big impact.
Ecological
Base Case – Unethical Approach of the Employees by Accessing Banking Details
of Customer
Lega
l
Objective – Suggest the approaches to address the issue
Industry : Specialty Coffee Shop
• The
implementation
of the Term
Auction Facility
have had a
positive impact.
• Economic
Stability is one of
the major issue
for the banks in
present day
• Go Green
Initiative is one of
the major factor
that have
impacted the
global economy
and environment
friendly approach
was a trend
• Banking Details
are one of the
most crucial data
that needs to be
protected

E Porter’s 5 Forces Analysis
SUPPLIER POWER
SUBSTITUTE
RIVALRY
THREAT OF NEW ENTRANTS
BUYER POWER
LOW
HIGH
HIGH
MEDIUM
HIGH
• There is dominance of
the regulatory bodies
that are associated
with the monitoring the
banking activities
• There are availability of
substitutes such as
Mutual Funds,
Cryptocurrency
• Strat-up cost are very
high of up to $1 Million
along with Capital
requirement of more
than $10 Million
• The switching cost is low
• Service Hours are always
open
• There are too many banks
in the industry
• Low capital to enter
market & to compete in
economies of scale
• Low exit barrier
EXIT BARRIER
/ ENTRY
LOW
• Banking industry is one of
the most fierce competitive
industry in US
• More than 6000 banks are
in operation in US (FDIC
2014)
Conclusion : ATTRACTIVE
MARKET

FIRM INFRASTRUCTURE
• Banks are situated in a
convenient location for the
customer
• There are existence in mobile
banking and internet banking
HUMAN RESOURCE MANAGEMENT
• Human Resource Development of
Wells Fargo is one of the major
factor for delivering the value to
the customer
• Employee’s ethical consideration
is one of the major factor to
improve the service
TECHNOLOGY DEVELOPMENT
• The flow of data needs to be
channelized properly
• The access of data needs to be
monitored by the various levels
of employees
PROCUREMENT
• Wells Fargo can incorporate a
process to develop a competitive
advantage against the
competition
Source: M. E. Porter, Competitive advantage: Creating and
Sustaining Superior Performance, Free Press, 1985.
PORTER’S VALUE CHAIN: SUPPORT
ACTIVITIES 1

INBOUND LOGISTICS
• Relationship with the supplier is one of
the key contributors in the process of
developing a product which needs to
be monitored by Wells Fargo
OPERATIONS
• Consistent economic growth of
Wells Fargo needs to incorporate
retail banking along with
products like loan and
debit/credit cards
OUTBOUND LOGISTICS
• Work ethically along with the
various stakeholders
SERVICE
• Focused on delivering the banking service\
• Provides Need Based Sale
• Cross Sales levels are one of the best I the
industry
• Providing the customer with best possible
experience
Source: M. E. Porter, Competitive advantage: Creating and
Sustaining Superior Performance, Free Press, 1985.
PORTER’S VALUE CHAIN: PRIMARY
ACTIVITIES
MARKETING & SALES
• Marketing during the 2013 is
one of the strong point of
Well Fargo that projects their
profit
• The Gr-eight was aimed to
sale 8 products to clients for
the subscription
2

soff Matrix (Business Strategy Analysis)
Current products New products
Current
markets
New
markets
Market Penetration
1. Developed nations such as
US is one of the main market
2. Taking a door step approach
for providing banking
services
Product development
1. Offer retail banking
solution to the
customer
Market development Diversification
1. Expand to emerging
economies to offer their
products
1. Collaborating with
partners to provide the
customers products like
Mutual Funds and
Insurance products

Word of mouth
communications Personal needs Past experience
Expected service
Perceived service
External
communications to
customers
Service delivery
Translation of
perceptions into service
quality specs
Management
perceptions of
consumer expectations
Wells Fargo
Wells Fargo
Gap 1 – The key issue with the
management is to understand the
market and the customer need. Gap 2 – Human resource development program
to incorporate ethical values in the employees
Gap 3: Unethical
approach for cross selling
can impact the brand
image
Gap 4: Need to share
the values
Gap 5 (Level of service) –
The products that are being
offered are incorporating
low level of service
Gap 1
Gap 2
Gap 3
Gap 4
Gap 5
Gap 1
Gap 2
Gap 3
Gap 4
Gap 5
Analysis: GAP model
of Service Quality

RESOURCES
(STEP 1) CAPABILITIES
(STEP 2) COMPETITIVE ADVANTAGE
(STEP 3) STRATEGY
(STEP 4) CORRECTIVE ACTION
(STEP 5)
Raw Materials Banking Products Better package as a product Best quality service Take corrective measure to reach
more customers
Needs to expand product line-up
Place Outlets 8050 Branches and 13000 ATMs Extensive service network Better ATM reach= Increased
customer accessibility Reaching the customer by
expanding to suburban areas
Facilities Equipment Automatic Teller Machine Better Customer Accessibility Increased accessibility and
customer service
Placement of the ATMs in more
secured and convenient location
Manpower Staff More than 250,000 Increased workforce Trained and professional
employees targets for customer
satisfaction
Incorporate ethical
considerations among the
employees
Management Leadership Competent leadership with
motivating mid level management Future growth and long term
commitment Strong and intellectual decision
making with valuable
consideration for long term
achievement
Need to incorporate training to
incorporate the sustainability in
the industry
Finance Financial Strong position against the
competition
Increased revenue and strong
market presence
Increased revenue ensures
strong position in the market and
a positive image among the
customers
Utilisation of resources for
trainings and development of the
executive level employees
Systems Processes and
Policies Standards have been long
established and duly maintained
and adhered
Temporary advantage.
Although its standards are near
to unique, but imitable
Important to adhere to policies,
but creative ways are required to
achieve customers; satisfaction
Processes improvements
required for operations efficiency
without compromising quality
Resources Based View Approach to Competitive Advantage

Value
Rare
Imitation
Resources Value Rare Imitation Competitive Advantage
Access to Cheap Capital Yes No Can be imitated by
competitors
Not significant in creating competitive
advantage
Ability to Attract Talent in Various
Local & Global Markets
Yes, Ofs Fargo strategy is built on
successful innovation and localization of
products
Yes, as talent is
critical to firm's
growth
Diffi cult to imitate Providing Strong Competitive
Advantage
Distribution and Logistics Costs
Competitiveness
Yes, as it helps in delivering lower costs No Can be imitated by
competitors but it is
diffi cult
Medium to Long Term Competitive
Advantage
Pricing Strategies Yes No Pricing strategies are
regularly imitated in the
industry
Temporary Competitive Advantage
Supply Chain Network Flexibility Yes Yes Near competitors also
have flexible supply
chain and share some of
the suppliers
Keeps the business running
Financial Resources Yes No Financial instruments
and market liquidity are
available to all the
nearest competitors
Temporary Competitive Advantage
Opportunities in the E-Commerce
Space using Present IT Capabilities
Yes, the e-commerce space is rapidly
growing and firm can leverage the
opportunities
No, most of the
competitors are
investing in IT to
enter the space
The AI and inhouse
analytics can be diffi cult
to imitate
In the long run it can provide
sustainable competitive advantage
Opportunities in the Adjacent
Industries & New Resources Required
to Enter those Industries
Can be valuable as they will create new
revenue streams
No Can be imitated by
competitors
Has potential
Intellectual Property Rights,
Copyrights, and Trademarks
Yes, they are extremely valuable
especially to thwart competition
Yes, IPR and other
rights are rare and
competition can't
copy
Risk of imitation is low
but given the margins in
the industry disruption
chances are high
Providing Strong Competitive
Advantage
Sales Force and Channel
Management
Yes No Can be imitated by
competitors
Can provide sustainable competitive
advantage. Potential is certainly there.

STRATEGY

Porter's Generic Strategies
Advantage
Target Scope Low Cost Product Uniqueness
Broad
(Industry Wide) Cost Leadership
Strategy
Differentiation
Strategy
Narrow
(Market
Segment)
Focus
Strategy
(low cost)
Focus
Strategy
(differentiation)
• Product Differentiation
• Providing the best possible banking service and financial products the customer by any means
• Increased sales by cross selling
• Value propositions :
• Controlled sales force
• Customer intimacy – Understand customer and indulge in sales
• Atmosphere – Comforting the customer to increase the sales

Customer ReachBanking Service
Federal SupportPublic Deposits
Competences
Better than
competitors’ and
difficult to
imitate
Same as
competitors’ or
easy to imitate
Resources
Johnson & Scholes - Exhibit 4.2
Resources, Competences &
competitive advantage

Strategy
Vision – We want to satisfy
our customers’ financial
needs and help them
succeed financially
Values – Five primary values
• What’s right for customers
• People as a competitive
advantage
• Ethics
• Diversity and inclusion
• Leadership
Objective – The objectives
are stated
• Innovation
• Risk management
• Corporate citizenship
Wells Fargo Purpose
To provide best possible customer
experience with the banking product
that will be providing
Angwin 2018

Assumption for strategy
• The company has been suffering from unethical sales issues.
• This has tarnished the brand image of the organization.
• The philosophy behind the strategy of providing the best customer
experience is that unique and positive product value will provide for
the best customer experience, thereby rebuilding the brand image.

Strategy recommendation
• Firing the unethical sales employees, hiring new employees and
training them accordingly.
• Incorporating a quality check body for the purpose of monitoring the
sales practices.
• Increased number of trust touchpoints with the customers to build
brand image.

Key challenges
• It will be difficult to monitor the practices of an enormous workforce
of Wells Fargo.
• Firing and hiring would mean letting go of experience and recruitment
of inexperience, thereby hampering the productivity. Therefore, crisp
training of the new employees is a necessity.
• Customers have already been betrayed by the touchpoints of the
company. The challenge is to reinvent the way in which the company
communicates in order to gain customer trust.

Competitor Analysis
Wells Fargo &
Competitors
Name Number of stores Differentiator
Wells Fargo 8,050 Branch, 13,000 ATM Best possible reach in retail banking
Bank of America 4,600 Branches One of the best in investment banking
Citibank 2,649 Branches One of the best in providing customer service

Competitor Analysis
• There are numerous completion from the other players in the market
• Citi Bank is one of the major competitor for Wells Fargo
• The key difference is always created by providing the service to the
customer as it is one of the major contributor to the growth of the
company
• Providing adequate financial product is also important for the bank to
involve in the process of developing the customer satisfaction

Wells Fargo SWOT Analysis
Strength
• One of the most trusted banks
in US
• One of the most valuable
company
• Fortune 500 company
• Strong distribution
• Diversified Products
• Cross Selling
Weaknesses
Opportunity Threat
• Limited presence in the
internal market
• Unethical approach of the
employees lead to bad image
of the banking industry
• Incorporation of the
technological advancements
• Growth in the population US
• Expansion to other countries
• Cyber security threats
• Rise on the online scams
• Negative effect of
regulatory restrictions
• High Competition in the
market

Wells Fargo Gestalt Analysis
Key Issues/Problem Specification Importance/
Urgency Ideal Outcome Options Cost/Speed/Ease of
Implementation
Low brand perception H/H
• Increased
in
customer
loyalty
• Increase in
Revenue
•Invest in HRD H/L/H
Ethical Consideration
of the Workers H/H
• Negative
Brand
Image
• More strategic marketing activities
based on consolidated data
H/L/H
•Incorporate ethical values L/L/L
High competition H/H
Substitute products L/L
Higher wages and
operating costs in
urban areas
L/L
Cost – H (high cost) L (Low Cost)
Speed – H (Slow) L (fast)
Ease of Implementation – H (Difficult) L (Easy)

Strategy: Segmentation, Target,
Positioning
Segmentation
• Segments based on the demographics as need of the banking
products varies from age to age
Target Market
• Target the existing customers for cross selling
• New target can be the young people
Positioning
• One of the best banking service provider in the US
• Best Cross Selling bank in US

Strategy: Marketing Mix (7Ps)
Product Price Place Promotion People Physical
Evidence
Process
• Current
Financial
Products such
as Deposits,
Securities,
Loan and etc.
• Maintain a
competitive
pricing
• Branches and
the ATMs • Marketing
campaign
• Brand Image
Building
• Getting the
trust of the
customer
• Bank Staff
associated
with customer
handling
• Customer
relationship
managers
• Banking
documents
• ATM Cards
• Provides a
seamless
banking
experience to
the customers
• Serves multiple
financial
products