Business Strategy Report: JP Morgan Analysis and Strategic Plan

This report provides a comprehensive analysis of JP Morgan's business strategy. It begins with an introduction to business strategy and the chosen company, JP Morgan, an American financial services holding company. The report then applies the PESTEL analysis to examine the impact of macro-environmental factors on the company, including political, economic, social, technological, environmental, and legal factors. Following this, a SWOT analysis is conducted to evaluate JP Morgan's internal environment, identifying its strengths, weaknesses, opportunities, and threats. The report also utilizes Porter's Five Forces model to assess the competitive forces within the market. Furthermore, the VRIO analysis is applied to identify valuable, rare, inimitable, and organized resources. Finally, the report culminates in the development of a strategic management plan for JP Morgan, drawing on the preceding analyses and offering recommendations for future growth and success. The report concludes with a summary of the findings and a list of references.

Business Strategy

Table of Contents
INTRODUCTION.....................................................................................................................................3
LO 1............................................................................................................................................................3
P1 Impact and influence of the macro environment on J P Morgan............................................3
LO 2............................................................................................................................................................5
P2 Analysis of the internal environment and capabilities of the chosen organization................5
LO 3............................................................................................................................................................9
P3 Porter’s Five Forces model.....................................................................................................9
LO 4..........................................................................................................................................................11
P4 Strategic Management Plan..................................................................................................11
CONCLUSION........................................................................................................................................13
REFERENCES........................................................................................................................................15

INTRODUCTION
Business Strategy can be defined as a set of actions that are competitive and used by
business organizations to attract customers and enhance their overall sales as well as
productivity. It helps an organization achieve its goals and objectives effectively and in the most
efficient way possible (Amran and et. al., 2016). A business strategy helps in creating a direction
for the complete organization. Company chosen for this report is JP Morgan, which is an
American Financial Services holding company and investment bank. It is headquartered in New
York, United States and is considered as the sixth largest bank by assets across the world. The
company is known for helping businesses and making them more profitable as well as financially
stable. It has operations in different parts of the world and is also widely recognized. The report
uses appropriate models like PESTEL and SWOT analysis in order to analyze the impact of
macro environmental factors as well as internal environment capabilities of the selected
company. Porter’s Five Forces model is also applied in order to evaluate the different
competitive forces in the market. Lastly, a range of different concepts as well as theories are also
used in order to devise a strategic plan for the company.
LO 1
P1 Impact and influence of the macro environment on J P Morgan
PESTEL Analysis can be defined as a strategic tool that is used by the marketers of
various organizations to monitor as well as analyze the various macro environmental factors that
can impact their overall functioning. The analysis helps in identifying any changes in the various
factors like political, economic, social, technological as well as legal factors. The PESTEL
analysis for JP Morgan is explained below –
Political Factors – There are various political environments that can impact the
profitability as well as chances of survival of a company (Chang, 2016). Various political factors
are political stability of the country, different political laws that are enforced by a particular
country, integrity of politician etc. JP Morgan should analyze the different political factors in
order to carry out its business operations effectively. If the company analyzes the different
political factors, it will be able to earn high profits and also run various tasks in a much more
refined way. This can further help the respective company to also enhance its position in the

market. Therefore, it is important to take these factors into account to ensure success and high
performance.
Economic Factors – Economic factors comprise of inflation and tax rates, credit terms
and conditions, skill levels of the workforce, rate of economic growth, education levels of the
economy, efficiency of the financial markets etc. These factors can impact the aggregate
demand, investment as well as the way in which companies carry out their business processes
(Chen, Eshleman and Soileau, 2017). The rate of growth in the GDP of an economy can effect
the way in which JP Morgan can grow in the future. The exchange rate of the country in which
JP Morgan operates can also significantly impact the overall profitability of the company. The
US is an economically stable company which is beneficial for the respective company in
ensuring a smooth flow of operations. On the other hand, if there is a high rate of unemployment,
the company will not have enough employees to work for it which will impact its overall
productivity.
Social Factors – The social factors which influence JP Morgan are directly related to the
society or market it operates in. It is important that the company has a complete understanding of
its customers, their lifestyle as well as their level of education to devise effective strategies. On
the other hand, if the company does not have the same, it will start losing customers and also will
be unable to promote its products in the market. The company should also lay its primary focus
to ensure that the target customers and other clients do not leave their interest and priorities in its
products and services. Since, JP Morgan is a company that has been able to maintain good
relations with its customers, they are loyal to the brand. Thus, social factors are an important
aspect that should be taken into account by the company.
Technological Factors – Technology is rapidly advancing and has become of the most
influential factors that can impact the overall performance of a company (Ciasullo, Cardinali and
Cosimato, 2017). This is the reason why it has become extremely important to constantly
upgrade and innovate the products and services. JP Morgan is an organization that keeps brining
innovation to its products due to which it has been able to generate large profits and thus become
a market leader in the finance industry. Incorporating latest technology will make it easier for JP
Morgan to carry out complex tasks more effectively as well as efficiently. The way in which
services are offered will also improve and the company will be able to attract more customers.

On the other hand, failure to do so will result in requirement of an increased manual labor, more
time to finish off tasks and also, a reduction in the overall profitability of the company in the
market.
Environmental Factors – Different markets have their own environment standards that
can impact the overall productivity as well as performance of a company significantly. Also,
consumers today are becoming increasingly aware about the environment and prefer associating
themselves with brands that are socially responsible. Environmental factors such as climate
conditions, sudden changes in the weather can significantly impact transportation of various
finished products and other resources (Evans and et. al., 2017). This will further impact the dates
of delivery of the final products on time. Therefore, the company should incorporate renewable
sources of energy in its system to be socially responsive and thus attract more customers. On the
other hand, if the company fails to do so, it will have to pay a huge amount for the same in terms
of its profitability as well as productivity.
Legal Factors – There are various legal legislations in a country that organizations
operating there are expected to adhere to in order to carry out their operations in an effective
manner. Thus, being a multinational company, JP Morgan is expected to comply by various rules
and legislations. Discrimination Laws that are put forward by the government should be
incorporated to ensure that fair and equal opportunities are provided to the employees and that
there no kind of discrimination among them (Yuan and et. al., 2018). Other legal factors include
Health and Safety laws that the respective company follows so that the employees in the
company feel safe and secure of their jobs. If the company will not follow or adhere to the legal
legislations, they will impact its overall position in the market as well as productivity adversely.
LO 2
P2 Analysis of the internal environment and capabilities of the chosen organization
SWOT Analysis of JP Morgan
It refers to strategic planning technique which is generally used by a company or an
individual as that will help them in understanding its strengths, weaknesses, opportunities and
threats. By understanding these factors an organization or a person develops effective decision
which helps them in grabbing opportunities through utilizing strengths (Grayson and Hodges,

2017). Along with this, it will also help in overcoming weakness in order to handle threats
effectively for gaining competitive advantage at the potential marketplace. In respect of JP
Morgan they are conducting SWOT analysis in order to understand their internal environment by
evaluating its strengths, weaknesses, opportunities and threats so that they can make effective
decision. SWOT analysis of respective company is given below -
Strengths Weaknesses
 Leading player in finance service at
global level: JP Morgan conducting its
business operations and functions in
more than 60 countries like United
State, United Kingdom and many more
as well as they serve their services to
various customers, institutions,
businesses and governments (SWOT
Analysis of JP Morgan, 2019).
Respective company is also leading the
marketing in investment banking,
financial services and commercial
banking.
 Strong capital and liquidity: JP
Morgan capital as well as liquidity
position are very strong which succeed
their business. Respective company
deposits increased and loans minimize
in the duration of 2008 to 2013. At that
this JP Morgan deposits to loans ratio
get increased to 174 percent.
 Enhancing expenses of firm: JP
Morgan expenses management is
deteriorating with firm’s non -
interest expenses and its operating
expenses are also have been getting
increased year by year. Respective
company non – interest expenses
developed near about 72 percent of
the total net revenue in the year 2013.
This will directly or indirectly impact
on the company and it seems to be
their weakness.
 Over dependence on certain
marketplace: Respective Company
is operating at the wide location as
well as they are heavily dependent on
the market of North America for
getting major portion of its revenue
and profits i.e. near about 65 percent,
especially the United States
(Whitehead, 2017). Due to such huge
dependency on a single market make
JP Morgan vulnerable to business
slowdown or any economic in

particular marketplace.
Opportunities Threats
 Expand Geographically - There is an
opportunity for JP Morgan to expand
its business in various untapped
markets of the world. This will help in
increasing the overall market share of
the company.
 Growth in the credit card market -
Also, the use of credit cards across the
world is increasing rapidly which
means that the respective company can
tap this opportunity and thus increase
its competitiveness.
 Financial Crisis – If there happens
to be a financial crisis, the overall
financial position, profitability,
revenues as well as margins of the
company will get affected adversely.
 Other regulatory challenges – A
sudden change in the regulations of
different financial institutions will
lead to an increase in compliance
costs and will thus affect their
operating margins on whole.
VRIO Analysis of JP Morgan
By conducting VRIO analysis an organization able to understand its capabilities that
helps them in developing strategies as well as plans in effective manner. VRIO analysis of JP
Morgan is given below -
Resources Valuable Rare Inimitable Organized
Services quality Yes - - -
Brand awareness Yes Yes - -
Employees Yes Yes Yes -
Financial position Yes Yes Yes Yes
Valuable - It refers to those resources which are valuable for a company and that will help them
in gaining competitive advantage. In respect of JP Morgan their valuable resources are-

 Service quality: It is valuable because that will help respective company in attracting
more and more customers toward their company and encourage them to purchase their
financial services (Johnson, 2016).
 Brand awareness: Respective firm is known for their quality financial services at the
worldwide level through which they make loyal customers as well as that also help them
in gaining competitive advantage.
 Employees: JP Morgan employees are skilled, talented, experiences and capable which
help company in attaining their every desire goal successfully.
 Financial position: Respective company have very strong financial position through
which they provide all required resource to employees by which they conduct their
operations effectively and succeed in market.
Rare - It refers to that resources which are rare and other company not have it in current time.
Through this a company gains market value and competitive advantage (Ko and Liu, 2017). In
respect of JP Morgan their some resources are not rare such as service quality because there are
some competitive firms who offer same kind of offering. But respective company has several
rare resources-
 Brand awareness: Respective Company use attractive methods for brand awareness
which help them in attracting and engaging more and more at the competitive
marketplace.
 Employees: This resource is rare because at JP Morgan every employee is talented,
skilled and experienced which conduct their work effectively.
 Financial position: It is rare in the market because there are no other companies who
have such financial position at the marketplace.
Inimitable - It refers to that resource which can’t be copied by any other competitive company.
In respect of JP Morgan their some resources can be copied such as service quality and brand
awareness but there are some resources which cannot be copied-
 Employees: This resource cannot be copied by others because every employee has their
unique skill, talent, knowledge and capabilities which help JP Morgan in gaining
advantage (Lai, Melloni and Stacchezzini, 2016).

 Financial position: It is not easy for any firm to copy financial position of JP Morag
because it is a big brand with strong financial background.
Organized - It refers to those resources which didn’t require to be organized after a period of
time for gaining competitive advantage. In respect of JP Morag their some resources need to be
organized in order to maintain their effectiveness such as service quality, brand equity and
employees. But there is a resource which didn’t required to be organized for long time duration-
 Financial position: JP Morgan financial position not need to be organized for long time
duration as well as it will also help them in gaining competitive advantage at the potential
marketplace.
LO 3
P3 Porter’s Five Forces model
Porter’s Five Forces model that explains the reason behind why various organizations are
able to sustain distinct levels of profitability. The model helps companies in determining their
competitive environment which also affects the profitability. Porter’s Five Forces model, in
context to JP Morgan is explained below –
Threat of New Entrants – The threat of new entrants in the market is a relatively low
force as any new company that tries to directly compete with JP Morgan will have to face many
challenges. The reason behind this is that the company has a strong hold in the market and is a
market leader. But still, there is some threat that the company and other investment banks can
face due to entry of new companies (JPMorgan Chase & Co. Porter Five Forces Analysis,
2020). Therefore, the company will have to adopt effective strategies in order to overcome the
same. JP Morgan can innovate its products and services which will not only help it reach out to
new customers but also its old customers will get a reason to purchase products. Also, the
company can invest some time as well as money in its research and development which can
reduce this force as there is a less probability of new entrants entering a market which has market
leaders like JP Morgan that keep redefining their standards.
Bargaining Power of Suppliers – Organizations operating in this particular industry
purchase their raw materials from a number of suppliers (Langabeer and Champagne, 2016).
This a strong force as suppliers who have a dominant position in the market can impact the

overall margins of JP Morgan in a negative manner. They can use their high power of bargaining
to earn more amounts of money. This can further lead to a decrease in its overall profitability.
Thus, JP Morgan can tackle this force by building an effective as well as efficient supply chain
with various suppliers. It can also use different raw materials to develop its products and if the
prices of one goes up, it can easily shift to another. Also, the company should develop relations
with suppliers whose business depends on it which will help in reducing their overall bargaining
power as compared to other suppliers in the market. Thus, JP Morgan should devise attractive
and effective strategies so as to reduce the overall bargaining power of the suppliers.
Bargaining Power of Buyers – In today’s age, buyers or consumers are considered to be
the important which is the reason why companies pay their primary attention to understand and
satisfy their needs in the most effective manner. Customers want the best quality products at
affordable and pocket friendly prices. This can lead to JP Morgan being a under high pressure
and can also affect its overall profitability (Lim, Chalmers and Hanlon, 2018). Also, if the
company will have a small base of customers, their bargaining power will be very high. On the
other hand, if the company build s a large customer base, the power of this force will reduce and
the bargaining power of the buyers will also go down. The company should also keep on
innovating its products which will help in limiting this force. This will also in gaining a
competitive edge against competitors. JP Morgan can also address this force by offering
attractive discounts to the customers as well as to attract new potential clients. Introducing new
products in the market will also reduce the buyer’s bargaining power.
Threat of Substitutes – There is a threat of other companies including its competitors
offering similar products as JP Morgan in the market that meet the demands of the customers.
Thus, the power of this force is relatively high as compared to other forces as it can impact the
company’s overall performance. Therefore, respective company can handle this force by not
being just product oriented but service oriented as well (Linder and Williander, 2017). Also, it
should understand the requirements of its customers carefully rather than just focusing on what
are customers buying. This force should be addressed effectively to ensure that the overall
performance as well as productivity of the company is not impacted. This is because companies
offering substitute products can gradually take way the customers and result in a decline of
overall sales.

Rivalry Among Existing Competitors – This is considered to be the strongest force
among all forces for respective company. JP Morgan faces intense competition from various
other investment banks in the industry. The major competitors of the company are HSBC bank
and Barclays. These banks offer various discounts and other attractive deals in order to attract
more customers. Therefore, in order to reduce this force, respective company should formulate
strategies to distinguish itself from others in the market. In order to cut competition, JP Morgan
can acquire small banks who operate in a comparatively small market and thus eliminate some
competition. If it fails to do so, the company will have to face major consequences including
impact on its overall revenue and profitability. Another way of reducing competition among
existing players is to build a scale so that there is no rivalry and only healthy competition among
the brands.
Therefore, it is important for JP Morgan to analyze the power of each force in the above
model so that its overall performance as well as productivity is not at all affected (Lloret, 2016).
Also, Porter’s Five Forces model will help it in getting an insight about the impact each of these
forces can have on its functioning as profit margins. If analyzed properly, these forces can help
JP Morgan in gain a competitive edge over other plyers in the market and thus continue
maintaining its position of a market leader in the industry.
LO 4
P4 Strategic Management Plan
Ansoff Matrix
Ansoff Matrix can be defined as a strategic tool that helps different departments of an
organization to formulate effective strategies for growth. If a company uses respective matrix, it
will be able to make better decisions and thus grow its business in the market. This will also
enable it to gain the position of market leader and achieve organizational goals as well as
objectives. The Ansoff Matrix in respect to JP Morgan is explained below.
Market Penetration – In this strategy, an organization operates its business within an
existing market along with its products (Lozano, 2018). Companies usually try to adopt
innovative activities of promotions. JP Morgan can use this strategy to expand its business within
a particular market. The primary objective will be to increase customer base.

Product Development – In this, a company develops new product and markets them inn
an existing market. This involves extensive research and development before the final
development of the product. This strategy is used when an organization has deep understanding
of its customers (What is the Ansoff Matrix?, 2020). If JP Morgan decides to adopt this strategy,
it will have come up with new products and offer them to customers in an existing market in
order to enhance their overall market share.
Market Development - In a market development strategy, a firm enters a new market by
introducing its existing products in order to attract new customers. JP Morgan can cater to a
completely different segment of customers, expand regionally or enter a foreign market.
Diversification – This strategy is basically adopted to diversify their businesses in
different market (Paulus-Rohmer, Schatton and Bauernhansl, 2016). New products are
introduced in a new market with the main objective of increasing the customer base as well as
attract more potential customers.
Porter’s Generic Model
Respective model can be used by organizations operating across different industries in
order to gain competitive edge against other players in the market. The model comprises of three
strategies that are explained below in context to JP Morgan.
Cost Leadership Strategy – The main goal of an organization behind opting this
strategy is to become the lowest cost producer in the industry. This strategy is usually adopted by
large businesses as they have high levels of productivity due to diverse workforce as well as a
high capacity to utilize resources. JP Morgan can implement this strategy to expand its business
across various geographical market.
Differentiation Strategy – This strategy involves enhancing the products of a company
and making them more attractive as well as appealing than other competitors in the market. In
order to implement this strategy successful, JP Morgan will have to conduct a market analysis
and then bring in innovation in its products accordingly.
Focus Strategy – Firms that follow focus strategies pay more attention to niche markets
and by understanding the needs of the customers in them (Rugman and Verbeke, 2017). The

main objective in this strategy is to offer best possible values to customers with the help of
lowest price possible.
Strategic Management Plan
A Strategic Management Plan can be defined as a document that is used by organizations
in order to communicate important information like goals and objectives, priorities and to ensure
that all employees are working towards achieving those objectives (Shuen, 2018). A strategic
plan for JP Morgan is described below –
Aim – The company aims to become one of the most respected financial services
organizations in the world and fulfil the requirements of its customers.
Vision – JP Morgan visions to provide its clients an exceptional service as well as have
excellent operations. It also aims to build a winning and great culture for its employees.
Mission – The mission statement of JP Morgan is to be the best possible financial firm
across the world.
Values – Values of JP Morgan include commitment to integrity and responsibility. Also,
since it values its customers the most, the company wants to deliver exceptional services to its
clients and retain them for a longer period of time.
Goals and Objectives – The main objective of the company is to become the most
trusted and respected financial firm worldwide by offering best services to its customers.
Strategies – In order to achieve the aims, the respective company can adopt various
strategies like constantly provide training to the employees to ensure that their skills are
enhanced (Tsai and Liao, 2017). Various promotional activities can also be adopted in order to
reach out to as many customers as possible.
Tactics – In order to adopt these strategies, the company will have to increase its overall
workforce by hiring new employees. Also, the existing employees should be trained so that they
acquire new skills which will further help the company not only in gaining its goals and
objectives but also a competitive edge.

CONCLUSION
From the above report, it can be concluded that in order to build a successful and
sustainable business, companies can carry out various analysis like PESTEL and SWOT
analysis. Such analyses help organizations in identifying their strengths, weaknesses as well as
various opportunities that they can avail in order to grow their business. Various threats as well
as their impacts can be analyzed for which effective strategies can be formulated so that they can
be eliminated. On the other hand, PESTEL analysis can help in identifying changes in the
different environment factors such as political, economic, technological, environmental, social
and legal factors. Apart from these models, VRIO and Porter’s Five Forces frameworks can also
be used in order to devise effective strategies so that the overall profitability as well as market
share can be increased.

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