Kensington College Business Strategy Report: JP Morgan Analysis

This report provides a comprehensive analysis of JP Morgan's business strategy, addressing key aspects of its internal and external environments. The introduction outlines the report's purpose: to examine factors impacting JP Morgan and suggest development strategies. The main body delves into the macro-environment using the BCG matrix to assess business units like financial services, supplier services, confectionery, and plastic bags. The internal environment is examined using the McKinsey 7S model, assessing strategy, structure, systems, shared values, style, staff, and skills, along with the VRIO framework. Porter's Five Forces are applied to evaluate competitive forces, including the threat of new entrants, the bargaining power of buyers and suppliers, and the threat of substitute products. Finally, a strategic management plan is presented, recommending strategies based on the analyses. The conclusion summarizes the findings, and references are provided.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO1..................................................................................................................................................3
P1 Impact of macro-environment...........................................................................................3
M1...........................................................................................................................................4
LO2..................................................................................................................................................5
P2 Analysis of internal environment......................................................................................5
M2...........................................................................................................................................7
LO3..................................................................................................................................................7
P3 Porter five forces...............................................................................................................7
M3...........................................................................................................................................8
LO4..................................................................................................................................................9
P4 Strategic management plan...............................................................................................9
M4.........................................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is basically mixture of various decisions which are taken by the
organizations and series of actions which are performed by firms for attaining their longer-term
and short-term goals. The main aim of this report is to study the various factors and forces
impacting JP Morgan and recommend the proper strategies for its development.
JP Morgan is primarily investment bank as well as financial services organizations being
established in 2000 by Asron Burr and headquartered in New York, U.S.
This report gives an overview of impact of macro-environment, analysis of internal
environment, porter five forces and strategic management plan.
MAIN BODY
LO1
P1 Impact of macro-environment
Macro-environment is basically the mixture of all the factors as well as activities which
occurs outside the business environment and hence impacts its overall operations.
BCG matrix
BCG matrix is basically the framework which is being used for evaluating the position of
business as well as its potential in market and thus helps to analyze the business units. BCG
matrix generally consist of 4 quadrants which helps organizations to assess their competitive
position in the market.
Stars
Stars are basically the business units as well as products which have the great market
share as well as generate the highest amount of cash for business. Monopolies as well as first-to-
market products are generally known by the name stars. They are termed as stars because they
are the business unit which generates a great amount of profit for then organizations and thus
helps to achieve goals and objectives. The major advantage of Stars is that it helps organizations
to achieve competitive advantage and enlarge the customer base. The financial services of JP
Morgan are generally considered as stars. JP Morgan earns the great amount of income form this
business unit and helps to attain their strategic view (Baumgartner and Mangematin, 2019). JP
Morgan should integrate vertically through acquirement of the other firms within supply chain.
This will assist in earning huge profits.

Cash cows
These are the one which generates the amount of cash then they consume. These are the
products and business units which have great market capture but have low growth prospect.
Major advantage of cash cows is that it helps business in their overall growth by providing the
fund and leveraging future expansion. Supplier services business unit of JP Morgan is cash cow
which has helped them to capture great market share but overall market generally is declining as
this organization manage suppliers by themselves instead of outsourcing it (Davids and Van
Belle, 2017). JP Morgan should stop its further investment within this business unit and thus
should operate it as long as it is profitable.
Question marks
Question marks are the business units which mainly have high prospect for growth bu
they have low share in the markets. They consume high cash but brings little return and known
by the name problem children. Confectionery business unit of JP Morgan is generally considered
as question mark which has low share in markets and does not bring much return on its sales.
Recommended strategy is that JP Morgan can seek support of market penetration to make this
product present on various outlets. This will increase sale of confectionery (Delgado‐Márquez
and Pedauga, 2017).
Dogs
Dogs are the business unit which have low share in market as well as have low growth
potential. These units and products neither consume cash nor earns for business. Plastic bags
business unit of JP Morgan is considered as dogs. This unit has been in loss from past 5 years
and is declining because of great environmental concerns. To deal with this, JP Morgan can
divest this business unit and thus can minimize its losses (Quenum and et.al.,2019).
The most recommended strategy which JP Morgan can adopt in order improve its
strategic position as well as to gain the great market share is drawing out the cash from dogs and
invest in stars. As plastic bags of JP Morgan are Dogs which are continuously in loss and is
consuming great expense for its maintenance and marketing thus company should stop investing
in thus business unit and should rather use that money for innovating their financial services to
great amount which are their stars. This will eventually help the organization to sustain its
competitive advantage and minimize its most of the losses(Pourali and et.al.,2019).

Illustration 1: BCG Matrix
(Source: BCG growth-share matrix, 2013)
M1
Macro environment basically helps the organization to asses the various external factors
which impacts operations of organization. BCG matrix is considered as the most effective tool
for assessing the market position of organization. This BCG matrix through its four quadrant
helps organization to analyze which products help in gaining competitive advantage. For
example- Financial services of JP Morgan are considered as stars as it helps to generate huge
cash. While, its plastic bags are digs which does not provide enough return to company and
consume high cash (Gupta, 2016).
LO2
P2 Analysis of internal environment
McKinsey 7S model is basically the framework which is being used by the organizations
for analyzing its internal environment and thus helps firms to analyze various parts of the
organization. This model mainly consists of 7 elements
Strategy
Strategy is basically the plan which is being designed by the organization for building as
well as maintaining the competitive advantage over the competitors. This is considered as the
hard element of the business. The main strategy of JP Morgan is to build the sustainable
environment in organization and thus perform the function in an ethical manner (Chuang, 2019).

Structure
Structure is all about that how the organization is basically organized and their
departments are structured. JP Morgan mainly follows the functional structure and have
specialized functional areas like IT, Finance, Marketing etc. The top level in the hierarchy of JP
Morgan consist of 11 boards of directors with around 395 main executives. Besides this, the
organizational structure of JP Morgan is highly complex and thus consist of various hierarchical
level where relation between top, middle and lower level management is highly imperative and
structured (Ahenkora, Banahene and Quartey, 2016).
Systems
Systems basically addresses the various daily activities as well as procedures which the
staff uses for getting their job done. The various system which forms the main pillars of JP
Morgan are HR system, communication system, financial system etc which are highly regulated
as well as monitored in the most effective manner. These systems are mainly helpful for the
smooth functioning of organization. These systems of JP Morgan helps to manage the workflow
activities and thus increases efficiency as well as productivity (Ajagbe and et.al.,2016).
Shared values
Shared values are the core values of organization and generally reflects corporate culture
as well as work ethics. The major core values of JP Morgan which are Integrity, responsibility
and fairness are highly fundamental and thus aligns to the strategic view of this organization.
Besides this, JP Morgan generally have team culture integrated in its organization where the
employees are focused to perform their wok in team for increasing their productivity (Marx,
2016).
Style
Style basically defines the style of leadership which is being adopted by organizations for
influencing its employees and motivating them. Talking of JP Morgan, this organization mainly
adopts participative leadership style where the top management solicit the feedback and opinion
of their employees in decision-making and thus continuously encourage them. Although mostly
it follows participative leadership but as per the situation, leaders changes their style for the
attainment of definite goals (Mendibil and et.al.,2016).

Staff
Staff comprises of the employees as well as their capabilities and abilities. JP Morgan
consist of highly trained as well as talented staff which are highly competent and thus delivers
the quality services to their customers. JP Morgan currently has around 256981 employees
spread across the various locations and are highly skilled and experienced in their respective
fields. Besides this, to foster their productivity and performance, employees are required to work
in teams for understanding cross-culture differences and this eventually increases their efficiency
(Du Plessis, 2017).
Skills
Skills are the competencies as well as capabilities of employees within an organization
which contributes towards the achievement of goals and objectives. The most strongest skills
which are being represented by employees of JP Morgan are communication skills, teamwork
and leadership skills. In order to gap the bridge between the various other skills, JP Morgan
continuously provides training and workshops to them for boosting their skills. Their skills are
highly monitored as well as assessed from time to time.
VRIO framework
Capabilities Valuable Rare Inimitable Organization
Financial
resources
Yes No No No
Distribution
network
No Yes No No
Patents No No Yes No
Employees No No No Yes
M2
It is highly essential for the organization to evaluate its internal environment for
identifying the various internal aspects which impacts its operations. McKinsey 7S model and
VRIO framework are the two framework which helps organization to analyze its internal
environment. For example- the strategy of JP Morgan is highly imperative which is to build the
sustainable environment within organization. Besides this, various system in JP Morgan like HR

system, financial system helps organization in its smooth functioning. Along with this, in VRIO
framework the most valuable resources are its financial services while inimitable are the patents
of organization (Baumgartner and Mangematin, 2019).
LO3
P3 Porter five forces
Porter five force is basically the framework which helps the organizations to evaluate the
various competitive forces that exists within the sector and which have a direct impact on its
operations and functioning.
Threat of new entrant
The threat of the new entrant to JP Morgan is mow and thus this is the weaker force. The
main reason behind this weaker force is that for entering the financial industry a huge amount of
capital is required which sometimes becomes difficult for the new entrant and entrepreneurs.
Thus, this makes this force much weaker. In order to tackle this treat, JP Morgan should build the
economies of scale as well as bring new products and services (Davids and Van Belle, 2017).
Bargaining power of buyers
The bargaining power of the buyers as well as customers in the retail banking is generally
low thus this makes this threat weak force for JP Morgan. The main reason behind the low
bargaining power of the buyers is high product differentiation like treasury services, wealth
management etc. Due to high product differentiation, buyers generally do not switch to other
competitors and are willing to pay the high interest rates and high price for products. For
overcoming this threat and to minimize it, company can invest in research and development and
can bring continuous innovation in its services like effective treasury services, real-time foreign
exchange etc (Delgado‐Márquez and Pedauga, 2017).
Bargaining power of suppliers
There are generally two types of suppliers for JP Morgan namely depositors and
employees which are labours. The bargaining power of both the suppliers is generally strong and
thus they have high power of bargaining due to their strong position in the market. Besides this,
the power suppliers within financial sector makes the bargaining power of suppliers for JP
Morgan much strong. In order to overcome this situation, JP Morgan can build the efficient chain
of suppliers by having various suppliers instead of depending on few suppliers. Along with this,

company should develop the dedicated suppliers as well as should make a long-term relation
with suppliers (Quenum and et.al.,2019).
Threat of the substitute products
The threat of substitute product is generally moderate due to high product differentiation
by JP Morgan. Most of their services and products like treasury services are highly differentiated
in JP Morgan but despite the high differentiation, some of the services like transfer services like
Apple Pay, lendingClub.com, are not differentiated and still falls the prey of substitute product
by various other investment banks. Thus, this threat is moderate for JP Morgan and might hinder
its financial position and competitive advantage in market in comparison to the competitors. To
tackle this threat, JP Morgan can focus more providing quality services instead of focusing more
on products as these have great chance to be substituted (Pourali and et.al.,2019).
Rivalry among the firms
This is the fifth dimension of porter five force and thus addresses the competition among
organizations. JP Morgan generally face immense competition on both the platform domestic
and international from various multinational banks like Barclays, HSBC. Thus, the rivalry
among the firms is fierce for JP Morgan and thus can hinder its competitive position in the
market. Therefore, this force is generally high for JP Morgan due to strong presence of its
competitors. To tackle this force and overcome fierce competition, JP Morgan can build the
sustainable differentiation as well as can focus more on building the scale. Besides this, company
can collaborate with the competitors fort increasing its market share (Gupta, 2016).
Illustration 2: Porter five forces
(Source: Porter's 5 Forces, 2020)

M3
Porter five forces helps the organization to analyze the competitive forces impacting its
overall functioning and operations. For example- threat of the new entrant is generally low for JP
Morgan due to high capital requirements while rivalry among the firms is generally fierce for JP
Morgan due to great brand image of competitors. Besides this, bargaining power of supplies are
high and that of buyer is low for JP Morgan due to high product differentiation (Chuang, 2019).
LO4
P4 Strategic management plan
Strategic management plan is predominately document which mainly outlines goals as
well as objectives of organization and their long-term vision as well as mission.
Vision
Vision of JP Morgan is to provide the exceptional best client services along with
operational excellence and work with integrity and fairness to develop a winning culture within
organization.
Mission
Mission of JP Morgan is to become the leading financial services organization across the
whole world and provide a great platform to customers by offering great services to clients.
Objectives
 To increase the market share by 20 30 in upcoming year of 2020.
 To increase the profitability ratio by 20% by the end of year 2021.
 To increase the quality of products and services in next three months
 To achieve competitive advantage in next six months.
Marketing mix
Product
JP Morgan basically provides the banking as well as financial services to their customers.
Along with this, the various products as services of JP Morgan covers Asset management,
investment banking, treasury services, wealth management etc (Ahenkora, Banahene and
Quartey, 2016).
Price

JP Morgan generally follows competitive pricing where their interest rates are low. Bank
mainly charges the brokerage percentage upon various services and thus earns larger profit. It
generally charges different prices for its different kinds of services (Ajagbe and et.al.,2016).
Place
JP Morgan has various service channels as well as branches. Bank has currently around
5300 branches and nearly 15500 ATMs. The personal services are mainly provided at the bank
branches as well as through ATMs.
Promotion
The promotional strategy of JP Morgan is highly imperative and major advertising is
done through the client relation. Bank mainly promotes its services by maintaining good relation
with the clients and fulfilling all their financial needs (Marx, 2016).
Ansoff matrix
Market penetration
Market penetration is basically the strategy in which organization advertises their existing
products and services within existing markets. For example- JP Morgan promotes its financial
services within the existing market segment (Mendibil and et.al.,2016).
Product development
This is the strategy in which organizations mainly develops the new products as well as
services and promotes them to existing markets. For example- JP Morgan started its business in
confectionery division and thus promoted its various food items to the existing market.
Market development
In this strategy, organizations mainly enter the new market with its already established
product and thus rap the new market area. In this, organizations take their well-established
products to new market and enlarge customer base. For example- JP Morgan took its parent
product line to the new markets of Saudi Arabia and thus attracted the customers by providing
quality financial services (Du Plessis, 2017).
Diversification
This is the another strategy in which organizations mainly tap new markets by taking its
newly developed and innovative products in that market. In short, here organizations develops
the new product and thus take it to new market. For example- JP Morgan entered the markets of

Malta with its new product which was plastic bags which was completely different from its
parent brand (Baumgartner and Mangematin, 2019).
Recommendation
JP Morgan can take the support of market development strategy and thus this would be
the most beneficial strategy for this organization. As in this, organizations mainly capture the
new market with its already established product thus JP Morgan can take its financial services to
the new segment of disabled persons. As financial services of this organization are highly rated
and thus forms the core strength of company thus JP Morgan can take these services to the
disabled persons. For example- it can provide concession to the disabled person for their
entrepreneurship development (Davids and Van Belle, 2017).
Evaluation and control
JP Morgan can make use of various indicators for evaluating the effectiveness of their
services and for improving their overall performance in the market.
Benchmarking
This is one of the major as well as performance indicator which is being used by the
organization for evaluating performance of its products and services. JP Morgan can utilize the
various dimensions of benchmarking like cost, quality of services for measuring its operational
objectives (Delgado‐Márquez and Pedauga, 2017).
M4
The strategic plan is basically the plan which helps the organization to evaluate their
vision and objectives and thus helps to provide the right path form accomplishing these
objectives. Strategic plan mainly consist of the vision, mission and objectives of the company
which it intends to achieve in the long and short term. Besides this, plan will also help JP
Morgan to evaluate the various strategies which are available to them for their growth and hence
helps to select the best strategy which is feasible and will help to achieve objectives. Lastly, plan
helps to monitor and control the various activities through various performance indicators
(Quenum and et.al.,2019).

CONCLUSION
It has been summarized that macro-environment plays an important role for organization
and thus helps to analyze the various external factors which influences operations of company.
The McKinsey 7S model and VRIO framework basically assists organizations to evaluate their
internal environment along with the resources which helps them to achieve competitive
advantage. Besides this, with the help of porter five forces organizations are able to analyze that
what competitive forces in market are affecting their functioning and how much threat they have
in their business. At the end, an effective and thorough strategic planning provides a right
direction as well as track to the organization for achieving their goals and objectives.

REFERENCES
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Online
BCG growth-share matrix. 2013. [Online] Available through:
<https://strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html>
Porter's 5 Forces. 2020. [Online] Available through:
<https://www.investopedia.com/terms/p/porter.asp>