Analysis of Wells Fargo's Stakeholders and Financial Performance

This report provides an analysis of Wells Fargo & Company, examining the influence of stakeholders on its financial performance. It begins with an overview of the company's background and the external factors, such as legal and economic conditions, that affect its operations. The report then delves...Read More

Running Head: BUSINESS AND CORPORATION LAW 0
Social Performance of organisations
7/22/2019
Student’s Name

Wells Fargo & Company
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Contents
Introduction......................................................................................................................................2
Background of the Company...........................................................................................................2
External Factors...............................................................................................................................2
Impact of primary Stakeholders on financial Performance.............................................................4
CSR Issue.........................................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Every business has some stakeholders towards which the entity has some responsibilities.
These stakeholders include internal as well as external factors. These stakeholders influence the
working and performance of the organization and also get affected by the same. Corporate Social
responsibility is an emerging concept in today’s era that state an organization has certain
liabilities towards stakeholders and society and therefore the same should act ethically. In the
presented essay, the discussion will be drawn upon to different ways, in which primary
stakeholders of an organization affect the financial performance of the organization. Further, a
controversial corporate social responsibility concern associated with the company will also be
discussed.
Background of the Company
The company chosen for this assignment is Wells Fargo & Company. This is an
American multinational financial services company, having headquarters in San Francisco,
California (Kantor & Judd, 2015). The company provides different financial services and
products to its customers. The services provided by the organization are mortgage loan, personal
lines, and loan, Auto loan, and Student loan. The company also provides credit cards. The
company also has rewards and benefits schemes for the customer. In terms of market
capitalization, the chosen company is the fourth-largest bank in the world.
External Factors

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As mentioned in the introduction section, some external factors are there that influence
the success of the organization. The very first factor is the legal factors. Being a multinational
financial service provider, the company has to comply with many rules and regulations of
different nations and localities (Tricker & Tricker, 2014). In such a scenario, any changes in the
legal framework can bring additional cost to the company. A company cannot do anything
beyond the legal boundary. Many of the times, the government brings some new policies that
require changes in the organization and in this manner; these factors affect the success of the
business. Corporate law, contract law, environmental laws are examples of some of the laws that
are applicable to the selected company. Changes in these laws require the development of new
plans and procedures. In addition to this, because of these laws the company has to modify the
manner, it provides loan, and amount and security aspect of the same. Hence, it is clear that even
being an external factor, legal environment affects business and its success.
Another factor in the organization’s external environment is an economic factor. Being a
financial company, the company soon gets the effect of this factor. Saving rate, foreign
exchange, inflation rate are some of the elements that determine demand and investment in an
economy. If the economy does not perform well, then people do not spend much money. It
reduces the level of loan applications that directly affect the business of Wells Fargo & Company
(hereinafter referred as Well Fargo or the company) in a negative manner. Further stability of the
economy is another aspect. Different economic factors influence loan defaults (Pratt, 2016) The
company faces issues while developing its plans and policies and forecast the profits when the
economy is unstable. Therefore being a finance company Well Fargo is highly affected by
economic factors.

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Impact of primary Stakeholders on financial Performance
Stakeholders are important characters for every organization. These people have some
interest or stake in the affairs of the business. Stakeholders do not only affect the day to day to
the affairs of the company but also influence the success and financial performance of the same.
Mainly two types of stakeholders are there in Well Fargo namely primary stakeholders and
secondary stakeholders. Before understanding the ways in which primary stakeholders influence
the financial performance of the company, first, the identification of these stakeholders is
necessary. Primary stakeholders of the company involve employees, customers, shareholders,
debtors and creditors of the company. Moving the discussion towards the ways, the following are
required to have a look upon.
1. Debtors are required to be loyal. As the company belongs to the financial sector, there is
always a risk that customers can fail to repay their loan. Such situations increase the
number of bad debts accounts and influence the financial performance of the company in
an adverse manner.
2. Another way is that a happy and satisfied customer always recommends a business to
others. If customers are satisfied then they promote the business of the company and
contribute to the success of the same. For instance, customers who find the company
suitable often recommend the services to their friends, family, and help to enhance the
customer base of the same.
3. Being a part of the primary stakeholder of the company employees also influence the
financial performance of Well Fargo. If employees are satisfied, they do more work and

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even their present work in a more efficient manner. In addition to this, lower employee
turnover brings cost-saving benefits to the company.
4. Another way in which an employee can affect the financial performance of the company
is strikes. For instance, in the year 2015, the company-experienced protest from its
employees in against of bank’s alleged predatory practice (Brescia & Marshall, 2016).
Such kind of incidents affects the financial performance of the company in direct as well
as indirect manner as first it disturbs the regular working of the company; secondly, it
reduces the reputation of the company.
5. In general board of directors of the company take decisions on behalf of the company but
some of the powers are available with shareholders of the company. Sometimes, the
company plans a project but shareholder does not approve the same, it affects the
economic performance of the company.
CSR Issue
After the abovementioned discussion, it is far clear that primary stakeholders play an
important role in Well Fargo and maintain the capacity to influence its financial performance.
Now, discussing another aspect of the report, i.e. corporate social responsibility, this is to state
that the company focuses on the same and displays its vision, goals, and values on its official
website. Nevertheless, it does not mean that the company never faced any issue with respect to
its CSR. Here, one of the controversial CSR concerns of the company is going to be discussed.
The issue is related to the year 2016 where it was found that many of the employees of the bank
opened fake accounts of customers. In further investigation, it has been detected that employees
of the organization were given very high targets that they were not able to meet. This is the

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reason that in order to meet targets they have opened fake accounts. This incident spoiled the
image of the company and also brought penalties to the same. As a result of this incident, the
company fired around more than five thousand employees out of which mostly were low level
manages (Cooper, 2018). This scandal counts as one of the greatest controversies in the field of
corporate governance of the company.
Conclusion
In order to conclude this report, this is to state that stakeholders are an important asset of
every organization. In the presented report, the external factors and primary stakeholders have
been discussed that influence working and financial performance of Well Fargo. Further CSR
controversy associated with the company was also been discussed. As the significant of the
stakeholders are far clear, hence the company is advised to take careful actions while dealing
with them as any small incident can bring significant adverse results.

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References
Brescia, R. & Marshall, J., T. (2016). How Cities Will Save the World: Urban Innovation in the
Face of Population Flows, Climate Change and Economic Inequality. Oxon: Routledge.
Cooper, D., R. (2018) Business Research: A Guide to Planning, Conducting, and Reporting Your
Study. SAGE Publications.
Kantor, P. & Judd, D., R. (2015). American Urban Politics in a Global Age. Oxon: Routledge.
Pratt, J. (2016). Financial Accounting in an Economic Context. USA: John Wiley & Sons.
Tricker, B., & Tricker, J. (2014). Business Ethics: A stakeholder, governance and risk approach.
Oxon: Routledge.