...ISM – II Case Analysis I Charles Schwab Corporation (A) Pricing Decision - 1 The following are the three possible price points that Pottruck is faced with: David Pottruck Is not a viable price point as they do not want to indulge in a price war with the low price discount traders The brand “Schwab” would be hurt as they would not be able to provide the service associated with the brand name at this price The range of services commanded at least a $10 price premium to the mid sized firms and a $20 premium on the bare bone providers The revenues impact will be similar to the 29.95 price point They also have an existing product - e.Schwab at a lower price point.They are looking to resolves issues with it and come up with a product with full range of services $19.95 $39.95 $29.95 The price would eventually drop down to this level due to competition Even at this price point, Charles Schwab will have the highest prices in the market At this price point price elasticity is more than that at $39.95 Pricing Decision - 2 Pricing has to be tackled on both the strategic as well as tactical level. Based on the analysis, our recommendation is: ◦ To provide a product with full features at $29.95 price point ◦ This price justifies their added services and will help prevent the other low cost firms from eating away at their market share ◦ Also, Charles Schwab has earned the reputation of entering every segment first. Entering at $29.95 will make it a market...
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...ქეისი N4 Charles Schwab – the switchboard business design ამ ქეისში განხილულია ამერიკელი მილიარდელი ბიზნესმენის მიერ დანერგილი ბიზნეს მოდელი და მისი რევოლუციური მოღვაწეობა ამერიკის ფინანსურ ბაზარზე. შეიძლება ვთქვათ, რომ მისმა ბიზნეს მოდელმა განვითარების სამ საფეხურიანი გზა გაიარა: თავიდან ჩამოყალიბდა discount brokerage კომპანიად, შემდგომ იყო financial planner-ებთან თანამშრომლობით მიღებული დიზაინი და საბოლოოდ მიიღო გამანაწილებელი დაფის (switchboard) ბიზნეს მოდელის ფორმა. ამ ბიზნეს მოდელის დანახვასა და განხორციელებაში ჩემი აზრით მნიშვნელოვანი როლი ითამაშა 2-მა ძირითადმა ფაქტორმა, თავად შვაბის პიროვნებამ და ფინანსურ ბაზარზე არსებულმა მდგომარეობამ, რომელმაც ხელი შუეწყო მის განვითარებას. შვაბის პიროვნებამ იმიტომ, რომ ამ ადამაინს ბავშვობიდანვე ჰქონდა მიდრეკილება შემოსავლის მიღების და ფულის კეთების. როგორც ცნობილია ჯერ კიდევ სკოლის პერიოდში თავს ირჩენდა ბაზარში კაკლის (ნიგვზის) გაყიდვით, კარდაკარ კვერცხებითა და ქათმებით ვაჭრობით. რაც შეეხება ფინანსურ ბაზარზე არსებულ სიტუაციას ის შემდეგნაირი იყო: არსებობდა რამდენიმე საბროკერო კომპანია და არსებობდნენ ადამიანები, რომელთაც სურდათ ფულის დაბანდება. საინვესტიციო პორტფელების შესაქმნელად საჭირო იყო ინფორმაციის მოძიება და გაანალიზება, ამისთვის ინვესტორები ქირაობდნენ ბროკერებს, ეს უკანასკნელნი კი აძლევდნენ მათ რჩევებს, რაშიც იღებდნენ თანხას. ერთი შეხედვით ყველაფერი ნორმალურადაა, მაგრამ ბაზარზე არსებობს მხოლოდ ერთი სახის შეთავაზება, რომელსაც აქვს პაკეტის სახე. ამ მომსახურებიდან კლიენტს რეალურად შეიძლება არ სჭირდებოდეს მთელი პაკეტი, მაგრამ უწევს...
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...Charles Schwab: Growth for the Future Marcus Readus & Brea R. Silva Team D Boston University; MET AD 741 October 14, 2013 Abstract This paper will discuss what direction the leading investment Services firm, Charles Schwab Corporation should take over the next ten years. To answer this question, an analysis of where Schwab and the financial industry are right now. In addition, it will examine what social and technological trends are shaping the way financial industry might be heading in the future. Lastly, it will recommend the direction the Schwab organization should take over the next 10 years. Introduction The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 8.9 million active brokerage accounts, 1.6 million corporate retirement plan participants, 895,000 banking accounts, and $2.11 trillion in client assets as of April 30, 2013 (Krieger, 2013). Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions;...
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...CHARLES SCHWAB CORPORATION Resumen situación actual: David Pottruck es codirector general Charles Schwab es fundador Se espera que en 1997 Schwab tenga ingresos por $2300 M; beneficio neto de $270 M, crecimiento de ingresos 20%, cuentas de clientes 4,8 M, activos de clientes +40%= $354000 M, capitalización doble en el mercado US$ 11000 M. Total de cuentas en línea: 1,2 M que es 25% del total: US$81000 M en activo de clientes. Schwab esta bien situada en el canal en línea, teniendo 5 veces mas cuentas que e*trade. Mayor intermediario con servicios en línea, servicios valiosos, precio justo. La empresa genera el 80% de los ingresos con el 20% de los clientes. Desde el punto de vista técnico se dispone de capacidad para soportar aumento de operaciones previsto Cambio en el sector: El sector de la intermediación financiera se mueve cada vez mas hacia el internet. Es cuestión de tiempo para meterse de lleno. La categoría por internet es muy competida. Mejorar la capacidad de operar por internet para retener clientes de mas volumen, atraer nuevos inversores x precios bajos y servicio de calidad. Los clientes son cada vez mas independientes y quieren tener el control, además están familiarizados con la tecnología. Hay que actuar deprisa lo cual proporciona ventaja competitiva. Asegurar temprana posición en el mercado es una ventaja competitiva. los bancos de inversión de wall street ausentes en el mercado de operaciones por internet por su estructura de costes alta...
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...the Talk to Chuck campaign? In the early 2000’s, competition started to intensify in the U.S. financial services industry among firms such as Charles Schwab, Merrill Lynch, Fidelity, Ameritrade and E*Trade. By 2004, Schwab’s net income had declined by 39% and they began to lose their reputation as the “leading-edge discount broker”. Furthermore, Schwab was losing its trademark as the ‘king of online brokers” because of its high equity trading prices in comparison to their competitors. This dip in profitability and market share was noted by company directors, and thought to be the result of the growing disconnect between Schwab and its retail customers. Until 2004, Schwab had 6 different advertising campaign strategies that led to inefficiencies in cost and allocated resources. These advertising campaigns focused on a different product or service that Schwab offered to its investors, but due to the magnitude of this approach, their combined efforts became counterproductive. Chief Marketing Officer Becky Saeger, felt that “future growth and brand revitalization” were necessary to rebuilding the Schwab brand. A major focal point to the campaign was the need to differentiate itself from its competitors through approachability. The advent of the internet was a contributing factor toward the diminishing rapport Schwab had with its clients. This avenue of trade instilled individual investors with a self-assured attitude. In addition, it provided convenient access...
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...Charles Schwab in 2008 1. Analyze the competitive structure of the brokerage house industry using Porter’s five forces model. What are the principle drivers of profitability in this industry? How have changing regulations, demographics, and technology impacted competition over the last two decades? Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are: 1) Bargaining Power of Supplier 2) Bargaining Power of Buyers 3) Intensity of existing Rivalry 4) Threat of New Entrants 5) Substitutes 1) Bargaining Power of Supplier In the on-line brokerage firms, we have 3 major categories of suppliers that are * Suppliers for IT infrastructure * Suppliers for the software required to operate these sites and offer functionality to customers * Information services that will offer content to brokerage firm’s website Once the on-line brokerage commits to a company (supplier/s) of the above .these companies that supply this back-end infrastructure can be reasonably certain that the on-line brokerage will commit and remain a customer for some time since future equipment will usually have to be compatible with the existing architecture. The same dependencies can be attributed to the software vendors. Another leading supplier consists of firms that provide financial information to the brokerages such as Aether, Reuters and Associated Press. However, Securities and Exchange...
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...Integrated Marketing Communication | Charles Schwab & Co., Inc : The « Talk to Chuck » Advertising Campaign | Group 5:Alka MishraElisabeth LespinetMegannePriyanka NarayananNaman Bhayana | Charles Schwab & Co., Inc : The « Talk to Chuck » Advertising Campaign Charles Schwab & Co is a financial company which offers brokerage products and services. In this case, we will see the new “Talk to Chuck” corporate advertising campaign launched by CEOCharles Schwab (also called Chuck) and Beck Saeger in January 2006. This campaign included a colorful series of television ads that used animated images of customers talking, about their investment needs. The goal was to improve market share. About the industry the financial services industry comprised three major sectors: banking, securities and commodities and insurance. Retail brokerage firms act as intermediaries between buyers and sellers, offer little assistance beyond executing a customer’s transaction and provide investment advice on which stocks to buy and sell and when. The main retail brokerage firm in the USA are Ameritrade, Schwab, E*Trade, Fidelity Investments and Merrill Lynch. Traditionally, investors turned to their brokers for research and advice to guide their investing decisions. But nowadays, technology allowed investors to sell or buy securities online. The stock market decline following the collapse of the Internet Bubble in 2001-2002 motived individual investors to become more investment...
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...1975, Charles Schwab created the discount broker. With new rules set in place commissions would now be set by market competition. While competitors like Merrill Lynch and Fidelity raised their fees, Charles Schwab chose the opposite route. For so many years the cost of trading stock was so high it limited the investment opportunities available for Americans. Schwab envisioned that individual investors would jump on the opportunity to be in control of their trading at a discounted rate. By focusing on the principle of providing the best customer experience across all channels CS revolutionized the brokerage industry. With the introduction of online trading in the late 90’s, CS became one of the top financial services firms in the nation while doubling profits. However, a dynamic marketplace posed new challenges. The stock market crash of 2001 and competition from new Internet discount brokers cut into CS’s transaction fees, which was their main source of revenue. With high trading volumes likely coming to an end CS has to focus on other sources of revenue. Recommendations CS’s decision to become the first discount brokerage firm was a great strategy to cement them as a force in the brokerage industry. However, this image was hurting them for future growth. While CS offered many of the same services affluent investors ($1MM + investable assets) sought from full-commissioned brokerage (FCB) firms, they weren’t known for them. As seen in the case study, Charles Schwab Corp...
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...position in deep-discount brokerage. In order to achieve this objective, the company must grow its customer base, requiring an investment of $100 million to upgrade its technological capabilities as well as an increase of $155 million for its advertisement budget. In order to evaluate the company’s cost of capital, we used the Cost Asset Pricing Model. Since the company went public recently, it would not be an accurate assessment of the risk of the investment to find the beta of this short time period. Therefore, we chose a similar company called Charles Schwab, which has very similar sources of revenue, discount brokerage services. However, this company has a very different capital structure, so we unleveraged the beta in order to get the best, most accurate beta for Ameritrade. We assumed that the capital structure of Ameritrade did not have debt, and that the project would be financed with equity only. We found a levered beta for Charles Schwab of 2.15. After unlevering it, we got a beta of 1.8768. When using the CAPM model, we concluded that the cost of capital of Ameritrade is equal to 20.40%. Factors to be considered in evaluating the project Various factors must be considered by the management of Ameritrade when evaluating the proposed strategies. It is necessary to determine the cost of capital that should be employed for Ameritrade. An appropriate discount rate is required to derive the net present value (NPV) of the investment. NPV is the preferred decision criterion...
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...Charles Schwab & Co: What were the key factors underlying Schwab's competitive advantage until the mid-1990s? How have these factors reinforced each other? Competitive Advantage 1. Different Customer Group. In 1975, brokerage commissions were deregulated. Schwab took the advantage of the new opportunities and focused on providing informed investors with low-cost access to security transactions. This was a new approach compared to full-service brokerage firms. 2. Technology. Schwab invested heavily in technology as a way to lower costs. In 1985, Schwab was one of the first firms to use personal computer as a distribution channel for financial services. In the late 1980s and on into the early 1990s, Schwab developed several technology-based services. a) TeleBroker, a fully automated telephone system (in English, Spanish, Mandarin, and Cantonese) that allowed customers to retrieve real-time stock quotes and place orders. b) SchwabLink, a service for fee-based financial advisors with back-office custodial services. Also, the relationship with independent, fee-based advisors allowed Schwab to reach more customers, to sell more products. c) OneSource, the Schwab Mutual Fund program, a revolutionary fund supermarket that helped customers purchase Schwab and non-Schwab no-load mutual funds with greater ease and without paying transaction fees. It was also an exceptional distribution channel for the fund providers, especially the smaller ones who lacked...
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...Jessica Turner has a master's degree in accounting and an undergrad degree in business. She established Turner Test Prep, a CPA exam review center, after being rejected by the Big Six accounting firms. She decided to bring the company into existence when she was searching for other employment options, and also because she had experience in the field when she worked at a review center's business office before taking up her master's degree. There, she inadvertently started teaching the math portion of the reviews, and received training in teaching. After passing the CPA exam on the first try herself, she decided that she would like to help those who want to take the CPA exam pass on their first try as well. And so she developed a business and marketing plan, convened with various professors to create a comprehensive curriculum, and opened her firm's doors. Instead of the normal review route of using books, software, or online courses, she provided a full service 6 week, 3-6 hours a day review regimen for her clients that include one hour live lectures from various professors, discussions about test taking skills and organizational skills to digest information faster, provided audiotapes that the clients can listen to at home or in their cars, executed timed mini tests as well as practice essay questions, one on one bi weekly client meeting to see how they've progressed and for them to ask questions, and a direct line to her via e mail for any queries the clients may have. She Even...
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...effective was Ko in defining and framing a vision for Motorola Penang? In what ways were her efforts similar to and different from the example of Charles Schwab citied earlier? How did Ko resolve the dilemma of where visions come from? Where did she find her vision? S. K. Ko had a very aggressive and challenging vision for Motorola Penang. She struggled with the most effective way of making that vision a reality. Ideal vision is something that inspires and directs people. There is always a tension for a leader when it comes to giving and receiving a vision. She engaged many of her top team in discussions about the challenges of the future of the facility. She had many specific and concrete ideas but didn’t want to seem to be imposing them on the group. She wanted to get most involvement possible to ensure all relevant information was considered that would be tasked with making the vision a reality. Ko’s philosophy reflects a positive, familial, celebrate every accomplishment kind of work environment. She saw technology as a two sided coin that would eliminate low skill job at the same time that it brought new opportunities. She was committed to rapidly moving Motorola Penang to produce more complex systems products, creating an increased demand for technicians and engineers and potentially less demand for unskilled operators. Besides Charles Schawb anticipated a need in the middle class. His vision led him the unique path. It took his organization to places other organizations could...
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...Few industries have undergone as much turbulence in the past few years as those internetrelated businesses. One of the leaders in this industry is Trilogy Software, based in Austin, Texas. Trilogy, founded in 1989, creates software to help e-businesses handle procurement, customer service, relationship management, and data integration. Its 1500 employees serve an impressive client base that includes Ford, FedEx, Land's End, Charles Schwab, and Motorola. Trilogy's president and CEO, Joe Liemandt, seeks to hire and keep employees who can flourish in a chaotic environment, who are willing to take risks, and aren't afraid of working long hours. Liemandt has fashioned a strategy for Trilogy that encompasses maintaining the high energy of a start-up with the experience of an established company. An important part of that strategy is continually recruiting "only the best'-bright, dynamic individuals from the best universities, business schools, and industries. By hiring great people and giving them signigicant responsibilities from day one, Liemandt hopes his firm will be able to respond to competitive challenges, keep its entrepreneurial spirit alive, and achieve its goal of being a high-impact company. New recruits are wooed to Austin with dinners, cultural and recreational outings, and competitive salaries. Once there, the recruits go through "boot camp-an intensive training program conducted to turn rookies into Trilogians. In classes led by Liemandt and other Trilogy veterans...
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...continuation of benefits. Further information about your COBRA rights will be sent to you. The effect on your other benefits is explained in the chart attached to this letter. If you have vested stock options as of the date of your termination, access your Charles Schwab account or contact Charles Schwab per the contact information below to exercise vested options. If you have questions about your benefits or stock, please contact the appropriate entity listed below. Plans administered through: Aetna Healthcare 888-220-1017 https://member.aetna.com/Member_Public/ Definity Healthcare 866-333-4648 www.definityhealth.com Vision Service Plan (VSP) 800-877-7195 www.vsp.com WageWorks – Flexible Spending Accounts 877-924-3967 www.wageworks.com Delta Dental/WA Dental Service 800-238-3107 https://www.deltadentalwa.com Conexis – COBRA 877-722-2667 www.conexis.org Magellan – Employee Assistance Program 800-523-5668 http://www.magellanassist.com/ Minnesota Life 800-843-8358 Putnam Investments – 529 Plan 800-685-6542 www.ibenefitcenter.com The Vanguard Group – 401(k) Plan 800-523-1188 www.vanguard.com The Hartford – Disability 800-303-9744 Charles Schwab 800-654-2593 http://eac.schwab.com It is XXX policy to pay an employee for the balance of accrued but unused vacation at the time of termination. This payment ordinarily will be included in the employee's final paycheck. XXX does not pay out for personal...
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...CASE STUDY– Trilogy Software Few industries have undergone as much turbulence in the past few years as those in Internet-related businesses. One of the leaders in this industry is Trilogy Software, based in Austin, Texas. Trilogy, founded in 1989, creates software to help e-businesses handle procurement, customer service, relationship management, and data integration. Its 1500 employees serve an impressive client base that includes Ford, FedEx, Land’s End, Charles Schwab, and Motorola. Trilogy’s president and CEO, Joe Liemandt, seeks to hire and keep employees who can flourish in a chaotic environment, who are willing to take risks, and are not afraid of working long hours. Liemandt has fashioned a strategy for Trilogy that encompasses maintaining the high energy of a start-up with the experience of an established company. An important part of that strategy is continually recruiting “only the best”—bright, dynamic individuals from the best universities, business schools, and industries. By hiring great people and giving them significant responsibilities from day one, Liemandt hopes his firm will be able to respond to competitive challenges, keep its entrepreneurial spirit alive, and achieve its goal of being a high-impact company. New recruits are wooed to Austin with dinners, cultural and recreational outings, and competitive salaries. Once there, the recruits go through “boot camp”—an intensive training program conducted to turn rookies into Trilogians. In classes led...
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