Bank of America: Analyzing Corporate Citizenship In the words of Thomas Friedman, “If you don't visit the bad neighborhoods, the bad neighborhoods are going to visit you.” With “bad neighborhoods” symbolizing customers, this portrays a direct consequence of what can happen if a company does not take into account the impacts of its business decisions. As society progresses through the 21st century, it is clear that the people along with the government are beginning to demand more from companies. Quality products and services are still highly regarded; however, becoming a good corporate citizen is turning out to be an important part of a company’s reputation. Good corporate citizenship is when companies look beyond business goals and take in consideration the effects of their business decisions. Giving back to the community is also something businesses do, however, is not part of good corporate citizenship. This is true because financially providing to a local community has no correlation to business as it is simply a way for businesses to advertise and market their product. Therefore, actions such as emphasizing an environmental program, using methods that respect social and cultural values, or providing employees with special benefits such as a company car or expense account illustrate examples of good corporate citizenship. Making sure stockholders, shareholders, and local residents are respectfully treated is also important. These actions constitute good corporate citizenship as businesses are not only focusing on their profits, but also on the local community around them. In addition, it is important for businesses to be good corporate citizens as not only does it help society as a whole, but this procedure can also lead to a better image for the corporation. Even though it may cost a business more money to implement such policies, an impact for being good corporate citizens is long term loyal customers. Moreover, besides the appealing factor, being a good corporate citizen is purely healthier for all of society. If corporations conserve resources, choose to respect social and cultural values, and treat their employees well the community is more likely to respond with a positive attitude towards the company. This leads to a good mutual relationship between the company and customers and does not only satisfy the members of the community, but also creates good business for the corporation. An example of good corporate citizenship can be seen within the McDonalds organization. McDonalds is one of the biggest fast-food restaurants in the world and has been known for its energy efficient methods as well as the Ronald McDonald foundation (charity that helps kids all over the world). In addition, due to McDonald’s global presence, admiring cultural and social values of different countries becomes a main priority for this corporation. For example, all McDonalds in India sell lamb burgers instead of beef burgers as the cow is a sacred animal in the culture. Even if lamb meat is more expensive than beef, the ability to recognize the cultural values of India has not only pleased the Indian people, but has also been a big reason why McDonalds has had success in this country. If McDonalds decided to sell beef burgers in India, one can only imagine the ruckus it would cause against business. Another example of good corporate citizenship can be seen within Google Inc. This company has soared over the last decade and has become one of the most recognized companies in the world. In addition, Google is known for its informal corporate culture. For example, Google’s headquarters in Mountain View, California is referred to as the “Googleplex,” or one followed by a googol of zeros. The lobby is decorated with a piano, lava lamps, and a projection of search queries on the wall. Each employee has access to the corporate recreation center, which includes a workout room, locker rooms, a massage room, assorted video games, foosball, a pool table, ping pong, and various snacks and beverages. Furthermore, a motivation technique, usually called Innovation Time Off, encourages Google engineers to spend about one day a week on projects that interest them. All of these enticements along with Google’s environmental concern have given a great image to the corporation. Similar to these corporations, Bank of America has also managed to evolve into an outstanding corporate citizen. In 1904, Amadeo Giannini founded the Bank of Italy, which later became the Bank of America, in San Francisco for the purpose of catering to immigrants other banks would not serve. With strong racial biases still existing, Giannini was heavily criticized for his decision to support minorities. His first break came when the 1906 earthquake struck San Francisco. Giannini was able to get all the deposits out of the bank and away from the fires while other San Francisco banks were unable to open their vaults due to the damage of the earthquake. As a result, Giannini was able to use the rescued funds to start lending a few days after the disaster. Although it seemed risky, Giannini lent money to anyone who wished to rebuild after the earthquake and took great pride after all of these loans were repaid two years later. This was the first major success Giannini’s career and in 1922 he was able to acquire a local bank in Italy and establish the Bank of America and Italy. As the company expanded, Giannini decided to merge the company with the then newly formed Liberty Bank of America. In 1927, the Bank of Italy National Trust & Savings Association was formed. In 1928, Giannini again merged with Bank of America Los Angeles and consolidated it with his other bank holdings to create what would become the largest banking institution in the country. For the last time, he changed the name to Bank of America. Through the twentieth century, Giannini sought to build a national bank by expanding his business across California as well as into other western states. Giannini was also fond of the idea of providing non-banking subsidiaries such as life insurance and investment advice. With the government’s scare of possible monopolies, Bank of America had a hard time achieving its goal. The Bank Holding Company Act of 1956 prohibited banks from owning non-banking subsidiaries while the Clayton Antitrust Act banned companies from merging with others. During this period, Bank of America continued to expand business within California. In 1958, the bank introduced its first ever credit card called BankAmericard (which later changed its name to VISA in 1975). In addition, the company built over three hundred branches of the company across California making it the largest bank in California at that time. It was not until the 1980s that a change in federal banking legislation and regulation occurred and Bank of America was permitted to expand its domestic consumer banking activity outside California. Bank of America first expanded outside of California in 1983 with its acquisition of Seafirst Corporation. The bank continued to expand during 1980s and experienced substantial growth during this period. The stock price soared and the corporation became one of the most successful firms in the country. It was not until the late 1980s that Bank of America encountered its first major setback. In 1987, the company dealt huge losses by a series of bad loans to various Third World countries, most of them being in Latin America. The losses resulted in a huge decline of company’s stock and made it exposed to a hostile takeover. In order to avoid a potential takeover, Bank of America began to liquidate the company. It sold its FinanceAmerica subsidiary to Chrysler, the brokerage firm Charles Schwab & Co. back to Mr. Schwab (former found and CEO of company), also sold Bank of America and Italy to Deutsche. In addition, the corporation fired it CEO, Sam Armacost. By the time of the Stock Market Crash of 1987, Bank of America’s share price had fallen to right dollars; however, the company rebounded strong in the 1990s. In 1992, Bank of America acquired its California rival, Security Pacific Corporation. At the time, this was the largest bank acquisition in history. Federal regulators, however, forced the sale of roughly half of Security Pacific as they claimed this acquirement would give Bank of America too large of a market share in the state. In the same year, Bank of America also purchased Valley Bank of Nevada, thus expanding its business to Nevada for the first time. In 1994, Bank of America attained the Continental Illinois Nation Bank and Trust Co. of Chicago. Both these mergers helped the Bank of America Corporation to once again become the largest U.S. bank; however, the company faced another setback in the late 1990s. In 1997, Bank of America fell to second place behind fast-growing Nations Bank Corporation and in 1998 fell another spot to North Carolina’s First Union Corporation. These downfalls eventually led to one of the most successful business merges in history. In 1998, Nations Bank Corporation, which at the time was the largest banking corporation in the United States, acquired the Bank of America Corporation. Although the deal was technically a purchase of Bank of America by Nations Bank, the newly joined companies went by the name Bank of America. The sixty-five billion dollar acquisition of Bank of America by Nations Bank resulted in combined assets of five-hundred seventy billion dollars and forty-eight hundred branches in twenty-two states. Without question, this merge easily led Bank of America back to being the largest banking corporation in the country; however, this did not stop the corporation from acquiring more companies in the twenty-first century. The acquisitions of Fleet Boston Financial, credit card giant MBNA, Banco Itaύ, The United States Trust Company, LaSalle Bank Corporation, and the recent multi-billion dollar purchase of Countrywide Financial and Merrill Lynch have made Bank of America one of the most diverse and stable corporations in the world. As Freidman says in The World Is Flat, “The ease of global business is satisfying.” With its various acquisitions, Bank of America has incorporated non-banking subsidiaries such as investment banking, investment advice, financial services, and trust corporations. Even though one could firmly state that Bank of America has achieved an outstanding amount in the business world, the corporation has faced conflicts within the corporation as well as with customers around the globe. A recent customer service survey has put Bank of America in last position among the nation’s four biggest lenders. On a scale of one to one-hundred, the bank scored a sixty-seven in 2009 compared to a seventy-three in 2008. The 2009 average customer satisfaction rating for all banks included in the survey was seventy-five. Claes Fornell, from the Electronic News Company, said that the decline in customer satisfaction could have to do with their recent acquisitions. He states, “Fewer people servicing more customers, means less attention for each individual customer. The lines are longer; customers get grumpier-it is like a vicious circle.” Bank of America has responded by acknowledging a definite need for better customer service. Current CEO Ken Lay said, “Our customers have always been our number one concern and will continue to be so in the upcoming year.” In addition, some employees of companies acquired by Bank of America have held negative thoughts against the corporation. According to the Boston Globe, when Fleet Boston Financial was attained by Bank of America, hundreds of workers lost their jobs or were demoted. In response, Bank of America rejected such action within their corporation. Whether or not this only happened to former employees of Fleet Boston is something that may never be known; however, this shows how important it is for corporations to consider the impacts their business decisions have on others. As a result, companies, such as Bank of America, have become better corporate citizens by implementing eco-friendly business practices, aiding local communities, and providing incentives for customers. Bank of America has implemented several eco-friendly business techniques in order to achieve a higher level of corporate citizenship. According to the Associated Press, the Bank of America Corporation will spend eighteen billion dollars on “green” projects over the next ten years. This new initiative is separate from the internal polices it implemented in 2004 to reduce greenhouse gas emissions and paper use.” Two billion dollars will also be spent on efforts to reduce the corporation’s impact on the environment. For example, Bank of America is currently building office towers in Charlotte, NC and Times Square that are more energy efficient. According to President and CEO Brian Moynihan, Bank of America will continue to construct energy efficient building in the future as well. This shows that the Bank of America Corporation is committed towards helping the entire community become more “green” and thus portrays quality corporate citizenship. On March 7th, 2007, Bank of America pledged another twenty billion dollars to support environmentally friendly business and combat climate change. With Citigroup also assuring a large amount of money to a similar cause, many believe Fortune 500 companies have reached a new level of awareness concerning the environmental and climate effects of business. On the other hand, motivating clients abroad might be more difficult than either of these two corporations expected. A new report released from Friends of the Earth (FoE) and Banktrack shows that Chinese banks still have miles to go before they can be considered green. The role of Chinese banks is especially troubling when considering the huge environmentally-unfriendly projects these banks are supporting and that many international banks, including Citigroup and Bank of American, own stocks in Chinese banks. In addition, many Chinese banks do not publicly disclose environmental policies. With all Chinese businesses being controlled by the government, this will definitely be a tall task to handle. As Friedman states in The World Is Flat, “China is a threat, China is a customer, and China is an opportunity." In order to minimize the environmental impact, Bank of America plans to participate in the evolving emissions markets globally as well as introduce credit cards that will give a percentage to help global companies. Without question, these actions entail good corporate citizenship as Bank of America is committed to decrease the environmental effect businesses can cause. Over the years, Bank of America has been one of the best corporations at giving back to the community. In 2007, The Bank of America Foundation donated one million dollars to the Camillus House, a Miami organization that provides shelter and services for the homeless. The corporation also mentioned that the charitable contribution is one of several it will announce in the upcoming weeks. This shows the relationship this company has with its customers. There are two-hundred thirty-one BOA locations and twenty-six billion dollars worth of deposits in South Florida. This placed the bank in second in both categories. Due to the loyal customers of South Florida, the Bank of America Corporation decided to help the people of this area by providing funds to the homeless. This portrays good corporate citizenship as it appears the company has not only realized that philanthropic donations are a good cause, but also that it creates long-term customers and a healthy business. A similar example can also be seen in the health centers of Eastern Massachusetts. According to the Globe Newspaper Company, in 2006, The Bank of the America Corporation vowed to pay five million dollars to mostly repay medical loans of primary care doctors who agree to practice in Eastern Massachusetts. With health insurance coverage becoming mandatory, many Massachusetts politicians have worried about the shortage of doctors in the area. In matter of fact, ten percent of the primary care positions are vacant at the state’s health centers. The reason for the shortage of health care physicians is mainly due to the fact that only twenty percent of U.S. internal medicine students choose to work in primary care facilities compared to fifty-five percent in 1998. This is true as most doctors have realized that they can make twice the amount of money running their own private practice rather than working in a state facility. Thus, acting as a good corporate citizen, Bank of America has decided to help the people of Massachusetts by providing a five million dollar grant (which is the largest the company has made in the New England area since it acquired Fleet Boston Financial in 2004) that ought to spur the number of primary care doctors in the state. This is another example of good corporate citizenship as the Bank of America Corporation is assisting a community that helped it grow their business in late twentieth century. Lastly, Team Bank of America is a worldwide association where Bank of America associates and retirees can work together to touch the lives of our customers and improve the communities around us. Within the corporation and communities around the world, Team Bank of America encourages self-initiated professional development, provides networking opportunities, recognizes and develops leaders, promotes teamwork, helps associates learn more about Bank of America, and engages associates and their families in enjoyable activities. In addition, Team Bank of America participates in local communities through a diversity network, environmental network, recreation network, speaking network, and volunteer network. Each network reaches out to the surrounding community and as a group organizes activities relate to the theme of each network. In most countries, current associates and retirees are automatically considered members of Team Bank of America. Associates are also encouraged to invite their families and friends to these events. Overall, Team Bank of America is a part of the Bank of America Corporation that promotes entertainment and raises awareness of important issues in the world. Similar to the donations the company provided for the homeless shelter in Miami and the health centers in Eastern Massachusetts, Bank of America has reached out to its customers through the Team Bank of America program by providing entertainment and incentives. This illustrates superior corporate citizenship as not only does Bank of America reflect on the effects its business decisions have, but also makes sure its customer satisfaction level is up to par. According to the definition of good corporate citizenship, Bank of America goes beyond the basic requirements of achieving such a standard and therefore can be named as a good corporate citizen. Besides taking steps to become a corporate citizen itself, Bank of America has provided incentives to encourage society to become more eco-friendly citizens as well. Earlier this year, the Bank of America Corporation came out with its own green card called the Brighter Planet Visa Credit Card. This credit card matches every dollar spent with one point that can be accumulated and traded in for “carbon offsets.” Carbon offsets are meant to reduce the impact of emissions made somewhere else, such as by planting trees. The Bank of America Corporation has also offered a fixed annual percentage rate of 9.99% (for the most creditworthy applicants) on the card, which is lower than the average of 11.97% on fixed-rate cards. In addition, Bank of America has offered to offset one U.S, ton of carbon emissions for every $1,000 cardholders spend. Even though many have valued the company’s effort, some critics believe that offsets do not greatly reduce overall emissions, and that these cards have been poorly advertised in society. In response, Bank of America has stated that reducing any amount of emissions is a step in the right direction. Furthermore, Carolyn Cui of the Wall Street Journal states, “Forcing customers to use a “green” card can be over pressuring the customers’ behavior, which can be detrimental to business.” Although the company is committed to helping the environment, it has neglected the idea of luring its customers into the card. Thus, this shows the effort Bank of America is putting forth to become a good corporate citizen. As one can see, the company has not only made sure its business decisions are not harmful, but also has presented ways for customers to save money if they also choose to become a part of the company’s mission. Moreover, Bank of America is among the few corporations pushing incentive-based automatic savings accounts as a way for consumers to boost their savings. This process works as the company rounds up debit card purchases and transfers the difference from customers’ checking to savings accounts. The bank has also pledged to match transfers by up to two-hundred fifty dollars a year. Data shows that less than one-third of low-income households and less than one-half of moderate-income households have savings or money market accounts, thus making this enticement extremely beneficial to customers. In addition, the banking industry is uniquely positioned to benefit from an increase in consumer savings. This is true as when the Federal Reserve begins to tighten monetary policy, by lifting key interest rates, the banks will have a new source of relatively inexpensive funds to use lend (funds in the savings accounts). The financial-services industry also expects customers using these accounts to eventually enter into deeper, perhaps more profitable, relationship with the banks. Bank of America has also employed several other inducements for its clients. For example, customers who have houses that qualify to be energy efficient receive lower interest rates on their mortgages and cash incentives are provided to employees who drive hybrid vehicles. All of these actions have led Bank of America to become nationally recognized for its excellent corporate citizenship across the country. In 2006, Bank of America was voted as the number one company for Hispanics by Hispanics Business Magazine. The company also ranked twenty-six on the most admired companies of 2009. This implies that the employees as well as customers of Bank of America have been satisfied with the recent actions taken by the corporation. It is clear that this company has not only measured the effects of its business decisions, but has also accounted for its employees and customers, which is an obvious sign of excellent corporate citizenship. When analyzing corporate citizenship today, it is remarkable to notice how important it is for companies to value the impacts their business practices have on society. Moreover, it is fascinating to see how the attitudes of companies regarding customer satisfaction have changed from the twentieth century to the twenty-first century. For example, in the 1900s, corporations could have cared less about the impacts of their business practices and feelings of their customers and employees yet still could continue good business . During this time period, not caring about the effects of business ways or about society’s opinion is not only intolerable, but can often lose business. Thus, in order to assure future success, Bank of America has become a better corporate citizen by implementing eco-friendly business techniques, aiding local communities, and providing incentives for customers to do the same.

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