Company Background: The Vanguard Group, one the most successful and profitable U.S. mutual fund providers, has been accustomed to success for decades. By 2002, the Vanguard Group boasted mutual fund assets totaling $557 billion, which accounted for 10% of the U.S. mutual fund market. Vanguard offered low-cost, long-term investing options and a consistently superior product line as compared to its competitors. By emphasizing its long-term investment strategy, Vanguard was able to outperform 88% of its competitors in the Money Market Funds, Bond Funds, Balanced Funds and Stock Funds markets combined over a 10-year period from 1992-2002. In 2002, Vanguard’s costs were 0.26% of assets, compared with an industry average of 1.36%. Such reliable returns and operational efficiency helped make Vanguard a world-class company seemingly destined to become the world’s largest mutual fund group.

Challenge: Market Climate Change: In 2002, a climate shift started to take place as investment markets weakened and competition expanded. Between 2000 and 2002, the average mutual fund return was -33.7%. Also, the financial services deregulation had enabled the three largest segments of the financial services industry (commercial banks, investment banks, and insurance companies) to enter one another’s line of business. Companies like Citigroup and Merrill jumped at the opportunity to become a one-stop, full-service financial firm.

Clear statement of strategies: To make sure that Vanguard is able to preserve its market share and maintain its assets in a competitive environment, the company should focus on preserving its clients existing assets while reaching out to net new customers.
First, for Vanguard to be able to retain their top position in the mutual fund marketplace, they need to make sure that its reputable brand name gets exposure through a combination of marketing