CASE STUDY

Monday 21th November 2011

STRATEGIC MANAGEMENT

Charles LUMBERS

Case study: Wells Fargo

1

Established in 1852, Wells Fargo is the oldest operating bank in the US. The bank is currently the fourth largest bank in the United States. The success of Wells Fargo lies within its remarkable strategy and competent management, which have allowed the bank to grow and diversify in ways that their competitors could only dream. The bank went through several changes, with over 1500 mergers and acquisitions. The most important merger was with Northwest Corporation, a merger, which is at the foundation of Wells Fargo as it operates today. It is clear that the underlying reason of the merger was management’s ability to identify the strengths and weaknesses of their respective banks, while foreseeing the complementary benefit their respective skill-sets could provide. Indeed, the merger brought together two halves and through the effects of synergy, it surpassed the potential of the separate halves. The story of Wells Fargo is full of similar cases in which the ability of strategic thinking and competent management laid the groundwork for what is now one of the most respectable banks in the US. This paper will analyse key strategic factors and competencies, which have resulted in the success of the bank. It will examine the bank through an analysis of their business environment, strategic capabilities and sources of sustainable corporate advantage. The analysis will be conducted using well-known management models ranging from PESTEL to Porter.

I. Strategic environment
A. Macro Environment
The Macro Environment of a company can be analysed with the PESTEL framework. In this model, each letter is the first of a factor, which determines its environment. We are to understand how these factors have influenced the decision in the bank, and the impact on its