Bankof America: Case study
Bankof America: Case study
TheBank of America has achieved a lot by acquisition. The biggestacquirement ever made was that of D. E Shaw & Company. This wasan achievement for the organization since they controlled over $570billion dollars in asset form in many states. Despite the bankattaining its corporate strategy through acquisition, this has alsoled to the organization making many losses. The last acquisition ofMerrill Lynch in 2009 made the organization the largest bank holdingcompany in the United States by the value of assets. Itgenerated 90% of its revenues from its domestic market and continuedto buy businesses in the United States. Moreover, themerge enabled the Bank of America to absorb manytoxicassets that increased the firm’s exposure to potentially massivelosses in the mortgage industry.
Despitethe many losses the Bank of America made by merging with MerrillLynch, the companies should work together in a bid to achieve theirultimate goal. However, the Bank of America has made a lot of lossesby absorbing toxic assets from Merrill Lynch. They should get rid ofthem. It should dispose of assets that are no longer in use. Thiswill enable the organization to get more cash flow, as well aseliminate the toxic assets.
Besides,the bank achieved greatly by introducing visa and credit cards. TheBank of America should incorporate more technology in the business.This will enable their customers to access their accounts easilythrough their mobile phones. This will enable the organization todownsize its branches, and thus, invest more in mobile banking. Thiswill not only increase the customer base but will also give the bankcompetitive advantage over its competitors. Further, it will improvethe services given to the customers.
Theintegrated bank should have more customers, supplementarytechnologies, and a competitive advantage in the market. This will beachieved by first, the bank should give better and improved servicesin order to maintain its core customers. Satisfaction of customers isthe main aspect to a bank moving forward. Through this, it willattract more clients and it will maintain the current customers.Thebank should aim at listening to its shareholders since they are themajorpart of the firm and their decision matter. If the bank loses itsshareholders, then it will be making losses in the long run.
Thebank can as well sell its shares at a higher price and buy them backat a lower price when the market rates are poorer.This will enable the bank to earn more profits. Thebank can increase the interest rates on the loans they give to theircustomers.Thiswill enable the customers to borrow more, and thus, will increasethe cash flow in the firm. Besides, the bank can provide mortgages atlow rates, thus attracting more customers who will, in turn, payhigher interest rates. By doing so, the firm will earn more profits,and thus, it will be better than its competitors.
Insummation, the Bank of America has come a long way to being among thebest companies in the United States. By incorporating the highlightedstrategies, it will not only be of great service to its customers butit will also achieve its ultimate goal, which is to be better thanits competitors and to be of great service to its clients.
Lynch,M. (2014). Bank of America. TheSilver Dollar Longevity Revolution Primer.