Firm History, Supplier/Buyers, Competitors: BOA’s achievements and growth throughout the past was from successful merger ND acquisition which start with two separate banking entities, Commercial National Bank and Bank of Italy in 1874. Commercial National Bank grew in value and expanded from repurchased and acquisition of several other banks and competitors on the East coast in 1958, 1960 and then in 1982, 1988, 1991, 1995, 1996 and 1997. On the other hand, Bank of Italy was doing almost the same things except that its expansions and acquisitions took place on the West Coast.
Bank of America faced two crises in the history with the first one took place in sass due to massive losses n loans made to third world nations. The second one took place in 2007 due to the inability to pay back debt from bad mortgages. Investors, shareholders, depositors are the main stakeholders of BOA. However, the biggest sources of profit come from mortgage loans to investors in which BOA is well known as the largest mortgage originator and services in the U. S after the acquisition of Countrywide Financial in between 2007 and 2008.
Three major BOA competitors as of today are Goanna Chase, Morgan Stanley and Goldman Cash Group. These competitors are American multinational banking reparations of securities, investments and retail. Principle factors and actors: Repayment of TARP Merrill Lynch acquisition Bank of America next step in growing Analysts: PESTLE Political: Bank of America have face tremendous pressure of paying back the Federal Reserve TARP funds after they bailed out BOA during the financial crisis.
Economic: The unemployment rate in the U. S as constant at around 8%-10% in 2009. The high unemployment rate will result in high savings, low spending, and low borrowings. Technological: BOA has the best technological advances in the banking industry, such s advanced bill-payment options for customers, banking applications for smartness, ATM technology that can accept deposits without envelope, etc… Legal: BOA faced investigations from the SEC of the large bonus pool paid at Merrill Lynch, which upset their shareholders.
The issue was later resolved after a suit which result in $150 million settlement to BOA shareholders. Formulation: BOA is a major player in the banking industry as well as the United States. Therefore, a wrong direction in the management can lead to an increase in debt as well as cause the U. S economy to struggle. Right now, BOA needs to fully recover their financial position as of before the recession hit in other to compete against their major competitors who already pay-off their TARP funds such as Goanna Chase.
BOA also need to realize the effectiveness of continue to merge and acquire other banks or institutions as well as expand to another locations since their financial recovery is at a slow pace. Finally, the best lesson for BOA is to learn from their failure. They must not overestimate asset values on their balance sheet; such as “Real Estate always goes up” expression before the recession hit. They should not give loan to unaffordable households anymore.
They must have a better system to keep track of the loans since the whole 2007 crises was caused by a failing system in lending out money to individual who couldn’t pay back because they have no Job or wasn’t even qualify to get the loans from the banks or other institutions. Finally, they need to realize the importance of shareholders since they have caused shareholders to lose trust in the corporation. Implementation: Penthouse BOA are falling behind in term of financial recovery, however, they household take advantage of their technological advance.
The comfort of depositing, or managing money in and out is so easy for customers at BOA. The corporation needs to advertise these technological advances to attract customers since not every bank have the same technology to follow up. Furthermore, BOA need to develop a better system to overlook mortgages and loans, credit rating on mortgages as well as monitor individual loans after giving out money. Finally, BOA needs to disclose information that is required by shareholders to Justify what the company is doing or planning to do.
