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Business Analysis Part 1

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Business Analysis - Part 1
In this paper I am taking on the role as a mutual fund manager making a decision on if to invest funds into Bank of America (BoA). Over the next three weeks I will conduct an extensive business analysis on BoA and this paper is part one of three of the complete analysis.
Part one of the business analysis of BoA consists of a SWOT analysis and my point of view in regard to which part of this analysis is the deciding factor for me to invest in this company or not. In addition all internal and external stakeholders will be identified and their want and needs described. An explanation of how BoA is fulfilling the different needs of the different stakeholders will be the last section of part one in this business analysis.
SWOT analysis of Bank of America
“Bank of America is one of the world’s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations. It is the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization. The company serves clients in more than 150 countries and has a relationship with 99% of the U.S. Fortune 500 companies and 83% of the Fortune Global 500.” (MBA lectures, 2010)
A SWOT analysis is defined as: “SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By definition, Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have some measure of control. Also, by definition, Opportunities (O) and Threats (T) are considered to be external factors over which you have essentially no control.” (MSG 2012)
SWOT analysis is a tool used to analysis internal and external factors of a business to help develop and analyze strategies to better the business organization. External threats and opportunities as well as internal strengths and opportunities evaluated to form a complete picture of the organizational situation.
A SWOT analysis of Bank of America is posted under MBAlectures.com. I am using this article as a reference and help with my SWOT of BoA. Bank of America’s SWOT analysis is given below: Strengths:
1. In 2010, Bank of America was considered as fifth largest corporation in the U.S. by total revenue.
2. Bank of America is the biggest bank holding corporation in the U.S. by assets, and the second biggest bank company by market capitalization
3. Bank of America acquired Merrill Lynch in 2008 which made them the largest wealth management company in investment business
4. Forbes listed BoA as third largest corporation in 2010
5. In 2009 it BoA reported 12.2 % of all deposits in the United States
Weaknesses:
1. Customer criticism because of raising of fees and interest rates
2. Does business in 150 countries, but only 10% of sales is generated internationally
3. Mismanagement of bail out money caused 6 directors to resign
4. Publicity and good name has been damaged due to bailout help and mismanagement
Opportunities:
1. “Bank of America has opportunity to increase market share by product development and markets penetration in the domestic markets by acquisitions.
2. Increase clients base by expanding globally through the joint ventures, acquisitions, and mergers.
3. Bank of America has the opportunities to offer innovative products and services.
4. Increasing trend towards the internet banking is also a good opportunity to introduce online banking in different countries of the world.
5. Diversification towards the non-banking services.
6. Increasing customers’ wealth and trend in the direction of the investment after the financial crises 2007-2010.
7. Additional consolidation in the banking sector.” (MBA lectures, 2010)
Threats:
1. “This industry may be on the restore, but its revival could be slowed down by heavy-handed regulation and more hurting in the housing market.
2. Bank of America has strong competitors in the industry such as JP Morgan Chase, Citigroup and Wells Fargo.
3. Banks are facing serious losses and miserable profits, mainly if the government gets approved away with financial and other improvement efforts.
4. Facing strong competition to sustain its market share.
5. Facing strong political instability and regulation and tariffs in various countries of the world.
6. The playing out of banks’ exposure to anxious assets.
7. New regulations and policies may shock financial firms’ business forms.
8. The call for constant hard work to improve risk oversight and governance, particularly at the board level.” (MBA lectures, 2010)
The most relevant factor of the SWOT analysis for me whether to invest in Bank of America or not to invest is the threats section of the analysis. It is very hard to single out one sector of the analysis since all four are very important when forming a decision and in addition the SWOT analysis is only a small portion of the analysis for me to help me decide whether to invest or not.
Threats are always evident and are important to consider. Knowing the threats of BoA and researching them further is a big decision factor for me. I need to know how what threats are evident, how Bank of America deals with them and what is done to eliminate them. If the threats are too many and too “dangerous” for the company, that would be a factor for me to not invest and take my money elsewhere.
Stakeholders of Bank of America
External stakeholders of Bank of America are:
- Customers
- Suppliers
- Government
- Society
- Environment
- Competition
- Stockholder’s
- Public/Community
Internal stakeholders of Bank of America are:
- Employees
- Board of Directors
- Owners
The needs and wants of the stakeholders vary. Internal stakeholders are more interested in being treated well, getting paid appropriately, moving up and getting promoted and having benefits offered to them. The owners and the board of directors are interested in the well being of their employees, the company and all external stakeholders. Stockholder’s wanted to know if the company is doing well and if they will get paid dividend checks or benefit of their investment.
The public/community is interested what the organization is giving back to the community and how the environment is treated. All stakeholders interests and needs vary but one is the same for all of them: They all want and need to be treated fairly with honesty, trust and integrity.
Reading over various reports and articles from bank of America, they seem to be doing all they can to be there for their employees and external stakeholders. They are heavily involved in the community, they are offering benefits and pay to their employees, they are working on fixing the mistakes made with the bailout money and their dividends and stocks are slowly rising again.

Conclusion
Part one of the business analysis was to conduct the SWOT analysis and identification of the various internal and external stakeholders. The company chosen for this is Bank of America and within the next two works a more complex business analysis will be conducted. As a mutual fund manager I will decide after these three weeks whether I will invest in Bank of America or sustain from investing.

Reference
MBA lectures, 2010. SWOT Analysis of Bank of America. Retrieved on August 29, 2011 from http://mba-lectures.com/marketing/swot-analysis-marketing/1157/swot-analysis-of- amazon-com.html
MSG, 2012. Management Study Guide: SWOT Analysis. Retrieved on August 29, 2011 from http://www.managementstudyguide.com/swot-analysis.htm

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