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Business Strategy Options for JP Morgan

University: University of Bristol

  • Unit No: 6
  • Level: Post Graduate/University
  • Pages: 20 / Words 4980
  • Paper Type: Assignment
  • Course Code: MAN3090
  • Downloads: 74
Question :

This assessment will cover following questions:

  • Evaluate the impacts of the micro environment has on an organisation and the business strategies.
  • Business Strategy is the set of the plan, actions and goals which analyse products and services to compete in the market. Generate JP Morgan internal environment and its capabilities.
  • Business strategy helps in understanding the strengths and weaknesses of organisation. Explain and implement the outcomes of an of the analysis using Porters Five Forces model to a given market sector.
  • Implement model, theories and concepts and assist with the understanding and interpretation of strategic directions available to an JP Morgan.
Answer :
Organization Selected : JP Morgan

INTRODUCTION

Business strategy is defined as some actions and plan which the business uses in order to run the business in successful manner. In this competitive world it is very necessary for the companies to work in effective manner. This is pertaining to the fact that if the company uses effective strategy then they can face the competition and sustain the market (Till and Eagleeye, 2017). The present report will outline the different business strategy option for JP Morgan which is an investment bank and financial service company headquartered in New York.

The present report will start by outlining the external forces and its impact and influence over the operations of the company. Further the report will discuss about the internal environment of the company and the capabilities which the company has. Next the discussion will highlight the competitive position of the company and the market sector of the company. in the end some of the theories and models will be applied and a strategic plan for the company will be outlined.

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MAIN BODY

LO 1

P 1 Influence of macro environment over the company

The business operates in a dynamic environment wherein there are frequent changes taking place which may be positive or negative for the company. Thus, it is essential for JP Morgan to evaluate all these factors and analyse its impact over the business. For this the model of PESTLE analysis is used. This model is used at time when the company wants to learn about the changes in the external forces and its impact over the working of the company.

  • Political factors-the political factors include the changes within the government regulations, political parties and its impact over the company. This factor impacts the working of a company to a great extent because all the banking regulation and guidelines are prepared by the central bank and the company has to abide by all these. For JP Morgan the political stability is there and there are not many changes in the political structure of USA and this is beneficial for the JP Morgan as they do not have to make much changes in their working pattern.
  • Economic factors-this includes the changes taking place within the economy of the country (Sia, Soh and Weill, 2016). This factor also influences the working of the company because the company runs in accordance with the economic system running in the country. For JP Morgan the interest rate of loan is decreasing and this is an opportunity for Morgan because of the fact that now more of the people will take loan and this will increase the income of the bank. Also, currently there is inflation within the economy and this is also an opportunity for the bank (Perera, 2017). This is because of the reason that in situation of inflation the prices are high and for the consumer to meet the basic demands need to take loan from the banks and this increases the income of JP Morgan.
  • Social factors-this includes the attitude and beliefs and thinking of the people of the society. This is also need to be considered because of the fact that this also impact the working of the company to a great extent. Currently the trend of people within the society has increased towards the use of heavy priced and latest technology and other gadgets. But the income level of the people has not increased and for this they take huge loans to cater to the need of leisure and luxury life. Thus, this is an opportunity for the company as this will increase the loan amount for JP Morgan and will increase its interest income.
  • Technological factors-this factor includes all the changes which are taking place within the technological sector. There are many advancement taking places within the technological sector which need to be adapted by JP Morgan. Adopting these advancements is an opportunity for JP Morgan as this will assist bank in simplifying its working and operations with help of technology. The latest technology is like artificial intelligence, chatbots, blockchain technology, mobile and digital banking and many others facilities.
  • Legal factors-this is also an important factor which may impact the working of the company. This is because of the fact that the bank deal in finance of many people and business organization and any mistake can result in huge financial losses. Thus, for this there are many laws and regulations being made and which need to be abided by the bank. Hence, compliance with the different laws will help the company in creating trust among the people transacting with the bank.
  • Environmental factors-this is also an important factor which need to be taken into consideration for the successful running of the banking operations (Zahari and Romli, 2019). This has no link with the business transaction but if the company will pay attention towards the environment and its protection then this will increase the market share of the company. This is majorly because of the reason that the consumer trend is towards the protection and safeguarding of the environment and this is an opportunity for Morgan to increase the consumer base.

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LO 2

P 2 Internal environment and capabilities

With the analysis of external analysis, it is also necessary for JP Morgan to analyse and evaluate all its internal environment (Gürel and Tat, 2017). This is done to ensure that whether the company is able to adapt to the external changes effectively or not. Also, the internal analysis will help the company in identifying the areas in which they excel and the areas in which they need to develop. For these two models are being used by JP Morgan that is SWOT and VRIO. The SWOT is used in order to analyse the strengths and weakness of the company and the VRIO helps in identifying the capabilities of the company.

SWOT- this is an important model of analysing the internal environment of the business and this is necessary because of the reason that there are frequent changes within the macro environment. Thus, these changes have impact over the internal working of the company. Thus, SWOT analysis help the company in analysing and evaluating the changes in the internal strength and capabilities.

  • Strength-this is defined as the areas in which the company is good and efficient in its working and profitability. The major strength of JP Morgan is that it has a strong brand position within the market and has a global presence. This is a strength because of the fact that this increases the consumer base for the company. Another strength is that the company has strong liquidity and capital which makes the bank in position to provide cash at any time of the day. The liquidity is the capability of converting the asset into cash and this is good in JP Morgan.
  • Weakness-these are the weak points which degrades the working capacity of the company and the employees. The major weakness is that the expenses of the company is increasing and weakening the profitability of the company. Another major weakness of the company is that the company is over dependent on some of the market. These markets are North America and the US for majority of its earning. If there is slow down in the economy of these country then the profitability of the company will also decrease (Shi, 2016).
  • Opportunity-this includes the areas in which the company can grow by undertaking the opportunities and changes present in the business environment. The major opportunity for JP Morgan is expansion in other countries. This is an important opportunity because of the reason that this will increase the market share and the consumers. as a result of this the overall profitability of the company will increase (Vargas-Hernández and Garcia, 2019). Another opportunity for the company is to adopt to the latest technology which is coming in the environment such as blockchain, crypto currency, chatbots and many others.
  • Threat-this is defined as the factors which degrades or harm the working capability of the company. the major threat for JP Morgan is the high and intense competition. This is the most important threat which is faced by JP Morgan and which affects the working of the company to a great extent. Another threat is the protection of the data of the consumers. This is also a major threat because of the reason that in current competitive world cyber crime are increasing and there may be theft of confidential data of the consumers.

VRIO- this is an analytical model which is applied by the companies in order to evaluate the resources of the company and to ensure that whether the resources provides a competitive advantage to the company or not. Also, this model outlines the capabilities of the company which make them different from the other competitors.

  • Value-the valuable resources of JP Morgan are like financial resources, employees and the cost structure of the company. This is because of the reason that all these resources add value to the working of the company and fosters the productivity of the company. Also, the research and development department are of value because it outlines all the necessary changes taking place within the market and environment.
  • Rarity-these are the resources which are rare to the company and JP Morgan includes the distribution network, financial resources, patents and employees. These are rare because of the reason that these resources are basic to every financial company and thus every company need these resources.
  • Imitability-these are the resources which can be imitated by the other competitors and can be used by them (Ariyani and Daryanto, 2018). For JP Morgan the imitable resources are the one like the cost structure, employees, patents and financial resources. The cost structure is imitable because JP Morgan has a very effective cost structure and every competitor need to adopt to this.
  • Organization-just arranging for the resources is not enough rather it is very important for the company to properly organize the resources so that they are efficiently used (Yudiono, Wilopo and Iqbal, 2019). The properly organized resources of the company are the financial resources, employees, cost structure, research and development are the organized resources.
Resources Value Rarity Imitability Organization
Financial resources ü  ü  ü  ü 
Employees ü  ü  ü  ü 
Distribution network   ü     
Cost structure ü  ü  ü  ü 
Patent   ü  ü   
Research and development ü      ü 

In the end it can be concluded that the financial resources, employees and the cost structure are the major capabilities of JP Morgan as these resources meet all the four criteria’s of VRIO that is value, rarity, imitability and organization.

LO 3

P3 Porter five force model.

The company JP Morgan faces higher competition at market place because in the market place already have various financial company which provide various better services to their customers. In order to analysis the competitive era of company here is apply Porter's five force analysis which is as follows:

Porter five forces analysis:

A porter five force analysis is the business analysis tool which is examine relative strength of five primary forces that are govern higher level of competition within the industry. This creates a higher opportunities for company in their competitive era. This model is implements in JP Morgan is determine the strongest force which the company must take account are competition from rivals in the industry (Safari, Farhang and Rajabzadehyazdi, 2016). This includes five forces which are explains below:

Bargaining power of suppliers (low):

In the banking and financial sector have two main suppliers who are the depositor and employee both are main resources of company. In respect to depositor, the situation is essentially same as that represented as bargaining power of customers. As per that company have approach to deal with the marketing force which is gain work to attract new clients as well as increase depositors hold funds. Through that suppliers is lesser force for company.

 Porters Five Forces

Bargaining power of customers (strongest): 

The customer have strongest power to which can influence the whole industry. In the banking sector customers have various option to switch and move to another bank by closing their accounts. However, the bargaining power of consumer is greater which cannot afford to suffers defections of depositors. This creates the negative impact on customers and company if company is not provide a proper facilities and customers services. In that case, JP Morgan address those issues of customers bargaining power primarily by extending new customers towards company but it is also difficult to attract new customer (Min, Liangwen and Yue, 2018). As per this, bargaining power of customers is strongest force which affect to JP Morgan.

Threat of new entrants (low):

Threat of new entrants is the significant force within the banking industry which have a very low impact on company. In the banking sector new companies are come with new plans and offers but customers are not easily trust them because already exists bank have and build good image at marketplace (Porter's Five Forces, 2018). On the other side, the new entrants are massive amount of capital and longer time to build trust of customer and image. As per that, this factor not put any negative impact on company because this have lower force on industry and JP Morgan.

Threat from substitute product (strongest):

In the baking industry have various companies and bank who are provide various services and financial services to customers in effective manner. As per that companies outside the industry have begun to offer specialized financial services which were traditionally available from bank. In any problematic situation customers switch from company and than it give negative impact through this analysis it has have been prove that threat from substitute product is strongest force which can give negative impact on company (Dawes, 2018). In that JP Morgan responded with proper initiatives which includes division focusing small business leading.

Competitive rivalry (strongest):

Competition within the industry gives a higher impact on business which is created negative impact on business because competition is very high. JP Morgan faces intense competition domestically from the other three majors money banks and globally from other larger multinational companies in effective manner. The main competitors of JP Morgan are HSBC and Barclays bank. As per that, competitive rivalry have a strongest force on industry and company. In that company deals with industry competition in attempting distinguish itself in the market on the primary basis for long term recognition.

The above is analysis of Porter five force for analysis higher force of company. As per this analysis, Competitive rivalry, threat from substitute product and bargaining power of customers have strongest force on JP Morgan company. In order to analysis the growth opportunities for company here is use Ansoff matrix are as follows:

  • Market penetration: in this company make strategy to sell more existing products in existing customer base. This is the best for primary success for company (Schawel and Billing, 2018). In that company can provide a discounts coupon to their loyal customer and also reduce their order processing time in effective manner.
  • Market development: market development is another tool which is also help to develop sales and profit of company in effective manner by making greater strategy which company can fount the online market when they launch their site for customers. This create great opportunities in the market and existing customers segment for higher growth of company.
  • Product development: the product development is help to make a positive and effectiveness for company because in that companies are able to take better decision for company by producing better product and services for company. In that company JP Morgan can provide online transactions facilities and wallet cash transfer facilities. This help to give higher competitive advantage by attracting more customers in effective manner.
  • Diversification: the diversification is get into the new market by launching new product and services at the market place (Bell, Dyck and Neubert, 2017). The company JP Morgan is the biggest financial services provider in the market place. Through that company have greater opportunities to achieve higher goals and objective. In this company can enter in new market with new product and services is help to increase their competition at market place in effective manner.

As per that the best option for JP Morgan is product development because present higher customers base is go with online transactions. This is the best and effective option because present days more customers and people are like to use online transaction for paying their shopping bills and others. This help to create higher advantage for company.

LO 4

P4 Applying range of theories and concepts.

Here is apply the different theories and concept for understand what is beneficial for JP Morgan at market place (Bertozzi, Ali and Gul, 2017). For that here is use Porters generic force and Bowman strategy are as follows:

Porters generic strategies model:

This is involves two basic types of competitive advantage which is the combination with the scope of activities for that companies are more seeks to achieve them in effective manner. All of this is help to achieve by reducing costs of product for organization competitors in respective manner.

Porters Generic

Cost leadership:

This strategy is involves gaining a competitive advantage by lowering cost. This is the main generic strategy in various customer market. The cost advantage sources are highly based on the structure of industry. This include economic growth, property technology. In that company can extent market share by targeting the middle class. This can provide cost advantage to JP Morgan.

Differentiation:

This is another aspects of generic strategy in which company can use the more effectiveness (Haselwanter, Muskat and Zehrer, 2016). This strategy is allow to company to expand their business in another market with unique feature in product. This help to provide advantage to company in effective manner.

Focused strategy: 

This help to make focus on competitive strategy which encourage companies to proper focus on their resources. In respect of cost focus strategy, company can reduce price of product and offers best values. This help to attract those customers who are not able to purchase higher price of products and services at marketplace. On the other side, differentiation focus strategy is provide new products for customers which is help to build branding of company at market place. This help to attract all over market because company have great target to all people by differentiate products at marketplace.

The company JP Morgan is adopt differentiation strategy by offering new product with new features to attract more customer in effective manner (Desai, 2019). Also use Bowman strategic clock model.

This model is explore the options for strategies position for company in effective manner. This include 8 aspects in their model which illustrate for business have variety of opportunities and growth factors to expand and increase sales or effectiveness of company are as follows:

  • Low price and low values: this is not provide a prop[er competitive advantage for company and not differentiate and customers perceive. This allow to JP Morgan to reduce price of services and provide lower values to customers.
  • Low price: business position look to be low cost leader in market. In that company minimise price of product and profits margin of each product and services are low, but have the high volume of output which help to generate higher profit.
  • Hybrid: in this company have right to add some lower price products but also little products are differentiate (Safari, Farhang and Rajabzadehyazdi, 2016). This have effective aim is to add value with combination of reasonable and product differentiation.
  • Differentiation: aim of this strategy to make positive brand image of company at market place by launching high quality of product and loyalty (Bowman's Strategic Clock (Strategic Positioning), 2017). This help to achieve goals and objective of company in effective manner.
  • Focused differentiation: strategy aim is to position a product at higher price level at their customers are buy that product because of the high perceived values. This is best position strategy adopted by luxury brands in effective manner.
  • Risky High margin: in this business and companies are sets higher price of product without providing and offering extra to customers. Like if customers are purchase this than profit is also higher and increased and not buy that then profit is lower. This is the short term strategy.

Bowmans Strategic Clock

  • Monopoly pricing: in the monopoly market companies are only offers product and services to customers for more growth of company (Min, Liangwen and Yue, 2018). In that company is not concerns needs of customer only make focus on sales of product.
  • Loss of market share: This allow to JP Morgan to reduce and sets middle range of market share for price for a product with low values unlikely to win customers is the better option.

As per the both model analysis company need to make proper and effective needs. With the help of those JP Morgan is able to find the better growth option for company. For that here is include recommendations for JP Morgan are as follows:

Reommanded for company to use differentiation strategy with porter generic strategy (Dawes, 2018). On the other side, as per Bowman strategy model JP Morgan should offers wallet and online transactions facilities to customers for gaining higher competitive advantage.

Strategic management plan

This is the document which is used to communicate within the organization like goals, objective, strength operations and others aspects which are important for company. Strategic management plan is the strategic planned strategy which is sets as per goals and objectives of company in effective manner.

Vision: Aspire to be the best, execute great team and winning the culture.

Mission: To bring together people and product in all concerns of the globe and to provide the best financial services to customers.

Objectives:

  • To be the most respected financial services provider in the world by satisfying need of customer.
  • To include the higher promotional and advertisement channel for promote their product and services at marketplace.
  • Increase sales and profit margin of company till the end of 2020.

Strategies: the strategy of JP Morgan is to target youngster because they are highly use online transactions and digital wallets.

Tactics:

  • Paid more for advertisement
  • Hire new staff for track online transactions.
  • Organize training session for giving training about online transactions and other factors.

Budget:

Budget is the amount which is help to company for get ready to their future expenses related to marketing. Those are as follows:

Marketing expenses Amount in pounds
Advertisement 50
Marketing research 40
Stationary 20
Total 110

Implementation:

Implement by generating new mobile app for online transactions which JP Morgan app. Provide complete details to customer about apps like how to uses and complete transaction.

Control and review:

review and controlling is the best process for oversees the task and work at marketplace because that is necessary to ensure about the implementation is approved by customers or not. This process help to find mistakes in process work in respective manner (Schawel and Billing, 2018). For controlling and review company take feedback from customers and take views about product is best or not. This help to attract more customers because they think company provide services as per their needs.

Students also like to read: Developing and Implementing Business Plan- BizOps Enterprises

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CONCLUSION

From the above study it had been concluded that the business strategy has help to create higher competitive advantage for company. For that company have need to analysis external, internal and capacity of company in effective manner by using PESTEL, SWOT and VIRO model. Those helped to give proper analysis of company. Through that company got idea of market and strength and weakness. On the other side, in continue to that company need to analysis competitive advantage for company in that report presented the Porter five force analysis model. This helped make sure about those factors which gave higher force on company which has bargaining power of customer, competitive rivalry and threat from substitute product. Here has also used ANSOFF model to analysis the strategic growth of company. To analysis the growth market for company report has used Porter generic and Bowman strategy model. The porter generic model has helped to analysis competitive advantage with cost, differentiation and focused strategy. Through that here has recommanded for company to use differentiation strategy by using strategic management plan. At the end of report here has also produce strategic management plan by including vision, mission, objective, tactics, strategy, budget and implementation as well as controlling.

REFERENCES

  • Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO Framework: Development of Scale for Resource and Capabilities Organization (Case Study: XYZ Company Animal Feed Business Unit). Asian Business Research Journal. 3. pp.9-14.
  • Bell, G.G., Dyck, B. and Neubert, M.J., 2017. Ethical Leadership, Virtue Theory, And Generic Strategies. Radical Thoughts on Ethical Leadership. 113.
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  • Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But with Two Logical Problems (February 27, 2018).
  • Desai, C., 2019. Strategy and Strategic Management. In Management for Scientists (pp. 65-84). Emerald Publishing Limited.
  • Gürel, E. and Tat, M., 2017. SWOT analysis: A theoretical review. Journal of International Social Research. 10(51).
  • Haselwanter, S., Muskat, B. and Zehrer, A., 2016. Strategic Planning in Micro Businesses: Adapting the Strategic Clock for Micro Firms.
  • Min, C., Liangwen, L. and Yue, X.G., 2018. New Thoughts on Porter. IETI Transactions on Social Sciences and Humanities. 1. pp.105-113.
  • Perera, R., 2017. The PESTLE analysis. Nerdynaut.
  • Safari, N., Farhang, M. and Rajabzadehyazdi, E., 2016. The study on the competitive status of construction companies based on Michael Porter's five competitive forces (Case study: Armeno Project Development and Management Company). European Online Journal of Natural and Social Sciences: Proceedings. 5(3 (s)). pp.pp-72.
  • Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33). Springer Gabler, Wiesbaden.
  • Shi, X., 2016. The future of ASEAN energy mix: A SWOT analysis. Renewable and sustainable energy reviews. 53. pp.672-680.
  • Sia, S.K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS Quarterly Executive. 15(2).
  • Till, H. and Eagleeye, J., 2017. Commodity Futures Trading Strategies: Trend-Following and Calendar Spreads. Editorial Advisory Board Commentaries, Global Commodities Applied Research Digest. 2(1). pp.86-91.
  • Vargas-Hernández, J.G. and Garcia, F.C., 2019. The Link between a Firm´ s Internal Characteristics and Performance: GPTW & VRIO Dimension Analysis. REBRAE. 12(1). pp.19-30.
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