Evaluate the Company’s Business Strategy and Global Competitiveness Plan
Wells Fargo & Company is an American banking and financial services public company that has perfected the art of banking over time. However, even the most successful companies are not immune to scandals because of loopholes that can be exploited by fraudulent entities. Such was the case in the fallout following the banks fake-account scandal that led to adoption of a transparent strategy to address the root cause of the scandal at the company’s branches (Maxfield, 2017). Therefore, it is essential to examine Wells Fargo business strategy that critics predict is destined for failure.
Wells Fargo observes that its business strategy is founded on unwavering focus on customers. Such a strategy is needed in successful navigation of challenges and addressing customers’ needs in the modern competitive and evolving business environment. Wells Fargo places specific emphasis in building enduring relationships with its customers, a crucial strategy in attracting and retaining new and old customers. The success of the company is deeply intertwined with that of the customers; hence prioritization of customers’ needs is paramount.
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Wells Fargo also emphasizes on earning customer trust consistently through sound risk, not just through provision of essential products and services, but also through proactive protection of customers from financial risk through a focused culture. However, the fake-account scandal tarnishes the validity of this strategic approach, and the company has suffered as a result of negligence as it continues to lose the trust of its customers, making gaining new ones an unsurmountable hurdle. Wells Fargo’s global competitiveness is founded on organizational culture that encourages innovation. Through integration of technology into its operations, the company can seamlessly serve its global clientele with efficiency.
Internal Assessment using SWOT Analysis
Wells Fargo operates within and without the US offering insurance, mortgage, banking, investments and consumer finance through distribution networks in North America. The nature of its dealings in cross selling to achieve a competitive advantage through few products or single channel dealings, and the ongoing consolidation efforts aimed at achieving sustainability in the competitive market, has a lot to do with the company’s internal structure. Through SWOT analysis, the company’s current position can be used to project future undertakings.
A strong brand name with a favorable financial position
A widely distributed networks that cuts across industries and countries
A strong credit rating
Diverse products and services
A diverse range of employees worldwide
Diversified earnings from a range of segments
Weakening asset quality due from unstable housing market
Limited presence at the international stage
Unsatisfied customers as evidence by increasing complaints
Legal issues that have tarnished the global presence
Attractive and lucrative market in unexplored countries
Diversified portfolio can be used to attract new and more customers
Adoption of technology in products and service offerings
Growing of the brand in the banking industry
Diversification of products and services to meet emerging needs of growing population segments
Acquisitions and collaboration to strength the brand’s position
Uncertainty in the future of the industry prompts consolidation
Stringent regulations on contingent commission
Proliferation in online fraudulent practices
Instability in the asset-based security market in the US and other countries
Potential of financial crises in some countries
Poor handling of incidents costing customers’ trust and reputation of the brand
Assessment of the External Environment via an External Scenario Evaluation
The 2008-2009 global financial crises proved that Wells Fargo is capable of holding its act together when the going gets tough for most players in the industry. However, the company has not been spared by the wave of changes that is sweeping the banking service industry. Following the 2008-2009 economic depression, the federal government in the US passes a number of Acts that impacted the banking sector with the objective of stabilizing the economy. Such regulatory acts impede the freedom of the company making it unable to meet the needs of its customers.
Other reforms such as the Wall Street reform of 2010 have introduced new power dynamics in the financial sector, plunging it into uncertainty, a trend aided by the emergence of technologies and innovations that have revolutionized how transactions are done across the industry. Social factors have contributed to the company’s uncertain future, a situation that competitors have been quick to point out and exploit as the company struggles to sanitize its name amidst loss of some of its very talented employees including the CEO.
The Company’s Organizational Structure
The recent embargo at Wells Fargo prompted a flurry of responses to stem waning customer trust. According to Thompson (2017), the company recently unveiled organizational changes that would in a bid to streamline its management, build a better ban, and restore customer trust. The three teams introduced into the company’s organizational structure are the customer segments, customer and branch experience, and business strategy administration, which are only part of the structural components as shown below.
Defining Wells Fargo Business Process
Wells Fargo business process is characterized by two main processes – operational (primary) and management processes. The company seems to place a lot of emphasis on its operational processes as evidence by customer focused business strategy. The company’s primary processes are designed to reduce costs and time of service delivery. These processes are defined in the company’s goals and objectives which include customer service and advice, engagement of team members, risk management, shareholder value, innovation, and corporate citizenship, all of which are targeted at achieving a culture of one Wells Fargo by optimizing customer experience (Wells Fargo, 2017). Under management processes the company needs to take a critical look at its business ideals. One can argue that the company does not have elaborate internal communication channels and governance it needs to establish a culture of transparency and accountability, despite doing exceptionally well in areas of strategic planning, budgeting and capacity management.
Potential Ethical Issues that May Impact the Traditional Management Functions of the Company
It is evident that Wells Fargo does not have measures in place to ensure transparency and accountability. The need to institute cross-selling led to employees unethically opening fake accounts to benefit from the incentives. However, the management failed to follow up to establish the truth about the rise in number of customers using cross-selling services. The scandal is evidence of complacency in the part of the management to institute measures for tracking developments in this new venture. One can argue that the top management is disconnected from employees due to poor leadership that presents loopholes for fraudulent activities. Deterrence of similar incidents in the future can be accomplished by putting in place an autonomous internal audit department to consistently audit and monitor all organizational activities. The company should also develop a fool-proof employee motivation plan that does not necessarily include monetary incentives. These measures are necessary to avoid victimizing innocent employees and customers and legal proceedings that may follow.
Maxfield, J. (2017, Apr). Wells Fargo's retail strategy is slowly dying. The Motley Fool – Business Insider. Retrieved 28/06/2017 from: http://www.businessinsider.com/wells-fargos-retail-strategy-is-slowly-dying-2017-4?IR=T.
Thompson, W. (2017, Mar). Wells Fargo unveils organizational changes in its Community Bank. Wells Fargo Stories. Retrieved 28/06/2017 from: https://stories.wf.com/wells-fargo-unveils-organizational-changes-community-bank/.
Wells Fargo. (2017). Our culture. Retrieved 28/06/2017 from: https://www.wellsfargo.com/about/corporate/vision-and-values/our-culture.