Wells Fargo is a leading service provider in the United States and other different parts of the world. The company specializes in banking and financial services, and it has been ranked as the second largest bank in the world regarding market capitalization. The Forbes Magazine has also ranked the company as the 7 th largest company in the world. Despite the company making numerous development milestones, the creating of 2 million fake accounts tainted its image. This failure has been attributed to various internal policies that were not useful in assisting the company to achieve a desirable global image.
The article, Are You Sure You Have a Strategy outlines the various components of a plan and how the management can craft a viable strategy that would lead to sustainable growth. From the article, it is possible to deduce the elements of Wells Fargo strategy. The company aims at achieving a global presence in the delivery of services including banking, insurance, wealth, and investment management. This explains why the management identifies new niches across the world to offer the services to the clients. The company also aims at being a leader in the delivery of the mentioned services, and this is achieved through acquiring new clients.
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The overwhelming number of clients is likely to offset competition and attract more consumers when such figures are released to the public. It also explains why the management decided to open more than two million unauthorized bank accounts to escalate the sales in the reports. However, according to Hambrick and Fredrickson (2001), when the executives do not a precisely crafted strategy, they end up calling everything a strategy, and this becomes the genesis of confusion and undermining of the management’s credibility.
In his article, What Is Strategy , Michael Porter identifies various factors that give a company a given form of strategic positioning (Porter, 1996).From the article, Wells Fargo falls in the variety-based positioning. The rationale for this is that as Porter explains, companies with this form of strategic positioning produce various goods to meet the needs of the different consumers. Consumers find such business favorable since it meets a subset of their needs. Wells Fargo offers consumers with various services and this gives it a competitive edge. However, as Porter notes a flaw in the management can have detrimental implications in all the production lines even the ones that are not implicated by the ineffectiveness.
Wells Fargo has various stakeholders. The employees are the closest of all the stakeholders since they are involved in the daily running of the business. They offer the services to the consumers by following the guidelines laid down by the management. Their effectiveness in the different occupations and job satisfactions contributes to the quality of the services that the consumers receive. They are also affected by the management decisions. For instance, when the executive decided to open two million unauthorized bank accounts, about 5,300 of the employees were relieved their duties for participating in the sale of the accounts to the consumers (Egan, 2017).
The consumers also form an intricate part of the circle since they are the recipient of the services offered by the company. They have been the main reason for the expansion of the company to different parts of the world. Also, through the realization of the crucial role that the consumers play in the sustainability of the business, the management offered $110 million to compensate the consumers affected by the unauthorized accounts scandal (Egan, 2017).
The regulatory authorities are also crucial stakeholders for Well Fargo. They assess the legality of the regulations and processes that the business adopt. Their importance was revealed during the scandal. For instance, the Department of Justice indicated that the company faced criminal charges. Other independent investigative agencies working on behalf of the shareholders, who are also primary stakeholders, carried out evaluations to make findings that could be used by the shareholders in making critical investment decisions.
A poor prioritization of the stakeholders was the man cause of the scandal. The executive aimed at presenting appealing reports to the shareholders who contribute immensely to the expansion strategy of the company. By recording overwhelming sales, it was expected that the shareholders would tabulate the figures to demonstrate the viability of the business and make the appropriate investment decisions (Egan, 2017). However, this led to the failure to meet the needs of other stakeholders. For instance, the consumers felt disregarded and downplayed from being made to open unauthorized accounts. Also, the employees were implicated in the scandal although they did not have anything with the decisions made by the executive.
Wells Fargo through its management and staff committed several ethical and legal offenses. First, the management committed a securities fraud by failing to report on the use of unauthorized accounts by the consumers despite having the information for six months (Egan, 2017). It was also unethical for the management to create non-existent accounts to lure the customers into luring them and sending manipulated information to the shareholders. It was expected that the company would gain a competitive edge by using the information. However, this was out rightly unethical.
The company also went against the whistleblower protection laws by intimidating the employees who raised the issue of the company operating fake bank accounts and selling them to unsuspecting consumers. CNN Money Reporting indicated that some of the employees were sacked for giving out information through the bank’s confidential ethics hotline. When the company was involved in a legal tussle by the affected consumers, the management tried to force arbitration. The stakeholders reproached the unethical behavior, and the company opted to put aside $110 to compensate the victims.
The company implemented different strategies to prevent employees from future abuses. The management scrapped off goals that were supposed to be met by the sales group. In doing so, it was believed that setting more realistic goals would be a remedy to avoid triggering the parties into using unscrupulous methods to hit the targets. Also, the bonuses that the CEOs earned for performing outstandingly were also scrapped off. It was reasoned that they were among the factors that led to the individuals hatching plan to increase sales using an unethical approach.
The company also resolved to make public the findings of the internal investigating committee. This decision was settled upon to gain the confidence of the stakeholders. By making the report public, it was reasoned that the top management would shift the blame to individual parties rather than predisposing the company to take collective liability. The consumers and the stakeholders would be relatively content when the disciplinary action was exercised upon the people who bore much of the blame. In doing so, the executive would exonerate itself and regain the public confidence.
Conclusively, the Wells Fargo case is a prime example of the effects of poor prioritization of the stakeholders and instituting a poor strategy. The management of global businesses should be sensitive to the needs of their stakeholders since any form of complaint would have detrimental effects on the confidence that they have the company. The executive should also be cautious not to implicate employees in unethical decisions which would have grave consequences on their careers.
References
Egan, M. (2017).Wells Fargo still faces over a dozen probes tied to fake account scandal. The Cable News Network. Retrieved from http://money.cnn.com/2017/03/31/investing/wells-Fargo-investigations-fake-account-scandal/index.html
Egan, M. (2017).Wells Fargo's notorious sales goals to get a makeover. CNN Money. Retrieved from http://money.cnn.com/2017/01/06/investing/wells-fargo-replace-sales-goals-fake-accounts/
Hambrick, D. C., & Fredrickson, J. W. (2001). Are you sure you have a strategy?. The Academy of Management Executive , 15 (4), 48-59.
Porter, M. E. (1996). What is a strategy ?Published November .
