jp morgan chases - business strategy

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Team 3

Therightrelationshipiseverything.

Thursday, September 30, 2010

JPMorgan Chase's Business Strategy

According to the description of Porters generic business strategies, JP Morgan Chase & Co

would be an example of the differentiation strategy. It is very complicated for companies like

JPMorgan Chase to distinguish their services or products from their competitors, so when

you look into the business strategy they use, you will find out that they focus more on the

brand identity of the business. JPMorgan Chase is more successful by playing up the trust,

loyalty, or experience angles of their reputations rather than exploiting differences where

there are few. For instance, look at their mission statement "At JPMorgan Chase, we want to

be the best financial services company in the world. Because of our great heritage and

excellent platform, we believe this is within our reach." They truly describe their business

strategy by pointing out their experience angles.

Porters five forces model has been accepted for businesses to use when thinking about

strategy and the impact IT has and also to help

understand the competitive pressures interms of

the five forces. JPMorgan Chase utilizes the five

forces model as a strategy for their business.

Considering the amount of competitors that

JPMorgan Chase has, it would be assumed that

their buyer power is high, but they offer so many

perks that it helps maintain their advantage over

competitors. They offer several rewards to their

customers such as free checking, $25 referral

rewards, and the newly implemented Chase

quick deposit. With quick deposit, you candeposit a check without having to go to a bank

location. You can use an application on your

iPhone which submits a picture of the check to the

bank and then in turn deposits the funds into your

account. Its quick, easy and free for most

customers.

There are so many companies in the financial

industry that the top minds looking to work in banking can work for, so JPMorgan Chase

provides extensive employee benefit programs to keep their competitive advantage. Benefits

such as exceptional health care plans, 401K programs, retirement plans, and even benefits

such as child care assistance, give them an appeal that other companies cannot match.

JPMorgan Chase offers both personal and business banking and lending, retirement and

investment accounts. They offer online banking and you can even receive text message

updates regarding your account on your cell phone.

Threat of substitute services, new entries, and rivalry of existing competitors is high in the

financial market but JPMorgan

Chase is consistently

implementing new strategies to

keep their competitive edge.

They are actually an innovator

in their sector. Most recently,

they have set aside $10 billion

to lend to small businesses with

an incentive to increase their

staff. They provide low rates

and once the loan application

has been approved, for everynew hire, there is a rate

discount of .5%, up to three

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new employees. They are also

offering an incentive of $100 cash back on an auto loan for any new or used car purchase.

JPMorgan Chase realizes they there are several banks available that individuals and

businesses can invest their money in, with new options frequently becoming available.

Because of this, they offer benefits and incentive programs to employees and customers,

from individuals to businesses, they offer something for everyone.

The major business initiatives being considered by JPMorgan Chase would be to increaserevenues, making them top line initiatives. Even though the company wishes to minimize

costs, it will agree to incur certain costs to develop new and deepen existing customer

relationships. For example, each account (and added features) cost the company a certain

amount per client; JPMorgan Chase will sometimes waive fees on the added features to

keep large balance carrying clients happy. This may increase costs but also its revenue

because that client will bring current and future monies to the company. This also opens the

opportunity to have the client pass on a success story to a friend which could result in new

customer relationships for JPMorgan Chase. Another example would be how the company

offers clients certain incentives such as a free $100 for opening a new checking account.

JPMorgan Chase uses such

software as Customer Assist

and Contact Manager which

are both forms of customer

relationship management

system. Customer Assist

allows employees to search

personal information (such as

address, SSN, etc.), as well as,

the various account types and

other features that a client has

in order to gain a deeper

understanding of what they may be interested in in the future. Customer Assist also works

with Contact Manager.Contact Manager allows employees to see a clear profile of each

client without having to click to various screens. Both programs give you the ability to see

any contact made to the individual in the past in order to lessen the frequency of calls and to

avoid making an offer more than once (especially if the customer refused it before).

JPMorgan Chase follows a fully integrated approach when it comes to their IT culture. Eachbusiness unit has its own IT organization. In 2001, JPMorgan Chase shifted its business

focus to one firm-one team which encourages employees and departments to collaborate

together. JPMorgan Chases IT decisions are lead by a five-member Technology Executive

Committee which is a subgroup of the companys Executive Committee and comprised of

the top line-of-business executives and the head of technology. The Technology Executive

Committee with the assistance of the Technology Council decide on the companies IT

principles and investment decisions. The Technology Council consists of the Enterprise

Technology Services CIOs and infrastructure leaders. The council is entrusted with making

firm wide architecture and infrastructure decisions with the assistance of six subcommittees

which are the Architecture Board, Engineering Board, Financial Performance, People,

Strategic Relationships, and Communications. Each subcommittee is headed by a Council

Member and has representatives from both business unit and corporate IT. JPMorgan

Chase is definitely on the innovative

spectrum when it comes to technology.

While they perform extensive research

prior to investing in new technology,

they are at the forefront of technology

in the financial sector.

JPMorgan Chase became one of the

first financial services company to

implement a single purpose grid which allows them to improve performance and lower

technology costs. The purpose of the grid is to assist in performing major tasks such as

calculating risk or performing simulations faster than competitors. It is because of this

initiative, they are one of the leaders in the financial sector. JPMorgan Chase is also the only

bank with end-to-end supply chain management capabilities which enables them to add

value to both the importing and exporting side of transactions. JPMorgan Chase has teamed

with Vastera to manage their physical and financial supply chains, optimizing transactions.

With Vastera, JPMorgan Chase offers improved inventory and document management,reduced Days Sales Outstanding, automated tasks, and risk compliance, demonstrating

once again how JPMorgan

Chase's BusinessStrategy

Company Profile:JP MorganChase & Co.(NYSE: JPM)...

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PostedbyKristinaVat10:02PM

Reactions:

Chases forward thinking and

innovation makes them a leader in the financial sector.

With all of JPMorgan Chases acquisitions and mergers came several different databases

and customer relationship software that needed to be combined in a format that maintained

the information and functionality of the existing systems. With the assistance of Siebel, the

Relationship Exchange (RX) was created which centralized the information previously

separated in different sources, creating an organized database containing all of the firmscontacts and customer information. RX enables every member of JPMorgan Chase to

access the database, no matter their location. RX harvests information provided by the

customer directly and obtained through the various actions by the customer such as

purchase activity. This information can then be reviewed to tailor offers to each customers

interests. Sales associates and customer service reps are now able to optimize every

customers experience and maximize sales, in-turn increasing profits just by having this

valuable information available in a convenient location. JPMorgan Chase is able to manage

its own data processing networks, data centers, help desks, and data and voice networks

internally in addition to managing their thousands of employees. Without the need to

outsource any of this work, JPMorgan Chase is able to retain an considerable amount of

money.

In keeping with the developing trends, JPMorgan Chase has turned to social networking to

reach more customers. They have teamed up with Facebook to offer an affinity credit card

with allows users to redeem Amazon gift certificates or make donations to the charity of their

choice. They have also launched a campaign on Facebook allowing users to vote for their

favorite charities to receive a donation of $25,000 to $100,000 depending on the number of

votes received. Utilizing Facebook to generate a PR buzz allows JPMorgan Chase to reach

millions of potential customers without having to adhere to stringent regulatory compliance

regulations. In addition to teaming up with Facebook, JPMorgan Chase also has pages on

other popular social networking sites such as Linkedin and Twitter.

In addition to turning to social networking, JPMorgan Chase has turned to E-Learning tools

such as Training Central, to train their employees and keep them educated. Through this

software employees and their superiors can easily see the training courses which they took

and provide information on future optional training. Also, whenever new company required

training is required the information for when its due as well as the learning materials and

most often the testing is available right on this program. This makes it easy to check what

needs to be completed and when and enables employees to support the skills already

obtained and to increase their knowledge of the system, regulations, and the general course

of business. With e-learning, one is no longer restricted to a certain location to learn such as

a classroom setting, but can access the learning programs from anywhere with the softwareis available. E-learning offers flexibility without comprising the learning experience.

JPMorgan Chases exceptional business strategy allows them to maintain their position as

the one of the worlds leading financial firms.

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