Wells Fargo & Company is one of the biggest providers of financial services in the world. It mainly focuses on three segments Community Banking, Wholesale Banking, and Wealth, Brokerage, and Retirement. These three segments are the primary source of income for the bank. However, the corporation also invests in small and developing businesses. Moreover, Wells Fargo’s intellectual property such as technological, digital, and augmented developments provides good quality security to the bank as well as customers and ensures the safety of personal and financial information.
The bank has been operating since 1852 till today. San Francisco Wells Fargo & Company owns more than 10% of the share market, and Berkshire Hathaway keeps another 10% of it. The company also provides services for more than 30 countries around the world. In 2019 there was reported almost 80 million USD of total revenue, 18 million income before tax, where tax expenses were calculated as 3 million USD. The balance sheet consists of nearly 2 billion USD from total assets. Cash flow was around 27 million USD, and the funds from operation growth were 1% less than the previous year. The company’s break-even is estimated to be almost 0, with 20 million fix costs and more than 5 million variable costs. These calculations ensure the sustainability and growth of the business.
Wells Fargo & Company provides financial services for small clients and big corporate clients. The company has created a system that ensures stable yearly income, lower costs, and provides the corporation with resources to have sustainability. The steady cash flow and proper pricing strategies guarantee the advantage over main competitors in the market. Constant development and proper organizational structure make Wells Fargo one of the most successful and respectful financial providers.
Benchmarking Model, ASDA Analysis, and Marketing Plan Analysis
Analysis of the Company’s Management
Wells Fargo & Company provides financial services for private and government corporations. The company originates in the United States and has a headquarters in San Francisco, California (Wells Fargo Personal, 2020). It was founded in 1852 by Henry Wells and William Fargo, and today it is owned by Berkshire Hathaway (Wells Fargo Personal, 2020). In 2019 the operating income of Wells Fargo & Company was more than 24 billion USD (Wells Fargo Personal, 2020). Wells Fargo & Company has significant experience in providing a service for big companies in many different industries and encompasses more communities than any other bank in the United States. Moreover, the bank provides financial services for almost 10% of small businesses in the United States (Wells Fargo Personal, 2020). It specializes in wealth managing assistance for small clients as well as large corporate clients and it is the largest mortgage lender in the U.S.
The company is focused on three main business segments, which are Community Banking, Wholesale Banking, and Wealth, Brokerage, and Retirement. Community Banking incorporates the Regional Banking, Diversified Products, Consumer Deposits groups, and Wells Fargo Customer Connection (Wells Fargo Personal, 2020). The Customer Connection includes phone Banking and Credit Card Customer Service. Moreover, Community Banking provides consumer lending, student loans, and supplying equipment for different companies (Wells Fargo Personal, 2020). Wholesale Banking supports services for large corporations, investors, international trade and finances, and institutional customers (Wells Fargo Personal, 2020). Cross-selling is a significant part of the company’s marketing plan, where they sell additional banking services to its customers.
Wells Fargo’s intellectual property is its logo and trademarks that can be seen on the billboard with their commercial and the company’s name. The corporation also owns all the copyright for social media and postings on the internet (Wells Fargo Personal, 2020). However, their patents are the most significant part of their intellectual property. It includes development for augmented system access, tandem purchasing and incentivized shopping, e-mail security programming, different programs for customization, etc. (Wells Fargo Personal, 2020). Wells Fargo & Company invest much money into improving digital services works for providing better security for both the company and its customers.
Strategic and Marketing Plan
Wells Fargo is one of the biggest banks in the United States, with branches all over the country and in more than 30 countries around the world. The company provides services for almost 70 billion clients around the world. Moreover, the company continually grows and works on the ability to process more clients (Wells Fargo Personal, 2020). Wells Fargo’s target market is the existing customers who already have an account, but do not have an investment one. The goal is to encourage such clients to open an additional investment account.
Wells Fargo & Company is one of the four biggest banks in the United States. Its main competitors are JPMorgan Chase, Citigroup, and Bank of America. However, Wells Fargo has a significant advantage in customer switching costs, core banking operations, and funding costs that support intangible assets and provide sustainable wealth management. San Francisco Wells Fargo & Company owns more than 10% of the market share, which brings a total of 39 billion yearly, and another 10% belongs to Berkshire Hathaway (Wells Fargo Personal, 2020). Most of the company’s market share is at the stock market trade.
Wells Fargo focuses on evolving the pricing strategy to ensure better sustainability of the business. The company promotes maintaining prices to keep the net profit margin as an alternative source of income and lowing the costs for different types of services to encourage a better relationship with existing clients and attract new ones (Wells Fargo Personal, 2020). Moreover, when developing a periodic pricing strategy, Wells Fargo considers the price changes of its competitor, market, production costs rising and decreasing (Wells Fargo Personal, 2020). This helps the company to maintain sustainability and draw more profit. The bank promotes the security of its services and guarantees the safety of money withdrawing in ATMs and online banking (Wells Fargo Personal, 2020). In addition, Wells Fargo offers distributive services in more than 30 countries around the globe (Wells Fargo Personal, 2020). The company works on developing different services to provide full protection of customers’ personal information.
Analysis of the Financial Plan and Projections
In 2019 Wells Fargo & Company reported more than 80 million in total revenue, with 17 million being the interest expense. The company also reported 18 million income before tax, with tax expenses of more than 3 million (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). In 2019 the company had a Net Income of over 14 million USD (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). The balance sheet consists of almost 2 billion USD from total assets, with 1.7 billion USD of total liabilities, which includes stakeholders’ equity, common stock, and retained earnings (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). This tendency guarantees the company’s sustainability and severe Controversy Level.
Moreover, the company promotes a stable cash flow, which is essential to avoid time gaps between outgoing and incoming payments. In 2019 the cash flow was around 27 million USD, which is a long-term tendency for the bank (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). Although the funds from operation growth were less for almost 1%, it costs less than three million USD to the Working Capital (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). On the other hand, Net Operating Cash Flow was approximately 30 million USD, with more than 45% Interest Income (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). Based on this data, the sustainability of the business, stable income, and tax expenses guarantee Wells Fargo the total fixed costs of around 20 million. On the other hand, the variable costs would be at 5-7 million USD. Therefore the company’s break-even could be estimated at almost 25 million USD.
Since Wells Fargo & Company is a large corporation with multiple assets and branches, it does not require additional sources of funding to support its needs and ensure sustainability. Moreover, the corporation itself supports small businesses with funding and invests in developing companies. Wells Fargo’s sources of income, such as Insurance, Community Banking, overseas investments, guarantee a stable flow of cash (Wells Fargo & Company (WFC) Stock Price, Quote, History & News, 2020). Therefore, the company practices the cyclicity of its resources, where income and expenses are interdependent. This provides the corporation with the independence that ensures long-term sustainability.
Wells Fargo & Company continuously works on improving the services that they provide to the clients. Multiple branches around the world ensure the speed and quality of their assistance in financial matters. However, the analysis presented above shows that such big corporations can be unprepared for the crisis. Therefore the bank should work on increasing cash flow and break-even to ensure its sustainability in extreme circumstances.
Wells Fargo Personal. (2020). Web.
Wells Fargo & Company (WFC) Stock Price, Quote, History & News. (2020). Web.