Business strategy is critical for every organization looking to grow strategically. A business model is a well-defined collection of objectives, activities, and targets that explains how a company will engage in a specific marketplace with a single product or a portfolio of goods and services (Holmberg-Wright et al., 2017). A marketing strategy must consider various elements, including the sector, rivals, economic outlook, and the firm’s architecture, capabilities, and weaknesses. Thus, developing and executing a business strategy demands excellent competitive planning and corporation analytical skills and an in-depth comprehension of advertising, sales, and logistics (Holmberg-Wright et al., 2017). A corporate strategy is a well-defined, long-term vision adopted by firms to generate company value and motivate employees to take the necessary steps to attain customer satisfaction (Rugman & Verbeke, 2017). Additionally, the corporate tactic is a continual procedure that demands constant efforts to convince stakeholders to spend their capital in the business, thereby expanding the institution’s equity. Organizations that consistently deliver customer value regularly examine their corporate plan to enhance sections that may be underperforming.
Application of Michael Porters Generic Business Strategies to Wells Fargo
Wells Fargo Company is a global financial services company with a strong presence in key industry categories. The sector’s increasing competitiveness has made it difficult for Wells Fargo to maintain its marketplace leader position and expand its customer base without major initiatives. The business landscape requires Wells Fargo to gain a vital strategic edge to stay competitive. As a worldwide brand with a significant presence, Wells Fargo has established its strategic advantage based on many essential elements that provide it with a significant advantage over competitors. The competitiveness initiatives of Wells Fargo make sense when viewed through the lens of Porter’s generic model. To combat price competition, the corporation has used a combination of cost leadership, distinctiveness, and focus methods (Islami et al., 2020). Expanding the client base and increasing sales are accomplished by concentrating on the most effective strategies depending on three generic strategy components.
Cost Leadership Strategy
Cost leadership methodology entails achieving a competitive edge through cost reduction. Wells Fargo’s primary generic approach in multiple consumer segments is cost leadership. This approach enables Wells Fargo to grow its customer base by focusing on the middle class, which accounts for the lion’s share of most nations’ entire client marketing function. Middle-class buyers place a premium on price, and cost leadership is the perfect idea for fulfilling their expectations. Wells Fargo places a premium on price and increased access to its products globally, resulting in increased brand exposure, revenue growth, and a significant competitive edge. Apart from offering competitive pricing through reducing manufacturing costs and optimizing distribution network efficiency, Wells Fargo routinely gives discount coupons to meet sales expectations and fend off market rivalry from its nearest opponent.
Differentiation Strategy
Diversification is another frequently utilized general method for establishing a significant edge. Wells Fargo achieves growth targets through differentiation in conjunction with a cost leadership approach. By highlighting the distinct item qualities, distinctiveness as a supplementary business model enables Wells Fargo to extend its customer base (Betz, 2018). The strategic purpose of Wells Fargo in pursuing this technique is to distinguish itself through technology and to handle customers’ growing medical problems. For instance, Wells Fargo expanded its product range in response to shifting consumer demands to separate itself from rivals and broaden the scope of new ventures.
Wells Fargo has established a powerful relationship with customers through cost leadership and differentiation. Wells Fargo differentiates its brand portfolio through a general strategy that positions it to stand out and be distinct from other competitors. As an established brand with a firm footing, the corporation leverages differences to alleviate competition from other companies (Betz, 2018). Significant expenditure is done only to separate Wells Fargo from competing brands in advertising, publicity, and celebrity endorsements. The trademark is also utilized to establish a basis for distinctiveness. The unusual and unique brand emblem has successfully established a powerful brand image in the minds of consumers (Betz, 2018). Although the logo has been revised numerous times, its essence has stayed consistent and functions as a powerful differentiator.
Focus Strategy
Concentration is the third porter’s generic approach that promotes businesses to focus their efforts on strengthening tightly defined niches. When businesses pursue a divisional structure, they target specific audiences and build a competitive edge through specialized advertisement (Betz, 2018). Wells Fargo has a philosophy of focus in terms of price and quality. The low-cost emphasis technique is implemented by servicing the requirements of a unique marketing group at the least possible price. Focusing on the best price is implemented by stressing the flavor, size, and specifications of the goods that best meet the users’ conditions and requirements (Betz, 2018). By focusing on merchandise qualities, Wells Fargo continuously scrutinizes its branding strategy and alters the appearance and wrapping of its products to meet consumers’ mental expectations and optimize value for money.
Wells Fargo Business Strategy
Risk assessment is a notion that underpins the entity’s strategic intent. The risk management committee is constantly on the lookout for evolving client needs. Efficient financial control enables the firm to operate more sustainably and securely. For instance, the organization examines its consumers’ liquidity commitments to mitigate risk before it becomes a problem (Sridharan & Hadley, 2018). This strategy explains why the organization has developed expertise in various products, including mortgages, investment, and lending. The management work relentlessly to expand the corporation’s reach throughout the world. Additionally, the corporation is noted for equally distributing its diverse earnings. This method has been seen to enhance the revenue and effectiveness of the company (Sridharan & Hadley, 2018). Thus, this assessment shows unequivocally that Wells Fargo operates under a strong business plan defined by its basic values and ideals.
Analysis of Wells Fargo’s Business Model
Wells Fargo’s success in the financial and banking market is due to its distinctive business model. The organization has created a strong business plan governed by a set of core values. The firm aims to meet clients’ financial requirements and assist them in gaining economic success. The enterprise believes in the power of resolve, determination, and hard effort to accomplish the firm’s objectives. The firm leverages its basic beliefs to develop long-term connections with each client (Maiorescu-Murphy, 2020). The connections enable the business to understand its clients’ different needs better. By doing so, the organization establishes a robust model capable of providing the greatest possible service to its clients.
Wells Fargo & Business is a publicly-traded corporation in finance and banking. This sector is engaged in distributing financial services to various segments of the market segment. Consumers can choose from various goods and services, including leveraged buyouts, corporate finance, investment management, personal loans, capital inflows, and client lending (Maiorescu-Murphy, 2020). Wells Fargo earns money by providing services to its customers. For example, cross-selling is a technique in which supplementary services or products are supplied and the main selling to gain more customers and keep existing ones. Numerous organizations diversify their product ranges by adding things that bear little similarity to their principal services (Maiorescu-Murphy, 2020). Additionally, Wells Fargo works as an aggregator, handling transactions for online retailers, auction websites, and other corporate clients on a fee-for-service basis. This phrase refers to the process of acquiring, trading, and exchanging currencies at present or preset macroeconomic variables.
The following are how Wells Fargo adds value to its clients. Since the corporation positioned itself as one of the greatest, most renowned, and omnipresent financial communities in the United States, its profile and industry position have grown (Maiorescu-Murphy, 2020). The corporation’s proven record of supplying dependable and sustainable commodities has provided a diverse variety of high merchandise and services to its clients over a long period. Its connectivity enables Wells Fargo to maintain a large office network in the United States and provide online, cellular, and landline payment solutions. Finally, Wells Fargo’s industrial knowledge and technology skills, as demonstrated by the Group’s professionally experienced employees throughout its three operating sectors, as well as seasoned industry representatives (Maiorescu-Murphy, 2020). On the other hand, the company’s profit proposition emerges from its popularity due to the economic rewards associated with investing through it. For example, Wells Fargo recognizes that few businesses are appropriately resourced to handle their finances effectively, considering the complexity associated with such concerns on both an individual and company level.
Corporate Strategy Analysis
Wells Fargo uses an information innovation corporate strategy and has benefited from digital technologies by automating business activities. The company has implemented many system changes to increase its efficacy in providing rapid and reliable service to its consumers. Wells Fargo has consistently invested in producing new and better products and services to fulfill the diverse demands of current and prospective consumers. The emergence of systems such as System Application Products (SAP) and Enterprise Resource Planning (ERP) eased the gathering and harmonization of multiple data sets and enhanced the overall quality of goods and services delivered (Veetikazhi & Krishnan, 2019). Additionally, the firm has established a homepage that informs clients about the company and the commodities and services it offers. Wells Fargo offers a comprehensive and holistic technique to computerized security agencies through the use of cutting-edge technology that results in significant cost savings, setting it apart from other security service providers.
Wells Fargo’s business is concerned with providing financial services to a group of customers within the target segment. Consumers can choose from various commodities, including private equity, commercial banking, asset management, card payments, money market, finance and insurance, and housing loans (Maiorescu-Murphy, 2020). Wells Fargo has been a standout performer in the post-crisis era. It excelled in its financial markets due to its well-defined vertical breadth, particularly on the mergers and acquisitions front. It recognizes the importance of transnational commerce today and seeks to leverage the global affiliation of high-income clientele by operating in various countries. Thus, this helps lessen the risk of conducting business in a single economy.
For its geographical scope, it primarily prefers inorganic expansion, in which it identifies small banks or segments of their network activities and eventually acquires them in that region. Its primary objective is to serve US shoppers wherever they conduct transactions worldwide. Initially, Wells Fargo picked nearly 20 countries on the first list, where it will grow to service most of its existing clients (Maiorescu-Murphy, 2020). Wells Fargo owns vertically integrated operations along the production chain for its goods. The company’s distribution network comprises various vendors worldwide who provide anything from cloud applications to household goods, enabling it to operate its business successfully.
Second-tier suppliers are merchants and network operators employed by a Wells Fargo-contracted provider to offer merchandise under the terms of the contract with Wells Fargo. Wells Fargo has gone beyond its initial product line and industry. Since its inception, Wells Fargo has significantly expanded its product range to the point that its product offering has grown excessively broad (Maiorescu-Murphy, 2020). It has enabled the company to hedge its risks by compensating for losses in one item category with benefits in others. Currently, the company serves more than its competitor product lines worldwide since product creation is critical for increasing consumer acquisition.
Corporate Structure Analysis
Wells Fargo has a one-of-a-kind corporate structure that enables it to accomplish its business objectives. The business has a Board of Directors (BoD) responsible for ensuring that the foundation’s essential features are fulfilled on schedule (Witman, 2018). The bank’s leadership is split among its eight executive officers (EOs), who oversee various divisions and responsibilities. The CEO keeps an eye on multiple organizational operations and urges each EO to maintain a laser-like concentration on the set strategies (Witman, 2018). The chairperson of directors oversees the firm’s primary operations to ensure they are lawful and viable. The Corporate Finance Officer (CFO) is responsible for supervising and managing the entity’s financial operations. The Risk Officer’s responsibility is to guarantee that the organization makes the best financial decisions possible (Witman, 2018). The business’s quality assurance (QA) section strives to enhance service provision to its client base in various geographic areas.
Diversification is ingrained in Wells Fargo’s organizational structure and institutional activity. Meeting the ever-changing demands of Wells Fargo’s global audience is vital to the company’s long-term productivity and expansion. The company is focused on improving multiculturalism, justice, and inclusivity by ensuring that all members of its employees, community, and supply chain feel respected and appreciated. Additionally, it provides each member has equitable access to resources, facilities, commodities, and chances for success. According to Wells Fargo, diversification is the distinctive mixture of multiple characteristics that distinguishes each individual from and is comparable to others. These factors may include but are not confined to ethnicity, racial identity, physical or mental ability, sexual identity, values, religion, family status, and educational attainment. On the other hand, global alliances do not form part of Well Fargo’s corporate strategies. The company’s management is reluctant to pursue international mergers because of the risks associated with the external foreign market and therefore decided to serve its local customer base in the USA.
Strategic Fit Between Business and Corporate Strategy
Risk management is a concept that underscores the strategic aim of Wells Fargo. The risk supervisory board is always on the search for potential client requirements. Effective budgetary management enables the business to function more economically and responsibly. For example, the firm monitors the liquidity obligations of its customers to manage risk before it becomes a crisis. Wells Fargo has a corporate plan focused on information innovation and has gained from digitalization by streamlining company processes. The organization has made numerous system modifications to improve its efficiency in offering prompt and convenient performance to its customers. Wells Fargo has invested significantly in developing new and improved goods and services to satisfy the diversified needs of current and future customers. As a result, there is a strategic alignment between the company and corporate initiatives, as both strive to increase consumer value and efficiency.
References
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