JPMorgan Chase Analysis

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JPMorganChase Analysis

JPMorganChase Analysis

Thesuccess of a business organization is based on its ability tocoordinate the factors of the internal environment to effectivelymanage the external environment. Through the management of thesefactors, a business organization achieves its objectives by exploringthe opportunities and surpassing challenges to create a competitiveadvantage. To explore these dynamics, this discussion will analyzeJPMorgan Chase as the case study. JPMorgan Chase is a multinationalfinancial institution that has dominated the banking industry andfinancial holding services over the decades. Considered one of thelargest public limited companies, the company controls assets worthover $2.5 trillion.

PESTLEMacro Environmental Analysis

Thepolitical environment is the first element of the macro environment.The current political environment is suitable for business expansion.However, the government control is enacted in the banking industrythrough legislations and requirements for banks to operate (Deloitte,2013).With no recent regulation that may target the bank, JPMorgan Chasefaces a favorable environment.

Theeconomic aspect of the banking environment is on a recovery stageafter the economy was affected by the recession. As the economyrecovers, the banking industry is gradually gaining ground because itwas the most affected. Moreover, changes in interest rates suggestthe performance of the players in the banking industry (Deloitte,2013).This makes the economy a favorable environment for JPMorgan Chase. Inaddition, the economic growth of the third world presents moreopportunities for the firm.

Thesocial element of the macro environment is influential to theexternal environment of the bank that employs thousands of employeesand serves millions of people. Any positive changes in the age groupsthat save money or borrow financing will affect the bank’s marketpositively (Kotler &amp Gary, 2006). The aging populations of thebaby boomers, who are the greatest savers, present a challenge astheir income generation reduces. With a large number of customers indifferent countries, social changes in these areas will affect thebusiness of the firm.

Thetechnological environment has influenced the growth of the firm. Inaddition, advancements in technology will continue to shape thebanking industry continues to influence the development of the bank(Deloitte,2013).The firm has established a series of e-banking products and continuesto develop them to match the changing IT environment. The U.S bankingindustry is shifting to mobile banking as a report showed thatmillions of users are likely to adopt the platform.

Theecological and environmental factors affect the operations andperformance of the banking sector when they influence the sectorsfinanced by banks. One of the main sectors affected by environmentalfactors includes the agricultural industry, tourism and insurance.Therefore, JPMorgan Chase will consider the developments in theseindustries before lending finances to the clients that may beaffected by environmental factors.

Thelegal framework that influences the banking industry is based on theregulations that the United States has established. In the UnitedStates, a bank has to adhere to the established banking laws thatguide the operation of the financial institutions. Therefore,JPMorgan Chase’s operations must be within the confines of thelegal framework in the U.S.

TheIndustry Description

Theindustry that JPMorgan Chase falls is the banking industry andfinancial services sector. The industry presents a range of issuesthat relate to the services banks provide. One of the main concernsis the regulation of the banks by the federal government as well asthe state authorities (Deloitte,2013).This is because of the government’s quest to control the extent towhich the banks can provide services without approval in terms of thelegality of any products. This prevents a breach of the privacy ofcustomers and prohibits the laundering of money. In the current worldthreatened by terrorism and crime, banks are particularly regulatedto avoid being used for illegal transactions.

CustomerAnalysis

Thecustomers of JPMorgan Chase are segmented into two main categoriesthe local customers and the foreign customers. Local customer segmententails the clientele within the United States, while the foreignsegments are those within the 60 countries that the bank hasoperations in(JPMorgan Chase, 2008). Aftera successful series of mergers, the client base of the company hasincreased since it ventured to finance the customers of the companiesit acquired. For instance, the merger with ChemicalBanking Corp and Washington Mutual made the company the secondlargest financial provider in the United States(JPMorgan Chase, 2008). Additionally,the 2010 acquisition of the U.K. joint venture increased its foreigncustomer base(JPMorgan Chase, 2008).

SWOTAnalysis

Thestrength of JPMorgan Chase is a large asset base that gives it acompetitive advantage of the trust of the customers. According toDeloitte(2013),customers trust to bank their money in banking institutions that havea strong asset base that inspires their confidence in the firm. Thebank has also extensively diversified in the industry, to give itscustomer base and resources. According to JPMorgan Chase (2008) thefirm has acquired and merged with eight key institutions to make it aleader in the industry.

Oneof the weaknesses of the firm is the management of bad mortgages asthey represent a widespread problem in the industry. This is becauseof the effects of the sensitive credit market that causes financialmanagement difficulties to lenders in the industry. According to BBC(2014), the bank also has a weakness of reduced profits such as the8% drop in mid of the 2014 financial reports due a drop in tosecurities trading.

Theopportunities that present themselves to the bank include theinternational expansion that opens it to foreign markets. Anotheropportunity for JPMorgan Chase is emerging markets of the growingeconomies and third world countries. The bank has the opportunity ofconsolidating its market that is diversified in the regions the firmhas merged or acquired its control.

However,the company faces the threat of the credit market crisis since theeconomy has not yet recovered from the experience of the recession.The clients who may be adversely be affected by the effects of theeconomic season presents the challenge of mortgage and housing issues(Deloitte,2013).In addition, the firm faces a threat of a sharp increase in interestrates, which will reduce its turnover. The bank also faces a threatof adverse government intervention and control over the bankingindustry that may limit its business volumes.

Recommendations

JPMorganChase should implement market strategies with a view of takingadvantage of its diversification to gain a competitive advantage. Thebank should also seek approval of its financial products with therelevant financial and legal authorities in each country to avoidlegal suits. This will build confidence among the customers andpromote the integrity of the firm (Kotler &amp Gary, 2006). Finally,the bank should also separate the marketing of its financial productsaccording to the two main market segments local market andinternational market. This will help the firm to customize themarketing strategy to respond to the market environment and needs ofevery market.

ReferenceList

BBC,2014.JPMorganprofits fall, but Goldman Sachs income rises. RetrievedFrom, &lthttp://www.bbc.com/news/business-28312474&gtOctober 23, 2014

Deloitte,2013. 2014Banking Industry Outlook Repositioning for growth.Retrieved From,&lthttp://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/FSI/us_fsi_DCFS2014BankingIndustryOutlook_111113.pdf&gtOctober 23, 2014

Everbet,C. n.d. Federal Banking Law. Kathrine R. Everett Law Library.Retrieved From,&lthttp://www.jpmorganchase.com/corporate/About-JPMC/document/shorthistory.pdf&gtOctober 23, 2014

JPMorganChase, 2008. The History of JPMorgan Chase &amp Co.: 200 Years ofLeadership in Banking. Retrieved From, &lthttp://www.jpmorganchase.com/corporate/About-JPMC/document/shorthistory.pdf&gtOctober 23, 2014

Kotler,P., &amp Gary Armstrong, G. (2006), Principles of Marketing.&nbspNewJersey: Pearson Education&nbspInc.