Conclusions & Recommendations For Charles Schwab

THE CASE ANALYSIS PROCESS: WHERE TO START AND WHAT TO LOOK FOR…

To Analyze a company you must:

Collect and Review all company information.

Determine what information is relevant.

Examine the financials: calculate ratios, analyze outcomes.

Analyze competition and marketplace issues.

Conduct secondary research on company. Who’s Talking?

Identify their strategy and business model.

Start asking questions of the data and “drill down”…

Draw conclusions and make recommendations.

1–‹#›

A COMPANY’S STRATEGY AND ITS BUSINESS MODEL

How the business will make money :

By providing customers with value.

The firm’s customer value proposition

By generating revenues sufficient to cover costs and produce attractive profits.

The firm’s profit formula

It takes a proven business model—one that yields appealing profitability—to demonstrate viability of a firm’s strategy.

1–‹#›

A company’s strategy is its action plan for outperforming its competitors and achieving superior profitability

CORE CONCEPT

1–‹#›

A company’s business model sets forth the logic for how its strategy will create value for customers, while at the same time generate revenues sufficient to cover costs and realize a profit.

CORE CONCEPT

1–‹#›

WHAT DO WE MEAN BY STRATEGY?

What is our present situation? Where are we now?

Business environment and industry conditions

Firm’s financial and competitive capabilities

Where do we want to go from here?

Creating a vision for the firm’s future direction

How are we going to get there?

Crafting an action plan for heading the firm in the intended direction, staking out a market position, attracting customers, achieving the targeted financial and market performance, and getting the firm where it wants to go is its strategy.

1–‹#›

THE ROAD AHEAD

Strategy is about asking the right questions:

What must managers do, and do well, to make a firm a winner in the marketplace?

Strategy requires getting the right answers:

Good strategic thinking and good management of the strategy-making, strategy-executing process.

First-rate capabilities and skills in crafting and executing strategy are essential to managing successfully.

1–‹#›

A firm achieves a competitive advantage when it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost to the firm.

The firm achieves a sustainable competitive advantage if its advantage persists despite the best efforts of competitors to match or surpass its advantage.

CORE CONCEPT

1–‹#›

STRATEGY AND THE QUEST FOR COMPETITIVE ADVANTAGE

Competitive Advantage

Require meeting customer needs either more effectively (with products or services that customers value more highly) or more efficiently (by providing products or services at lower cost).

Sustainable Competitive Advantage

Requires giving buyers lasting reasons to prefer a firm’s products or services over those of its competitors.

1–‹#›

WHAT MAKES A STRATEGY A WINNER?

A winning strategy must pass three tests:

The Fit Test

Does it exhibit dynamic fit with the external and internal aspects of the firm’s overall situation?

The Competitive Advantage Test

Can it help the firm achieve a significant and sustainable competitive advantage?

The Performance Test

Can it produce good performance as measured by the firm’s profitability, financial and competitive strengths, and market standing?

1–‹#›

Identifying a Company’s Strategy–What to Look For