This website uses cookies to ensure you have the best experience. Learn more

Charles Schwab In 2008 Essay

3303 words - 14 pages

Charles Schwab in 2008

1. Analyze the competitive structure of the brokerage house industry using Porter’s five forces model. What are the principle drivers of profitability in this industry? How have changing regulations, demographics, and technology impacted competition over the last two decades?

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:
1) Bargaining Power of Supplier
2) Bargaining Power of Buyers
3) Intensity of existing Rivalry
4) Threat of New Entrants
5) Substitutes

1) Bargaining Power of Supplier

In the on-line brokerage firms, we have 3 major categories of ...view middle of the document...

Charles Schwab, E*TRADE, Waterhouse Securities, Fidelity Investments and Datek are considered to be the largest players in this industry. These large firms account for 57% of the on-line discount brokerage business and the boutiques catering to niche markets account for the other 43%. The industry is highly competitive with the large companies engaging in fierce competition between themselves and with the boutiques for market share. This results in the consumer getting a bigger share of the surplus. Notably, one trend in the past two years has been that boutique firms have increased their market share at the expense of the bigger players.

4) New Entrants
Despite fairly high sunk costs, the lure of the visibility of Internet-based businesses attracts more entrants all the time. At this time, most new entrants are focusing on particular segments of a fragmented market. Another likely entrant is a full service brokerage firm.
In Addition to the above, and with the continuous technological changes that will make it possible for new entrants to enter the market and that is considered to be a threat for the existing companies who are using less sophisticated infrastructure.

5) Substitutes
As we can analyze from the case that the full-service brokers are considered to be substitutes for the discount brokers, however dealing with a full service brokerages is considered to be higher ,another options customer have is that they might start trading between themselves in different on-line marketplace, however this is not an easy option due to economies of scale and scope and volume that the brokerages have achieved

As for the Profitability drivers, and as concluded from the case We can conclude that the profitability in this industry is driven by the favorable economic environment:
* Changes in the value of interest rates. The fall in the interest rates will increase the underwriting income, corporations and governments tend to issue more securities, people encouraged to invest in stock market and increase merger and acquisition activities.
* New IT advances. This industry relies very much on the IT development.
* Steady economic expansion, which translated into growing profit and rising stock prices.
* Baby boomers started to save for retirement and the speculative behavior of retail investors.

Macro environment has a great influence on this industry and specifically speaking the Political .Legal, Social and Technological Factors
* The deregulation of the industry allowed for the emergence of discount brokers such as Charles Schwab.
* Act of Congress known as the Glass-Steagall Act causes high segmentation in the financial service industry and erected a wall between commercial banking commercial banking and investment services; barring commercial banks from investing in shares of stocks, limiting them to buying and selling securities as an agent, prohibiting them from underwriting and dealing in securities...

Other Essays Like Charles Schwab in 2008

Andrew Carnegie Essay

945 words - 4 pages ." In time, Carnegie would become the company's largest stockholder. In The Carnegie Steel Company, Andrew began working three very talented workers including Captain William Jones, who was skilled at handling men, inventive in handling equipment, and was a natural artist which earned him a very high reputation. The next two were Henry Frick, whose coke industry complemented Andrew's steel company and Charles Schwab. Even as we might admire

Ethical Risks and Threats in the Accounting Profession

2316 words - 10 pages questions. (IFAC 2003) A popular story recounts a meeting that may have taken place at the Edgewater Beach Hotel in Chicago in 1923. There is some debate whether the meeting in fact occurred, but what is not in question is the actual rise and fall of the men featured in the story, who were nine of the richest men in the world at the time: Charles Schwab, President of the world's largest independent steel company; Samuel Insull, President of the

Term Paper

1304 words - 6 pages expressed appear | |mostly Gillette-centric. | | | |These limitations apart, the book offers important lessons for managers. First, in a day and age when companies like Wal-Mart and | |Charles Schwab are

Effects of Heavy Metal

838 words - 4 pages we assume that plants can have musical preferences, it's possible that classic rock was not their music of choice. References: • Becknell, M.E.; Firmin, M.W.; Hwang, C.; Fleetwood, D.M.; Tate, K.L.; & Schwab, G.D. (2008). "Effects of listening to heavy metal music on college women: A pilot study." College Student Journal, 42(1), 24-35. • Kemper, K. J., & Danhauer, S. C. (2005). “Music as therapy.” Southern Medical Journal , 98(3), 282-288

Case Strategy

1272 words - 6 pages   SCI Systems  Applied Materials  Charles Schwab  Best Buy  Microsoft  Amgen  ADC Telecommunications  Merrill Lynch  500 Revenues  Rank  287  248  216  107  479  428  48  184  230  196  260  156  79  455  486  25  1990 ­ 2000 % Annual  Growth in EPS  71.5  69.6  59.3  59.1  52.0  49.8  49.5  47.7  47.5  44.0  43.7  39.7  38.6  36.7  35.5  35.4  © Business Studies Online: Slide 4  Profit

Case Study-Crime That Pays

1767 words - 8 pages Netherlands, a country of fewer than 17 million. By 2010, the rate of worldwide piracy rose to 42 percent (up from 38 percent in 2007). Of all the packaged software installed on PCs worldwide in 2010, 42 percent was obtained illegally. Correspondingly, software piracy cost technology companies about $52 billion as well as thousands of IT jobs. For many nations, software piracy rates toppled 75 percent in 2008. Regional data, although not as

Us Embargo on Cuba

1616 words - 7 pages to2006):International (1-3) Lexisnexis Web. 5 Oct. 2010. Perez, Nonoska“Cuba must show respect for human rights” USA Today first edition (2008): Edit 11A LexisNexis Web. 12 Oct 2010. Ruiz, Albor“Cuba Embargo’s a Bust, so why stick with it?” Daily News (New York)(2007): Suburban (3-4) Lexisnexis Web. 12 Oct 2010. Schwab, Peter“Cuban health care and the U.S. Embargo” Monthly Review (1997):49(6) Master file Premier. EBSCO. Web 10 Oct 2010. Shultz

Evaluating E-Business Leadership and Its Links to Firm Performance

4568 words - 19 pages . MELLON FINANCIAL CORP. SCHWAB (CHARLES) CORP. HARTFORD FINL SVCS GRP INC. SIC 2082 2520 2621 2711 2810 2820 2821 2821 2834 2844 2851 3420 3576 3600 3620 3630 3661 3674 3711 3812 4011 4011 4210 4213 4512 4512 4512 4813 4841 5065 5065 5311 5311 5940 5940 6020 6020 6211 6331 Control Sample KIRIN BREWERY LTD -ADR HON INDUSTRIES 3M CO. AMERICAN GREETINGS -CL A ROHM & HAAS CO. BAYER A G -SPON ADR AVENTIS SA -ADR PRAXAIR INC. ABBOTT LABORATORIES LAUDER

Andrew Carnegie

3030 words - 13 pages railroads and steamships. Thanks to this agreement, Rockefeller got a steady customer for his railroads and boats while Carnegie got a huge amount of iron for a very low price. It was 1898 when 63 year old Carnegie was ready for retirement. He decided that he was going to sell his company and use the money he would get to redeem himself after the Homestead Strike, but he had trouble finding someone who would buy it. Then, in 1900, Charles Schwab

The Effect of Social Circle on the Life Charles Darwin

4984 words - 20 pages the history of the earth would be written and theories about the earth formed. However, every scientific idea and indeed every scientist develops in a specific intellectual context and personal community. These ‘social circles’ or ‘networks’ that the scientist develops in are fundamental to not only understanding the theories themselves but crucial in order to understand the formation and dissemination of those theories. Given a figure like Charles

Chapter 8

1393 words - 6 pages , Bergman, Stagg, Coulter Management 5e © 2008 Pearson Education Australia Change, innovation and sustainability   Government support  Kyoto Protocol Equator principles - a financial industry Business support  benchmark for determining, assessing, and managing social and environmental risk in project financing Robbins, Bergman, Stagg, Coulter Management 5e © 2008 Pearson Education Australia Charles Darwin:  ‘It is not the strongest of the

Related Papers

Executive Summary: Wal Mart, Inc Essay

3129 words - 13 pages by an individual or business. A company's assets include tangible assets, such as equipment, inventory and real property, and intangible assets such as goodwill (the value of a company's name in the market), patents and other intellectual property, which are owned by a company and given monetary value in the company's balance sheet (Charles Schwab, 2010). At the end of the annual period ending in January 31, 2009, Wal-Mart had a total of

Competitiveness Essay

1792 words - 8 pages competitiveness as the country develops (Schwab 2014). Furthermore, Reiljan, Hinrikus and Ivanov (2011 p.14) note that “each entity’s competitiveness should be examined according to the factors most vital to the survival of the entity in its specific competitive environment”. For this reason, this essay will rely on WEF’s global competitiveness reports to determine the performance of competitiveness indicators. The US is classified as an innovation

Trilogy Software Essay

522 words - 3 pages Few industries have undergone as much turbulence in the past few years as those internetrelated businesses. One of the leaders in this industry is Trilogy Software, based in Austin, Texas. Trilogy, founded in 1989, creates software to help e-businesses handle procurement, customer service, relationship management, and data integration. Its 1500 employees serve an impressive client base that includes Ford, FedEx, Land's End, Charles Schwab, and

Ameritrede Essay

1732 words - 7 pages subtracting 0 as the previous price of the stock. 6. Exhibit 4 provides various choices of comparable firms. Which firms do you recommend as the appropriate benchmarks for evaluating the risk of Ameritrade’s planned advertising and technology investments? Determine the betas for these firms. Let us agree that Charles Schwab is a comparable firm. Their price changes, dividends, and stock split information for 1992-1996 is in Exhibit 5. If there