David Sm13e Cn 11

8/13/2019 David Sm13e Cn 11

1/16

Wells Fargo Corporation - 2009Case Notes Prepared by: Dr. Mernoush Banton

Case uthors: Donald !. Croo"s# $obert %. &ood'an# (ohn Burbridge

A. Case Abstract

Wells Fargo Corporation )***.WellsFargo.+o', is a +o'prehensie strategi+'anage'ent +ase that in+ludes the +o'panys Calendar year-end De+e'ber /#2001 inan+ial state'ents# +o'petitor inor'ation and 'ore. 3he +ase ti'esetting is the year 2009. %ui+ient internal and e4ternal data are proided toenable students to ealuate +urrent strategies and re+o''end a three-yearstrategi+ plan or the +o'pany. 5ead6uartered in %an Fran+is+o# Caliornia#Wells Fargo Corporation is traded on the Ne* 7or" %to+" 84+hange under ti+"ersy'bol WFC.

B. Vision Statement )+tual,

ur produ+t: %8$;C8. ur alue-added: F;NNC;! D;C8. ur +o'petitieadantage: no*n by ur *n 3ea' Me'bers. ?Well be "no*n as a +o'pany thatbeliees in people as a +o'petitie adantage# a great pla+e to *or"# an

e'ployer o +hoi+e# a +o'pany that really +ares about people# "no*s thealue that a dierse *or" or+e +an bring# that en+ourages innoation: ne*and better *ays o sering +usto'ers.= )@# 9,

>no*n by ur Custo'ers. ?We *ant to be "no*n by our +usto'ers as ainan+ial partner# or outstanding seri+e and sound inan+ial adi+e#satisying all o their inan+ial needs and helping the' to su++eedinan+ially. ur +usto'ers# e4ternal and internal# are our riends. 3heyrethe +enter o eerything *e do.= )# 2,

>no*n by ur Co''unities. ?Well be regarded as the pre'ier inan+ialseri+es +o'pany in ea+h o our 'ar"ets. Well pro'ote the e+ono'i+adan+e'ent o eeryone in our +o''unities in+luding those not yet able

to be e+ono'i+ally sel-sui+ient# *ho hae yet to share ully in theprosperity o our e4traordinary +ountry. Well be "no*n as an a+tie+o''unity leader in e+ono'i+ deelop'ent# in seri+es that pro'otee+ono'i+ sel-sui+ien+y# edu+ation# so+ial seri+es and the arts.= )/# A# #1,

>no*n by ur %hareholders. ?Well be "no*n as a great inest'ent. Wellhae inan+ial results# not only a'ong the ery best in the inan+ialseri+es industry# but a'ong the entire Fortune 00. 3oday# *ere the only

Copyright 20 Pearson 8du+ation# ;n+. publishing as Prenti+e 5all.

8/13/2019 David Sm13e Cn 11

2/16

ban" in the

8/13/2019 David Sm13e Cn 11

3/16

'%reats. ;n+rease regulations ro' regulatory agen+ies in inan+ial seri+es2. 8'erging legislature 'ay +onstrain reedo' in inan+ial seri+es

'ar"etpla+e/. 3rau'a +aused by inan+ial seri+es +risis inhibits inest'ent in that

se+tor@. &ro*ing dis+ontent o role o Federal $esere +ould result in urther'ar"et tur'oil

. ;n+rease in une'ploy'ent rate +auses 'any to deault on loans and+redit +ard debt

External actor Evaluation /EE0 Matrix

1e2 External actors Wei!%t &atin! Wei!%tedScore

pportunities. %tronger st hal 2009 inan+ial

position +ould lead to urthere4pansion and a+6uisitions

0. / 0./

2. 84pansion in international 'ar"ets 0.09 / 0.2

/. &ro* se+urities and inesting se+toro the business as a result oWa+hoia a+6uisition

0.09 @ 0./A

@. 8nhan+e Wells Fargo brand on 8ast

Coast and globally

0.0 / 0.2

. Consensus a'ong e+ono'ists+on+erning late 2009 and 200re+oery

0.09 / 0.2

A. ;n+rease in use o te+hnology and;nternet or online ban"ing

0. / 0./

'%reats

. ;n+rease regulations ro' regulatoryagen+ies in inan+ial seri+es

0. 2 0.2

2. 8'erging legislature 'ay +onstrain

reedo' in inan+ial seri+es'ar"etpla+e

0.09 0.09

/. 3rau'a +aused by inan+ial seri+es+risis inhibits inest'ent in thatse+tor

0.01 2 0.A

@. &ro*ing dis+ontent o role oFederal $esere +ould result inurther 'ar"et tur'oil

0.09 0.09


8/13/2019 David Sm13e Cn 11

4/16

. ;n+rease in une'ploy'ent rate+auses 'any to deault on loans and+redit +ard debt

0. 0.

'otal (.)) *.+,

Positionin! Map

E. 3nternal Audit

Stren!t%s. %trong

8/13/2019 David Sm13e Cn 11

5/16

Wea"nesses. de6uate reseres still being 6uestioned2. !a+"s international presen+e against 'aIor global ban"s/. Wa+hoia brand is still present in 'any 'ar"ets@. Negatie @th6uarter earnings in 2001

. %till assi'ilating Wa+hoia +ulture and inrastru+tureA. Co''er+ial and residential 'ortgage loan portolios inherited ro'Wa+hoia

. Wells Fargo %e+urity is ne* in oering 'erger adi+e# sto+" and bondunder*riting# loan syndi+ation and i4ed-in+o'e trading

1. Negatie 6ui+" ratio by appro4i'ately J1@/ billion at year end 2001

inancial &atio Anal2sis )De+e'ber 2009,

#ro4t% &ates 5Wells

ar!o

3ndustr2 S6P ,))

%ales )Gtr s year ago 6tr, 9.20 @.00 [email protected]

Net ;n+o'e )73D s 73D, @.00 [email protected] -A.00

Net ;n+o'e )Gtr s year ago 6tr, A.0 1.20 2A.10

%ales )-7ear nnual g., 2.@@ .1 2.99

Net ;n+o'e )-7ear nnual g., -.0 -1./ 2.A9

Diidends )-7ear nnual g., .A/ A.2 .1/

Price &atiosWells

ar!o3ndustr2 S6P ,))

Current PK8 $atio /. 22. 2A.PK8 $atio -7ear 5igh @/.0 2@./ A1.0

PK8 $atio -7ear !o* 9. /.0 9.9

Pri+eK%ales $atio .A1 2.2 2.2

Pri+eKBoo" alue ./9 .2@ /.@1

Pri+eKCash Flo* $atio A.@0 A.@0 /.0

Profit Mar!ins 5Wells


&ross Margin N 0.0 /1.9Pre-3a4 Margin 2./ A.1 0./

Net Proit Margin 9.2 A. .

7r &ross Margin )-7ear g., N 0.0 /1.A

7r Pre3a4 Margin )-7ear g., 2. 2.9 A.A

7r Net Proit Margin )-7ear g., 1.1 9.0 .


8/13/2019 David Sm13e Cn 11

6/16

inancial ConditionWells


DebtK86uity $atio 2.0 2.1 .09

Current $atio N N .

Gui+" $atio N N ./

;nterest Coerage N 0.0 2/.

!eerage $atio 0. /.A /.@

Boo" alueK%hare 2A.0 2.A/ 2.A/dapted ro' ***.'oney+entral.'sn.+o'

Av! P7E Price7 Sales Price7 Boo"8et Profit

Mar!in /50

2K01 @2.00 .9@ .2A A.1

2K0 @.A0 .9 2.09 22.9

2K0A /.10 2./ 2.A2 2A.

2K0 /.0 2.A 2.9 29.

2K0@ @./0 /.@ 2.1 //.

2K0/ /.10 /.@ 2.90 /.9

2K02 @.0 2.A 2.A /0.9

2K0 2/.@0 2. 2. 1.

2K00 1./0 /.@ /.A0 2.@

2K01 @2.00 .9@ .2A A.1

Boo" Value7

S%are

Debt7

E9uit2

&eturn on

E9uit2 /50

&eturn on

Assets /50

3nterest

Covera!e2K01 J2/.@/ /.9 2. 0.2 ./

2K0 J@.@ /. A.9 .@ .1

2K0A J/. 2. 1.@ . 2.0

2K0 J2.2 2. 1.9 .A 2.

2K0@ J. 2.2 1. .A /.1

2K0/ J0. 2.A 1.0 .A /.1

2K02 J1.99 2.A 1.1 .A /.2

2K0 J1.0/ 2.10 2. . .1

2K00 J.2 2./@ .2 . .1

2K01 J2/.@/ /.9 2. 0.2 ./dapted ro' ***.'oney+entral.'sn.+o'

3nternal actor Evaluation /3E0 Matrix

http://www.moneycentral.msn.com/http://www.moneycentral.msn.com/http://www.moneycentral.msn.com/http://www.moneycentral.msn.com/

8/13/2019 David Sm13e Cn 11

7/16

1e2 3nternal actors Wei!%t &atin! Wei!%tedScore

Stren!t%s

. %trong

8/13/2019 David Sm13e Cn 11

8/16

Stren!t%s Wea"nesses

. %trong

8/13/2019 David Sm13e Cn 11

9/16

. ;n+rease regulations ro'regulatory agen+ies ininan+ial seri+es

2. 8'erging legislature 'ay+onstrain reedo' ininan+ial seri+es

'ar"etpla+e/. 3rau'a +aused by

inan+ial seri+es +risisinhibits inest'ent in thatse+tor

@. &ro*ing dis+ontent o roleo Federal $esere +ouldresult in urther 'ar"ettur'oil

. ;n+rease in une'ploy'entrate +auses 'any todeault on loans and +redit

+ard debt

. Create a tas" or+e toensure the ban"s are in+o'plian+e *ith allregulatory agen+iesoerseeing the ban"s )%2#3# 32# 3@,

2. er no ee ban"ing andno 'ini'u' a++ountbalan+e# i'proing theban"s i'age by helpingthose *ho areune'ployed *hi+h +ouldresult in brand loyalty )%#%2# %/# 3@# 3,

. er s'all businessesloans that hae lo* interestrates and that the s'allbusiness +an payba+" theloan in longer ter'# se+ured*ith +ollateral and other

or's o assets )W/# WA#3/,

2. ;n+rease in adertising andpro'otions using lo*erthan aerage +osts su+h aspop-up# 3*itter# Fa+eboo"#and other net*or"ingstrea's )W/# W@# 3,


8/13/2019 David Sm13e Cn 11

10/16

#. SPACE Matrix

inancial Stabilit2 /S0 Environmental Stabilit2 /ES0

$eturn on ;nest'ent 2

8/13/2019 David Sm13e Cn 11

11/16

Competitive Stabilit2 /CA0 Avera!e :*.- 3ndustr2 Stabilit2 /3S0 Avera!e *.

Documents

David Sm13e Cn 11