Introduction
The Bank of America Corporation (BOA) started in 1904 with the headquarters in North Carolina. The company is famous both locally and internationally. It ranks 28th overall and 63rd in sales with regards to the Forbes Global. Brian Moynihan is the company’s chief executive officer, together with approximately 267,000 employees. The company is improving its clients’ and customers’ financial lives due to its commitment to providing opportunities throughout the clients and customers engagement with the bank. For all the stakeholders’ decisions, expertise, judgment, diversity, and leadership is paramount from each member. Home loans, credit cards, and savings accounts offered to the customers and the leading in the United States Company Small Business Administration program in the country. Financially a myriad of services are offered to both small and large businesses. (Shelby-Green, 2018)
The company operates on ethical values that are majorly open and transparent, which is enhanced by the management board of directors, independent in management. All employees should give the customers unbiased services as required by the laws governing the company. Through BOAs healthy risk management practice, they are prepared and tactical to deal with any situation that comes by to achieve the set goals and objectives. BOA is a formidable competitor in the banking and finance industry, and some of its competitors include; local credit union, J.P Morgan Chase, and the Federal Credit Union. (Bank of America Annual Report, 2017)
Demand analysis concepts
Those who supply financial capital via savings receive a return rate contrary to those who pay a percentage of return for providing financial capital by collecting the funds, basing on the investment type hence the term interest. With the vast business services and products, the bank addresses the customers’ alternating and competitive needs. BOA uses psychographics, segmentation, and demographic variables to respond to its customers’ financial needs. Selective targeting is the long-term strategy by the bank to identify customer segments, and maximum business is mobilized from them by up-selling and cross-selling. The perception created in consumers’ minds is due to the pricing and positioning strategy and creation of touch points that address the customer’s needs.
The demand for the financial capital of the BOA depends on a large number of factors including price. The price of the financial capital of the bank is the interest rate charged by the bank. If the interest rate is high the cost of borrowing the capital increases and hence fewer economic agents demand the services from the bank and hence demand reduces. The changes in the price for the financial capital change the quantity along the demand line. There are other factors which also influences the demand for the financial capital of the bank. These include the inflation rate of the economy, average income level of the consumers of the market, economic performance and many more. The changes in these factors lead to a shift in the demand for financial capital of the bank (He & Sun, 2019). For example if the economy performs in a bad manner, the income of the consumer will reduce and hence the demand for new housing will reduce. Therefore the consumers of the market will not be much likely to demand loans or other financial capitals. Furthermore the demand for financial capital of the bank has responsiveness to the changes in the interest of this bank, interest of other banks and the income of the consumers.
Production and Cost Analysis Concepts
The Bank of America is digging deeper into recession, which they regard as risking. The uncertainty between the U. S and the China trade war has led to a worldwide slowdown in the economy, which has dramatically affected the interest rates. Business owners juggle new tariffs and the fiscal policies from the last month’s report that stipulates, as well as a low business investment. The bank’s customer satisfaction index has been considered low for an extended period due to its fees. (Ensign, 2019)
The cost of production for the bank is important for the maximization of the revenue. The fixed cost of operation for the bank is very high as the banking license itself is costly. Apart from that there is other fixed cost of production that is a liability to the company even if the production is zero. Another type of cost important for the organizations is the variable cost. This is the cost which depends on the number of output or the number of financial products sold to the customers of the market. The variable cost of the company reduces with the increase in the number of units sold to the customers (He & Sun, 2019). Therefore there is an economics of scale available to the BOA. The reason for the reduction in the cost along with the increase in the output is the reducing average cost of production. The profit of BOA is the difference between the average cost of production and the price level charged by the bank for the financial products sold to the customers. The operation of the bank is feasible as long as the average cost of production is below the price level. Below the minimum Average cost curve, the BOA will announce a shut down.
“What they got right” Analysis
The company aims at becoming the best in the world as it maximizes the benefits of the services to its target customers. Regarding the company’s mission, all the strategic plans for success aim to address their clients’ needs, accessing the financial services and products that are beneficial. The company’s corporate mission and vision have fostered maintaining high-quality set standards that match the customers’ expectations. The banks’ products and services remain consistent in the market stimulus due to the company’s quality management. The different departments of the company continually improve the system of production and services. (Bettina, 2017)
One of the crucial strategies of the bank for its success is the pricing strategy. The price charged for the financial products for the customers of the market is competitive since the beginning. Therefore the bank has been able to reach out to the people who want banking services and financial services at lower cost. Another crucial strategy that went right for the bank is the quality of the services. Despite the low margin on the operation of the bank and the financial products, the company has maintained a good quality of service. In addition to that, data based consumer insight to understand the behavior of the customers have also helped the bank management to have a competitive edge over the other rival banks of the market. Furthermore, the network of the bank is also very high compared to the other banks of the market. Currently the bank has 4600 financial centers and banks in the USA which is more than any other banks in the country (Rangarajan and Singh, 2019). The management of the bank undertook preemptive strategy in the early days of expansion which also led to better reputation of the bank. Therefore, these strategies have helped the bank to create the biggest customer base in the country.
In summary, improving the communication services on the bank’s products and services, making complete customer satisfaction is achieved, and listening to the customers will ensure the company rises to better heights in the competitive market.
Reference
Bank of America Corporation 2017 Annual Report (Form 10-K)”. sec.gov. U.S. Securities and Exchange Commission. February 2018. Archived from the original on March 3, 2018. Retrieved April 2, 2018.
Bettina, Warzecha (2017). Problem with Quality Management Process orientation, controllability, and zero-defect processes as modern myths. Walsrodee.
Ensign, Rachel Louise (February 25, 2019). “Bank of America to Drop Merrill Lynch Name from Some Businesses.” Wall Street Journal. ISSN 0099-9660. Retrieved February 25, 2019.
He, J. H., & Sun, C. (2019). A variational principle for a thin film equation. Journal of Mathematical Chemistry, 57(9), 2075-2081.
He, J. H., & Sun, C. (2019). A variational principle for a thin film equation. Journal of Mathematical Chemistry, 57(9), 2075-2081.
Rangarajan, P. and Singh, A.P., Bank of America Corp, 2019. System for executing, securing, and non-repudiation of pooled conditional smart contracts over distributed blockchain network. U.S. Patent Application 15/869,513.
Shelby-Green, Michael (June 11, 2018). “The 15 biggest wealth managers in the world”. Business Insider. Archived from the original on August 19, 2018. Retrieved August 11, 2018.
