JPMorgan & Chase Strengths, Weaknesses, Opportunities and Threats: [Essay Example], 2594 words (2024)

In the analysis below JP Morgan & Chase’s Strengths, Weaknesses, Opportunities, and Threats will be stated. It is important for companies to identify their S.W.O.T while facing their current business environment. A couple of strengths would be JP Morgan has good returns on capital expenditures. They are successful at executing new projects and they generate good returns on capital expenditure by building new streams of revenue. They also have a strong distribution network. Over the years, J.P. Morgan Chase has built a reliable distribution network that can reach the majority of its potential market. As well as a high level of customer satisfaction and reliable suppliers.

Some of their weaknesses include having limited success outside of their core business, integrating firms with different work cultures, product range gaps, and other things that will be mentioned. Even though J.P Morgan chase is one of the leading organizations in its industry, it has faced challenges moving to other product segments with its present culture. J.P. Morgan Chase is successful at integrating small companies however, it had difficulties merging firms that have different work cultures. Next, there are gaps in the product range sold by the company. This lack of choice can give a new competitor a base in the market. The company has not been able to tackle the challenges presented by the new entrants in the segment and has lost a small market share in their corner categories. J.P. Morgan Chase has to build an internal feedback mechanism directly from the sales team on the ground to counter these challenges. They have problems with product demand forecasting leading to a higher rate of missed opportunities compare to its competitors. One of the reasons why the day's inventory is high compared to its competitors is that J.P. Morgan Chase is not very good at demand forecasting which leads to them keeping higher inventory with both in-house and in the channel.

O, Meaning Opportunity describes the point of potential growth in a company. JP Morgan Chase has increased opportunities by having a lower inflation rate by using the new taxation policy. In 2018, the Trump Administrations Tax reform caused JP Morgan Chase to profit $3.7 billion dollars in which they used for promotions, new technology, building new Chase branch locations, increasing wages, donating towards non-profits,s and investing in the communities it serves. The new technology provides an opportunity to J.P. Morgan Chase to exercise different pricing tactics. Ultimately, helping the firm to keep its loyal customers with great service and gain new customers. Opening up the adoption of new technology standards and the government free trade agreement has provided J.P. Morgan Chase an opportunity to enter a new potential market. The market development will lead to the dilution of competitors’ advantages and enable J.P. Morgan Chase to increase its competitiveness. New environmental policies – It represents a great opportunity for J.P. Morgan Chase to drive home its advantage in new technology and gain market share in the new product category. New trends in the consumer behavior can open up a new market for J.P. Morgan Chase. It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Lastly, to identify your threats it is important to know who the competition is, which market areas are a potential danger for the business, which trends can negatively affect the business, and is there a product or innovation on the market that will make your product or innovation outdated? Things like laws, new technologies, competitors growing in their strengths, and consumer wants could pose as a threat to JP Morgan Chase's potential growth. One law-related threat includes liability laws, as they could be different in other countries and J.P. Morgan Chase may be exposed to various liability claims due to the change in policies of those markets. As well as different laws and continuous fluctuations regarding product standards in those markets could cause JP Morgan Chase to face lawsuits. New technologies developed by the competitor or market disruptor could be a serious threat to the industry in the medium to long term future. Growing strengths of local distributors also offer a threat in some markets as the competition is paying higher limits to the local distributors. As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in a number of markets across the world. Changing consumer buying behavior from online channels could be a threat to the existing physical infrastructure-driven supply chain model.

Another way to create a definite strategy as well as analyze JP Morgan & Chase is to use Porter's Five Forces. Michael Porter is a business strategist, economic theorist, and a current professor at Harvard Business School. He is well known for creating the business strategy, Porters Fives Forces, which is a tool used to analyze a business’ competition. Porter defines a competitor’s business strategy saying “deliberately choosing a different set of activities to deliver a unique mix of value.” This means, you need to understand who your competitors are and the market you have decided to compete in, in order to determine how your business should take its steps towards progression. Porter's Five Forces include Supplier power, Barriers to entry, Threats of substitutes, Buyer power, and Degree of rivalry.

When it comes to Supplier Power, the two main suppliers for a bank are the depositors, who supply the primary resource of capital, and employees, who supply the resource of labor. In regard to depositors, the situation is essentially the same as that delineated under the bargaining power of consumers. Individual depositors, other than major corporate or HNWI depositors, have relatively little bargaining power but taken as a whole, their bargaining power is considerable. JPMorgan's approach to dealing with this market force is, again, to work diligently to attract new clients and to increase the extent to which existing depositors hold funds and access services through JPMorgan. In regard to the bargaining power of suppliers of labor, individual suppliers have little bargaining power other than major executive employees. JPMorgan must address its overall bargaining power by offering attractive salary and benefits packages to retain the best employees.

Barriers to entry is described as the existence of high start-up costs or other obstacles that prevent a new competitor from easily entering an area of business, it protects the company’s revenue and profits. The threat of new competitors that will have difficult competition within the industry is relatively small. Any company attempting to compete directly on the same level with JPMorgan or the other major U.S. money-center banks would face major barriers. The primary barriers for potential new entrants are a large amount of investment required, the length of time required to establish a significantbrand identity,and the numerous and burdensome government regulations that apply to the operation of banks. In the future, however, JPMorgan and other major banks are likely to face increasingcompetitive threats in the industry arising from major banks in developing economies such as China that will eventually compete on a more international scale.

Thethreat of substitutesis the availability of other products that a customer could purchase from outside an industry. The competitive structure of an industry is threatened when there are substitute products available that offer a reasonably close benefits match at a competitive price. The threat of substitute products has increased in the banking industry, as companies outside the industry have begun to offer specialized financial services that were traditionally only available from banks. For Example, payment processing and transfer services such as Cash App, Pay Pal, and Apple Pay, prepaid debit cards, and online peer-to-peer lenders such as Prosper.com or LendingClub.com. The interruption of these substitute services has cost both JPMorgan and the other major banks considerable revenue. In response, the company has plans that include a division focusing on small business lending, and establishing its own digital wallet service, Chase Pay using Zelle.

Buyerbargainingpowerrefers to the pressure consumers can exert on businesses to get them to provide higher quality products, better customer service, and lower prices a Consumers' overall bargaining power is an important factor influencing the industry. Individual consumers, especially in the retail banking marketplace, have relatively little bargaining power since the loss of any one account has a minimal impact on JPMorgan's bottom line. However, in the aggregate, the bargaining power of consumers is greater, since the bank cannot afford to suffer mass defections of depositors. Corporate andhigh net worth individual clients have relatively greater bargaining power since the loss of sizable accounts, and sources of revenue can more substantially affect the bank's profitability. JPMorgan addresses the issue of customer bargaining power primarily by extending attractive offers to potential new clients. It also continually makes efforts to get existing clients to open additional accounts and sign up for additional services, which effectively increases the switching cost for consumers by making it more troublesome for them to transfer their finances to another bank.

The intensity ofrivalryamong competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other's profit potential. Ifrivalryis fierce, then competitors are trying to steal profit and market share from one another. Competition within the industry is the strongest of Porter's five forces for JPMorgan Chase. The company faces intense competition domestically from the other three major money-center banksand globally from other large multinational banking firms, such as HSBC and Barclays. One of the industry elements that intensifies the importance of competition is the relatively lowswitching coststhat consumers face, especially in the retail and commercial banking areas. The major banks, much like the principal cell phone companies, are continually extending offers to draw customers away from other banks. JPMorgan deals with industry competition in three main ways. It attempts to distinguish itself in the marketplace primarily on the basis of its long, recognized heritage and experience. It aims to stay on the cutting edge of offering customer convenience and low-cost and cutting-edge services. It has a history of acquiring smaller banks, removing some potential competition from the marketplace.

As any company deals with important issues, JP Morgan has faced legal issues and global regulatory pressures. In 2013, JP Morgan Chase CEO Jamie Dimon testifies on Capital Hill in Washington in regard to the London Whale trading loss. JPMorgan is accused of wrongdoing in how it marketed mortgage-backed securities, how it chases down credit card payments from delinquent borrowers, and whether it should have noticed that Bernie Madoff was running a giant Ponzi scheme. This resulted ininvestigations and lawsuits in addition to a $6 billion loss. CEO Jamie Dimon has said the bank is undergoing “extensive changes” to its business practices, and that regulatory compliance is its top priority. “Let me be perfectly clear: These problems were our fault, and it is our job to fix them,” Dimon wrote in the 2013 annual letter to shareholders. “In fact, I feel terrible that we let our regulators down.” Some observers think JPMorgan is being unfairly targeted. They say that regulators are criticized for being too lax before the financial crisis and are now overcorrecting by being too corrective. Authorities are focusing on whether the bank had sufficient control over its trading operations, and also whether it tried to cover up or downplay the size of the loss. Federal prosecutors are preparing to arrest two employees who were involved. JPMorgan says it has also received requests for information related to 'inquiries and investigations' by Congress, U.S. banking regulators, the U.K.'s Financial Conduct Authority, and others. JPMorgan says it is cooperating. The bank has admitted that it made mistakes. It has gotten rid of top managers, taken back bonuses, and changed some of its risk management practices. But it rejects any allegations that it tried to hide the losses or the risks, and it is fighting lawsuits from shareholders who accuse it of that.

Globally, regulatory changes are forcing the sell-side to reconsider current activities and business models as risk-weighted assets and balance sheet rationalization put pressure on revenue generation and spending. The search for funding drives the sell-side to complement old sources with new options, to seek new counterparties, or to expand the range of acceptable insurance assets. At the same time, the need to efficiently utilize all assets most effectively forces a shift to company-wide collateral management. Global regulatory pressures are replacing traditional market drivers and changing business behavior. Institutions are faced with three categories of challenges:

1. New pressures on capital, liquidity, pricing, and costs
2. Changing variables in terms of funding options and sources (such as accessing new counterparties and market participants) as well as how assets are employed
3. Increased demands for optimization, reuse, and upgrades as well as for company-wide collateral management.

With new pressures on capital, liquidity, pricing, and costs institutions must weigh the competing pressures that are changing the environment in which they do business against their own business priorities. As far as changing variables, new market participants and collateral availability will be critical to future market operations. Given the pressures above, where will the funding come from, and will non-traditional players emerge as collateral providers? Will equities be more sought after as acceptable collateral, or will “cash be king?”. Although the questions posed above will be answered over time, what’s understood is that these changing markets demand sophisticated solutions for coping with new requirements and increased complexity. Global institutions must nimbly navigate competing challenges—managing cost alongside balance sheet, maintaining liquidity while leveraging assets, and managing risk on multiple fronts—and make key strategic decisions without a clear view of the terrain that lies ahead. As the sell-side faces increased complexity, the ability to seamlessly operate across regions and asset classes becomes critical to success—causing many institutions to seek expert support from collateral agents with the global reach, expertise, and resources to provide essential support in changing markets.

The future looks bright for JP Morgan Chase when it comes to the use of technologies and based on Trump's new tax cuts, the company has a great possibility of financial growth.

Jamie Dimon praised President Trump because of his tax cuts and deregulation while criticizing his trade and immigration policies because they will likely hurt growth in the United States. “According to Dimon, it is possible for the bank to grow and penetrate into new markets by investing excess capital stemming from the new federal tax cuts and constructive regulatory environment since the 2016 presidential elections. JPMorgan can earn a 17% return on the actual equity that exceeds the target before the enactment of corporate tax cuts.” Along with financial investments, JP Morgan Chase has looked into investing in new technologies. In their latest global future report, they look at the overall factors of the improvements of society because of technology. They do not directly say that they will make a huge contribution of technological improvements. However, based on the report one can infer that JP Morgan Chase has taken an interest in technological advancements. Over the years, JP Morgan Chase has struggled with keeping a positive reputation legally and politically. But lately, their name has had a good rep. If they continue to keep up their positive reputation with national and international legality and politics, they should stay in good standings with their name and finances. JP Morgan Chase has served this nation since the mid 1800s and now serves customers internationally. The outlook of the bank looks pretty successful. As everyone made mistakes, the bank had made adjustments to improve overall. Based on their current finances. legal standings, global and employment standing I would say JP Morgan Chase has a bright future ahead of them.