Case Analysis of Bank of America

By

Group 11,

Section C

Bank of America (as on year 2000-01)2nd largest national bank with 4500

branches in 21 statesMost branches in high growth areasServing 20 m households & 2 m

businessesOperating in 190 nations with 1.4

lakh employeesMoving from inorganic growth to

organic growthDecentralizing national operations

and empowering regional branches

Innovation driven growth of BoANew CEO launched I&D market model

in year 2000 through 20 laboratory bank branches

Team of executive level leaders (Brady and Butler)

Generated 200 new ideas in one year; launched 20 on nation wide.

Resulted higher customer satisfaction & lower employees turn over rate in year 2001.

10% increase in revenue of I&D branches w.r.t traditional branches.

Why innovation driven growth?

High competition in banking industry: 7000 active banks in year 2000: WAMU was giving tough competition

Loose structure of BoA due to history of high acquisitions

Patent filing by other banks

Innovation & Development teamNew team of Brady, Johnson and

ButlerGoal to boost customer and staff

satisfaction at bank branches, which would ideally boost revenue growth with in a given customer base while lowering staff turnover.

Working of I&D team

Present scenario of Case

CEO proposed to add 10 new I&D branches national wide

Brady & Butler looking for the answer of following questions

Stand alone branches Vs Real time branches

Should accept new proposal or not ?

Standalone Vs Real time branches

Standalone I&D branches Real time I&D branches

Pros Pros

Will avoid short term gain over long term thinking & opportunities.

Can bear their operational cost

Will prevent premature testing in live conditions

Will give quicker result s and real time feedback

Fast execution

Cons Cons

Will cause extra cost on BoA More work load on employees

Hypothetical: can fail in real condition

Difficult to identify the real reason of success

Slow execution

Implementation of I&D in new product offerings ?

Yes, I&D system can be implemented in new product offerings but at a lower success rate

Reasons:Services:

Relatively less financial implications No legal & regulatory implications Can be tested in real time effectively

Products: Will have more impact on brand value of

BoA High financial implications

Role of experiments in Organizations

Satisfied and motivated employeesWill result in low turn over rateCan increase the product & service

life cycleHelps the organization in being

competitiveBetter understanding of customersHelps in increasing knowledge

base of company

Should accept new proposal or not ?SWOT ANALYSIS

Strengths Weakness

Experienced R&D team Spent enough time in training of associates

Confidence due to previous success

Red tape in the system

Decrease in turnover rate Deposit growth rate

Support from the top management

0.5% in I&D branches, 3.7% in others

Already have sufficient budget

10% more increase in revenue of I&D branches

Opportunities Threats

National wide rollout will be easier & quicker

If fail in turnaround, then existence of I&D team will be in danger

If succeed in turnaround underperformed banks, can win greater promince in banking industry

Recommendations

Based on SWOT analysis, Brady & Butler should accept the proposal as Strengths and opportunities are much higher and stronger than the weaknesses and threats.

Thank You