Merrill Lynch:
Strategic Management
Team Case
Victoria AleksinaMark DeYoungRuth HallKristin Palmer
Agenda
Intro / Industry info Critical Factors Competitive Analysis Goals and Objectives Key Strategies Strategy Implementation and Control Questions
Intro to the company
• Basic Background on Merrill Lynch
• Strategic Positioning
Critical factors
Threats•Retirement of the baby boomers•Recession•Regulations
Opportunities•Ethics•Globalization•Diversification
Weaknesses•Mortgage turmoil•Decreasing revenues •Rigid corporate structure
Strengths•Financial assets•Global presence•Employee expertise
Competitive Analysis
Porter’s Competitive Strategies
Cost Leadership
DifferentiationFocusStuck in the middle
Competitive Analysis
• Key dimensions– Annual revenues– Global revenues
• Key competitors– Goldman Sachs– Lehman Brothers– Bear Stearns
1 2 31
2
3
Merrill Lynch Lehman Bros.Goldman Sachs Bear Stearns
Global Revenues
An
nu
al R
even
ues
Strategy Formulation
Goal 1
Grow internationally
Objectives
Brazil
Russia
Eastern Europe
Support
Sao Paolo -13th richest by 2020
Sao Paolo Stock Exchange (world 3rd
largest)
87 Russian billionaires
Czech Republic
Strategy Formulation
Goal 2
Global acquisition
Objectives
RSA Insurance Group
Support
Product diversification
UK’s largest insurer (13% of
market)
Offset losses
Strategy Formulation
Goal 3
Improve the image and reputation
Objectives
Maintain high approval ratings
Support
Investor relations
Moody’s ratings has 40% in the world
credit rating market
Fitch Ratings in 75 countries
Key Strategies
Expansion and concentration
Expansion and diversification
Marketing
Strategy Implementation and Control
Goal 1: International Expansion and Concentration in current product
• Action Steps• CFO• Finance, Accounting, IT, Operations, all senior management• Outcome – established presence in Brazil, Russia, Czech
Republic• Control
– Market share %– Positive cash flow within 3 yrs.
• Contingency– May need to consider cutting back work force– May need additional help (too successful)– Continued support for critical functions
Strategy Implementation and Control
Goal 2: Product Diversification through global acquisition• Action steps• CFO• Finance, Accounting, IT, Operations, all senior management• Outcome – acquisition of RSA Insurance Group• Control
– Change in revenues from both acquired entity and ML’s core businesses
– Change in EBITDA– Goal of avg. of 5 yr. cash ROI of 10% and 15% ROI by yr. 5
Contingency• Reassess the acquired entity to ascertain why the measures
were not reached and retool what is necessary
Strategy Implementation and Control
Goal 3: Marketing strategy to increase company approval ratings
• Action steps• Director of Marketing• Marketing department, Ad/PR consultant, focus groups• Outcome – increased approval ratings• Control
– Pre-strategy and post-strategy ratings– Polls, surveys, referrals
• Contingency– Examine what, if any, business segments need to be cut/sold.– What is giving company bad image.
Strategy Implementation and Control
Goal 1: • 11/1/2008 – 3/1/2012
Goal 2:• 1/15/2009 – 4/1/2010
Goal 3:• 9/1/2008 – 10/1/2009
What does this mean?• Jan 2009-Oct 2009 Busy!!!• Must make certain necessary resources are
available
Questions?
