Wells Fargo Financial Analysis example essay topic

Wells Fargo For this project, we researched Wells Fargo's performance in the last couple of years as a way to check on its progress to greatness. What we found was an overwhelmingly charismatic company that not only puts down its values in ink, but also strictly abides by them. Much to our surprise, a huge chunk of their thick annual report for 2002 was an honest listing of all the threatening factors that stand in the company's way rather than its exceptional rankings in its sector. In this paper, we will focus specifically on Wells Fargo's leadership, company culture, SWOT analysis, and financial performance analysis.

We will try to link our findings to Jim Collins's book as a way to prove that the company has really made the jump from good to great. Charismatic Leadership The CEO Dick Kovacevich became the head of the company in 1998 after its merger with Norwest Corp. "Business Week" classifies him as one of the best managers: "While many of his peers have been embroiled in one scandal or another, Wells Fargo & Co. CEO Richard M. Kovacevich, 59, has kept his bank safely out of the fray" (BW). Kovacevich obtained his MBA from Stanford after an injury in his shoulder kept him from becoming a pitcher for the New Yorker Yankees.

Nevertheless, Kovacevich transports his athletic attitude to his business "pitching hard and fast" in his industry (RMA Journal). For him, mistakes are unavoidable part of business but he treats them as opportunities to learn and grow. His core strategy is to sell as many products as possible to each customer. Currently, four products are sold on average to each customer, which is double the industry average. Furthermore, Kovacevich admits to his willingness to sacrifice a little profit margin for the purpose of building lasting and trusting relationships with their customers. Kovacevich has also invested in building better relationships between the management and the workers because for him having the right people on the team is crucial.

He acknowledges the need for decentralization in such a big company, for the purpose of which the right people have to be picked and allowed to run the segment as if they own it. Ever since becoming a CEO, he has made worker satisfaction a top goal for Wells Fargo. He has also introduced incentives for his "people goals" expressed in the generous bonuses (ranging from 10 to 30 percent of base salary) the managers receive for listening and tending to their workers. Wells Fargo employees take an automated phone survey every 18 months in which they answer basic questions about their satisfaction with the management. The responses to these surveys are used to analyze the management style and to see if there is any need or opportunity for further improvement. In other words, the management of Wells Fargo has already passed from good to great.

Kovacevich strives to create an atmosphere of employee satisfaction and trust. It is true that he finds it profitable to maintain happy workers who execute their jobs better but we saw much more than the pure profit added to these open management - employee relations: we saw a caring leader, humble enough to risk his authority to be undermined by critiques. Several years after Collins' book was published, the management at Wells Fargo is still approachable, humble, humane, and very charismatic. Company Culture, Values and Visions We found Wells Fargo as charismatic a company as its CEO Kovacevich is.

It has preserved proudly its values for 150 years now, and anyone can look at them on their homepage (web). Wells Fargo places its employees above their customers and above their products. An employee is what makes a service company successful. As Kovacevich says for RMA journal", Our ability to provide outstanding sales and services all gets down to our people - they " re our one true sustainable competitive advantage".

On top of the values for Wells Fargo is maintaining outstanding relationships with customers, team members, and stockholders. They also encourage open communications among managers and workers as well as among customers and members. The company views corporate governance as a team project and inspires honesty, trust and integrity among its members. Like the research team of Collins, we stumbled upon the words "culture" and "values" many times in our research. It is overwhelmingly convincing that Wells Fargo has maintained its spirit of a good to great company for a century and a half already. Our personal experience with the company further convinced us that these values are not cited just for decoration - every new employee is trained to appreciate and adhere to the company's values.

Company products and services " We are a diversified financial services company. In addition to banking, we provide insurance, investments, mortgages and consumer finance" (Annual Report 2002). Since Collins' research, Wells Fargo has only continued to grow and add new sectors in its business. Its visions contain growth as a consequence of getting better, and not just for the sake of growing. Currently, it is alert to any opportunities for mergers and acquisitions as a means of expanding its business. Wells Fargo has continued its use of technology to further its progress since Collins' book.

The CEO indicates in an interview with BW that the company budget is spent on technology - software and hardware, and on upgrades. Its most recent achievement is leading the financial services sector with their online banking and effective use of cyberspace. "In the last few years, Wells has become a prime example of how a 150-year old institution can build a round-the-clock running alongside an old-fashioned traditional bank" (BW). The company has seen online banking as an opportunity to satisfy their customers making their services more approachable and convenient. Although the upgrade to online banking has been costly ($900 million were spent since 1999), it is profitable as it saves time for branch employees and phone bankers as customers can now go online for information.

Furthermore, Wells' online monitors let them individualize the customer's needs and advertise only the products they might need. They can also track unfinished applications for products and send an email to the customer encouraging them to apply. Competition Wells acknowledges the fierce competition they face which has even increased in recent years as nonbank's have started offering products and services that traditionally belonged to banks (automatic transfer and payment systems). The foreign banks that have acquired financial services companies in America are yet another form of competition. The 2002 article "Wells Fargo: Blazing a Trail Online" in BW also recognizes the competition of the firm. Although it is currently a leader in online banking, many other banks are offering basically the same product and are planning to invest even more in it.

Wells exceeds its rivals in that it has done "the best job of melding its offline operations with its online service, which does not cost customers any extra to use". (BW). Financial Analysis The financial data for the company is convincingly good-to-great. Its revenues has been rising constantly since 1998 as can be seen on the exhibit. Net income for 2002 was the highest in 5 years - $5,710 million, rising by 58% since 2001. Its total assets have increased by 13.6%.

Wells' financial performance is great compared to its competitors' as well. It has shown revenue growth (1%) above the industry average 0%, and well above the negative numbers in its biggest rivals BofA, Bank One Corp. and US Bank. Its revenue and net income are also much above the industry average and second only to BofA. Clearly, WFC is one of the best in its industry. More financial analysis can be found in the attached exhibits. Conclusion Our research has convinced us that WFC has made the transformation from a good to great company.

We found that it has preserved its humane humble management style and its core values and culture, and together with the right people on the bus and with the sensible use of technology, has progressed even further. Their performance has been praiseworthy - WFC survived the economic recession as one of the nation's leaders in the financial services companies.