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Bank of America: Profile Analysis Essay


Undertaking a critical business analysis has long been established as a central component that fund managers and investors employ to identify the performance and competitiveness of an organization and, in effect, make critical decisions on whether or not to invest in a particular organization (Beenhakker, 1996). In this perspective, this report aims to conduct critical business analysis on the Bank of America, particularly in its strengths, weaknesses, opportunities, and threats (SWOT), and in its stakeholder relations – both internal and external, to make important and well-informed decisions about whether or not to commit investment funds to this particular organization.

A brief evaluation of the Bank of America’s background reveals that it is indeed “…one of the world’s largest financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services” (Bank of America, 2006, p. 3). The organization avails unrivaled convenience in the United States, extending services to more than 55 million consumer and small-scale business relationships with more than 5,700 retail banking outlets, approximately 17,000 Automated Teller Machines (ATMs), and award-winning online banking products with more than 20 million customers as of December 2005 (Bank of America, 2006).

SWOT Analysis

Despite the challenges encountered by academics and practitioners in its use, SWOT (strengths; weaknesses; opportunities; threats) analysis remains a fundamental strategic tool for outlining the strengths and weaknesses of a company, particularly about making important business decisions and translating them into value prepositions that could then be used to comprehensively inform the organization’s as well the stakeholders’ strategic actions (Rinzinwanmo et al, 2009; Bank of America, 2006). Consequently, it can be argued that conducting a SWOT analysis on the Bank of America could provide useful insights that could be used to decide on whether to commit investment in this particular entity.

Among its strengths, it can be argued that the Bank of America not only enjoys a leading market position in the United States and globally, but has managed to institute efficient banking policies to spur robust growth in core banking (Mariotti & Piscitello, 2010). The bank has also demonstrated a sound management and dividend policy, and an unparalleled product and service innovation, particularly in online banking (Tully, 2011).

To build a compelling case for the company’s strengths, it is imperative to note that the Bank of America has a customer base in 175 countries around the world (Bank of America, 2006), is listed by Forbes as the 3rd largest company in the world (Rinzinwanmo et al, 2009), is among the five leading companies in the United States by total revenue, and has business relationships with approximately nine in ten of the United States Fortune 500 companies, and eight in ten of the Global Fortune 500 companies (Business Insider, 2011; Bank of America, 2006 ).

Among the presenting weaknesses, it is clear that the Bank of America is increasingly been faced with declining net interest margins due to stiff competition in the banking industry, and it is yet to fine-tune its wholesale banking operations to achieve greater efficiencies and economies of scale (Tully, 2011). According to Rinzinwangmo et al (2009), the banking institution is also faced with a declining asset quality, not mentioning that it has a weak sub-optimal geographic asset allocation.

The Bank of America enjoys several valuable opportunities, which may prove critical in deciding the future growth agenda of the bank. Growth opportunities for the bank exist in credit card operations and affinity marketing, as well as in asset management, corporate and individual wealth management, and consumer banking (Tully, 2011; Rinzinwangmo et al, 2009).

The bank can also continue with its acquisition strategy of countrywide financial firms. As noted by the Business Insider (2011), “…the bank’s 2008 acquisition of Merrill Lynch made Bank of America the world’s largest wealth manager and a major player in the investment banking industry” (para. 3). Due to its sheer size and operational frameworks in the United States, the bank has an unrivaled leverage to diversify its banking products to cover potential populations, including Hispanics and Muslims (Mariotti & Piscitello, 2010).

Banking institutions around the world are increasingly been faced with a multiplicity of threats to their external operating environments, and Bank of America is no exception. The sub-prime exposure and the credit crises constantly been witnessed in the United States and globally are a major cause of discomfort for the bank. Equally, the elevated regulatory pressures on interchange rates, ever-present volatility in financial markets and the perceived lack of consolidation in the financial services industry continue to act as major weaknesses to the bank’s operations, both in the United States and internationally (Mariotti & Piscitello, 2010).

In deciding on which parts of the SWOT analysis are most important in informing the decision about whether to commit investments in the Bank of America, it is important to understand that the SWOT analysis is based on the premise that an effective business strategy should gather its strengths from a sound “fit” between the organization’s internal resources, specifically its strengths and weaknesses, and its external scenario in terms of perceived or actual opportunities and threats (Coman & Ronen, 2009). Although all components of the SWOT analysis are important in ensuring effective decision-making, it is generally felt that the ‘strengths’ and ‘opportunities’ components are most relevant in deciding on whether or not to invest in a particular organization.

The underlying principle for taking this orientation is that an organization’s strengths in the market are the ones used to decide on the viability and value of its stocks, not mentioning that whereas an organization’s strengths can be used to remedy incidences of imagined or real weaknesses and threats to its competitive advantage in the marketplace, the weaknesses or threats cannot be used synonymously to develop the value of the company. Equally, it can be said that an organization’s opportunities form an important consideration in making investment decisions because they represent potential ‘green’ areas where the organization can focus on to facilitate its future growth needs, and hence raise its future value in the marketplace (Beenhakker, 1996).

Stakeholder Analysis

In layman’s terms, stakeholders can be defined as the people and organizations who are either directly responsible for implementing the organization’s projects, policies, and other activities or who could be positively or negatively affected by the outcomes or consequences of the organization’s activities (Friedman & Miles, 2006). According to these particular authors, internal stakeholders consists of all members who are working directly for successful completion of a particular project or activity, while external stakeholders consist of all members outside the implementing units, and who are either directly or indirectly affected by the project or activity outcomes.

In this perspective, therefore, the internal stakeholders of the Bank of America would consist of the management, board members, members of staff, team leaders, supervisors, volunteers, and/or project donors (The Denver Foundation, n.d.). In equal measure, the bank’s external stakeholders would consist of customers/clients, suppliers, creditors (IMSRI, 2009), other banking and credit institutions, and community partners, such as United Nations Environment Program (UNEP), Coalition for Environmentally Responsible Economies (CERES), and the International Leadership Council (Bank of America, 2006).

Stakeholders play fundamental roles as advocates, sponsors, partners, and initiators of change (IMSRI, 2009), and therefore organizations must develop comprehensive methodologies, strategies, and protocols to deal with their many and varied needs and wants (Tully, 2011). In this perspective, the stakeholders’ needs and wants may arise from communication challenges, administrative issues, lack of the needed staff and/or other resources, conflicts between interbank financial systems, mainstreaming (project adoption) challenges, lack of trust, and leadership conflicts, among others.

It is imperative to note that stakeholders’ wants and needs must be addressed adequately if the organization is to gain the much-needed value in the eyes of the public. As observed by IMSRI (2009), “…people are more willing to listen to companies with strong reputations: where there is trust, [and where] communications are more effective” (p. 2). It is indeed true that the Bank of America witnessed challenges in its communication systems due to its sheer size and, as such, stakeholders failed to not only communicate effectively, but the lapse in the communication systems made it difficult for the stakeholders to meet the needs and expectations of a dynamic, complex institution (Rinzinwangmo et al, 2009).

The Bank of America rectified the above scenario by realizing that good stakeholder relationships are developed over time through many day-to-day interactions and, in effect, developed a communication system that was not only relevant, regular and consistent, but also ensured a two-way mechanism through which stakeholders could be able to listen and at the same time provide feedback (Rinzinwangmo et al, 2009). As noted by IMSRI (2009), “…stakeholders who feel well informed about what an organization is doing are far more likely to speak highly about it” (p. 6). The Bank of America also always ensures that all stakeholder views, demands, and expectations are acted upon – not just listed to. Equally, the bank has established mechanisms to ensure that communication systems are oriented towards responding to the needs of stakeholders, and are linked to their collective agenda (Tully, 2011).

Many banking and financial institutions are occasionally faced with leadership wrangles precipitated by conflicts of interest in the light of the intense competition in the sector, and the Bank of America is no exemption. Such conflicts, according to IMSRI (2009), only serve to derail the respect and public image of a company in general and stakeholder confidence in particular. Bank of America, on its part, has attempted to fulfill the stakeholder needs about effective, hands-on leadership by demonstrating good leadership, with clearly outlined vision and direction to not only add value to the organization but also to efficiently meet the stated aims and objectives (Rinzinwangmo et al, 2009).

Members of staff, though themselves a component of the internal stakeholders of an organization, are critical in ensuring that all the needs and wants of all the other stakeholders are successfully met (IMSRI, 2009). Bank of America has a huge number of employees owing to its sheer size and nature of operations (Advameg, Inc, 2011), not mentioning the fact that its employees come from diverse socio-cultural and ethnic backgrounds (Rinzinwangmo et al, 2009). Their management and engagement, therefore, are of immense importance if the company is to progress its growth agenda and sustain value for the stakeholders. Indeed, IMSRI (2009) notes that “…stakeholder relationships are ultimately about day-to-day working relationships [and] therefore, as effectively as an organization might be led, the quality of working relationships makes a difference to stakeholders” (p. 7).

To ensure that its members of staff are responsive to the needs and wants of stakeholders, the Bank of America recruits experienced and knowledgeable employees, not mentioning the fact that such recruitment is done consistently at all levels and spheres of work (Tully, 2011). Current literature in strategy research demonstrates that the perceptions of stakeholders about the quality of members of staff of a particular entity have a strong and direct influence on the way the entity is evaluated by the general public in general and its stakeholders in particular. With this in mind, Bank of America has invested heavily in its human resource capacities to project an orientation that its stakeholders are always dealing with experienced and knowledgeable members of staff (Mariotti & Piscitello, 2010).


The discussed elements demonstrate that the Bank of America is satisfactorily fulfilling the needs and wants of its stakeholders. The SWOT analysis and the bank’s dominant position in the marketplace reinforce this assertion. All that is now needed is for the bank to continue researching and implementing the best practices in shareholder management to ensure the sustenance of competitiveness and elevation of shareholder value (IMSRI, 2009). The bank, in particular, needs to diversify its social corporate programs to enhance its public image, and introduce new products into the market place to ensure continuity.

Reference List

Advameg, Inc. (2011). Web.

Bank of America. (2006). 2005 sustainability report. Web.

Beenhakker, H.L. (1996). Investment decision making in the private and public sectors. Westport, CT: Greenwood Publishing Group Business Insider. (2011). Bank of America. Web.

Coman, A., & Ronen, B. (2009). Focused SWOT: Diagnosing critical strengths and weaknesses. International Journal of Production Research, 47(20), 5677-5689.

Friedman, A.L., & Miles, S. (2006). Stakeholders: Theory and Practice. Oxford: Oxford University Press

Ipsos MORI Social Research Institute. (2009). Understanding your stakeholders. Web.

Mariotti, S., & Piscitello, L. (2010). International growth of banks: From competency-exploiting to competency enhancing strategies. Service Industries Journal, 30 (7), 1007-1024.

Rinzinwangmo, Y.P., Fengming, S., & Flavel, P. (2009). Building a giant – Bank of America. Thunderbird International Business Review, 51(6), 583-595.

The Denver Foundation. (n.d.). Web.

Tully, S. (2011, July 25). Can this man fix America’s biggest bank? Fortune, 164(2), 136-147.

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