ISM 158 Lecture 3 Charles Schwab Case

Fig 1.7 Strategic Alignment Model Ideally, all four quadrants align to create value

Opportunities Can IT change basis for competition? Can IT change balance of power among buyers and supplyers? Can IT build or reduce barriers to entry? Can IT increase or decrease switching costs? Can IT add value to existing products and services or create new ones?

Risks Can emerging technologies disrupt current business models? Are we too early or too late to exploit IT opportunity? Does IT lower entry barriers? Does IT trigger regulatory action?

Fig 1.8 Analyzing Disruptive Technologies

Fig 1.9 Analyzing Cash Flow Curve

Questions

Case Overview: Charles Schwab Decision making under rapidly changing environment Technology providing large opportunities and risks Regulatory environment changing at same time

Outline for discussion Background/history of company Main issues at time of case Any updates since case?

Company History Discount Broker 1975 – 1994 Multi-channel online broker Strategic Transition –What are the differences? –What were strengths and weaknesses in each period?

Financial Services 1980’s

Charles Schwab Discount Broker

Case: Charles Schwab

Time of case

Charles Schwab

US Trust Acquisition

Examining the Numbers Calculating –Return on Assets –Return on Equity –Profit Margins

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Questions, Survey, Break

Student Presentation Johan Stenberg

Between case and now

Financial Services Market Today

Schwab Private Client

US Trust – State Street

Extending to other Financial Products

Schwab Equity Ratings

Research Offerings

Schwab Capital Markets

2004 follow up

Schwab Personal Choice

Still struggled

Charles Schwab

More Recently Very strong 2006 Recent sale of US Trust Announced

Stock Price History