Strategic Management Project Iryna Trygub Amit Shroff Alex Downs Prasanna Gopalan Hanqian Liu

Background Global leader and international provider of financial services and investment resources Worldwide assets under management was $999.8 billion Customer accounts was 67.6 million Worldwide number of employees was 35.2 thousands

Multidivisional Structure

Characteristics of the Organizational Structure Complex structure vertical differentiation Relatively flat structure Wide span of control

Characteristics of the Organizational Structure Decentralized approach High level of differentiation Highly complex forms of integration mechanism

Fidelity Brokerage Company

Geographic Structure 8 regional centers in 7 states: Smithfield, RI; Boston, MA; Western Region; New York city; Southwest Region; Marlborough, MA; Merrimack, NH; Midwest Region. International affiliates in 24 countries on 5 continents

Corporate Culture Stimulates friendly communication Supports a flexible, high-performance working environment, in which creativity and innovation are rewarded

Norms and Values Building partnerships among internal customers and employees to provide effective services and solutions Re-engineering business and technology processes to improve customer responsiveness and profitability of the company Selecting and developing employees who are committed to excellence Providing an environment where excellence is fostered, recognized and rewarded

Rewards Individual reward Group reward

Individual Rewards Bonuses Profit Sharing Promotions Educational Benefits Non-Monetary rewards

Strategic Controls Financial Control Output Controls Behavioral Control

Financial Control Stock price Return on Investment

Output Controls Benchmarking Analysis of customer survey

Behavioral Control Operating Budget Standardization

Improvements Fidelity needs to look at how the changing market conditions

Improvements Adjust Structure of Fidelity Globalization Deregulations Changes in information technologies

Improvements Adjust Reward System of Fidelity Subjective standards Long term reward system

Obstacles to Change Repositioning strategy Private ownership

Repositioning Strategy “In personal Investments, we developed a number a new brokerage services, and strengthened our commitment to the high net worth customer. This is essential at a time when our competitors are providing more and more specialized services to reinforce their ties with this important group of investors. At the same time, we must reaffirm our long-term commitment to all categories of investors, no matter what their net worth.” Chairman's letter 2000 annual report .

Repositioning Strategy “I want us to be seen as what we are becoming – a firm that can provide solutions for customers across their whole range of financial needs.” Chief Operating Officer Robert L. Reynolds

Repositioning strategy Fidelity has not clearly defined their vision. Why Good Companies Go Bad By Donald N. Sull Active inertia Need to act appropriately

Private Ownership Expand globally Fidelity – 24 countries Merrill Lynch – 44 countries JP Morgan – 50 countries

Example Fidelity developed the “Private Wealth Management group” in March of 2000. Merrill Lynch “Private Client Group” 20,200 Financial Consultants in nearly 1000 private client offices in 34 Countries. This Merrill Lynch group has grown at a compounded annual growth rate of 15% over the last 5 years and has over $1.5 trillion dollars under management.

Conclusions Repositioning strategy Vision Write a mission statement Don’t try to be the best at every thing. Build on core competencies.

Conclusions Private ownership Expand globally Borrow at AAA credit rating, or go public to raise capital