Banc One --- 1993
Dr. Diane Eppler
Banc One’s Mission, Objective and Strategies
Mission – Banc One’s mission is to build shareholders value by sticking to the nuts and bolts. Banc One believed in the basics. The major objective was to create a perception of value and to focus on customer service.
Overall – The general strategies of Banc One is to be different than its peers; different in a good way. Banc One worked hard to develop a straightforward and simple strategy for continued success of their company. The Banc One overall target is being the best at managing opportunities, making affiliations work for ...view middle of the document...
Operations – Banc Oneshas concentrated on acquiring “average banks” not trouble institutions and make them better by generating an average 40-70 percent return on assets improvement. Another core issue within Banc One was to invest in and implement technology, which enhance retail products to create competitive advantages, provide operating efficiencies, and generate non-traditional bank revenue sources.
Human Resources – Banc One knows how to motivate people to act as if they were entrepreneurs. Management went to great lengths to motivate the employees of newly acquired companies to do things the Banc One way. Banc One is committed to developing its own “human capital”. Banc One organization is verydecentralized. A decentralized organization usually allows and encourages innovation and attracts stronger people. Throughout the years Banc One has continue to provide opportunities, and give their people authority and responsibility to make decisions throughout the organization.
Outline and discuss the firm’s external opportunities and threats, using any analytical model(s) you believe to be relevant. Insufficient data is available to provide a standard 3-year look at Liquidity, Debt, Profit, and Turnover ratios.
Return on Assets improvement averaged 40%-70% for newly affiliated banks.
Averaged 17% Return on Equity over the past decade despite below average financial leverage.
Consistently maintained a earnings growth rate of 13%.
Approximately 70% of Banc One's growth can be attributed to internal growth not associated with acquisitions.
Net interest margin lead the top 25 largest banks for nine years, exceeding their median by 42% in 1992.
From 1984-1993 Banc One assets were rated 8th largest among U.S. Banks, up from 37th.
TWELVE YEAR GROWTH COMPARISON, 1980 -1992
1992 Key accomplishments:
24th consecutive year of increased earnings
24th consecutive year of return on assets greater than 1%
22nd consecutive year of increased cash dividends to shareholders
17th consecutive year of return on equity greater than 15%
BANK ONE 10-YEAR AVERAGE PERFORMANCE, 1983-1992
Outline and discuss the firm’s external opportunities and threats, using any analytical model(s) you believe to be relevant. Porter’s Five Forces
Threat of New Entrants - High threat
Mega mergers and consolidations of large banks
Superbanks aggressively pursuing acquisitions in same markets
Non-regulatory businesses offering financial services once limited to banking industry
Threat of Substitutes - High threat
Declining interest rates have consumers looking for alternative investment products
Core deposits transferred into mutual funds
Cost of funds and rate they are being lent is being squeezed, consumers will look elsewhere for loans
Threat of Buyer -Moderate threat