ISM 158

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ISM 158

• Lecture 3
• Charles Schwab Case

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

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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?

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Fig 1.8 Analyzing Disruptive Technologies
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Fig 1.9 Analyzing Cash Flow Curve
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Questions
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Case Overview Charles Schwab

• Decision making under rapidly changing
  environment
• Technology providing large opportunities and
  risks
• Regulatory environment changing at same time

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Outline for discussion

• Background/history of company
• Main issues at time of case
• Any updates since case?

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Company History

• Discount Broker 1975 1994
• Multi-channel online broker 1995-1999
• Strategic Transition 2000-2002
• What are the differences?
• What were strengths and weaknesses in each period?

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Financial Services 1980s
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Charles Schwab Discount Broker
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Case Charles Schwab
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Time of case
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Charles Schwab
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Charles Schwab
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US Trust Acquisition
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Examining the Numbers

• Calculating
• Return on Assets
• Return on Equity
• Profit Margins

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ISMA MEETING TODAY!

• Engineering 2, Room 399, 6-7pm
• Right next to the elevators
• Open to everyone! Even if youre new to ISMA.
• Please turn in member apps if you have one

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Questions, Survey, Break
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Student Presentation

• Johan Stenberg

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Between case and now
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Financial Services Market Today
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Schwab Private Client
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US Trust State Street
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Extending to other Financial Products
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Schwab Equity Ratings
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Research Offerings
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Schwab Capital Markets
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2004 follow up
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Schwab Personal Choice
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Still struggled
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Charles Schwab
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More Recently

• Very strong 2006
• Recent sale of US Trust Announced

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Stock Price History