Merrill Lynch Swot Analysis
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Mr. Charles E. Merrill founded Merrill Lynch in 1914. Merrill Lynch was a company that was renamed after a company by the name of Burrill and Housman was founded in 1885. Merrill Lynch in the present time is one of the leading brokerage firms in the world. Merrill Lynch has offices all over the world, but only in the United States Merrill Lynch has about 15,000 brokers. The basic principal of Merrill Lynch is ÐŽ§The interests of our customers must come firstÐŽÐ which in many business is what drives a company to be leader in its field. Other thing that makes a company to be good on what they do is having there ÐŽVin these case- financial consultants be involve in training and state of the art system and technical support. Merrill Lynch has all this and more. What does more mean? Merrill Lynch has all this: Client assets exceeding $1 trillion, spends 150 million dollars per year on research (one of the best research departments on the world), a 2003 third quarter net earning of $2.7 billion, 2002 finished up with net revenues of $28,253 million, employs approximately 65,000 employees worldwide, mean account of more than $600,000 with a median of $300,000. With all these shown there is no reason to say that Merrill Lynch is not the leader in planning financial and management advice either for individuals as well as for small businesses.
Merrill Lynch is organized into four groups that might be one the reasons the company is leader. These groups are: Corporate and Institutional Group, the Asset Management Group, the US Private Client Group and the International Private Client group. The Corporate and Institutional Group is one of the second biggest with net revenues for Merrill Lynch. What the Corporate and Institutional Group those, is to give financial, trading and strategic advisory services to large institutions and governments. The Asset Management Group only accounts for 7% of the net revenues. It is one of the worldÐŽ¦s largest investment managers. The US Private Client Group, that accounts for the highest percentage in net revenues is in charge of providing financial related tasks to loan and trust accounts. Last but not least, The International Private Client Group that accounts for 6% of net revenues is the one that is thought to grow heavily in the future.
Like every other company, Merrill Lynch has its own: Strengths, Weaknesses, Opportunities and Threats.
Strengths
Established international presence: As it was mentioned before, Merrill Lynch has presence in 45 different countries.
Expertise: Merrill Lynch is a company that is being around for more than 100 years. They offer a broad variety of services (banking and lending, business needs, estate planning, investment strategies, retirement, as well as advice and planning, credit and lending). Also as mentioned before financial analysts are highly trained and they have access to research information. LetÐŽ¦s said once again that the research department of Merrill Lynch is one of the best research departments.
Brand Recognition: Anybody knows about Merrill Lynch. When Merrill Lynch is mentioned, everyone knows what they do. It is also every finance major student to work for them.
Resources and size: Earnings and revenues talk by themselves. Also they have a computer system that it is a state of the art, which is a pleasure to work with. What hurts them a little in here is that they still donÐŽ¦t like to work with e-commerce.
Weaknesses
Low market capitalization: Even though Merrill Lynch has higher revenues, net income and capital, it still has a relatively low market value. Merrill Lynch is number ten in market value. Some of the companies that come before Merrill Lynch are: Morgan Stanley, Credit Suisse, Charles Schwab. This last one specially has a high market value, but revenues, net income and capital are much lower than the ones of Merrill.
Resistance to Internet trading: As it was mentioned on one of the strength, Merrill Lynch does not believe in online trading. The reason for why Merrill Lynch does not get along with online trading is reasonable; this is ÐŽ§brokerage commissions.ÐŽÐ Fist of all if Internet trading is applied, brokers live. If brokers live, then there is no brokerage commission. If there is not brokerage commission then income drains, why? High broker commission represent source of income.
High commissions: Even though commissions represent a good source of income, for the costumer investing is a headache. If there is going to be a transaction for a share that costs $50 you will be paying $400 for buying 500 shares. If you do the same transaction on an online web site (Scottrade) this will cost you almost nothing, depending the stock that you are trying to buy. A lot of investors are changing from Merrill Lynch to online trading due to this reason.
Lack of presence in the Internet stock offering: Merrill Lynch those not like internet related stock offerings. Ten years ago this was crazy, but now it is a reality and it shows that they were right.
Low morale among brokers: Of course one of the main reasons driving brokers to have a low morale is the online trading. People are beginning to realize that for small transactions that do not involve any kind of magic, it is easier and cheaper to do it online.
Opportunities
Mergers: Mergers are opportunities for any company. Past on my internship days at Merrill Lynch there were the talks about merging with Bank of America. This was never made, but a merge which such a big bank will have Merrill Lynch to access to million of new customers from Bank of America.
Customer services: a Customer service is big in any company. This is because the people that work in Merrill Lynch are trained to give the best when in contact to their customers. A good example will be the provision of on line trading. Of course as I said before not everyone has access to this kind of trading. Whoever does it though has a great service, of course Merrill Lynch does this so they donÐŽ¦t loose their clients to competitors like E*Trade.
Partnership with MIT: Merrill Lynch and Massachusetts Institute of Technology engaged in a five-year contract. This contract allows to run a financial engineering at the university. Of course because of this, Merrill Lynch will be donating big amount of money to the school. The reason that Merrill Lynch engages in this kind of agreements is because they are trying to get a better technological system, which is big in the business they are in. Also they are trying to get big future clients, as everyone knows MIT graduates are known to be very wealthy.
Embracing