need help finishing up a business analysis report about 1 and 1 2 pages

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I need alternatives, conclusion, and recommendations done for my project. its about wells fargo and I need about 1 and 1/2 pages done to finish it.

Enclosure

Company History:

Wells, Fargo & Co was founded in 1852 by Henry Wells and William Fargo in San Francisco, California. Its original purpose was offering banking by buying gold and offering paper bank drafts back as good as gold. Soon after Wells Fargo opened offices throughout cities and mining camps across the west. In 1861 Wells Fargo began connecting communications across the west, delivering business by the fastest means possible including steamboat, steamship, railroad, horse, or telegraph. By 1889 Wells Fargo adopted the motto “Ocean-to-Ocean” as it became the first nationwide express company (History of Wells Fargo). In the peak of this era of Wells Fargo, it connected 10,000 communities across the United States, but that year federal government took control of the national express network leaving Wells Fargo with only one bank in San Francisco (History of Wells Fargo). Since then, Wells Fargo has maintained its headquarters in San Francisco, and has opened 8,050 locations across 38 countries and territories. Today Wells Fargo offers banking, investment, and mortgage products and services for consumer and commercial finance (Quarterly Fact Sheet, 2nd Quarter 2018).

Financial Analysis:

Despite a significant amount of scandal Wells Fargo continues to remain steady at both income and net earnings per share. While there was a slight loss of about .13 cents a share in 2016, the company regained almost all of that in 2017, and both the $3.99 is 2016 and $4.10 in 2017 surpass the 10 year average of $3.93 per share (Morningstar). Wells Fargo has continued to raise dividends dating back to 2012 each year, and recently raised its dividend by 10% (Linnane). The damage caused by recent scandals has been mostly restricted to cash on hand and stock price. Although still higher than it was pre and immediate post recession, the average price per share has dropped approximately 20% in 2018, indicating a lowered trust in the company (Morningstar). Wells Fargo has also been forced to use its cash reserves to pay hefty fines it is facing from various government agencies, including most recently a 2.09 billion dollar fine to settle issues with its mortgage process (Reuters). The company is currently in an unprecedented situation, as it is under an asset cap, meaning it cannot grow, until certain policies are changed and improvements are made. This cap was implemented by the Federal Reserve in response to numerous scandals and financial misconducted performed by the company and its employees (Goldstein). This cap will force Wells Fargo to manage what it currently has, and does not prevent the company from making a profit, but will limit how much and how rapidly it can grow its size in the future, making it unlikely that it can grow its profits significantly until it addresses its current internal issues.

Market Analysis:

The banking industry is a highly competitive industry with a number of major players including Bank of American, BB&T, JP Morgan Chase, and many others. Wells Fargo also competes with independent loan and mortgage companies, as well as investment firms, with its financial services sector. The industry does have very high barriers of entry, as the costs are in the multi millions (HuffPo), there are also significant government regulations that must be followed (HuffPo). That said, Wells Fargo is in a somewhat vulnerable position, although it is still one of the largest, it recently lost its hold on the top spot in the industry to JP Morgan Chase, and has since fallen even farther after being surpassed in total assets by Bank of America (Dixon). The industry also faces high levels of scrutiny from both the public and government as it deals with many industry wide scandals, meaning that more government regulations may come to fruition. Overall, despite having slipped recently, Wells Fargo’s position is still strong in the industry, and it is a highly recognized company that is fully capable of being a formidable competitor.

Porter’s 5 Forces:

1. Competition in the industry – The money center banking industry is highly competitive with competition coming from over 10 major players including Bank of America, BB&T, JP Morgan chase, and many more. Along with money center banking, Wells Fargo faces competition in multiple different financial service sectors, including banking, investment, and mortgage products and services.
2. Potential of new entrants into the industry – The industry has a high barrier of entry, as there are specific cash requirements and government regulation that must be met. There is some threat for smaller competitors to enter specific sectors or geographical regions, but new competitors on a large, diverse scale, are highly unlikely and extremely rare. The most vulnerable part of Wells Fargo would be loan services, which have a lower capital requirement, and are subject to restriction that prevent high interest rates, smaller companies can affect Wells Fargo in this sub-industry by offering lower rates and better more personalized services.
3. Power of suppliers –
4. Power of customers – Customers can switch banks or agencies for the most part as they wish, but some things, such as mortgages and loans, are difficult to move over and can take some time. Banks are also a necessity in today’s society meaning that they will always been utilized, the primary concern is that customers will switch over to a competitor.
5. Threat of substitute products – In an ever-changing technological world, the way in which consumers choose to do their banking is becoming increasingly consumer friendly (convenient), so Wells Fargo must continually update every online banking apparatus it has, especially since other companies are doing the same.

Issues:

Over the years Wells Fargo has had quite a lot of issues. The ethics and culture of Wells Fargo has been questioned over the past few years. Their mission statement is “The reason we wake up in the morning is to help our customers succeed financially and to satisfy their financial needs, and the result is that we make money. It’s never the other way around”. This mission statement is very questionable after the problems they have had. Since 2011, Wells Fargo employees were secretly creating millions of unauthorized accounts without any permission from the customers. They were given unattainable quotas from higher management and if they didn’t make their quotas then the employees could lose their jobs. The creation of fake accounts also have the employees more money as they would receive bonuses and commission for every account that they opened. The level of corruption was very high as an analysis was done by a consulting firm and they concluded that over 1.5 million deposit accounts were created. What would happen is that the employee from Wells Fargo would move funds from their existing account into a newly opened account which was unauthorized by the customer. Then the customer would be charged with fees for insufficient funds in account or overdraft fees. Wells Fargo were fined for $185 million and $5 million to refund to customers. 5,300 employees were fired as a result of this scandal. This fine wasn’t large at all when you look at the scale of Wells Fargo who have the highest market valuation at $250 billion. Ethically this is very wrong and goes against what their mission statement portrays to the public.

A big problem with this ethical issue is leadership. Who is leading the employees to this? Wells Fargo culture comes across as “soul crushing” of fear and intimidation from higher level managers. There is definitely a gap amongst the senior leaders at Wells Fargo as the issues Wells Fargo face are significant. People are very sensitive and careful when it comes to money so trust is a big thing. After scandals like this is can be hard to trust Wells Fargo as nobody wants to be part of another scandal. Stumpf still thinks that “the culture of the company is strong” but that is questionable after problems like this is revealed. Maybe he is in denial but there is a clear problem with the culture at Wells Fargo and the ethics of the company.

Another big issue that is more recent is that about 400 customers lost their homes due to an error in their system. Wells Fargo said that their “error” caused more than 600 people in foreclosure to be incorrectly denied, or not offered to make their home loans more affordable to the customer. Wells Fargo also said that “This effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.” Wells Fargo dedicated $8 million dollars to reimburse the customers who were affected by the mortgage problem which only works out at $12,800 per customer which is quite pathetic seeing as that some people had lost their homes. These issues are not small kinks in the system but massive dilemmas that are really affecting their customer and giving trauma to families who had their home taken from them. No apology and a sum of money will fix what people had to go through.

Alternatives:

Recommendations:

Conclusion:

https://www.huffingtonpost.com/2010/03/19/how-to-start-your-own-ban_n_497261.html

https://www.bankrate.com/banking/americas-top-10-biggest-banks/#slide=1

https://www08.wellsfargomedia.com/assets/pdf/about/corporate/wells-fargo-today.pdf

https://www.wellsfargo.com/about/corporate/history/

https://www.marketwatch.com/story/wells-fargo-to-r…

http://financials.morningstar.com/ratios/r.html?t=WFC

https://www.reuters.com/article/us-wells-fargo-penalty/wells-fargo-to-pay-2-09-billion-fine-over-decade-old-mortgage-loans-idUSKBN1KM5TR

https://www.marketwatch.com/story/fed-hits-wells-f…

https://www.charlotteobserver.com/news/business/banking/article216171595.html

https://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-bank-fees/index.html

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