Wells Fargo Strategic Plan

03/20/2011

Wells Fargo Strategic Plan Minnesota School of Business Capstone: Business Management Professor G. Whitehead

[Type the company name] | Confidential Cassie Iris Amundson

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Table of Contents EXECUTIVE SUMMARY…………………………………… SUMMARY……………………………………………………………………… ……………………………………………………………… ……………………………..……………… 4 COMPANY BACKGROUND………………………………… BACKGROUND…………………………………………………………………… …………………………………………………………… …………………………..……………… 4

CORE PRODUCTS AND SERVICES……………………………… ………………………………………………………………… …………………………………………….……………. ………….……………. 6 Banking…………………………………… ……………………………………………………………………… ………………………………………………………………… ……………………………….…….…….6 Mortgage………………………………… …………………………………………………………………… ………………………………………………………………… ……………………………….………....7 Credit Cards……………………………… …………………………………………………………………… ……………………………………………………………… ………………………….….……..….8 Insurance ………………………………… ………………………………………………………………………… ………………………………………………………………… ………………………….………….8 Investments…………………………… ……………………………………………………………… ……………………………………………………………………….… …………………………………….…….…9 ….…9 VISION STATEMENT…………………………………… STATEMENT……………………………………………………………………… …………………………………………………………………… …………………………………………………10 ………………10

MISSION STATEMENT………………………………… …………………………………………………………………… ………………………………………………………………… ……………………………….……10 VISION STATEMENT………………………………………………………………………………………………….…………10 VALUE STATEMENT………………………………… STATEMENT…………………………………………………………………… ……………………………………………………………………… …………………………………………..……….10 ……..……….10

PEOPLE………………………………… …………………………………………………………….…………… ………………………….…………………………………………… …………………………………………..……….11 …………..……….11 ETHICS……………………………… ………………………………………………………….….…… ………………………….….…………………………………………… ……………………………………………………………11 ……………………11 CUSTOMER…………………………………………..… CUSTOMER…………………………………………..…………………………………… …………………………………………………………………… …………………………………….…13 ….…13 DIVERSITY…………………………………………… DIVERSITY………… …………………………………………………………………… ………………………………………………………………………… ………………………………………… …..14

LEADERSHIP........................................................................................................................…...15 ENVIORNMENTAL ANALYSIS................................................................................................................17 GENERAL ENVIORNMENT………………………………… ……………………………………………………………………… …………………………………………………………………1 ……………………………17 7 Demographic Trends………………………………………………………………………………………………17 Economic Trends…………………………………………………..……………………………………………….18 Political Trends ………………………… ………………………………………………………………… ………………………………………………………………………… …………………………………… …18 Social Trends……………………………… ……………………………………………………………………… ………………………………………………………………………… …………………………………..20 Technological Trends………………………………… …………………………………………………………………… …………………………………………………………..22 ………………………..22 Global Trends…………………………………………………..…….………………………………………………22 Physical Trends…………………………………………………………..…….……………………………………23 INDUSTRY ENVIORNMENT……………………………………………………… ..…………………………………………23 Entry Barriers…………………………… ………………………………………………………………… …………………………………………………………………… ……………………………………. ……...23 Supplier Power …………………………………………………………………… ………………………………………………………………………..………………………….… …..………………………….…24 24 Buyer Power …………………………………………………………………… ……………………………………………………………………………..……………………..……2 ………..……………………..……24 4 Substitute Availability ……………………………………………………………….. ………………………………………………………………..……………………..….24 ……………………..….24 Competitive Rivalry ……………………………………………………………………. …………………………………………………………………….…………………………25 …………………………25 OPERATING ENVIORNMENT……………………………………………………………………….……………………….25

Competitors……………………………… ……………………………………………………………………… …………………………………………..……….……………………..2 …..……….……………………..25 5 Creditors……………………………… 25 ……………………………………………………………… ……………………………………………….……………………… ……………….………………………………. ……….25 Customers……………………………… ……………………………………………..………………………… ……………..…………………………………………………………… …………………………………….26 ….26 Labor …………………………………………………..………………………… …………………………………………………..………………………………………….………………… ……………….……………………..26 …..26 Suppliers……………………………… ……………………………………………………………… ………………………………………………………….…………… ………………………….…………………….26 ……….26 INTERNAL ENVIORNMENT SCAN…………………………………………………………………………………………26

Strengths……………………………… ……………………………………………………………… ……………………………………………………………………..… ……………………………………..…………………….26 ………………….26 Weaknesses……………………………… ……………………………………………………………………… ………………………………………………………………………………. ……………………………………….……….27 ……….27 EXTERNAL ENVIORNMEN SCAN……….………………………………………………………………………………….27

Opportunities………………………………… ……………………………………………………………………… ………………………………………..……………………………….… …..……………………………….………..27 ……..27 Threats…………………………… ……………………………………………………………… …………………………………………………………….……… ………………………….……………………………….…..27 ……………………….…..27

Strategic Plan: Wells Fargo

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Table of Contents EXECUTIVE SUMMARY…………………………………… SUMMARY……………………………………………………………………… ……………………………………………………………… ……………………………..……………… 4 COMPANY BACKGROUND………………………………… BACKGROUND…………………………………………………………………… …………………………………………………………… …………………………..……………… 4

CORE PRODUCTS AND SERVICES……………………………… ………………………………………………………………… …………………………………………….……………. ………….……………. 6 Banking…………………………………… ……………………………………………………………………… ………………………………………………………………… ……………………………….…….…….6 Mortgage………………………………… …………………………………………………………………… ………………………………………………………………… ……………………………….………....7 Credit Cards……………………………… …………………………………………………………………… ……………………………………………………………… ………………………….….……..….8 Insurance ………………………………… ………………………………………………………………………… ………………………………………………………………… ………………………….………….8 Investments…………………………… ……………………………………………………………… ……………………………………………………………………….… …………………………………….…….…9 ….…9 VISION STATEMENT…………………………………… STATEMENT……………………………………………………………………… …………………………………………………………………… …………………………………………………10 ………………10

MISSION STATEMENT………………………………… …………………………………………………………………… ………………………………………………………………… ……………………………….……10 VISION STATEMENT………………………………………………………………………………………………….…………10 VALUE STATEMENT………………………………… STATEMENT…………………………………………………………………… ……………………………………………………………………… …………………………………………..……….10 ……..……….10

PEOPLE………………………………… …………………………………………………………….…………… ………………………….…………………………………………… …………………………………………..……….11 …………..……….11 ETHICS……………………………… ………………………………………………………….….…… ………………………….….…………………………………………… ……………………………………………………………11 ……………………11 CUSTOMER…………………………………………..… CUSTOMER…………………………………………..…………………………………… …………………………………………………………………… …………………………………….…13 ….…13 DIVERSITY…………………………………………… DIVERSITY………… …………………………………………………………………… ………………………………………………………………………… ………………………………………… …..14

LEADERSHIP........................................................................................................................…...15 ENVIORNMENTAL ANALYSIS................................................................................................................17 GENERAL ENVIORNMENT………………………………… ……………………………………………………………………… …………………………………………………………………1 ……………………………17 7 Demographic Trends………………………………………………………………………………………………17 Economic Trends…………………………………………………..……………………………………………….18 Political Trends ………………………… ………………………………………………………………… ………………………………………………………………………… …………………………………… …18 Social Trends……………………………… ……………………………………………………………………… ………………………………………………………………………… …………………………………..20 Technological Trends………………………………… …………………………………………………………………… …………………………………………………………..22 ………………………..22 Global Trends…………………………………………………..…….………………………………………………22 Physical Trends…………………………………………………………..…….……………………………………23 INDUSTRY ENVIORNMENT……………………………………………………… ..…………………………………………23 Entry Barriers…………………………… ………………………………………………………………… …………………………………………………………………… ……………………………………. ……...23 Supplier Power …………………………………………………………………… ………………………………………………………………………..………………………….… …..………………………….…24 24 Buyer Power …………………………………………………………………… ……………………………………………………………………………..……………………..……2 ………..……………………..……24 4 Substitute Availability ……………………………………………………………….. ………………………………………………………………..……………………..….24 ……………………..….24 Competitive Rivalry ……………………………………………………………………. …………………………………………………………………….…………………………25 …………………………25 OPERATING ENVIORNMENT……………………………………………………………………….……………………….25

Competitors……………………………… ……………………………………………………………………… …………………………………………..……….……………………..2 …..……….……………………..25 5 Creditors……………………………… 25 ……………………………………………………………… ……………………………………………….……………………… ……………….………………………………. ……….25 Customers……………………………… ……………………………………………..………………………… ……………..…………………………………………………………… …………………………………….26 ….26 Labor …………………………………………………..………………………… …………………………………………………..………………………………………….………………… ……………….……………………..26 …..26 Suppliers……………………………… ……………………………………………………………… ………………………………………………………….…………… ………………………….…………………….26 ……….26 INTERNAL ENVIORNMENT SCAN…………………………………………………………………………………………26

Strengths……………………………… ……………………………………………………………… ……………………………………………………………………..… ……………………………………..…………………….26 ………………….26 Weaknesses……………………………… ……………………………………………………………………… ………………………………………………………………………………. ……………………………………….……….27 ……….27 EXTERNAL ENVIORNMEN SCAN……….………………………………………………………………………………….27

Opportunities………………………………… ……………………………………………………………………… ………………………………………..……………………………….… …..……………………………….………..27 ……..27 Threats…………………………… ……………………………………………………………… …………………………………………………………….……… ………………………….……………………………….…..27 ……………………….…..27


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LONG TERM OBJECTIVES…………………………………… OBJECTIVES……………………………………………………………………… …………………………………………………………………… …………………………………………28 ………28 CORPORATE STRATEGY………… STRATEGY……………………………………………… ……………………………………………………………………… ……………………………………………………….28 …………………….28

LONG-TERM OBJECTIVES……………………………………… OBJECTIVES…………………………………………………………………………… …………………………………………………………….28 ……………………….28 PLAN GOALS AND I MPLEMENTATIO MPLEMENTATION N ……………………………… ………………………………………………………………… …………………………………………………………….28 ………………………….28 SHORT TERM OBJECTIVES……………………………………… OBJECTIVES…………………………………………………………………………… ……………………………………………………………28 ………………………28 FUNCTIONAL FUNCTIONAL TATICS……………… TATICS…………………………………………………… ……………………………………………………………………… ……………………………………………………...29 …………………...29

Functional Tactics: Marketing ……………………………………………………………………………….29 Functional Tactics: Operations………………………………………………………………………………30 Functional Tactics: Business Development ……………………………………………………….……30 ……………………………………………………….……30 Functional Tactics: Service Delivery ………………………………………………………………….……30 ………………………………………………………………….……30 Functional Tactics: Finance…………………………………………………………………………….………30 ORGANIZATIONAL AND LEADERSHIP STRUCTURE……………………………………………………………….31 CRITICAL SUCCESS FACTORS………………………………… FACTORS………………………………………………………………………… ………………………………………………………………………… …………………………………31 31 CONTROLS AND EVALUATION…………………………… EVALUATION…………………………………………………………………… ………………………………………………………………………… ……………………………………32 …32 PREMISE CONTROL…………………………… CONTROL…………………………………………………………………… ……………………………………………………………………..…… ……………………………..…………32 ……32 IMPLEMENTATION CONTROL……………………………………………………………………………………….……..32 CONCURRENT CONTROL……………………………………………………………………………………………………..32 REFERENCES…………………………… REFERENCES…………………………………………………………………… …………………………………………………………………………… …………………………………………………….………..33 ……………….………..33


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Executive Summary Wells Fargo is a stable and long term company providing financial products such as banking, mortgages, credit cards, insurance, and investment services to consumers and business clientele. Wells Fargo’s mission, vision, and values have propelled them through rough financial times in the great depression as well as the current economic downturn. Wells Fargo has a proven history of success and overcoming obstacles. Change management and the ability to adapt to new environment will be of the utmost importance to Wells Fargo over the next few years. The financial reform act has made many drastic changes to the way that companies do business in the financial industry which will directly affect the multi-billion dollar financial institution. Wells Fargo must ensure that their upper level management pays close attention to the external environment with emphasis on governmental and legal changes to the industry standard.

Company Background Wells Fargo has been in business since 1852. Their first office opened in San Francisco during the gold rush. The stage coach was used to transport gold and other valuables. Wells Fargo helped establish the Great Overland Mail service continuing to use the stagecoach but also adding steam ship, rail road, pony rider, and telegraph. From their humble beginnings they expanded from California to the rest of the nation. In 1910 they had 6,000 locations nationwide. Then the federal government took over due to the First World War leaving Wells Fargo with just their initial San Francisco location. Once again Wells Fargo was resistant and expanded again.


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By 1990 they gained back all of their locations across the nation. In the 1980’s Wells Fargo was the seventh largest bank in the nation. (Wells Fargo, 2011) Wells Fargo continued to expand throughout the Midwest with their merger with Norwest in 1998. The merger combined the largest bank presence on the West coast with the largest presence in the Midwest. After the merger the bank rated first in financial services in the western hemisphere, mortgage origination services, internet banking, agriculture lending, student loans, small business loans, commercial real estate, auto finance, and insurance agency sales. (Wells Fargo, 1998) Wells Fargo merged with Wachovia in 2009 gaining greater presence on the East coast and Southern states. Wells Fargo now had banking presence in 39 states and the District of Columbia.

Wells Fargo acquired and merged with many other companies and made many other notable achievements that can be seen below in the timeline:

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1852: Wells Fargo & Co. founded in San Francisco

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1869: Allows the Big 4 in California to gain a controlling interest for rights in the transcontinental railroad.

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1888: Wells Fargo releases ocean to ocean service

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1905: Wells Fargo headquarters moved to New York and merges with Nevada National Bank

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1906: Wells Fargo wires the following message ―Building Destroyed. Vaults Intact, Credit Unaffected‖ after the San Francisco earthquake.

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1918: The US Government takes control of the Wells Fargo Brand in the American Railway Express Agency. Everything but the bank in San Francisco is taken over.

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1923: Wells Fargo mergers with Union Trust Company


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1960: Wells Fargo is acquired by American Trust Company shifting the focus to banking but keeping the Wells Fargo name.

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1986: Wells Fargo mergers with Crocker National Corp & Crocker National Bank

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1987: Wells Fargo acquires personal trust business of Bank of America

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1988: Wells Fargo acquires Barclays Bank of California

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1989: Wells Fargo releases online banking to it’s customers

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1990: Wells Fargo acquires 4 other banks: Valley National Bank, Central Pacific Corp., Torrey Pines Group, and Citizens Holdings.

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1995: Wells Fargo agrees to enter into a jointly owned trade bank with HSBC

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1996: Wells Fargo merges with First Interstate Bankcorp.

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1998: Wells Fargo mergers with Norwest making them the 7th largest bank in the U.S.

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2009: Wells Fargo mergers with Wachovia (Wells Fargo, 1998)

Core Products Banking 

Online Banking: Online banking includes mobile and text messaging banking. Wells Fargo offers standard online banking as well as applications for mobile devices and text banking. Currently three are 18.3 million active online banking customers.

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ATM Banking: Wells Fargo currently has 12,196 ATM’s. 8,029 of these ATM’s are envelope free accepting checks and bills directly. We offer email receipts and transactions in seven different on screen language. Our ATM’s also feature voice instructions for visually impaired. The ATM’s are also used to market new products and services to the current customer base.


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Business Banking: Our business banking serves over 2.5 million businesses with annual revenues up to 20 million. Business banking also includes business lending through capital lines of credit, business credit cards, equipment loans, and commercial real estate loans. We offer merchant services and process $108 billion in annual credit card sales. Business payroll services are available as well as year end tax reporting services.

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Wholesale Banking: Wholesale banking is comprised of commercial banking, treasury management, receivables solutions, payments solutions, and technology solutions. Commercial banking offers solutions that are tailored to the middle market businesses with annual revenues from $10-$750 million dollars.

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Government & Institutional Banking: This option provides solutions for government, education, health care, and nonprofit organizations. This can be split into education & nonprofit banking, government banking, health care financial services, public finance investment banking, and sales, trading, and syndicate.

Mortgage 

Home Equity: Wells Fargo is one of the nation’s leading prime home equity originator holding a portfolio of $118 billion serving 2.1 million customers as of December 2010.

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Mortgage: Wells Fargo is the number one total mortgage producer in the United States. We are also the number one mortgage lender to low-to-moderate income home buyers. Wells Fargo is the number two mortgage servicer in the United States. Wells Fargo currently services 12 million loans totaling $1.8 trillion dollars. Wells Fargo mortgage originations through third quarter of 2010 totaled $262.9 billion dollars.


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Credit 

Debit & Consumer Credit Cards: Wells Fargo is the 2nd largest debit card issuer in the United States. We currently have 39.6 million debit card account holders of which

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Personal Credit Management: Personal credit management offers unsecured loans and lines of credit as well as transportation loans, boat loans or other vehicle loans. This segment holds 1.4 million accounts with portfolio balances of $6.1 billion.

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Auto Dealer Services: Wells Fargo is the number 1 used car lender and a leading provider of solutions for the dealer community. Relationships are currentl y held with over 11,000 dealers providing commercial and real estate floor plan lending, aftermarket products and services through warranty solutions, and banking products and services for the dealer community.

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Education Financial Services: Wells Fargo education financial services is one of the nation’s leading private education loan providers with a portfolio of $26.4 billion in private and federal education (student) loans. This segment currently serves 1.9 million customers and has originated more than $6.4 billion in loans in 2010.

Insurance 

Wells Fargo Insurance: Wells Fargo insurance offers personal and small business insurance. They offer property & casualty, life insurance, and other protection products. Wells Fargo insurance currently serves 2.6 million customers.

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Rural Community Insurance Services: One of the United States largest providers of crop insurance operating in all 50 states.


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Investments 

Retail Brokerage: Wells Fargo Advisors (WFA) currently handles $1.2 trillion in client assets. WFA provides planning and advice, asset management, estate planning, retirement planning, and portfolio monitoring.

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Wealth Management: Wealth management and family wealth manages more than 117,000 trust accounts. This service provides private banking, investment management, trust and estate services, financial and business planning services, along with bank based brokerage offered by WFA.

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Retirement: Wells Fargo is a leader in retirement planning. We currenty hold $266 billion in IRA assets. From a retirement 401K account standpoint we hold 3.5 million plans totaling $231 billion in assets.

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Norwest Equity Partners: Norwest Equit y Partners is an investment firm that helps businesses grow into industry leaders. This firm was founded in 1961 and has $30$150 million in investments as well as $4.6 billion in capital.

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Norwest Venture Partners: Norwest Venture Partners (NVP) is a global investment firm that manages $3.7 billion in capital. NVP has subsidiaries in Mumbai and Bengaluru, India, and Herzelia, Israel.

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Lowry Hill: Lowry Hill is a firm that has been established for 24 years providing investment management and financial planning services for high net worth families, foundations, and endowments. Minimal investments start at $10 million and private equity investments of $20 million or more. The retention rate for Lowry Hill is 97%.

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Capital Markets: Wells Fargo Securities offers investment banking and capital markets through equities, investment grade debt, high yield debt, loan syndicates, and advisory.


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Vision Mission Statement Wells Fargo’s mission statement is ―Our Product : SERVICE. Our value-added: FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE” ( Kovacevich ). Richard

Kovacevich has since left Wells Fargo but one thing remains the same, their mission. John G Stumpf took over the reins in 2007 as the CEO, replacing Kovacevich.

Vision Statement Wells Fargo’s vision statement is ―We want to satisfy all our customers’ financial needs and help them succeed financially‖ (Wells Fargo, 2011). The company realizes that this is a rather lofty statement and they go on to say that ―This may sound odd to some, but we don’t believe our first job is to make a lot of money. Nowhere in our vision statement will you find ―we want to make a lot of money.‖ Our first job is to understand our customers’ financial objectives, then offer them products and solutions to help satisfy those needs so they can be financially successful. If we do that right, then all sorts of good things happen for all our stakeholders including our shareholders‖(Wells Fargo, 2011)

Values Statement Wells Fargo states that their values are what they stand for. These core values boil down to 5 primary areas: people, ethics, what’s right for the customer, diversity and leadership. These can be seen in their Vision and Values Statement Page:


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People: We value and support our people as a competitive advantage . We must attract,

develop, retain and motivate the most talented people who care and who work together as partners across business units and functions. We want to give them the training they need to succeed in their work. We want them to be responsible and accountable for their businesses and functions. We want to recognize and thank them for outstanding performance. We believe everyone on our team is important and deserves respect for who they are and how they can contribute to our success. We say ―team members‖ not ―employees‖ because our people are a precious resource to be invested in, not expenses to be managed — and because teamwork is essential to help our customers succeed financially. Products and technology don’t fulfill the promise behind a brand — people do, people who are more talented, more motivated, more energized than their competitors.‖

Ethics: We strive for the highest ethical standards with team members, customers, our communities and shareholders. Honesty, trust and integrity are essential for meeting the

highest standards of corporate governance. They’re not just the responsibility of our senior leaders and our board of directors. We’re all responsible. All 275,000 of us. Corporations don’t have a conscience. People do. Our ethics are the sum of all the decisions each of us makes every day. If you want to find out how strong a company’s ethics are, don’t listen to what its people say. Watch what they do. This is even more important in our industry because everything we do is built on trust. It doesn’t happen with one transaction, in one day on the job, or in one quarter. It’s earned relationship by relationship.


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Our customers trust us to protect their money. They trust us to keep their private information confidential. They trust our tellers to make transactions accurately and promptly. They trust our bankers to recommend the right products and solutions for their needs. They trust our financial consultants to give them the right financial advice. They trust our mortgage salespeople to manage their application process completely, accurately and as quickly as possible. They trust our investment bankers to build the right financial models to analyze business trends, shape investment ideas, raise capital, meet their strategic objectives, and satisfy all their financial needs. We behave ethically when we:

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Value and reward open, honest, two-way communication.

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Hold ourselves accountable for, and are proud of, our decisions and our conduct.

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Only make promises we intend to keep —do what we say we’ll do. If things change, let people know.

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Share information with our colleagues that they need, and let them know if things change.

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Avoid any actual or perceived conflict of interest.

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Comply with the letter and the spirit of the law.

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Acknowledge and apologize for our mistakes, and learn from our errors so we don’t make them again.


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We want compliance and risk management to be part of our culture, an extension of our code of ethics. Everyone shapes the risk culture of our company. We encourage all team members to identify and bring risk forward. We should thank them for doing so, not penalize them. Ben Franklin was right: An ounce of prevention is worth a pound of cure‖.

Do What’s Best for the Customer: We value what’s right for our customers in everything we do.

We’re proud to compete in an industry that’s central to the growth of our national and local economies — industries where we do what’s right for our customers and communities and make a fair profit at the same time. Our customers — external and internal — are our friends. We advocate for their best financial interests. We want them to feel as if they’re part of the Wells Fargo family —that we’re their bank. We put their long-term financial interests first by:

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Starting every discussion with what’s best for them.

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Exceeding the expectations of internal and external customers — we want to surprise and delight them.

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Investing in long-term relationships that we want to last a lifetime.

Speaking and acting with them in mind — being approachable, natural, friendly, respecting their time, empathetic and caring — and speaking in language our customers use and that they can easily understand. We need to share customer information among our businesses to better understand how we can satisfy their needs, but we do not sell information about our customers to third parties nor do we share it with outside parties who may want to market their own products to our customers. Our customers trust us to protect their confidential information.


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They trust us to use that information to provide them with products and services that can save them time and money. We’re committed to protecting their information. We’ve been doing it for almost 160 years‖.

Diversity: We value, and learn from, the diversity of team members, customers and communities. We want all our team members to feel valued for their culture, skills and traits,

and to know they can fulfill their ambition and help our company succeed. We want them to feel comfortable and enjoy being part of Wells Fargo. We can’t be one of the world’s great companies unless we become more diverse and inclusive. It’s a tremendous business opportunity — because it enables us to use creativity and multiple perspectives to respond fast and effectively to customer needs. All our leaders must promote diversity and inclusion in every aspect of our business and be accountable for measurable results. We must do better in recruiting, placing and retaining diverse team members. We also must increase the number of people of color, women and other diverse groups in senior leadership. The spirit of diversity and inclusion doesn’t exist on a balance sheet. It lives in our hearts and minds, and most important, in our behaviors, including:

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Attracting and retaining a diverse work force.

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Making sure diverse candidates are part of the selection process for positions for which we’re responsible.

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Building diverse leaders by rotating them through jobs in a variety of functions and businesses to give them a broad view of the company.


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Seeking out diverse perspectives.

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Supporting the diversity of our team members, customers and communities.

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Earning each other’s mutual trust.

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Getting outside ourselves and taking a clear, objective view of our behaviors — to see ourselves as others see us.

By making diversity a competitive advantage, we can make our company a better place to work, better under stand our diverse customers’ needs, and give customers and community’s outstanding service and deliver more value to our stockholders. For example:

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We integrate supplier diversity into our sourcing and procurement and measure our progress publicly against our goals. We’re committed to spend at least $1 billion annually with certified diverse suppliers by 2013.

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Our Diverse Segments team helps create and execute strategies so we can earn more business from, among others, our Latino, Asian- American, African-American, and Lesbian-Gay-Bisexual-Transgender (LGBT) communities.

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Our leaders and team members participate in diversity councils and team member networks — for professional and leadership development, mentoring and community involvement‖.

Leadership: We’re all called to be leaders . We believe everyone can be a leader — that

leadership is not the exclusive domain of senior managers. We’re all called to be leaders — to be the link between the vision of Wells Fargo and our customers.


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We define leadership as the ―act ‖ of establishing, sharing and communicating our vision and the ―art ‖ of motivating others to understand and embrace our vision. Leaders are accountable. They share the credit and shoulder the blame. They give others the responsibility and opportunity for success. A good leader inspires a team to have confidence in her or him; a great leader inspires a team to have confidence in themselves. When a customer is waiting for an answer, we have to be able to respond to them fast, on the spot. That’s a competitive advantage. Leaders don’t wait for an answer from headquarters. They don’t rely solely on policy manuals at that ―moment of truth‖ when they have to come through for the customer. They consider themselves equal partners in a team effort to achieve our vision.

When the team needs help, leaders pitch in just like everyone else. They’re involved. They’re hands on and available. They take personal ownership for a customer’s problem and don’t let go until that problem is solved.

No one tells them to do it. They just do it.

The best leaders are the best coaches. They don’t rely on authority or force of personality.

They believe in the inherent knowledge and talent of every team member. They believe our people have the answer to every problem and every opportunity.

They empower their people to develop ideas, test them, quantify the results, and then share the good ones with our other businesses and functions throughout the company. Leaders connect to our vision. They share their passion and their discipline about how to make our vision come alive. Only when a team member understands how much the leader cares does the team member then permit the leader to lead.


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Leaders learn from each other. That’s an advantage of being big. We share ideas, give ideas and search for the best ideas across our company. We don’t resist a good idea simply because ―it wasn’t invented here.‖

We’re always searching across the company for the single best way to do something and adopting it wherever it applies — to improve the customer experience, keep customers, attract new ones, increase revenue and reduce expenses. It’s not the strongest or most intelligent who survive in our industry, but those who best adapt to change. By being common where possible and custom where it counts, we can take full advantage of the knowledge and experience of all our businesses and the creativity of all our team members. (Wells Fargo, 2011)

Environmental Analysis The environmental analysis is comprised of three segments, the general environment, industry environment, and the operating environment.

General Environment ―The general environment is composed of trends in the broader society that influence and industry and the firms in it‖ (Ireland, R., 2009, p.45). The general environment is comprised of seven main segments. These segments are demographic trends, economic trends, political/legal trends, sociocultural trends, technological trends, global trends, and physical environment trends. These are expanded on below:

Demographic Trends ―Demographics can be described as the ―changes in population size, age structure, geographic distribution ethnic mix, and income distribution‖ (Ireland, R., 2009, p.45).


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These trends are important to keep an eye on however a business cannot change the demographics of an area. They need to understand the changes and adapt to them in different areas of the United States. Wells Fargo has shown their ability to tailor their services to their market; many of their bankers are multi lingual in order to handle their diverse population. Wells Fargo offers services for low income through high incomes. They have a diversified portfolio and options for every income level.

Economic Trends Our current economy is in despair. The interest rates are down but the unemployment rates are up and so are foreclosures. Wells Fargo had decided to stay out of the subprime market so they fared better than their competitors during the economy downfall. Wells Fargo has been able to pay back the ―bailout‖ funds provided by the federal government and still made significant earnings in 2010. Despite the economy being down Wells Fargo has found ways to help their customers and continue to be profitable in a recession like economy.

Political Trends Political/Legal implications have become very stringent in the banking and mortgage industry. Many changes are going into effect from the financial reform law which is the most recent and pressing trend that plagues the financial industry. Changes are outlined in an article from the Christian Science Monitor, they can be seen below:


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New Consumer Watchdog: ―The bill establishes a Consumer Financial Protection Bureau

within the Federal Reserve. This agency will enforce existing consumer-oriented regulations that apply to big financial firms, mortgage-related businesses, and payday and student lenders. It will also ensure that the fine print on financial services is clear and accurate, and will maintain a single toll-free hotline for consumers to report possibly deceptive practices.‖

Financial Early Warning System: ―The law sets up a Financial Services Oversight Council

that is intended to work as a sort of bureaucratic early warning radar that scans the horizons looking for trouble in financial markets. Composed largely of existing officials, such as the Secretary of the Treasury, the group could require Federal Reserve oversight for big nonbank financial firms whose failure might destabilize the US economy. The council could also vote to require big, troubled companies to sell off assets – but only as a last resort.‖

Breakup Authority: ―Federal regulators will have the power to seize and dismantle troubled

financial firms whose collapse might pull other companies down as well. This resolution authority would be overseen by the Federal Deposit Insurance Corporation. Taxpayers would pay for upfront costs but regulators would then be required to recoup the money by levying fees on financial firms with more than $50 billion in assets.‖

Tighter Leash for Financial Firms: “The bill establishes tight restrictions on the ability of

banks to trade in financial markets with their own funds. Proprietary trading – when banks place market bets for their own profits, instead of their customers – will be banned. Banks will be able to invest sums equal to only 3 percent of their capital in hedge and private equity investment instruments. In addition, the complex financial risk swaps known as derivatives will face comprehensive regulation for the first time. Most will have to be traded through public clearinghouses or exchanges.‖


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Mortgage Reform: ―Banks and other financial companies must review the income and credit

histories of mortgage applicants, to ensure they can afford payments. Firms that bundle mortgages into pooled investment instruments must keep at least 5 percent of these instruments on their books. This is intended to serve as an incentive for the firms to make solid loans – not questionable ones that are then dumped entirely on outside investors.‖ (Grier, P., 2010)

As seen above there are many regulations to ensure that another mortgage or financial meltdown happens on Wall Street. The federal government hopes that these changes will help stabilize the financial industry and regain consumer trust. These changes are at the forefront of every financial institution. The law is beginning to be implemented and it has left many companies scrambling to make the necessary changes to comply with the new law.

Social Trends Wells Fargo has a track record of being a socially responsible company. A quote from the 2009 Corporate Social Responsibility Report says it all ―Our vision for social responsibility builds on our corporate vision of helping our customers – and that means everyone in our communities – succeed financially. At Wells Fargo, we believe our success is tied to their success. It’s a relationship we honor by contributing to better economies and environments, and by creating opportunities for greater prosperity for individuals of all walks of life. In this report, we show how we’re striving to be a strong, stable, and socially responsible financial services company – which benefits us all‖ (Wells Fargo, 2009). Wells Fargo has strategic focus areas for corporate social responsibility. These strategies can be broken down into 5 categories seen below:


Wells Fargo Environmental Stewardship 

Greener products



Building sustainable communities

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Team member engagement

Team Member Engagement 

Health and wellness



Diversity and inclusiveness



Team member giving and volunteering

Ethical Business Practices 

Governance



Code of ethics



Risk management and compliance

Product and Service Responsibility 

Fair and responsible lending and pricing



Access to products and services

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Education and trusted advice

Community Investment 

Philanthropy



Financial education



Supplier diversity



Community partnership

(Wells Fargo, 2009)


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―Wells Fargo has a genuinely diverse workforce. In some Californian stores, one in three workers is foreign born and the bank provides language classes to employees as well as allowing extra time to learn for new employees whose first language is not English‖ (Bradford, 2007). Wells Fargo also won the Leading by Example Award in 2005 from The Center for Women’s Business Research. ―The Leading by Example Award recognizes individuals or organizations that are enlarging the possibilities for women business owners. The recipients of this award set the standard for others by demonstrating the courage and leadership to be a role model, and initiate programs and policies that unleash the full economic potential and power of women entrepreneurs‖ (Bradford, 2005).

Technological Trends Technology trends are becoming more prevalent in the financial industry. It also provides a threat for financial businesses. Many new programs and online firms are available so from a brick and mortar standpoint businesses must ensure they continue to provide a competitive advantage.

Global Trends Although Wells Fargo does not operate globally they do have customers from different countries and ethical backgrounds. It is important for any business to understand what is going on from a global perspective and apply that into their business. The most recent disaster in Japan coupled with the problems in the Middle East is at the forefront of most consumers’ minds. A company should be aware of consumer fears or needs based on global changes. Some great examples of global awareness by Wells Fargo would be their donation to the tsunami relief in Japan. Wells Fargo donated $1.5 million dollars to aid in disaster relief and recovery.


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Physical Trends Wells Fargo’s commitment to the environment can be seen in their Corporate Social Responsibility Report of 2009. Wells Fargo noted that ―We run our company as efficiently as possible and take many other steps to protect our natural resources and benefit future generations. We engage customers and communities in our stewardship efforts to achieve greater impact‖ (Wells Fargo, 2009). Wells Fargo has identified that the environment is one of the most common concerns from the physical environment and they have capitalized on this opportunity to support positive environmental trends.

Industry Environment The industry environment is comprised of entry barriers, supplier power, buyer power, substitute availability and competitive rivalry. Each category of the industry environment will be reviewed and analyzed below:

Entry Barriers ―Potential entrants can be a threat to firms already competing in an industry; by entering that industry, new firms can take market share away from current competitors‖ (R. Ireland, 2009 p.50). Wells Fargo is an established firm that holds the majority of the financial industry along with their major three competitors. New entrants in the financial industry are not considered a threat for Wells Fargo. The financial industry requires a lot of capital and trust. Currently none of the industry has a lot of trust but they do have capital to make investments and decisions that a new entrant to the industry does not have. There is a very high entry barrier in the financial industry.


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Supplier Power Supplier power is mainly related to capital in the financial industry. With capital being harder and harder to obtain the suppliers do hold a lot of power over the financial industry. Fannie Mae and Freddie Mac as well as FHA and VA have increased their guidelines for mortgages to ensure that they are good investments; they are less willing to back mortgages leaving less business for the financial/mortgage sector. The one thing that Wells Fargo has going for it in this area is that they hold a large amount of capital and have the ability to invest and keep mortgages on their own portfolio. This helps lessen the restrictions that are put in place by other investors.

Buyer Power Buyer power is high in the financial industry. Since it is a service based industry if they do not please the consumer they have other options. There are no switching costs to go from one bank to another bank and from a mortgage standpoint there are costs to change but they are often coupled with a lower rate either washing the change or even improving the buyers position. The products available by the financial industry are very similar leaving the buyer lots of other options if they are not happy with the current one.

Substitute Availability ―Substitute products have the potential to influence an industry’s profitability potential. Substitute products are goods or services that perform functions similar to an existing product‖ (R. Ireland, 2009 p.53). The financial industry has four major players that all offer similar products and services. There is a high degree of substitutes available to the end consumer.


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Competitive Rivalry Competitive rivalry exists between Wells Fargo, J.P. Morgan Chase, Bank of America and Citigroup. Wells Fargo has done a great deal of work to differentiate their products from that of their competitors allowing them to keep a good reputation in comparison. The problem with this rivalry is that there are very low switching costs in the financial industry. It is the consumer’s money so they are able to take it away and give it to another competitor if they are unhappy.

Operating Environment The operating environment includes five segments, competitors, creditors, customers, labor and supplies. These segments are dissected below with relation to the financial industry.

Competitors Competition is relatively low; there are only four major choices in the financial industry. This competition has not hindered the performance of Wells Fargo and with the recent acquisition of Wachovia they have gained even more momentum to propel them over the competition. They have a strong foot hold on the banking and mortgage markets.

Creditors Credit is extended by Wells Fargo but Wells Fargo has some major investors. Wells Fargo is a publically traded government backed bank. This means that they offer products from Fannie Mae, Freddie Mac, Federal Housing Administration, and Veteran’s Administration. These are the major investors to Wells Fargo’s mortgage business.


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Customers Customers are a vital part of any financial institution. They must be provided a value based service or they will leave to the competition. Wells Fargo must ensure that they are keeping a competitive advantage and a high level of service delivery to ensure that they keep their current customers.

Labor There is no shortage of labor in the industry. With so many other financial institutions closing due to the economy there are a surplus of qualified individuals to fill the needs of the remaining financial institutions.

Suppliers Supply is not an issue since there is no product being exchanged. This is a service based industry.

Internal Environment Scan Strengths 

19th on the Fortune 500 list in 2010



Among the world’s most 50 respected companies in Barron’s 2010



Ranked #1 Green bank in Newsweek, 2009



Asset Leverage



Market Share Leadership



Unique Products



Reputation Management


Wells Fargo

Weaknesses 

Weak Asset Quality



Limited International Presence



Low Debit Card Market Hold

External Environment Scan Opportunities 

Acquisitions



Asset Leverage



Emerging Markets



Product / Service Expansion



Historically Low Rates

Threats 

Competition



Economic Slowdown



Product Substitution



Government Regulations/Changes



Rising Rates/Inflation


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Long Term Objectives Corporate Strategy Our strategy is to continue to be the premier financial institution while expanding and adapting to the market. We will accomplish this by maintaining an ethical lending perspective while keeping our competitive advantage. Our main focus will be on leveraging a differentiation strategy in order to continue to service a broad spectrum of customers. ―Unlike most banks, Wells Fargo does not heavily segment the market with the aim of attracting only ―good‖ customers. It believes that all customers can be ―good‖, it is just a matter of how the relationship is handled‖ (Bradford, 2007).

Long-Term Objectives 

Expand through mergers and acquisitions



Increase market share



Capitalize on rates

Plan Goals and Implementation Short Term Objectives Expand Through Mergers and Acquisitions 

Review current market for opportunities



Identify key players in the industry



Increase growth



Gain Market Power


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Increase Market Share 

Increase marketing



Evaluate current marketing plan & revise / update



Review competitive advantage



Find new customers in emerging markets



Provide value added services



Research and Development /Innovation



Drive an Aggressive sales campaign

Capitalize on Rates 

When rates are down ensure that staffing is appropriate for volume



When rates are high add additional marketing to continue to bring in business



Anticipate rate changes based on the federal reserve projections

Functional Tactics Functional tactics have been broken down into the different segments that need to be addressed in order to meet the short and long term goals with the differentiation strategy. These segments are marketing, operations, business development, service delivery, and finance. Functional Tactics: Marketing 

Evaluate existing marketing plan



Innovate current marketing plan



Increase research and development budget



Market to the competitive advantage



Cross sell to internal customers



Leverage public relations / publicity


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Functional Tactics: Operations 

Ongoing training and development to foster innovation



Gallup Q12 action plans annually & follow up quarterly



Clifton strengths finder for all employees for self-assessment



Implement post contact surveys for customer contact positions



Create performance based incentive Functional Tactics: Business Development



Create a SWOT for major competitors



Discuss SWOT with upper level management along with a strategy of differentiation



Create a referral process as well as an incentive for customers expanding their product base with Wells Fargo / Wachovia. Functional Tactics: Service Delivery



Provide ongoing training to staff



Provide ongoing training to management



Provide refresher training regarding the cost of losing a customer



Provide training to obtain referrals and leads



Ensure appropriate staffing based on projections Functional Tactics: Finance



Benchmark financials against three major competitors



Establish quarterly goals



Create performance based bonuses and adjust budget



Add additional funding for research and development in current budget


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Organizational and Leadership Structure A functional structure will be used to implement our strategy. This will consist of splitting up goals and ensuring that each segment specializes in the area they will work in. They will need to focus on communication and coordination across all channels due to the level of specialization that is being placed on each item.

Critical Success Factors In order for Wells Fargo to meet their strategic plan there needs to be many pieces in place. Wells Fargo needs to ensure that they have enough diversification to make them stand out from the competition. Being a financial institution the only real way to diversify is to provide the best service delivery and value added options. In order to create excellent service delivery you first need to hire the right people, and then provide constant training. Wells Fargo has a history of being able to maintain and manage change, this skill is critical to the success of the diversification plan. Wells Fargo has a very diverse portfolio so ensuring that all employees that have contact with customers understand the other products and services offered and how they can help the consumer; this will lead to more cross selling opportunities. The main points that need to be focused on are hiring, training, development, sales, and marketing. These items will need constant review and evaluation to ensure a smooth plan implementation.


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Controls and Evaluation Premise Controls A premise control is ―a type of strategic control that involves identifying key assumptions and premises for plans and then gathering data systematically to monitor their ongoing accuracy‖ (Planning Skills). Premise controls will be put in place to review change management situations and how they are handled as well as the external environment changes with emphasis on the competition.

Implementation Controls Implementation Controls will be used to review budgeting compared to previous years and ensure that the changes from the strategic plan are having a positive impact. The short term objectives will also be reviewed and analyzed quarterly.

Concurrent Controls Concurrent Controls will be used to measure the progress of the activities being implemented in the strategic plan. The concurrent controls will review items such as the survey and ensure that it is asking the right questions to achieve the desired responses from the customers. Also, the training and development will be constantly reviewed to ensure that it is effective and up to date. Overall each segment of the planning stage will be reviewed and analyzed during implementation.


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References Astrup, K.. (2010). Spotlight on THE STRATEGIC PLAN. International Journal of Government Auditing, 37(4), 20-23. Retrieved March 20, 2011, from ABI/INFORM Complete. (Document ID: 2184292441). Crain, M.. (2010). A Competitive Analysis of Business Valuation Services. Journal of Accountancy, 210(5), 36-40. Retrieved March 20, 2011, from ABI/INFORM Complete. (Document ID: 2185836801). Grier, Peter . (2010, Jul 21). Financial Reform Law: What’s in it and how does it work?. Retrieved March 20, 2011, from The Christian Science Monitor: http://www.csmonitor.com/USA/Politics/2010/0721/Financial-reform-law-What-s-init-and-how-does-it-work Ireland, R., Hoskisson, R., & Hitt, M. (2009). Analyzing the General Environment. In R. Ireland, R. Hoskisson, & M. Hitt, Understanding Business Strategy . Mason: SouthWestern CENGAGE Learning . Kovacevich, R. (n.d.). About Us . Retrieved Jan 18th, 2010, from Wells Fargo Bank: http://www.chamberorganizer.com/glendalechamber/mem_72962855 Lepsinger, R.. (2010). THE EXECUTION IMPERATIVE: THE GAP-CLOSING TRADE SECRETS OF COMPANIES THAT CONSISTENTLY GET THINGS DONE. Ivey Business Journal Online,. Retrieved March 20, 2011, from ABI/INFORM Complete. (Document ID: 2201739811). Planning Skills (n.d.). Premise Control. Retrieved March 20th 2011, from Planning Skills: http://planningskills.com/glossary/195.php Rind, C. (2011, Jan 17). Wells Fargo SWOT Analysis. Retrieved March 20, 2011, from Free SWOT: http://www.freeswotanalysis.com/swot-analysis-of-banking-sector/162-wells-fargoswot-analysis.html

Thomson, J.. (2010). Staying on Track in a Turnaround. Strategic Finance, 92(6), 4350. Retrieved March 20, 2011, from ABI/INFORM Complete. (Document ID: 2211204081). Wells Fargo accepts center for women's business research award. (2005). Women in Management Review, 20(7/8), 533-534. Retrieved March 20, 2011, from ABI/INFORM Complete. (Document ID: 968130211).


Wells Fargo Strategic Plan

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