A Comprehensive Written case analysis for Wells Fargo Corporation- 2009

The year of 2009 witnessed continued deterioration in the housing and credit markets, high
unemployment rates, and tight credit. Many banks are struggling and many have recently
failed, including Colonial National and Guaranty Financial Group. Like many banks today,
Guaranty had more than $3 billion of securities backed by adjustable-rate mortgages.
Delinquency rates on their holdings soared as high as 40 percent before federal officials
seized the bank in August 2009. Many homeowners today cannot make mortgage payments.
The value of houses has dropped below the amount borrowed, causing great problems for all.
This is the environment that Wells Fargo Bank and its competitors in the financial services
industries face as they look to the future.
1 Wells Fargo Corporation vision, mission, objectives, and strategies
Wells Fargo Corporation vision.
As Wells Fargo’s chairman and CEO, Richard M. Kovacevich, discusses the bank’s vision at
length. He said, “This is not a task. This is a journey. Every journey has a destination. To get
to that destination, you need a vision. Ours is an ambitious one.” Kovacevich further stated,
“We are a big company. We will continue to grow not to become bigger but as a result of
getting better. Regardless of how big we are and how much territory we cover our team
shares certain values that hold us together wherever we are and whatever we do.”
Wells Fargo puts considerable emphasis on its culture and image as seen by the following
values:
• Known by Our Own Team Members. “We’ll be known as a company that believes in
people as a competitive advantage, a great place to work, an employer of choice, a company
that really cares about people, knows the value that a diverse work force can bring, that
encourages innovation: new and better ways of serving customers.”
• Known by Our Customers. “We want to be known by our customers as a financial partner,
for outstanding service and sound financial advice, satisfying all of their financial needs and
helping them to succeed financially. Our customers, external and internal, are our friends.
They’re the centre of everything we do.”
• Known by Our Communities. “We’ll be regarded as the premier financial services company
in each of our markets. We’ll promote the economic advancement of everyone in our
communities including those not yet able to be economically self-sufficient, who have yet to
share fully in the prosperity of our extraordinary country. We’ll be known as an active
community leader in economic development, in services that promote economic self-
sufficiency, education, social services and the arts.”

• Known by Our Shareholders. “We’ll be known as a great investment. We’ll have financial
results, not only among the very best in the financial services industry, but among the entire
Fortune 500. Today, we’re the only bank in the United States with a Moody’s credit rating of
“Aaa” [the highest possible rating]. Wells Fargo also believes that competing effectively and
ethically are both at the forefront of its long-term objectives. Wells Fargo expects all of its
team members (employees) to adhere to the highest possible standard of ethics and business
conduct with customers, team members, stockholders, and the communities that it serves
while complying with all applicable laws, rules, and regulations that govern its business. Its
aim is to promote an atmosphere in which ethical behavior is well recognized as a priority
and practiced throughout the organization. The following statement by Richard Kovacevich,
the chairman and CEO, summarizes this emphasis: “Integrity is not a commodity. It’s the
most rare and precious of personal attributes. It is the core of a person’s—and a company’s—
reputation.”
Wells Fargo Corporation mission
Wells Fargo provides banking, insurance, investments, mortgage, and consumer
finance services for more than 25 million customers through over 6,000 stores, the Internet,
and other distribution channels across North America and elsewhere internationally. The
company’s statement says, “We’re headquartered in San Francisco, but we are decentralized
so every local Wells Fargo store is a headquarters for satisfying all our customers’ financial
needs and helping them succeed financially.”
Wells Fargo strives to be the number-one financial services provider in each of their markets.
As can be seen below, it has made great strides in that direction in the United States:
• Number-one small business lender
• Number-one agricultural lender
• Number-two debit card issuer
• Number-two prime home-equity lender
• Number-three mutual fund provider among U.S. banks
Wells Fargo Corporation objectives and strategies.
Wells Fargo also believes that competing effectively and ethically are both at the forefront of
its long-term objectives. Wells Fargo expects all of its team members (employees) to adhere
to the highest possible standard of ethics and business conduct with customers, team
members, stockholders, and the communities that it serves while complying with all
applicable laws, rules, and regulations that govern its business. Its aim is to promote an
atmosphere in which ethical behaviour is well recognized as a priority and practiced
throughout the organization. The following statement by Richard Kovacevich, the chairman
and CEO, summarizes this emphasis: “Integrity is not a commodity. It’s the most rare and
precious of personal attributes. It is the core of a person’s and a company’s reputation.
2 New developed Wells Fargo Corporation vision and mission statement.
Wells Fargo prioritizes financial success for their customers in their mission and vision
statement. Their values centre on their views of what is right for their customers and
effectively motivate their employees. To fulfil their customers’ financial needs, Wells Fargo
aims to provide reliable guidance, build a trustworthy relationship, and value leadership,
ethics, and inclusion in their mandate. However, after several malpractices in the past and
ongoing government scrutiny, the company has fallen short on some of its promises. We will
discuss Wells Fargo Mission Statement and Vision statement.
 Vision statement
Satisfy customers. In this case, Wells Fargo strives to show that the company is not all
about its personal growth. Instead, it directs its resources to the needs of who it serves –
the customers. It does this by personalizing its products and services to cover all
individuals and corporations in various capacities. The varieties it provides are proof that
it has succeeded in meeting the needs of this component.
Financial needs. Wells Fargo is all about finances. The specialization is an element that
has distinguished the company from the rest because it emerges as a dependable body in
this sector. Moreover, it has no conflicts of interest as all its operations and resources are
suited for this primary purpose.
Help them succeed. The management approaches adopted by Wells Fargo speaks volume
about the intention of the company. In everything that it does, Wells Fargo has proven
beyond doubt that it seeks to change the financial situation of its customers for the better.
Mission Statement
The company stresses that personal growth and profit are not their main priority. Wells
Fargo mission statement is “we want to satisfy all of our customers’ financial needs”.
Their mission first and foremost is to assist customers for their financial success and to
“satisfy their financial needs.” These aims are being achieved through the company’s
variety of services. 

3 Wells Fargo Corporation external opportunities and threats.

Wells Fargo Corporation opportunities
In the fall of 2008, Wells Fargo considered acquiring Wachovia Bank. Wachovia,
headquartered in Charlotte, North Carolina, had been a rising East Coast bank
growing by leaps and bounds over the previous decade. Since Wachovia’s merger
with First Union Bank a few years before, Wachovia seemed to be very well
positioned to take the next step in order to compete with the likes of Bank of America,
Citigroup, Merrill Lynch, and even Morgan Stanley. However, all was not well with
Wachovia, which had its own subprime mortgage problems. It was also
overcommitted in credit default swaps, the same issue that brought down Bear
Stearns, Merrill Lynch, and Lehman Brothers. Wells Fargo agreed to acquire all of
Wachovia’s almost 2.2 billion shares of stock for $7 per share. It also announced it
would issue $20 billion in new shares to pay for the transaction. Wells Fargo was
purchasing an extensive banking system, especially strong in the East but saddled
with a large portfolio of subprime mortgages. So although there would be continued
downward pressure on housing prices, the value of Wachovia could drop. Wells Fargo
management could only make an educated guess of potential loss. Wells Fargo and
Wachovia saw this outwardly as a tremendous marriage of convenience presenting
opportunities for one and survival for the other. Robert Steele, CEO of Wachovia,
stated that the deal would enable Wachovia to remain intact and preserve the value of
the integrated company without government support. Wells Fargo CEO Richard
Kovacevich was quick to add that “the agreement provides superior value compared
 to the previous [Citigroup] offer to acquire only the banking operations of the
company and because Wachovia shareholders will have a meaningful opportunity to
participate in the growth and success of a combined Wachovia-Wells Fargo that will
be one of the world’s great financial services companies.” On the surface, the fourth
and fifth largest banks in assets appear extremely similar. Both were oversized super-
regional’s that had never seemed to have national aspirations. Both emphasized
consumer banking over lending to big institutional clients. Both were built on a
platform of strong sales culture and attention to detail in operations.

Wells Fargo Corporation threats.

The resultant combined company had total deposits of $787 billion and assets of $1.42
trillion, more than doubling Wells Fargo’s totals on both counts. The bank will operate more
than 10,000 locations and currently employs 280,000 people, although there will be
anticipated downsizing because of duplication of labour and functions. On December 31,
2008, the deal was completed, creating according to Wells Fargo’s press release “The Most
Extensive Financial Services Company, Coast-to-Coast in Community Banking.” The new
entity was traded on the New York Stock Exchange under the symbol WFC; the Wachovia
symbol WB was retired.
4. Competitive Profile Matrix (CPM) of Wells Fargo Corporation
Weels Fargo Bank of Citigroup US Bancorp Industry
America Average
Market Cap 130.52B 151.06B 25.89B 42.60B 19.63B
Employees 269,900 283,000 279,000 57,904 42.31K
Qtrly Rev 106.20% 33.10% 68.00% -14.40% 11.70%
Growth
Revenue 42.84B 62.09B 34.69B 10.15B 7.98B
Oper 21.64% 15.44% -57.85% 26.57% 23.69%
Margins
Net Income 3.58B 3.47B -23.79B 1.46B n/a

EPS 0.912 0.597 -3.651 0.820 0.91

5. External Factor Evaluation (EFE) Matrix of Wells Fargo Corporation

Opportunities weight rating Weighted score
The Wachovia 19% 2 0.38
Acquisition
Expanding securities 15% 4 0.6
Use of the Internet 18% 3 0.54
and e-commerce
Threats
economic recession 14% 3 0.42
lack of regulation 16% 2 0.32
changes in the 18% 2 0.36
banking industry
 total 100% 2.62

6. Wells Fargo Corporation internal strengths and weaknesses

. Wells Fargo Corporation internal strengths
Wells Fargo is a storied name in American Old West folklore going back to the days
of the stagecoach. Wells Fargo is the result of over 200 mergers including, most recently,
Wachovia. The vast majority of these acquisitions, except for Wachovia, involved financial
institutions in the far western part of the United States. An important acquisition came in
1998 when San Francisco–based Wells Fargo acquired Norwest Corporation in a stock swap
that valued Wells Fargo at $34 billion. The result was a San Francisco–based bank with
branches in 21 states in the West and Midwest, $191 billion in combined assets, and almost
6,000 service outlets worldwide. Because Norwest was the country’s largest mortgage
underwriter, the new bank became a major force in that market. It also had a presence in
Canada, the Caribbean, Latin America, and other countries. By the end of 2008, Wells Fargo
had built a very creditable reputation and was widely recognized as an industry leader. The
following statistics based on industry sources and government statistics clearly show its size
and strength:
• 41st in revenue among all U.S. companies as ranked by Fortune
• 17th most profitable company in the United States
• 33rd largest employer in the United States
• 18th most respected company in the world as ranked by Barron’s
• “Aaa” credit-rated by Moody’s
• The only Standard & Poor’s “AAA” bank in the United States.
• Among the top 50 companies as ranked by Diversity, Inc.
• Retail Banker of the Year according to U.S. Banker
• Number-one commercial real estate lender [number of transactions]
• 18th among the world’s most valuable brands according to the Financial Times.
Wells Fargo has been a leading innovator in the use of the Internet and is in the
forefront of using e-commerce in the financial industry. Wells Fargo has been fortunate to
sidestep most of the subprime market mess and the accompanying derivative credit
meltdown. Senior management has shown keen acumen in not pursuing the easy path and has
moved forward to capture more and more of the mortgage and banking business in its
geographic area. Wells Fargo has a vision (noted earlier), and its strategies complement that
vision. At the end of 2008, Wells Fargo was in an enviable position as the largest financial
institution headquartered in the western United States. It has an unbroken record of paying
increasing dividends since 1995, when it paid $0.0525 per share. In 2008, the dividend had
increased to $0.34 per share. A strong balance sheet and the ability to steer through the
pitfalls that plagued many of its larger competitors have allowed Wells Fargo a stronger force
in the banking industry in 2009.
 Wells Fargo Corporation weaknesses
The first half of 2009 was not kind to the banking industry or Wells Fargo. Moody’s Investor
Service reduced Wells Fargo’s debt rating two levels during January, citing a “significantly
weakened” capital position and the likelihood that Wachovia assets would hurt earnings. The
shares lost half their value in January, falling to the lowest level since 1997. On March 6,
2009, Wells Fargo cut its dividend 85 percent to a nickel per share in a move to attempt to
solidify its balance sheet banks have all but disappeared. The large national banks have
become bigger while community banks still exist to satisfy local communities. All of the
larger banks worldwide are attempting to grow globally. The lack of regulation today has
blurred the products and services banks offer. Given the lingering economic recession and
changes in the banking industry, how should Wells Fargo Bank proceed from a strategic and
operational standpoint during the next few years? This is the question facing the Wells Fargo
board and its chairman and CEO.

7. Internal Factor Evaluation (IFE) Matrix of Wells Fargo Corporation

internal strengths Weight Rating Weighted scored
Higher in 12% 2 0.24
revenue among
all U.S.
companies as
ranked by
Fortune

most profitable 12% 2 0.24

company in the
United States
1.71
most respected 9% 3 0.36
company in the
world as ranked
by Barron’s

“Aaa” credit- 9% 3 0.27

rated by Moody’s
Retail Banker of 11% 2 0.22
the Year
the world’s most 9% 2 0.18
valuable brands
according to the
Financial Times
commercial real 10% 2 0.2
estate lender
Internal
weaknesses 1.03
Lack of 8% 4 0.32
regulation
economic 9% 3 0.27
recession
Dividend cutting 11% 4 0.44
100% 2.74

8. Prepared a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix of Wells

Fargo Corporation.
Strengths Weaknesses
•higher in revenue among all U.S. The first half of 2009 was not kind
companies as ranked by Fortune to the banking industry or Wells Fargo.
• most profitable company in the United Moody’s Investor Service reduced Wells
States Fargo’s debt rating two levels during
• largest employer in the United States January, citing a “significantly weakened”
• most respected company in the world as capital position and the likelihood that
ranked by Barron’s Wachovia assets would hurt earnings. The
 • “Aaa” credit-rated by Moody’s shares lost half their value in January,
• The only Standard & Poor’s “AAA” bank falling to the lowest level since 1997. On
in the United States. March 6, 2009, Wells Fargo cut its dividend
• Among the top 50 companies as ranked by 85 percent to a nickel per share in a move to
Diversity, Inc. attempt to solidify its balance sheet banks
• Retail Banker of the Year according to have all but disappeared. The large national
U.S. Banker banks have become bigger while
• Number-one commercial real estate lender community banks still exist to satisfy local
[number of transactions] communities. All of the larger banks
• the world’s most valuable brands worldwide are attempting to grow globally.
according to the Financial Times The lack of regulation today has blurred the
products and services banks offer. Given the
lingering economic recession and changes
in the banking industry, how should Wells
Fargo Bank proceed from a strategic and
operational standpoint during the next few
years? This is the question facing the Wells
Fargo board and its chairman and CEO.

Opportunities Threats
Wells Fargo considered acquiring The resultant combined company had total
Wachovia Bank. Wachovia, headquartered deposits of $787 billion and assets of $1.42
in Charlotte, North Carolina, had been a trillion, more than doubling Wells Fargo’s
rising East Coast bank growing by leaps and totals on both counts. The bank will operate
bounds over the previous decade. Since more than 10,000 locations and currently
Wachovia’s merger with First Union Bank a employs 280,000 people, although there will
few years before, Wachovia seemed to be be anticipated downsizing because of
very well positioned to take the next step in duplication of labour and functions. On
order to compete with the likes of Bank of December 31, 2008, the deal was
America, Citigroup, Merrill Lynch, and completed, creating according to Wells
even Morgan Stanley. Fargo’s press release “The Most Extensive
Financial Services Company, Coast-to-
Coast in Community Banking.” The new
entity was traded on the New York Stock
Exchange under the symbol WFC; the
Wachovia symbol WB was retired.

9. Recommended specific strategies and long-term objectives for Wells Fargo

Corporation
The success of Wells Fargo in the Banking and Finance industry can be attributed to its
unique business strategy. The firm must develop a powerful business strategy that is guided
by specific principles. The company’s vision is “to satisfy the customers’ financial needs and
help them succeed financially”). The firm should embraces the power of determination,
persistence, and hard work to ensure the targeted goals are realized. The firm must use its
core values to build sustainable relationships with every client. The created relationships
make it easier for the company to discover the diverse needs of the customers. By so doing,
the company must develop a powerful model that can deliver the best support to the
customers. In order to achieve its best goals, Wells Fargo must create new teams that can deliver
exemplary results. The firm should create new opportunities for its customers in different regions. The
move to understand the unique financial needs of the customers plays a critical role towards reshaping
the business strategy. The company must use its financial resources to innovate and develop superior
financial products. The next step is channelling such products to the targeted customers. The firm’s
ultimate objective is to ensure the company’s customers realize their potentials.

The firm’s strategy must be supported by the concept of risk management. The risk
management department is always committed to the emerging needs of different customers.
The firm must use effective capital management to ensure its business more sustainable and
safe. The company “monitors the financial needs of its clients in order to address risk before
its affects them
This approach explains why the company has specialized in a number of products such as
mortgage, investment, and banking. The managers should work tirelessly to avail the
company’s services to more people across the globe. The firm is also distribute its diversified
earnings equally. This strategy will observed to support the firm’s profitability and business
performance). This analysis shows clearly that Wells Fargo must use a powerful business
strategy that is guided by its core values and principles.
Recommended Long-term objectives for Wells Fargo Corporation
. Maximize the value of the shareholders by minimizing risk
. Hiring highly knowledgeable personals in order to facilitate a better service
. Satisfy customers' financial needs and help them succeed financially.
.Be leader in financial services in areas of team member engagement, customer services and
advice, shareholder value, innovation, corporate citizenship

10. Specification of how our recommendations can be implemented and results we

expect.
In order to implement the strategies we offer is done by establishing specific rules and
principles that guide the organization. Motivating the employers is a crucial issue that the
organization should consider as to make the workers to fulfil their responsibilities
accordingly with the value and objective of the organization. The organization should be
engaged in insurance activities in order to minimize risks and uncertainty. In order to satisfy
the customers need and maximizing their value the organization should create, control and
evaluate a good and better system that connect the customer and the organization. By doing
those actions it expected that the employers will have better working moral, maintain the
existing customers and also expected to attract others and risk free environment that enable
the organization to control any threats that affects the financial operation of the organization
this helps to maximize the value of the shareholders and also the value of the company.

11. Recommended specific annual objectives and policies .

Every employee is expected to be a leader. This means that each of us must take
responsibility for maintaining Wells Fargo’s reputation and for ensuring the organization
should always act with honesty and integrity. Each of the member of the organization must:
• Act consistently with company’s expectations.
• Be familiar and comply with this Code; applicable laws, rules, and regulations; and
corporate and business policies. Pay particular attention to the policies that pertain to your job
responsibilities.
• Be a role model for ethical leadership, and support your fellow employees when they ask
questions and raise ethical concerns.
• Help to maintain a culture where everyone feels comfortable speaking up.
• Never pressure an employee or third-party service provider to do something for you that is
outside the scope of standard business practice.
• Complete required training in a timely manner.
• Cooperate and be honest and accurate when responding to any formal investigation,
regulatory examination, audit or similar type of inquiry

12. Recommended procedures for strategy review and evaluation

The process of strategy evaluation consists of following steps:

 Fixing Benchmark of Performance:
 Measurement of Performance:
 Analysing Variance:
 Taking Corrective Action:
 Quantitative Factors: