Strategic Management Project

Iryna Trygub

Amit Shroff

Alex Downs

Prasanna Gopalan

Hanqian Liu

Background

• Global leader and international provider of financial services and investment resources

• Worldwide assets under management was $999.8 billion

• Customer accounts was 67.6 million

• Worldwide number of employees was 35.2 thousands

Multidivisional Structure

Fidelity Brokerage Company

FidelityE Business

Fidelity Management& ResearchCompany

FidelityCapital

Companies

FidelityCorporateServices

Fidelity Corporate Systems &Processing

Fidelity Institutional

Service Company

Fidelity EmployeeServices

Company

CEO &

Board of Directors

Characteristics of the Organizational Structure

• Complex structure

• vertical differentiation

• Relatively flat structure

• Wide span of control

Characteristics of the Organizational Structure

• Decentralized approach High level of differentiation

• Highly complex forms of integration mechanism

Fidelity Brokerage CompanyExecutive Manager

Fidelity PersonalInvestments

Institutional Brokerage Groups

National FinancialServices

Private

Wealth Management Group

Retirement Group

Customer Service

Fidelity CustomerMarket & Development

Capital Markets

Client Services

Sales and Relationship Mgmt

Market & Product Development

Mutual Funds

Margin Group

Brokerage Processing

Risk Management

Finance, Acting & Regulatory Control

Treasury & Tax Services

Geographic Structure

• 8 regional centers in 7 states: Smithfield, RI; Boston, MA; Western Region; New York city; Southwest Region; Marlborough, MA; Merrimack, NH; Midwest Region.

• International affiliates in 24 countries on 5 continents

Corporate Culture

• Stimulates friendly communication

• Supports a flexible, high-performance working environment, in which creativity and innovation are rewarded

Norms and Values• Building partnerships among internal customers

and employees to provide effective services and solutions

• Re-engineering business and technology processes to improve customer responsiveness and profitability of the company

• Selecting and developing employees who are committed to excellence

• Providing an environment where excellence is fostered, recognized and rewarded

Rewards

• Individual reward

• Group reward

Individual Rewards

• Bonuses

• Profit Sharing

• Promotions

• Educational Benefits

• Non-Monetary rewards

Strategic Controls

• Financial Control

• Output Controls

• Behavioral Control

Financial Control

• Stock price

• Return on Investment

Output Controls

• Benchmarking

• Analysis of customer survey

Behavioral Control

• Operating Budget

• Standardization

Improvements

• Fidelity needs to look at how the changing market conditions

Improvements

• Adjust Structure of Fidelity

• Globalization

• Deregulations • Changes in information

technologies

Improvements

• Adjust Reward System of Fidelity

• Subjective standards

• Long term reward system

Obstacles to Change

• Repositioning strategy

• Private ownership

Repositioning Strategy “In personal Investments, we developed a

number a new brokerage services, and strengthened our commitment to the high net worth customer. This is essential at a time when our competitors are providing more and more specialized services to reinforce their ties with this important group of investors. At the same time, we must reaffirm our long-term commitment to all categories of investors, no matter what their net worth.” Chairman's letter 2000 annual report

• .

Repositioning Strategy

“I want us to be seen as what we are becoming – a firm that can provide solutions for customers across their whole range of financial needs.”

• Chief Operating Officer Robert L. Reynolds

Repositioning strategy

• Fidelity has not clearly defined their vision.

• Why Good Companies Go Bad • By Donald N. Sull

• Active inertia

– Need to act appropriately

Private Ownership

• Expand globally

• Fidelity – 24 countries

• Merrill Lynch – 44 countries

• JP Morgan – 50 countries

Example• Fidelity developed the “Private Wealth

Management group” in March of 2000. • Merrill Lynch “Private Client Group”

20,200 Financial Consultants in nearly 1000 private client offices in 34 Countries.

• This Merrill Lynch group has grown at a compounded annual growth rate of 15% over the last 5 years and has over $1.5 trillion dollars under management.

Conclusions

• Repositioning strategy

• Vision

• Write a mission statement

• Don’t try to be the best at every thing. Build on core competencies.

Conclusions

• Private ownership

• Expand globally

• Borrow at AAA credit rating, or go public to raise capital