E*TRADE FINANCIAL CORPORATION

Internal and External Environmental Analysis

Internal and External Environmental Analysis

Introduction

The study is related to the internal and external environmental analysis of E*Trade Financial Corporation. E*TRADE Financial is a financial services provider organization which offers online brokerage services to retail investors and also other similar services and products to the investors. Organizational strategy is a systemic concept, made up of essential parts which are independently distinguishable but which together forms a new and better strategy which ultimately affect the whole organization in terms of efficiency and effectiveness of the organizational productivity. Therefore, E*Trade Financial Corporation should have knowledge about the internal and external environmental of the company.

SWOT Analysis

E*Trade Financial Corporation is a financial services provider organization which offers a wide series of financial solutions to the customers. The company Trade has been a pioneer in online stock broking and has been consistently ranked among the top online brokers. The company's strong brand and solid business model enables it to weather bear markets and recessions while growing in bull and decent economic growth periods. However, higher leverage, credit loss and increasing provision could impact the company's revenue and margins.

Strengths

Strong market position in online brokerage provides revenue visibility

Diversification into banking strengthening its business model

Positive customer metrics providing scope for return to profitability

Weaknesses

Exposure to mortgage loan portfolio leading to loss

Relatively high leverage affecting the company's financial position and performance

Increasing credit loss and provisions adversely affecting profitability

Opportunities

New products/services launches and initiatives provide scope for profitable business growth

Acquisitions and alliances likely to increase market share

The positive outlook of the asset management likely to increase revenues

Threats

Increase in FDIC Insurance premiums likely to affect banking income

Increasing identity theft or other fraud could harm E*Trade's reputation and financial performance

Increasing competition likely to impact commission and market share

Compliance with regulations likely to affect margins

Strength

For the strategic performance management strengths are the key forces for a company as it identifies and help the organizations to move towards the goals and objectives that were previously set by the management which ultimately affect the overall efficiency of the organization like E*Trade Financial Corporation (Hannan and Freeman, 2009). E*Trade has been a pioneer in online stock broking and has been consistently ranked among the top online brokers.The company has been ranked as the number one online broker by SmartMoney for the third consecutive year. According to Barron's, E*Trade was awarded four out of five stars in 2010 'Online Brokers Survey' and described it as one-stop shopping destination, highlighting the company's mobile-trading technology, and listed among the best firms for both long-term and international investing. Strong market position in online brokerage provides revenue visibility for the company.

In addition to this, E*Trade management monitors number of metrics in evaluating company's performance. In FY2010, the company's end of period brokerage accounts increased to 2,684,311, as compared to 2,630,079 in FY2009, and 2,515,806 in FY2008. This represented a CAGR of 3.3% over the period 2006-10. Brokerage related cash increased to $24.5 billion in FY2010, as compared to ...