Memo to Managing Partner

Memo to Managing Partner

Background

Edward Jones was founded in the year 1922. In the year 2006, this company became the fourth largest dealer in U.S. The aim of writing this memo is to perform analysis of the company in order to identify possible options and provide recommendations on the basis of those available options.

Problem Statement

This company encounters firm competition from some traditional dealers like Merrill Lynch, Charles Schwab and TD Ameritude. This has largely reduced its market share and profitability, because many customers prefer to approach online dealers, because of the advancement of information technology. In the company, there is need of brining improvement in the department of information technology in order to properly manage the online transactions.

External Analysis

Opportunities

The company has utilized many technological advances, for example, online retailing, to provide services to its various clients. It also includes retailing on internet that helps the organization to perform real time retailing. In addition, the company has also targeted some institutional businesses, which own significant market shares. Edward Jones Company has also expanded its demographics globally that provides the company the benefit of dealing with diverse customers.

Threats

The competitors of Edward Jones have been increasing progressively. At present, the company has eight competitors that provide same services in the trading market. The downturn of economy has also been a threat for the company as the company attains lower profit margins. In addition, the substitutes that are present in the trading market are also posing threat to the company. Edward Jones has also poor market performance in the previous years (Beamon, 1998).

Porters Five Forces Analysis

Substitutes

The progress of Edward Jones has greatly been dependant on technology. On the other hand, the advancement in technology has also posed a significant threat for the company. It is due to the reason that loyalty, which is experienced by customers in the financial market, is undefined. This means that in order to be competitive, the company has to make certain that it completely meets requirements of its customers. This clearly shows that likelihood of introducing substitutes is inevitable and this must be addressed in an adequate manner (Kaplinsky, 2000).

Threat of New Entrants

In the market, new entrants get with diverse and similar interests. For Edward Jones, in order to deal with some new entrants, the company must make certain that it maintains and attracts its customer base. In the previous years, the company has strived to maintain its customer base by developing a strong relation with its customers, and by setting up earnings for traditional investors. Facilities of training, employing legal candidates and setting up a location for training mainly require the large amount of monetary resources from capital investment.

Suppliers

The company operates in a market that has not been developed in terms of the power of suppliers. This means that the supply trading has various substitutes. The major reason that why people get stock is due to the reason that they need to gain profit from ...