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E *TRADE

Financial Corp.-2004
Presented by: Megan Dow, Kristin Belanger, and Angle Bourgoin

Overview of E*TRADE Presentation

Overview of E*Trade History Stocks Stock Information Goals and Objectives The Two Divisions Banking Brokerage BCG Their Mission and Vision Statement New Mission and Vision Statement External Opportunities and Threats CPM EFE Internal Strengths and Weaknesses IFE

Analysis SWOT Matrix SPACE IE Matrix Grand Strategy Matrix Key Ratios Different Strategies QSPM Decisions Implementation Evaluation Update! References

Overview of E*Trade

E*Trade Financial Corp. or E*Trade is active in 10 known as E*Trade Group other countries Inc. (changed name later Germany on) in an online brokerage firm that trades equities, Australia keeps portfolios updated Canada and obtains market New Zealand information. Denmark E*Trade receives commission from each trade Hong Kong E*Trade offers 15,200 ATM Japan Machines Korea E*Trade is becoming a Sweden complete financial support by offering every service United Kingdom you need in your financial life.

History

Founded by Bill Porter, a physicist & inventor in 1982. There was an opportunity to capitalize on potentially discount brokerage so Bill Porter came up with the idea that allows individuals to use their own personal computers to invest, and this would pay less that traditional brokerage fees. In 1992 the company became E*Trade Securities Inc. and began offering online investing services through AOL and CompuServe.

1996 There was an increase in E*Trade services by them launching www.etrade.com website. In August the Company went public (IPO) and had another stock offering 1 year later when Porter handed the company over to Christos Cotsakos. Cotsakos has over 20 years of senior management experience at Federal Express and A.C. Neilson Under new guidance E*Trade became a global leader in online personal financial services with branded web sites around the world.

History Continued
2000
E*Trade bank introduced the first purchase of Telebanc Financial (now E*Trades Financial) an online bank with more than 100,000 deposits. E*Trade bought Card Capture Services (now E*Trade Access) the operator of 9,000 ATMs across the U.S. E*Trade acquired Canadian firm VERSUS Technologies; a provider of electronic trading services. The International Capital announced plans to offer IPO to European Investors

2001

E*Trade entered consumer leading business when acquired online mortgage originator Loans Direct (now E*Trade Mortgage). E*Trade Mortgage had 3,400 employees at the end of 2003 which was only down 5 employees from 2003

2003

revenues increased to $2008 Million and net income increased to $203 Million.

Info about ET
Traded on NYSE under symbol ET
Before 2/15/01 traded on Nasdaq under EGRP

The option symbol is ET plus 2 letters indicating month & strike price. The first IPO 8/96 net proceeds 46.4 million The secondary IPO 8/97 net proceeds 188.8 million.

Goals and Objectives


Goals To provide financial solutions to retail and institutional customers globally. In the Internet economy, the only competitive advantage is speed. Weve got to move quickly and powerfully with one another to achieve our goals. We must operate in a global context always ready to adapt to emerging opportunities. We thrive on chaos. We feel empowered to act quickly and adjust as often as needed. And if we fail, we learn from it and restart in the direction of our goals. We are risk-takers. Objectives Offers retail investing, trading products, services with automated order placement and limit equity, futures, options, exchange-traded funds, bond orders; real-time streaming quotes, commentary, and news; advanced trading platforms, for traders, personalized portfolio tracking and access to more than 7,000 mutual funds.

Divisions of ET

Banking
Includes the E*Trade Bank Access to 15,200 ATMs VERSUS Technology TIR Holding Limited

Brokerage
Cash accounts or also called a margin account, with or without the options trading feature. Has E*Trade Securities and E*Trade Clearing as protection agencies within the division

The service center for institutional investors, comprises the Global & Institutional segment

BCG

Due to unforeseen circumstances the financials for both Banking and Brokerage divisions do not exist. The revenue for both divisions is combined into one. Without the required information we were unable to actually do a BCG. Thank you for your understanding.

Their Mission Statement

Using technology to set the standard for innovation, service, and value for investors seeking more control over their investments. E*TRADEs rich suite of products and services can be customized to reflect a customers unique needs and interests, including portfolio tracking, free real-time quotes, market news, and research available 24 hours a day, seven day a week. Customers can assess their E*TRADE accounts virtually any time anywhere around the world.

Their Vision Statement

E*TRADEs vision is to empower selfdirected investors to make informed investment decisions and take control of their financial future with anytime, anywhere access to the worlds major investment markets.

New Mission Statement

E*TRADE provides is an online brokerage firm for anyone and everyone concerned with their financial freedom, it allows you to trade equities, create a portfolio, get market information any day at anytime around the world, and much more. With our technology to set the standard to be innovative, service and control over the investors investment, this will help us grow as a company in becoming a complete financial support business offering every service you need in your financial life, while making our customers, stockholders and employees happy. We help the communities through non-profit partnership, volunteer work, and increase financial literacy in the neighborhoods. In becoming more profitable, we set ourselves apart from tradition brokerage firms, we have huge discount brokerage fees to help customers be more affordable.

New Vision Statement

To become the a leading and complete financial support and execution portal for individuals, by diversifying and offering every service you need in your financial life, with access to your accounts anytime, anywhere in the whole world.

Key External Factors

Opportunities
Commission revenues increased, declining volatile stock prices Businesss turn to E*TRADE because of other unethical businesss, gaining customers Stock markets have remained turbulent Excited market overseas, slightly better Expanded into new businesss 2nd largest market share in the industry

Threats
U.S economy may fall back into recession Lowered interest rates Geopolitical fears Numerous corporate scandals, investor confidence Aggregate pretax profits, fell 33% Investment Services Industry fell 24% Market for electronic financial services are growing rapidly, more competitors

EFE
KEY EXTERNAL FACTORS Opportunities 1. Commission Revenues Increase 2. Gaining Customers because other unethical business's 3. Stock markets remained turbulent 4. Excited market overseas 5. Expanded into different business's 6. 2nd largest market in the industry Threats 1. U.S may fall back into a recession 2. Lowered interest rates 3. Geopolitical fears 4. Numerous corporate scandals, investor confidence 5. Aggregate pretax profits, fell 33% 6. Investment Industry fell 24% 7. Market is growing rapidly, more competitors 0.10 0.05 0.05 0.10 0.05 0.05 0.05 3 2 1 2 3 3 2 0.30 0.10 0.05 0.20 0.15 0.15 0.1 0.10 0.10 0.05 0.10 0.10 0.10 4 3 2 2 4 4 0.40 0.3 0.10 0.20 0.40 0.40 WEIGHT RATING WEIGHTED SCORE

TOTAL

1.00

2.85

CPM
E*TRADE Schwab Ameritrade Weights 0.0 to 1.0 0.17 0.17

Critical Success factors Market Share Financial Position

Ratin g 1 to 4
3 3

Weighted Score 0.51 0.51

Rating 1 to 4 4 4

Weighted Score 0.68 0.68

Rating 1 to 4 2 2

Weighted Score 0.34 0.34

Customer Loyalty
Global expansion Organizational structure Customer service

0.15
0.15 0.13 0.15

3
4 2 3

0.45
0.60 0.26 0.45

3
3 3 4

0.45
0.45 0.39 0.60

2
3 3 3

0.30
0.45 0.39 0.45

Management experience
Advertising

0.13
0.12

3
3

0.39
0.36

3
2

0.39
0.24

2
3

0.26
0.36

TOTAL

1.0

3.02

3.20

2.55

Key Internal Factors


Strengths Rich suite of products financial services on the internet Access to accounts 24/7, 7 days a week Discount on brokerage fees Located and have access throughout the world ATMs located around the world You can do your financial services yourself in your home Incurred $227 million to restructure its operations

Weaknesses Does not have as many services as a traditional brokerage firm Distribution of money, expenditures Revenue is falling Regaining the investors confidence back

IFE
KEY INTERNAL FACTORS Internal Strengths WEIGHT RATING WEIGHTED SCORE

1. Rich suite of products


2. Access to accounts 24/7, any day 3. Discount on brokerage fees 4. Located and have access through the world 6. ATM's located around the world

0.05
0.10 0.15 0.10 0.10

3
4 4 4 4

0.15
0.20 0.60 0.40 0.40

7. You can do your financial service in your home


8. Incurred $227 million to restructure its operations Internal Weaknesses 1. Does not have many services like traditional firms 2. Distribution of money, expenditures 3. Revenue is falling 4. Regaining the investors confidence back TOTAL

0.05
0.15 0.05 0.15 0.05 0.05 1.0

3
4 2 1 1 2

0.15
0.60 0.10 0.15 0.05 0.10 2.90

SWOT

SPACE

IE Matrix

Grand Strategy Matrix

Key Ratios

Rev: 1.63B Market cap: 11.24 B Return on assets: 1.18% Return on equity: 15.86% REV. per share: 4.388 Total Debt: 17.39 B Total debt to equity: 5.114 Operating Cash: 568.77M

Different Strategies

Acquire other firms in order to diversify the services offered to clients To restructure the internal organization of E*Trade in order to compete with competitors

QSPM

Decisions

Restructurization of the internal aspect of E*Trade


QSPM numbers signify this

Implementation

Distribute the money throughout the company Include everyone involved with E*trade to put suggestions where the company needs to be reformed Short term Long term

Evaluation

Re-evaluating the strategic plan Financials for money flow Quarterly reports Competitors Work on any suggestions that continue to appear

Update!

As of this year E*Trade is 5th in the Top Investment Brokerage Firms

References

http://www.etrade.com http://finance.yahoo.com Strategic Management Concepts and Cases