Bank of America Vision and Mission Statement and Long-Term Objectives

The mission statement of Bank of America (BOA) is that the actions of individuals working in tandem build strong communities and businesses such as BOA are obligated to support the communities that it operates in and serves. The vision of the BOA Company is to become the finest financial corporation in the world. Thus, the Bank of America plans to use its proficiencies to generate economic value in the communities and regions where its customers live and work. The purpose of the company is to assist in improving the financial lives of its consumers and clients. The long-term objectives of the BOA include increasing its market share, increasing its consumer base, increasing its level of profitability, decreasing its overhead expenses, and decreasing the service fees that it incurs (Bank of America Website, 2015).

Bank of America's Background as an organization

Bank of America has the repute and status of being the best, as well as the largest, bank in the United States (U.S.). In addition, the financial institution is the largest bank in the United States with regards to market capitalization on the basis of assets. The head offices of the Bank of America are located in Charlotte, North Carolina. Presently, the organization offers its services in more than 150 nations, and has affiliations with most of the companies listed in the Fortune 500 as well as over 80% of the Fortune Global 500 companies (Wood, 2014). Having acquired Merrill Lynch in 2008, the bank became the world's biggest wealth manager; it manages over 2 trillion in wealth and is a forerunner in the investment banking sector (U.S. Securities and Exchange Commission, 2012). In accordance with the corporation's annual report, the banking and non-banking divisions offer a comprehensive portfolio of financial products and services through key business segments. These business segments include Consumer and Business Banking, Consumer Real Estate Services, Global Wealth and Investment Management, Global Markets, and Global Banking (Bank of America Corporation, 2015).

Industry Analysis

Bank of America is set in the banking industry and also the publicly traded financial institutional services. In terms of structure, the banking industry's structure is monopolistic competition. This is a kind of imperfect competition that is centered between monopoly and perfect competition. This is because every bank in the banking industry has a certain level of monopoly power over its own brand, because no other entity can produce the same brand, although the products and services are differentiated substitutes. In addition, there are numerous buyers and sellers in the banking industry; companies have the freedom to enter as well as exit from the banking industry (Mudida, 2003).

Figure 1 below illustrates the life cycle of the banking industry. As indicated, the industry is at its maturity in the present. The growth period of the banking industry took place in the 1800s, with several establishments coming up as banks. In the present, the banking industry has come to be a mature industry that encompasses banks, financial institutions, mortgage firms, and financial investment companies. In addition, the industry has embraced technologies and innovations such as mobile banking and also online banking, which shows that the industry is at its prime.

Maturity

(Present)

Development

(300 -- 400 AD)

Introduction

(Ancient times)

Growth

(1800s+)

Time Period

Figure 1. The Life-cycle of the Banking Industry.

In terms of Porter's Five Forces Analysis, Bank of America does not face any risk in terms of entry of new firms into the industry. This is because establishing a bank requires a high level of capital and experience, making it harder for firms to enter. In addition, the buyers have no bargaining power as they require loans and deposits from the bank. Therefore there is a low risk with respect to bargaining power of buyers. The same case applies to the risk for bargaining power of suppliers. However, Bank of America faces high risk in terms of the rivalry among established firms. The bank faces stiff and extensive competition from rival companies such as JP Morgan, Chase, and Wells Fargo Company. The bank also faces international competition from companies such as the Industrial and Commercial Bank of China Limited, and HSBC Holdings PLC. The Bank of America also faces high risk in terms of the potential threat of substitutes. There are a wide range of products and services offered in the banking and financial institution industry that can be easily substituted by the various companies in the industry (Bank of America Annual Report, 2014).

Competitive Analysis

The bank faces competition from these entities on both regional and global levels, as well as on a product basis. The competition that the bank faces is centered in different factors that consist of the quality and range of products that are offered, types of customer service rendered, interest rates on loans and deposits, the repute and status of the bank, credit and loan limits, and consumer convenience. The capability of the bank to continue competing in an effective manner is dependent on the ability of the bank to attract new personnel, retain and motivate its prevailing employees, and manage reimbursement and other expenses (Bank of America Website, 2015).
Bank of America operates in a highly competitive setting. The bank is registered as a publicly traded financial services institution. Some of the financial institutions that offer intense competition to the company in the same market and/or industry include Wells Fargo & Company (WFC), Citigroup and JP Morgan & Chase Company (JPM).

i. JP Morgan & Chase Company (JPM)

JP Morgan & Chase Company is one of the leading international financial services company; it is also one of the biggest banking institutions in the United States, and has business operations all over the world. The financial institution offers fierce competition to Bank of America, as it has the second biggest hedge fund in the United States. In addition, the financial institution offers competition as it offers financial services such as wealth management, asset management, private banking services, and treasury and securities services. The bank also offers retail banking and also commercial banking activities. Being one of the top four banks in the United States, the bank is one of the major competitors of Bank of America. In addition, it terms of assets and market capitalization, the bank is the second largest company in the world (JP Morgan & Chase Company Website, 2015).

ii. Wells Fargo & Company (WFC)

Wells Fargo & Company (WFC) is one of the four biggest banks and financial institutions in the United States and therefore one of the major competitors of Bank of America. The company is a global banking and financial services firm and it is ranked number four in terms of assets in the United States; it is also the biggest bank with regards to market capitalization. In addition, the company is a major rival as it is the second biggest bank in terms of deposits, debit cards issued, and services offered for home mortgaging (Wells Fargo Company Website, 2015). In the year 2014, the bank was mentioned and acknowledged as having the most valuable bank brand for the second year in a row (Haigh, 2014).

iii. Citigroup The bank is a global banking and financial services company whose headquarters are based in the state of New York. The company was created after two financial institutions, Citicorp and Travelers Group, merged in the year 1998. The bank offers stiff competition to Bank of America as it is the third biggest bank holding corporation in the United States with regards to assets. In addition, the bank offers competition in the global market as its major shareholders emanate from the Middle East as well as Singapore. More so, prior to the financial crisis that took place in the year 2008, Citicorp was ranked as the largest corporation in the world as well as the biggest bank globally. Despite the losses suffered, the company was helped by the government through emergency aid which the bank has since then repaid in full (Citigroup Website, 2015).

Financial Analysis

The financial performance of Bank of America in the past three years has not been a consistent one. According to the annual report of the company, the economy of the United States continued to grow in the year 2014, culminating the year in the middle of the nation's sixth successive year of recovery. The financial income of the company largely declined, due to the payments expected for the payments of charges that are linked to the settlements with the United States Department of Justice (DoJ). The deteriorations in the net interest income of the bank were largely as a result of lower net interest income from the assets, and also lower loan yields Bank of America Annual Report, 2014).

Financial Data of Bank of America for the years 2012, 2013 and 2014 (in Millions) as of December 31, of every year and the company's Earnings per share (EPS)

Bank of America

Year 2014

Year 2013

Year 2012

Net…