Key Issues and Problems of Wingspan Bank - Essay Example

WingspanBank.com - A Case Analysis Executive Summary The emergence of the Internet has created several innovations in the way business operates.The banking industry was one of the industries that exploited the benefits that the Internet brings. Traditional banking institutions saw the opportunities that the new channel brings. Bank One is one of the biggest traditional banks in the US. They launched WingspanBank.com on 1999 in order to cater to tech-savvy Internet customers, in the hope of expanding their market size and operation. Wingspan was aggressive in their marketing and advertising strategies in order to capture the market and become a leader in the virtual banking industry. The company implemented and launched innovative strategies to gain competitive advantage. However, by 2000, the new company was in trouble of closing shop. This paper aims to identify the key issues and problems that caused the failure of WingspanBank.com amidst the successful launch in 1999. The paper also enumerates several corporate strategic solutions that addresses the issues and answers the problems identified. With emphasis on market expansion and business growth, the alternative solutions were evaluated and the best strategy was chosen as a recommended approach to beat the issues. The last part of the paper enumerates several action plans for the implementation of the recommended strategy. Case Analysis Identification of Key Issues WingspanBank.com is an internet-only banking institution. It is under the umbrella of the parent company, Bank One, particularly in its subsidiary First USA. It was launched on 1999 with good reviews. It has garnered several awards for its internet-only operations after its launching. However, the virtual bank was treading on troubled water by 2000. Several issues contributed to the downfall of the bank. First, the Bank's expected success was highly dependent on the financial cover of First USA. When First USA was troubled and was under scrutiny from its customers, the financial support was brought to a standstill. Without the money poured into the initial operations and its aggressive marketing strategies, WingspanBank.com was in danger of a collapse. Second, the expectations of the mother company on the internet bank were high. Bank One anticipated high growth rate on Wingspan's customer base as more and more people were hooked on the Internet. They invested millions in aggressive marketing and advertising initiatives to capture the market. When the expected growth was not achieved, Bank One has become skeptic on the performance of the new company and has doubted its future as a potential contributor to the corporation. Lastly, the internet-only banking industry has become unattractive to customers. People were complaining on its operations, security and customer service. Sites were difficult to use. Human interaction, which was essential in the traditional banking, was lacking if not missing. Marketwise, the growth of online banking customers was only 2%. With all these issues facing WingspanBank.com, Bank One top executives were weighing the pros and cons of discontinuing the operations of the virtual bank, due to its poor performance and failure to achieve expected growth. Alternative Strategic Approach Bank One can opt to implement several corporate strategies to address the issues and problems facing Wingspan Bank. First, they can decide to sell the internet-only bank as a whole or pieces of the organization. Selling the company is a good option if buyers are willing to acquire it. Unfortunately, the bank is not attractive for buyers because it has no desirable assets aside from its Internet technology and infrastructure. Because the bank is still in its initial stage of operation, its brand name is not so much attractive to buyers. The brand name is yet to be embraced by consumers and become a part of the industry vernacular. Second, they can choose to merge it with Bank One's existing Internet bank brand. Merging WingspanBank.com and bankone.com would benefit the corporation. The acquired customers from Wingspan would increase the client base of Bank One Internet bank. The technological infrastructure of Wingspan is an added asset for the operation of bankone.com. Third, they can opt to spin-off the company from the parent corporation. Spinning off the company would unburden Bank One from the load of financial support for Wingspan. It would create Wingspan as an independent entity that is outside the umbrella of Bank One. Recommended Strategy The best and recommended strategy for Bank One is to merge WinspanBank.com and bankone.com. The existing infrastructure and business processes of bankone.com will benefit from the new technology of WingspanBank.com. Additional customers from Wingspan would increase the size of bankone.com. In any banking institution, growth is the best strategy for profitability and market leadership. In an online banking industry, market expansion and revenue growth is important to gain competitive advantage against its rivals. The merging of the two banks would integrate and reinforce the bricks and clicks infrastructure of Bank One. Tapping the Internet bankers' market segment would expand the market size and presence of Bank One. Furthermore, with bigger market share would create a proportional revenue growth. The merger is a strategic approach for both organizations to achieve significant objectives that would be mutually beneficial. Wingspan can continue its inherent operations while Bank One can profit from the additional customer base and technology. Implementation Plan In order to execute the merger the corporation's top management should manage the conversion of operations from WingspanBank.com accounts into bankone.com. A smooth conversion is necessary in order to prevent commercial, legal and political conflicts. A direct face-to-face communication is a necessary step in the execution of the merger. Representatives of the management shall correspond with the entire workforce, when feasible, or in groups of manageable size so as to facilitate exchange of view points and provide opportunities for feedback. Written communications such as newsletters, advisory, posters and internal bulletins that carry the message associated with the reasons for the merger and the possible organizational changes. The written medium will help in reinforcing the motivation of people to accept the need and act accordingly. Human resource policies shall be created that supports the desired changes. These can include investments in training. The need for a substantial investment in training will impart new skills and also influence attitudes and values. The merger will not only fuse two businesses but also two different organizations with different culture and practices. References Porter, Michael. Competitive Strategy. New York: The Free Press, 1980. Sadler, Philip. Strategic Management. Sterling VA: Kogan Page Limited, 2003. Read More