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Published by:
Stanford Business School (1996)
Version:
18 September 2003
Length:
33 pages
Data source:
Published sources

Abstract

This business case study opens with Dave Pottruck, President and co-CEO of Charles Schwab Corporation (CSC), contemplating a piece of news in the June 1, 1999 edition of the Wall Street Journal that was about to send shock waves through the brokerage community. The newspaper had just announced Merrill Lynch''s decision to launch on-line trading on 1st December 1999. Customers at Merrill Lynch would be able to trade on-line for $29.95/trade or, for a minimum annual fee of $1,500, make as many trades as they wanted. Now that Merrill Lynch had joined the on-line trading revolution, Pottruck wondered, how would this affect Charles Schwab & Co, Inc and what should the company do in response? Pottruck observes that Merrill Lynch, E*Trade, WingspanBank and Schwab, although competing for similar customers, appeared to be doing so from very different starting points. Pottruck considers the competitive dynamics of the brokerage industry and wonders: How can Schwab maintain its growth trajectory in the face of so many, varied competitors? What other firms might enter the space? How could Schwab protect and grow its existing customer base? Was Schwab getting ''squeezed in the middle'' or could it create a ''category of one?'' This case is intended for use in a course on strategy and action in the information processing industry. The case highlights strategy, industry transformation and technology in the brokerage industry. The teaching objectives of the case are: (1) to expose students to on-line brokerages; and (2) to enable students to think through the impact of changes in technology on Schwab''s strategy.

Topics

Financial services; On-line brokerage; Electronic commerce; Networks; Competitive advantage

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