Product details

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Abstract

The Internet has had a major and diverse impact on many parts of the financial services industry. But in no market sector has the effect been so profound as within broking. Growth in Internet-based share dealing, since its early days in 1996, has been extraordinarily high, in terms of the number of individual accounts and the volume of stock trades. Early comment foresaw great changes for the traditional broking industry. This was a new channel through which individuals could trade in stocks and shares, and it was thought by many to pose a threat to the existing broking firms. This case examines the impact that on-line broking had had on the industry by mid-2001, and the differing strategies taken by some established players as well as new entrants. It describes how three widely disparate companies - Merrill Lynch (a traditional full service brokerage with over a century''s history), Charles Schwab (a company that came to prominence in the 1970s by pioneering the discount broking service) and E*Trade (considered to be the first on-line entrant in the 1990s), responded to the promise of the Internet for their own broking business. The case raises questions about the emerging shape of the industry as a whole, the reasons for the inaccuracy of early predictions of on-line dominance and the competitive positioning of the three companies by the end of the case (mid-2001) and their prospects for the future given the direction each is taking.
Location:
Industry:
Size:
Multinational companies
Other setting(s):
2001

About

Abstract

The Internet has had a major and diverse impact on many parts of the financial services industry. But in no market sector has the effect been so profound as within broking. Growth in Internet-based share dealing, since its early days in 1996, has been extraordinarily high, in terms of the number of individual accounts and the volume of stock trades. Early comment foresaw great changes for the traditional broking industry. This was a new channel through which individuals could trade in stocks and shares, and it was thought by many to pose a threat to the existing broking firms. This case examines the impact that on-line broking had had on the industry by mid-2001, and the differing strategies taken by some established players as well as new entrants. It describes how three widely disparate companies - Merrill Lynch (a traditional full service brokerage with over a century''s history), Charles Schwab (a company that came to prominence in the 1970s by pioneering the discount broking service) and E*Trade (considered to be the first on-line entrant in the 1990s), responded to the promise of the Internet for their own broking business. The case raises questions about the emerging shape of the industry as a whole, the reasons for the inaccuracy of early predictions of on-line dominance and the competitive positioning of the three companies by the end of the case (mid-2001) and their prospects for the future given the direction each is taking.

Settings

Location:
Industry:
Size:
Multinational companies
Other setting(s):
2001

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