Strategic Management

Strategic Management

Wachovia Corporation

Wachovia Corporation was created after First Union Corporation and the original Wachovia Corporation merged in 2001. First Union Corporation was the actual purchaser of Wachovia Corporation. First Union had started off as a one man operation operating out of the Buford Hotel in Charlotte, North Carolina. Over the years First Union grew and acquired the reputation as a strong financial performing corporation with superior customer service. Its strong underwriting performance over the years is what kept the bank above water during the 1930’s depression and on into the 21st century. Though its roots lied in general banking the company has diversified into a complete financial service company. During 1999 First Union made a fatal flaw that would lead to its purchasing of Wachovia Corporation. First Union destroyed its reputation for having excellent customer service by forcing all customers coming into the bank to use phones that would put them into contact with a national call center. With customers unable to get service in the banks First Union could not stop the land slide that would ruin their name in the industry. Looking for a quick fix to the problem First Union went on to buy and merge with Wachovia Bank who was the top rated bank in America for customer service. First Union kept their business model intact but quickly went back to in bank support and took on the name of Wachovia Corporation. (Watson, 2007)

Wachovia Corporation as it stands today is one of the top financial service providers in America. Wachovia has some international ties but the company primarily operations within the continental United States. “Wachovia offers commercial and retail banking, mortgage banking, investment banking, investment advisory, asset management, leasing, insurance, retirement services, and securities brokerage services.” (Wachovia.com) With Wachovia’s recent acquisition of Golden West Corporation it now operates in 21 states and has over 3,400 banking centers. It employees over 110,000 people and its headquarters is out of Charlotte, North Carolina. Wachovia Corporation has several subsidiaries that make up its family of financial providers. Its largest subsidiaries include Wachovia Bank, N.A., Wachovia Mortgage, Wachovia Securities, LLC, Wachovia Capital Markets, LLC. (Wachovia.com)

Wachovia’s vision statement is simple yet very aggressive in today’s competitive financial world, “Wachovia's vision is to be the best, most trusted and admired financial services company.” (Wachovia.com) Wachovia’s mission is to execute effective sourcing of external products and services based on these Guiding Principles: integrity, respect and value the individual, team work, service, personal excellence and accountability, and winning. By taking a closer look at these principles you can understand Wachovia’s approach to business. Integrity involves leveling the playing field when it comes to external vendors and service providers. Using open communication between vendors and service providers insuring that they use the same principles set forth by the company when representing Wachovia. Respect and value the individual pertains to embracing diversity both culturally and intellectually. Wachovia places infuse on individual personal growth within the company. Having team work as an operating principle stresses Wachovia’s belief in the together we stand divided we fall theory. This is also a key principle for Wachovia because of its large service and sales families that don’t interact with each other on a day to day basis. They place great importance on sales and service family referral’s to other parts of the Wachovia family. By utilizing all parts of the team they can achieve being the complete financial supplier for customers they are aiming for. Service is at the core of all jobs at Wachovia. Every employee’s pay is somehow tied into service measurement. Wachovia uses a third party company to check 5% of all customers who interact with banking personnel. Personal excellence and accountability is a very important principle at Wachovia. Most jobs at Wachovia are very independent. The retail banking centers are run like a private business by the branch managers. Because of this autonomy, Wachovia places great freedom along with great responsibility on its retail banking employees. They receive high praise for success yet there is know one to blame for their failures. Few companies list Winning as an operating principle. Wachovia has done this to insure that they do not settle for good. They are constantly seeking ways to keep a competitive advantage on their competition. (EBSCO, 2007)

The financial market that Wachovia operates in has been going through a turbulent time. There have been many bank consolidations and mergers changing the face of Wachovia’s competition. Wachovia’s key competitors are Bank of America Corporation, Citigroup Inc., US Bancorp, HSBC Holdings plc, SunTrust Banks, Inc, Washington Mutual, Inc., Wells Fargo & Company, Morgan Stanley, UBS AG, Bank of New York Co. Inc., Countrywide Financial Corporation, and Fidelity Investments, Inc. All of these companies, including Wachovia, are facing a crisis at a scale that has never been seen before, the collapse of the housing market. All companies in the financial sector have some interest in the housing market. Wither its Wachovia and Bank of America writing and funding mortgages, HSBC and Countrywide buying mortgages on the open market and servicing them, or Morgan Stanley selling and buying mortgage backed securities. With the housing market suffering huge depreciation it is becoming riskier for lenders to do higher risk loans. When a loan goes into default the bank is stuck with the collateral and must sell it to recoup its funds that were lent. Because of housing depreciation the collateral is being sold at less than originally was lent. These losses have reached a point where 32% of all lenders in the country have either went bankrupt or merged with larger lenders to stay afloat. (Ritholtz, 2007) A recent interview with Countrywide Financial, the countries largest home lender, revealed that the housing “slump” was worse than originally believed. “The country is seeing home price depreciation at levels not seen since the Great Depression.”(Ritholtz, 2007) Previously, Countrywide had stated it expected a turnaround in mid-2008;