Generic and Corporate Strategies of the Bank of America

Introduction

A business strategy is a new way of doing business developed by a company purposely to better its performance. A successful venture or move is always a well thought out idea, which amounts to a business strategy. The way to develop a sound business strategy is simplified in three significant steps that shall be highlighted in this paper about the bank of America's strategic moves.

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Business strategy formulation

This takes three perspectives, and they include corporate-level strategy, business-level strategy, and functional level strategy. In the first one, the scope is broad, and therefore any move reflects the direction and the goals of the entire organization. In the second one, the business level strategy applies to companies that have different lines of business. A move touching on one of the business lines is at the business level. The last one, any thought idea aimed at making the performance of a particular functional department better, is at the operational level (Wheelen et al., 2017).

For this paper's purposes, we look at cost leadership and diversification strategies so that we may understand what real business strategy formulation, implementation, and evaluation are. Cost leadership is the move by a company to move towards attaining a position of least cost of production as well as operations so that the company can compete favorably in the market. The bank's move to acquire so many businesses, as illustrated in the case number 14 of the bank of America, offers the bank a competitive advantage due to its size and scope of operations (Rothaermel, 2016). It is a cost leadership strategy that aims to make sure that the bank cushions its failures with successes in other areas.

Diversification is yet another strategy that is evident in the assigned case. It appears that the bank's primary system is attaining growth through acquisitions of different businesses, and that has brought in diversification. Diversification involves entering into new places different from the one that an organization is currently doing. Since the first successful acquisition, the bank of America has grown its operations to attain a portfolio that includes asset management contributing up to 7%, consumer and commercial banking 69%, and global and corporate investment banking that contributes up to 24% of the organization's revenue (Rothaermel, 2016).

Shareholder Perspective in Business Strategy Formulation

The shareholders are the financiers of business. Their existence brings about an agency relationship between themselves and the managers of an organization. The bank of America I the formulation of its generic and corporate strategies, the views of the shareholders' general feeling have to be seen. Since sole responsibility of the operations of management is to maximise shareholders wealth, every strategic move has to imply the desire to maximise the shareholders wealth but not to imply attainment of the managers' interests – commonly known as agency problem (Zhang et al., 2018).

Business Strategy Evaluation

Upon developing and implementing business strategies, there is always a need to evaluate them to tell if the results are comparable to what the expectations were during the development and implementation. For America's bank to achieve the above, it is essential that they determine the internal consistency, consistency with the environment, how appropriate the strategy is given the available resources and the workability (Wheelen et al., 2017).

Recommendation

The above conceptualization is a clear picture of what business strategy is to America's bank and its impact on its operations. Looking at the generic method, which is implied by the cost leadership business strategy, the company seems not attaining a competitive advantage based on cost since it is reportedly indicating failure at some point. That means that growing its size through acquisitions is not helping in building a competitive advantage. I thus recommend them to lower the operating costs and relinquishing some of the business ventures that seem to disadvantageously add to the value of operations for the company leading to low performance.

Similarly, diversification is good for the bank. It is highly recommended that it judiciously diversify its portfolio looking forward to fully spreading the risk for maximum profitability even in adverse seasons. However, it is good to grow the portfolio while making sure that its management does not get too complicated as a result of a broadened span of control, which again may negatively impact the organization's operations.

Conclusion

Business strategy is a compulsory thing for any business to think about if it, in any way, imagines of becoming successful in the market. As mentioned earlier, any successful business idea or a change in the way a company does its things is an adoption of a business strategy, and it is always a well thought out move. As for the bank of America, I may say that it has really tried in the formulation and implementation of its strategies, but there is still a lot more that needs to be done regarding the strategy evaluation for appropriate adjustments.

References

Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.

Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (p. 55). Boston, MA: pearson.

Zhang, F., Wei, L., Yang, J., & Zhu, L. (2018). Roles of relationships between large shareholders and managers in radical innovation: A stewardship theory perspective. Journal of Product Innovation Management, 35(1), 88-105.