Sample Business Studies Paper on JPMorgan Chase & Co.

The JPMorgan Chase & Co. has been chosen for this study because is the largest United States Bank by revenue. JPMorgan has posted a net income of $6.5 billion on revenue allocation of $30 billion as of 2020. The bank’s revenue has grown by 14% in comparison to the same four-month period two years ago. JPMorgan’s revenue growth is primarily driven by an increase in non-interest revenue, up to 30% compared to 2019. The net interest rate has fallen by 3%. The bank’s net income has plunged by 50% in Quarter 3 2020 compared to the two-year-ago quarter. A report released by the bank showed that JPMorgan’s credit provision has risen to $12.5 billion, up $7 billion from the preceding year.

What has been the broad globalization/global strategies of the bank?

JPMorgan Company is an international financial service holding organization and the largest United States bank by revenue allocation. The financial institution provides services such as investment banking, consumer banking, commercial banking, and asset management by governments, institutions, corporations on global scale. The New York-based company, JPMorgan competes on the global level with a broad range of brokerage firms, banks, hedge funds, private equity firms, commodity trading companies, investment managers and insurance firms, including the Citigroup Inc., Bank of America, Morgan Stanley, Goldman Sachs Group Inc. and Wells Fargo (Riehl, 2016).

Business segments – JPMorgan breaks down its net income and revenue into the following financial segments: Investment and Corporate Bank, Consumer and Community Banking, Wealth and Asset Management, and Commercial Banking. The company’s business segment is usually done on GAPP basis. The total GAPP revenue for the company as of Quarter 3 2020 was 34.9 billion, which is approximately $ billon more than non-GAAP revenue (Riehl, 2016).

Community and Consumer Banking – JPMorgan’s Community and Consumer Banking segment offers varieties to businesses and consumers including investment and deposit products, payment solutions, cash management, credit card issuance, mortgage origination and auto loans. The Community and Consumer banking has recorded a net loss of $160 million in Quarter 2 of 2020. The segment revenue was $5.6 billion in net income recorded in the two years ago (Riehl, 2016). The segment revenue was $10.5 billion, being down by 10.9% from the same four-month period two years ago. This segment is accounting for about 30% of the company’s total GAAP revenue.

Investment and Corporate Bank. JPMorgan’s Investment and Corporate Bank segment offers investment banking, prime brokerage, market-making and securities and treasury services and products to investors, corporations, governments and financial institutions. The net revenue for the investment and corporate banking segment has grown by 86% in Q4 of 2020 in comparison to the same two quarters a year ago. At $6.6 billion, the segment has accounted for about 90% of JPMorgan’s total income. The corporate and investment bank segment has grown 67% to 15.7 billion for the same quarter, which comprises about 48% of total GAAP revenue (Riehl, 2016).

Commercial banking – the company provides comprehensive financial services including treasury services, lending, asset management, and investment banking services to various clients including large and midsized corporations, small businesses, and local governments.

What are the challenges the bank has been facing in the global market

In a letter communicated to the JPMorgan, Jamie Dimon, the company CEO, expressed his concerns that the financial institution is facing challenges of recession given the unstable nature of the U.S. economy. It is noteworthy these challenges are limited to the U.S. financial market – JPMorgan is performing excellently well in the international market. Jamie Dimon has compiled a number of uncertainties and concerns that, he think, will hurt the progress and growth for investors in both long- and short-terms (Hearit et al., 2018). He noted that the JPMorgan’s stocks have risen by 2%, climbing 7% amid a seven-session win. However, the company has lost 4.8% over the past 6 months. Incomparison, the LXF has slipped by 5.8% over the past two years. Fortunately, Jamie Dimon is opportunistic that these challenges will be identified and managed effectively by his bank since the U.S economy is beginning to take shape. He talked about how the U.S economy is positively improving given the rise of wages, moderate inflation, consumer balance sheet and financial markets are healthy, and the short supply is expected to booth economy growth (Hearit et al., 2018).

What are the emerging opportunities for the bank in the global market?

In the shift of the global economy, JPMorgan is well-positioned in the emerging market. For instance, the company is strategically positioned in the home and international market. The company is also open for expansion in the newly emerging markets and develop banking market. The banking sector has not negatively impacted by the economic crisis, and thus JPMorgan has a firm balance sheet. The company can use it strong capital to invest into the growth opportunities in the global market (Hearit et al., 2018). JPMorgan is well-equipped to innovation and effectively adapt to managing these market place challenges.

According to a report by the International Monetary Fund and World Economic Outlook, the developed markets and emerging markets account for a third-quarter of the world’s GDP. In the future, the emerging market is estimated to account for more of the developed market and global gross domestic product. Therefore, this is a viable opportunity the JPMorgan should tap into (Hearit et al., 2018). Fast-growing firms – companies based in emerging market are gaining global significant and growing fast; the reason why the JPMorgan should consider investing in these markets.

What broad and specific strategies would I propose that the bank adopt to effectively manage the challenges identified?

It is recommendable for the JPMorgan to consider its long-term goals and business trajectory when venturing onto the international market. The company should focus on adapting a high degree of centralization for its operations. Embracing a regional model would be appropriate for making inroads into the international market. For instance, the company could implement the first tendency as a way of embracing a maximized amount of market centralization – facilitates the goals of control and visibility (Knight et al., 2017).

Gaining a buy-in senior level is fundamental for executing the company’s treasury agenda. Optimizing its banking structure will require cooperation and resources from varieties of stakeholders. Before implementing the project, JPMorgan should consider preparing a solid business case that outlines the challenges of its current structure, as well as the potential rewards and risks of the proposed changes (Knight et al., 2017). Clarification of the project’s KPI will greatly help to set up the company for success when following up the programs’ performance. It is recommendable to rationalize the company’s accounts through global integrated banking services. Consolidation of its accounts among its partners will allow reducing the counterparty risks, negotiating low transaction fee, reducing borrowing cost and centralizing banking decisions (Knight et al., 2017). Account rationalization provides viable opportunities to leveraging banking technologies and adopting automated controls, and thus enabling advanced treasury structural. The establishment of receivable and payment factories and adoption of notional cross-border pooling will be easier with the rationalized accounts.

References

Knight, N., Baker, R., Metherell, M., Chittick, I., Parkin, R., Leong, S., … & Anders, M. A. (2017). U.S. Patent No. 7,822,656. Washington, DC: U.S. Patent and Trademark Office.

Hearit, L. B. (2018). JPMorgan Chase, Bank of America, Wells Fargo, and the financial crisis of 2008. International Journal of Business Communication, 55(2), 237-260.

Riehl, L., & Anderson, G. (2016). U.S. Patent No. 7,062,456. Washington, DC: U.S. Patent and Trademark Office.