Forces and Trends
September 29, 2008
University of Phoenix-MBA 580
Forces and Trends
Within the remote environment tier, numerous external factors influence business’ decisions and plans. The economic factors is a significant variable that “concern the nature and direction of the economy in which a firm operates” (Pearce, J. & Robinson, R., 2004, ch 3). Companies must consider the economic trends and how it affects their industry. Mangers must consider credit availability, disposable income, spending trends, interest rates, inflation, and unemployment (Pearce, J. & Robinson, R., 2004).
Wells Fargo Bank is affected by the economic factor on a daily basis. The economy’s direction drives people to make different purchasing and saving decisions. Wells Fargo must make frequent changes to their products offered and interest rates. As the Federal Reserve changes their rates, the bank must also alter theirs. As the economy slips into a recession, people are more likely to save money. Wells Fargo and other banks shift their attention on offering high yielding CD’s and saving plans. Moreover, the housing market crash forced banks into being more conservative on offering credit. Finally, as the FDIC begins seizing banks while new mergers and acquisitions begin, people are in search of secure lending institutions. Currently, the credit quality of banks is highly scrutinized. Joseph Giaraputo, Global Finance publisher, comments that Wells Fargo has demonstrated “an appropriately prudent approach to risk in providing international financial services” (Keeler, D., 2008). Banks that are operating successfully are those that respond to the economy and market.
Instead of operating reactively to the economy, Wells Fargo is operating proactively. Wells Fargo is focused on operating conservatively within policy in order to weather the current economic downturn. The focus on products to ensure the security of customer’s funds is a...