Introduction
The banking industry is one of the most delicate one as it is the determinant of the economic status of nations. Therefore, just the economy of nations is changing the banking industry in its ways of adjusting to change keeps on moving with trends of technology and other economic determinants. The Bank of America Corporation has its headquarters in Charlotte in North Carolina. The American bank is multinational as it offers financial services worldwide.
The bank is second large in the United States banking industry considering its assets and as a Company; it is currently the fifth largest company in terms of total revenue. The bank has a credible resource management team, which enhances its financial establishment. The bank has branches in all states of the United States of America and other more than 50 countries worldwide.
In order for the Bank of America to maintain its competence and integrity in the world financial and banking industry, it has to consider maximizing its revenue while minimizing costs. The Bank of America just like any other company is highly interested in profit maximization. The Bank of America makes its profit through processing payments in addition to accumulating deposits and issuing loans to its wider and diverse market (Pride, 1998, p. 199).
However, in this process of generating income so as to achieve the interest of its stakeholders, stockholders and the American community at large, the bank is confronted by business associated risks and expenses which are key to the bank management. The bank management thus takes all the responsibility of handling expenditure so as to spur success in making profits and market effective market power, thus the management makes cost, product selection and product pricing effective decisions, holding it responsible for the bank’s success and solvency status.
Bank of America management has several numbers of stake and stockholders who have the overall responsibility of keeping in check the daily and routine duties of every individual in the bank to avoid misuse thus minimizing costs and general unnecessary expenses.
First in the list is the American banking sector regulators among them is the American government exercising its powers through the department of states in finance (Pride, 1998, p. 199).
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The department has a responsibility mandate of imposing and implementing the banking regulations and ensuring extensive compliance with this laws and regulations. However, the Bank of America has its own internal body in the management including legal consultants and advocacy department that advice on the importance of upholding integrity by abiding by the financial laws of the United States of America and global laws. In banking industry, the reputation of a company is always of consideration as the industry is very volatile and dynamic being affected by any negative allegation. Therefore, The Bank of America is doing all that it has to maintain its jealousy for reputation and integrity by having and maintaining high levels of discipline and general public picture.
Second in the list is the board of directors they have abiding contract with the shareholders to use the shareholders resources to attain the interests of the shareholders while playing it safe to the general stakeholder concerns. This is as according to the ethical principles of management. There in the board of directors ensures that every person in the bank in the name workers performs his or her duties objectively. The management and the auditing committee is thus kept in check in addition to the general surveillance on product efficient competence and delivery. These kind of checks are prior to The Bank of America in its high-level maintenance in the American and global stock market as it reduces chances of mistakes that might cost the company a fortune.
The most important to the Bank of America stakeholder is its customers. The bank has established customer care department that deals with complaints and general customer issues. The bank considers the safety of its customers has it is one of its expansion strategies for ones used in the bank’s establishment in California. The bank makes its profit by targeting a wider consumer market unlike with others who gain in the expense of customers. The company effectively expands its consumer market through efficient product presentation to its customers (Lipczynski, 1998, p. 199).
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The last are the Bank owners are only concerned with the return to their invested capital, they advance their capital to the managers expecting a certain estimated level of profit. The maintenance of their investment in the company shows that their specific interest is easily achievable by the bank. This is because its financial returns of capital are positive despite the various fluctuations in the global economy. The management thus requires adequate information on the various strategies to improve on the bank profits by administering effectively fee schedules and prices for company services.
The American bank just like any other business entity operates in a highly competitive market. The pricing systems and strategies adopted by the organization converts the companies outputs and inputs into monetary terms thus allowing for the current and projected monetary plans to be positioned and ranked in various market segments according to their profitability.
Information and communication asymmetries and channels adopted in the highly competitive American banking environment leads to adverse selection among the targeted consumers. As a result, pricing in this marketed adopts another highly significant but additional role. The additionally adopted role refers to market segmentation.
The target market by the highly reputable bank of America contains various categories of different consumer groups. To some moderate extend this largely works to the advantage of the bank of America. This is more so because as product prices takes an added role of conveying information on the products qualities among the various market operators and competitors. In the highly volatile banking industry, products quality is measured about risk stability. In many banking setups, the credit quality is denoted by the price paid (Griffin, 1998, p. 199).
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However as a result of the many and intertwined product and price relations that governs the banking industry, measurement and of pricing efficiencies has always become an uphill task to many scholars. The measurement of pricing efficiency in the banking production industry is ever increasing in its complexity from the fact that product prices varies with products qualities and meanwhile product prices is a highly fluctuating and variable decisions that depends on the financial performance of the major firms operating in the banking market.
This firms controls and influences the market the normal market conditions through creating unfavorable competitive environments and barriers that hinders effective competition by the competitors thus forcing them out of the market. This creates some sort of monopoly that only allows the mighty to operate in such unhealthy environment (Lipczynski, 1998, p. 199).
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The bank of America has always been in the forefront in enjoying meaningful market conditions that enhances effective environments for its operations. The bank of America is always on the forefront in creating a competitive edge and increasing its market share. This is always through embracing brain storming sessions among its top-level management to develop creative ideas that enhances market success.
The cause-effect relationships of the endogenous price components that are of utmost significance in the American banking production industry that will be of significance in advancing the financial performance of the bank of America bank is dependent on careful analysis of the product value model and the production dependent model that develops and enhances best market practice frontiers.
Disparate to the customary profit functions principles initially adopted by the bank of America, the recently production and market value models are not customized on price analysis that they only compare the financial performances of the existing firms with the varied prices because of the perceived product qualities. The newly adopted business strategy model that aims at increasing market penetration, identify and develops best pricing strategies and most significant production and marketing plans that aims at filling the gaps in existence in the markets(Griffin, 1998, p. 199).
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The two alternative pricing and production models for enhancing pricing efficiencies recently employed by the bank of America has yield tremendous results in its operations. The immense interest rates that the bank of America obtains on its loans and other numerous assets influence its expected profits, market value, profit risks and operations efficiencies.
The American bank utilizes distinct methodologies to determine its production function efficiencies. This entails the determination of the upper profit functions and the firm has cost functions firms available production and price data. The envelop function adopted in the above utilized function controls the prices acquired by the firm thus representing the best observable practices in price samples of the adopted prices by the firm (Lipczynski, 1998, p. 199)
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The inefficiencies existing in the firm is determined by divergence from the best practice frontier. The gap identifies the actual amounts by which the firms profit could be increased and cost reductions if its operation sticks to the principles of best practice production. The strategy assumes that to maximize it profits because of competitively prices of both outputs and inputs. This conveys information on relative scarcities on various price aggregates on price inputs and outputs and converts them into money metric aspects that allow production strategies to be positioned according to their projected profitability.
Adoption of new technologies and reduction of the highly cumbersome paper work in banking is another meaningful strategy that aids in the financial performance of the company. The company also embarks in numerous efforts to address the conflicting interests that lead to price distortions between paper based and electronic payment instruments. Modern pricing reforms those are underway in the organization aims at reducing the fees for electronic transactions as way of increasing incentives to the consumers. This aims at making the target consumers adopt more cost effective and consumer friendly electronic banking systems.
The Bank of America makes its revenue through the automated teller machines as it has issued its customers with electronic VISA cards at a fee considering the general regulations in place. The ATM performs all of the common transactions, which reduces the costs by a great concern by reducing work force use and bank working hours. The bank has consider establishing many ATMs considering strategic placement and also investing on what is now called mobile banking where by a customer can perform banking operations at his or her convenient place via mobile phone (Griffin, 1998, p. 199)
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It is self-evident that the American bank has realized immeasurable success in banking service industry as one of the economic pillars. However, despite the immeasurable success, there still a lot that can be done to enhance the global corporate entity financial entity financials performance.
References
Griffin, R. W., & Ebert, R. J. (2001). Business (2nd ed.). Englewood Cliffs, N.J.: Prentice Hall.
Harvard business review on negotiation and conflict resolution. (2000). Boston: Harvard Business School Press.
Lipczynski, J. (2008). Business. Chicago: Chicago Review Press.
Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2009). Business (6th ed.). Boston: Houghton Mifflin Co..
