Porter’s Five Forces Analysis of Morgan Stanley
Key Facts
| Name | Morgan Stanley |
| Industry | Commercial Banking and Financial Services |
| Founded | 1931 |
| Headquarters | New York, United States |
| CEOs | James Gorman |
| Revenues | US$59.76billion,2021
US$53.66 billion,2022 FY December 31st |
| Profit | US$15.12billion, 2021
US$ 11.02 billion,2022 FY December 31st |
| Competitors | Charles Schwab Corporation ,JP Morgan Chase, Citigroup, Wells Fargo |
Company Overview
Morgan Stanley is a multinational financial services firm 4th largest by market share of 5.4% of the global banking transactions.It has a Balance Sheet value of1.18 trillion as of FY Dec, 2022.It was founded on September 16, 1931 by Harold Stanley and Henry S. Morgan. It is placed 36 on the Forbes Global2000 list and 61st at Fortune 500 list as of December 2022.
Morgan Stanley experienced a revenue decrease of 10.2% with net income decrease of 27.11% in FY 2022.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is used to determine the company’s competitive position reference to it’s Industry for better strategizing the companies’ operations for higher profits and less competition, defined by Professor Micheal E. Porter in 1979,at Harvard Business School.
Morgan Stanley Rivalry among Existing Competitor
- Morgan Stanley: Morgan Stanley provides financial advice, brokerage and investment advisory services, capital-raising services, and associated financing services to institutional clients. Its sales climbed from US$31.30 billion in 2010 to US$48.76 billion in 2020 before skyrocketing to US$59.76 billion in 2022. In 2021, 2020, and 2019, its net income was US$15.12 billion, US$11.18 billion, and US$9.24 billion, respectively. Its entire assets are at US$1,222.23 billion.
- Charles Schwab Corporation:It is a banking and financial services company that offers wealth management, securities brokerage, banking, asset management, custody, and financial advising. Its yearly sales climbed from US$5.44 billion in 2013 to US$11.69 billion in 2020, before skyrocketing to US$18.52 billion in 2021. Its net income for the previous three years was US$5.36 billion, US$3.04 billion, and US$3.53 billion in 2021, 2020, and 2019, respectively. Its total assets are US$681 billion.
- JPMorgan Chase:It is the world’s largest privately held financial institution, a position it has held for decades. Notwithstanding the 2008 financial crisis, its net income has consistently climbed from US$8.48 billion in 2005 to US$48.33 billion in 2021, with no losses reported in the prior 17 years. Its net revenue has risen consistently from US$62 billion in 2006 to US$126.65 billion in 2021. Its total assets grew from $2,031.99 billion in 2009 to US$3,743.57 billion in 2021. With a market value of US$393.34 billion as of December 31, 2022, JPMorgan Chase was the largest bank in the United States. Bank of America was the second-largest bank based on this criterion, followed by Wells Fargo.
- Citigroup: It offers both financial services and merchandise. From 2011 and 2021, its revenue ranged from US$77.64 billion to US$69.53 billion, with last three-year revenue of US$71.90 billion, US$74.30 billion, and US$74.29 billion for 2021, 2020, and 2019, respectively. Its net income swings as follows: it suffers a big loss of US$(27.70) billion in 2008, followed by a loss of US$(1.60) billion in 2009 during the global financial crisis; subsequently, it produces profits with the exception of a loss of US$(6.80) billion in 2017.
- Wells Fargo:It is a locally based, financially diverse firm. Banking, insurance, investments, mortgages, consumer and corporate financing, and other financial services are all available. Its sales varied from US$74.26 billion to US$88.9 billion between 2009 and 2021. Its sales in the previous three years totaled US$78.49 billion, US$74.26 billion, and US$86.83 billion in 2021, 2020, and 2019, respectively. It has not reported a loss since 2009, and its profit for 2021 is estimated to be US$21.55 billion.
Morgan Stanley Threat of New Entrants
- Market share of wealth management services: Because of its expertise in wealth management and subsequently possessing the greatest market share of the Wealth management portfolio, it makes it difficult for others to enter that market segment. In terms of managed assets, Bank of America’s global wealth and investment management business proved to be the greatest wealth manager in 2020, with managed assets of US$1.35 trillion. Morgan Stanley wealth management and J.P. Morgan chase came in 2nd and 3rd, with US$1.26 trillion and US$774 billion, respectively.
- Acquisitions: Morgan Stanley bought 100% of Eaton Vance Corp on March 1, 2021, expanding the scope and breadth of the investment management business division. The total transaction value was around US$8.7 billion. At the time, Eaton Vance had net revenues of roughly US$1.8 billion and net profits of approximately US$413 million.
Further, Morgan Stanley acquired online brokerage giant E-Trade for an estimated US$13 billion. Morgan Stanley’s US$2.70 trillion in assets will be combined with E-Trade’s US$360 billion, allowing the business to compete more easily with powerhouse rivals Fidelity and Charles Schwab.
Charles Schwab joined with TD Ameritrade to form one of the world’s leading asset management organizations. Morgan Stanley is attempting to play catch-up in terms of asset size, with Schwab currently at US$4.05 trillion and Fidelity at a staggering US$8.30 trillion.
Morgan Stanley Bargaining Power of Suppliers
- Amongst Major players in the market: Due to its size and top positioning in industry it has strong influence on its suppliers, Its entire assets are at US$1,180.23 billion , it has acquired major market players e.g., Eaton Vance and E-Trade , this shows its market strength.
- Diverse Supplier Portfolio: Morgan Stanley managed a diverse supplier portfolio. Some of it’s partners and members are National Minority Supplier Development Council (NMSDC),US Black Chambers, Inc. (USBC) and Women’s Business Enterprise National Council (WBENC).
Morgan Stanley Bargaining Power of Buyers
- Leading merger and acquisition service provider:Goldman Sachs is world’s biggest financial advisor to merger and acquisition (M&A) transactions in 2022, managing M&A transactions worth US$1.2 trillion. JP Morgan and Morgan Stanley have joined Goldman Sachs as the world’s biggest financial advisors in terms of M&A deal volumes in 2022. These three firms consulted on roughly 1,100 M&A transactions globally.
- Customer Satisfaction: Morgan Stanley ranked # 15 in Banking and Financial Services brand by “Comparably” while comparing with it’s competitors JP Morgan holds 1st and Goldman Sachs holds 2nd position so in the presence of big giants Morgan Stanley should focus more on it’s Customer Onboard, Digital Transformation and Customer Experience Journey.
Scoreboard also ranked Morgan Stanley on 494 in customer service survey sample of 1012 companies which is not very good ranking.
Morgan Stanley Threat of Substitute Products or Services
- Digital Payments and Trending in Banking Industry: The transaction value in the digital payments sector is estimated to reach $9.47 trillion in 2023. Total transaction value is expected to climb at an annual pace of 11.79% (CAGR 2023-2027), reaching US$14.79 trillion by 2027. With a total transaction value of US$5.99 trillion expected in 2023, digital commerce is the market’s largest segment.
- Fintech Trends – Growth of Credit Card Giants:Visa is without a doubt the undisputed worldwide payment processor leader, processing more than US$10 trillion in payments each year. According to the data, Apple Pay and Alipay are the world’s second and third largest payment services, handling more than US$6 trillion in payments each year.
- Climate Risk : Morgan Stanley taking Climate Risk into special consideration as due to transformation to a low-carbon and high technology driven economy there will be new models from policy to operational design which will impact the business cost and risks. Also the physical risk to the people and property is increased in this era of climate change.
References
- Morgan Stanley, profile ,Forbes Global 2000 List 2022 : The Top 200
- Morgan Stanley, profile, Fortune 500
- Net revenues of Morgan Stanley from 2010 to 2021(in billion U.S. dollars) atStatista
- leading wealth management firms worldwide in 2020, by assets under management (in trillion U.S. dollars) at Statista
- Annual report 2021, MorganStanly
- Largest Investment Firms by Assets Managed at statista
- Leading financial advisors to merger and acquisition transactions worldwide in 2022, by deal value(in billion U.S. dollars) atStatista
- Global market share of revenue of leading investment banks as of December 2022 at Statista
- Net income of Morgan Stanley from 2010 to 2021(in billion U.S. dollars) at Statist
- Number of new client accounts opened at Charles Schwab from 2013 to 2021(in 1,000s) atstatista
- Assets under management (AUM) of Charles Schwab Corporation from 2016 to 2021, by asset class(in trillion U.S. dollars) atstatista
- Investment funds owned by Charles Schwab globally which grew the fastest over the year through September 1, 2021, by one year return atstatista
- Digital Payments Catch up to Credit Card Giants at statista
- Digital Payments – Worldwide at Statista
- Net revenue of JPMorgan Chase from 2006 to 2021(in billion U.S. dollars) at Statista
- Net income of JPMorgan Chase from 2005 to 2021(in billion U.S. dollars) at Statista
- Revenue of Citigroup from 2011 to 2021(in billion U.S. dollars) at Statista
- Total revenue of Wells Fargo from 2009 to 2021(in billion U.S. dollars) at Statista
- Largest commercial banks in the United States in 2021, by revenue(in billion U.S. dollars) at Statista
- Annual report 2021, JP Morgan
- Largest commercial banks in the United States in 2021, by revenue(in billion U.S. dollars) at Statista
- Total assets of JPMorgan Chase from 2006 to 2021(in billion U.S. dollars) at Statista
- Net income of Citigroup from 2005 to 2021(in billion U.S. dollars) At Statista
- Net income of Wells Fargo 2009 to 2021(in billion U.S. dollars) atStatista
- Largest banks in the United States – statistics & facts at Statista
- Statista (January 2, 2023) Global market share of revenue of leading investment banks as of December 2022 | Statista. [Online].Available at Statista
- Morgan Stanley,Supplier Diversity
- Comparably, Morgan Stanley is ranked # 15 in Banking and Financial Services Brands
- Customer Service Scoreboard, Morgan Stanley Customer Service