J.

P Morgan and Chase: A mini case

1) Identify the management philosophy of the company you have chosen and discuss. Did they ever
make any changes in their management philosophies through the years? Why or why not?

J.P. Morgan, the man behind the J.P. Morgan and Chase is an American capitalist and philanthropist figure
that dominated the entire company and eventually history says save the American economy. Believes in work ethic
and duties of the rich as a contemporary tycoon. As a merchant banker, he had to develop clients, and his business
life was necessarily social. An old-fashioned banker whose word was his bond and who sealed his deals with a
handshake. As history unfolds, several mergers occurred. As this merger over troubled businesses, he reorganized
their structures and management to return it to a profitable institution. Like any other company. J.P. Morgan and
Chase has its management philosophies aligned with its creator. A transformational company of the Financial
industry wherein it allows to incorporate other companies philosophies, policies and acts by merging, absorption
and alliance to other company. One must sense that each company has different philosophies as it is an integral
part of companies operational and management guidance. In the book of Ron Chernow, the Morgans always
believed in absolute monarchy which is evident with their company. Morgans dominated their company as they
are absolutely at the C-level of each company they have.

As to the question of changing management philosophies, yes they have. Acquiring over 1,200 companies
and globalization over the past years and in existence, it is indeed changing management philosophies. As it tries
to survive over the great recession in 1907, the Lehman brothers bankruptcy. Even with this crisis, J.P. Morgan and
Chase still emerged as stronger. Regulations differ from an era, from the time that Federal Reserve System was
created to the crisis in the economy occurred. Challenges to management philosophy unfold even if J.P. Morgan
and Chase have an extensive Code of Conduct and Code of Ethics as mentioned. The Code is based on our
fundamental understanding that no one at JPMorgan Chase should ever sacrifice integrity. The company’s code of
ethics is more lengthy, and says in part: “The purpose of this Code of Ethics is to promote honest and ethical
conduct and compliance with the law”. Perhaps those statement leads to its Financial Statements and Financial
capabilities. Mentioned in the case analysis, that despite having extensive ethical-based statements, JPM has had
its fair share of ethical issues over the years. In January 2011, JPM admitted that it wrongly overcharged several
thousand military families for their mortgages, including active-duty personnel in Afghanistan. Another was the
overcharge that Chase violating the law and harassing a couple for nonpayment.

Another key challenge of J.P. Morgan and Chase is globalization. No one can challenge globalization not to
occur. They considered strategic efforts to cope. Key notable Challenges to management philosophy, as a reader,
that J.P. Morgan and Chase must consider is the emerging Mobile Payments, Regulatory Reforms, and mortgage
businesses as Americans are using traditional banking less and less. To address these emerging challenges, as
mentioned, J.P. Morgan and Chase's international expansion strategy aims to increase the firm’s global presence
through an aggressive international expansion plan. The institution is focused on expanding its asset management,
investment bank, and treasury and securities services segments in Asia, Latin America, Africa, and the Middle East.
Furthermore, slowly expanding into newly emerging or even frontier markets, J.P. Morgan and Chase’s clients in
this expansion plan include multinational corporations, sovereign wealth funds, and public entities.

A clear evident of changing management philosophies is when a company takes the international stage.
To meet globalization. As cited in the problem statement, In 2008, J.P. Morgan had approximately 200 clients
in Brazil, China, and India combined, but by 2012, the number of clients in these nations had expanded
to 800. By 2017, J.P. Morgan is expected to have more than 2,000 clients in these nations, as these
nations, has its different culture, political structures and ethical beliefs.
 2) How did these management philosophy contributed to the achievement of the company’s goals and
objectives, socially and financially. Substantiate your answer by citing actual milestones in the case
mentioned.

Current Management philosophy of J.P. Morgan and Chase which is posted in their website are the
following: a) Exceptional Client Service, b) Operational Excellence, and c) Commitment to integrity, fairness and
responsibility. With over years in existence, if we look at the segments of J.P. Morgan, fundamentally all of the
achievements was pursued through the management philosophy of the founder. Building nations, investing in
different businesses to further elaborate his philosophical ideas. Chase Manhattan's earliest predecessor, the
Manhattan Company, was formed in 1799, ostensibly to supply New York with clean water to fight a yellow fever
epidemic, From the time of the merger between Chase and the Bank of Manhattan, the Battered by Bad Loans and
Third World Debt Crisis in 1980’s, Restructuring in the Early 1990s, Merging with Chemical Bank in 1996,
Consolidation and Further Takeovers in late 1990’s and that in 2000’s the J.P. Morgan Chase Era Begins.

Despite the challenges that J.P. Morgan and Chase incurred, positive phenomena occurs. Excerpt from the
case stated that with the 2011 acquisition of Sempra, JPM is currently one of the top-three firms in the world in
commodity dealings. It is evident that growth from 2011 to 2012 grew by 10 percent to bring total commodity
clients to more than 2,200, as well as increased commodity packaging and selling to existing clients. J.P. Morgan
expected commodity demand to increase with the growth of emerging markets and anticipates increased business
in the various commodity asset classes the firm currently offers. Surprising to some, J.P. Morgan is actively growing
its physical branches. Another evidence is that JPM’s own research suggests however that although 17 million JPM
customers do much of their banking business online, but still value a face-to-face conversation when it comes to
taking out a mortgage, applying for a credit card, or seeking general financial advice in a physical branch location as
these needs’ documents. Currently, as the point out, 45 percent of Chase credit cards and 50 percent of the retail
mortgages are sold on site at branch locations.

As segments draw successful dimensions of the company, it is evident that Within J.P. Morgans's
investment bank segment, $8,303 million of the $26,274 million was derived from noninterest sources, with the
balance of $17,971 derived from interest sources. Customers of its investment bank division include corporations,
financial institutions, and government and institutional investors. Investment bank activities include advising on
business strategy and structure, raising capital through debt or equity, derivative instruments, prime brokerage,
and research. J.P. Morgan's retail financial services segment accounts for about 27 percent of 2011 net revenues
with $10,405 million of the segments, $26,538 million being derived from noninterest sources, with the balance of
$16,133 derived from interest sources. The retail financial services segment includes bank branches, ATMs,
mortgages, and real estate. J.P. Morgan customers have access to more than 17,200 ATMs and 5,500 bank
branches. The Chase business segment currently services more than 8 million loans in 23 states and services more
than $150 billion of mortgage originations each year. J.P. Morgan’s credit card services and auto segment
accounted for about 19 percent of 2011 net revenues with $4,892 million of the segments, $19,141 million being
derived from noninterest sources with the balance of $14,249 derived from interest sources. The segment
accounts for more than $132 billion in credit card loans with over 65 million open credit card accounts, making J.P.
Morgan by statistics one of the largest credit card issuers in the USA. J.P. Morgan customers can also obtain
financing through 17,200 auto dealerships and 2,000 schools and universities. J.P. Morgan earned a record of $19
billion in net income in 2011, up 9 percent from the previous record of $17.4 billion the prior year. The company’s
net income would have been considerably more, except for losses from the J.P. Morgan mortgage business. As
Mortgage losses are expected to continue for a while longer, but the bulk of J.P. Morgan's bad mortgages have
already been absorbed.