Charles Schwab Corporation

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Case: Charles Schwab Corporation Question: What are the key strategic and technological factors that have made Charles Schwab so successful and how are they inter-related to Schwab’s competitive position? The key strategic factors that have made Charles Schwab so successful are as follows: • Pioneered the concept of a discount brokerage firm. • Empowered the individual investor by offering unbiased products and services • Their brokers are paid salary plus bonus, thereby eliminating the issue plaguing traditional full-service firms of having a conflict of interest because their brokers are paid commissions on trades. • Providing accessible local branch offices for those customers who prefer personal interaction. • Live telephone customer representatives available 24 hours a day, 7 days a week. • Schwab provided a price point of $29.95 per trade using their new Internet trading service, which offered a significantly lower price than the traditional full-service firms. • Schwab maintained their full-service customer offerings in order to differentiate themselves from the highly discounted traders such as E-Trade and AmeriTrade. • Schwab’s decided to mildly advertise the new Internet trading service so as to not emphasize and promote low commission prices as the deciding factor for consumers. Instead Schwab wanted consumers to focus on the value of a full suite of trading tools and customer service representatives they offered before price. The key technological factors that have made Charles Schwab so successful are as follows: • Providing real-time online trading via the Internet • Providing online research tools through customized investing applications • Created seamless interruption through the use of IBM’s DB2 database system so that customers were not impacted of by mainframes going down. • Industry leaders in security and

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