Charles Schwab Case Study

1624 Words7 Pages
Company Background Based in San Francisco, Charles Schwab in 1975 formed the company and seized the opportunity to start the world first discount brokerage firm after the S.E.C. (Securities and Exchange Commission) abolished fixed rate commissions brokerage trades. Schwab's strategy was to empower the individual investor by offering products and services at discounted prices. To avoid churing (many buys and sales of stocks to generate commissions), Schwab paid its brokers a salary plus bonus as opposed to commissions on trades...a great move. The bonus was determined by performance against a number of team-based measures including business development, client satisfaction, and productivity. While Schwab initially attracted customers who felt they had been "burned" by traditional full-service brokers, by 1982 they had grown to $54.0 million dollars in revenues. In 1983 BankAmerica bought Schwab for $57.0 million. However, they did not own them long due to Schwab's go-go entrepreneurial culture which clashed with BankAmerica culture.. Schwab lead a $280 million dollar management buyout of the firm from BankAmerica in 1987. Then in 1988 Schwab went public. (they sold common stock to the public) in the years 1987 and 1988 Schwab grew from $18 billion in customer assets to $354 billion and revenues from $267 million to $2.3 billion. They now had a branch system of 272 offices in 47 states. They were on a roll. Now get this! To provide live customer support, Schwab operated four 24-hour a day, seven day a week regional customer service centers. Indianapolis, Denver, Phoenix, and Orlando, handling 150,000 calls per week related to trading, quotes, and general inquiries. Customer Service representatives were fully equipped with online computer terminals that enabled account information and placing of orders online. Schwab is beginning to build his

More about Charles Schwab Case Study

Open Document