Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code : COM0035

Year : 2005

Industry : Retailing

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction:On May 16th 2004, Charles Schwab & Co. Inc. (Schwab), the leading investment bank of America announced a massive reduction in the fees charged for securities trading. Fees were slashed by 66% for high-end customers with more than $1 million in assets maintained with Schwab and around 33% for all other trades. This move was estimated to result in an annual revenue loss of $95 million or 3% of total revenue. According to David S. Pottruck, the Chief Executive of Charles Schwab, the move was expected to help boost the company's business in the long run.

After the dotcom bubble of 2000, Schwab tried hard to emerge as a full-fledged investment bank. It was steadily losing ground to the competitors such as Ameritrade, Merrill-Lynch and Fidelity Investments over various parameters including trade commissions and customer service. For example, Fidelity Investments charged fees as low as $14.95 on a single trade compared to $19.95 by Schwab.