Countrywide Fit Bofa's Business Case

Discussion Questions

1. How did the acquisition of Countrywide fit BofA’s business strategy? Be specific. What were the key assumptions implicit in BofA’s business strategy? How did the existence of BofA’s mission and business strategy help the firm move quickly in acquiring Countrywide?

Overall BofA was looking to be one of the largest bank in U.S. Their strategy was acquired the most important banks which provided financial services. Acquired Countrywide gave them the access to a huge customer portfolio in the mortgage area since this bank was one of the biggest providers of loan closing services, such as appraisals and flood determinations; and other residential real estate–related services.

In addition, a considerable tax saving to Bof

The purchase of the nation’s largest mortgage lender offered BofA’s the possibility of increase profit.

2. How would you classify the BofA business strategy (cost leadership, differentiation, focus, or some combination)? Explain your answer.

I think BofA was following a hybrid strategy which is a combination between low cost, differentiation and niche strategy because I believe the management was trying to diversified or builds a multiproduct bank across business unit organizational lines.

I think BofA’s want to be focus in the industry of residential real estate-related services though a cost leadership. Buy Countrywide gave them access to increase their customer portfolio sooner; instead to invest in marketing and efforts expecting revenue that could take years. (No taking in consideration the legal problems that this acquisition has caused).

3. Describe what the likely objectives of the BofA acquisition plan might have been. Be specific. What key assumptions were implicit in BofA’s acquisition plan? What were some of the key risks associated with integrating Countrywide? In addition to the purchase price, how would you determine BofA’s potential resource commitment in making this

4. What capabilities did the acquisition of FleetBoston Financial and MBNA provide BofA? How did the acquisition of Countrywide complement previous acquisitions?

The acquisition of FleetBoston Financial and MBNA, the most branches, customer, checking deposits and credit card issuer of any bank in the U.S. gave BofA a huge advantage in the investment and service banking industry. With the acquisition of Countrywide they were looking to go even deeper in the industry and take the control of residential real estate-related services too. They bought the change to diversify products and offer more to their clients. Through this strategy they enhance the opportunity to have a cost saving.

5. What alternatives to outright acquisition did BofA have? Why do you believe BofA chose to acquire Countrywide rather than to pursue an alternative strategy? Be