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Case Study P. 35: Morgan Stanley’s Return on System NonInvestment
1. Overview of the company
• Morgan Stanley is a global financial services firm with more than 600 offices in 30 countries and over 53,000 employees.
• Founded in 1935, headquartered in New York City
• Operates in 4 segments: Institutional Securities, Asset Management, Retail Brokerage, and Discover (which provides Discover Card services)
• provides Discover Card services ? merger with retail brokerage Dean Witter Discover and Co. in 1997
2. Key issues in the case
• Retail brokerage group never accepted as an equal partner by the rest of Morgan Stanley. Former Dean Witter employees have claimed they felt like disrespected outsiders after merger
• Retail Brokerage was not well-integrated with the rest of the company (it ran on different systems platform than the institutional brokerage side, its employee systems were not integrated)
• IT infrastructure problems ( e.g.: outdated computer systems, not-upgraded desktop PC’s, printers clogged) ? firm’s technology problems, e.g. : customer Web site
• Top brokers started to leave, profits dropped, margins lagged, nearly 1,500 brokers left the company ? as a result of a lack of investment in technology
• CEO Phillip Purcell ? focused business strategy on maximizing profits instead of generating revenue ? technology is invested in low priority ? miscalculated and mismanaging areas of business (leadership problems)
• June 2005 Phillip Purcell is res ...