I. Company Background

E*TRADE Financial Corporation is a financial services company that provides brokerage and related products and services primarily to individual retail investors under the brand "E*TRADE Financial." It also provides investor-focused banking products, such as sweep deposits and savings products, to retail investors. Their competitive strategy is to attract and retain customers by emphasizing value beyond price, ease of use and innovation, with delivery of the products and services primarily through digital and technology-intensive channels. E*TRADE is considered an industry pioneer on the following:  Online Trading: In 1983, a doctor in Michigan placed the first online trade using a new technology developed by the predecessor to E*TRADE Securities.  Two-Second Execution Guarantee: E*TRADE Securities offers all customers an industry- leading two-second trade-execution guarantee on qualified stock trades.  Security: The Company’s Complete Protection Guarantee offered the industry’s first fraud coverage and payment protection for the retail consumer, employing strict physical, electronic and procedural safeguards designed to help protect customers’ non-public information.  Unique Customer Growth Channel: As part of the Company’s mission to attract, retain and migrate customers, the Corporate Services business provides stock plan administration services to leading companies, including 22 percent of the S&P 500, acting as a strong feeder for the retail customer base.  Global Trading: E*TRADE’s US retail customers have online access to foreign stocks and currencies in the major international market. a. Mission and Vision Statement

Mission Statement of the Company

To create long-term shareholder value through superior financial performance driven by the delivery of a diversified range of innovative, customer-focused financial products and services and supported by an operating culture based on the highest level of teamwork, efficiency and integrity.

Vision Statement of the Company

To empower self-direct investors to make informed investment decisions and take control of their financial future with anytime, anywhere access to the world’s major investment markets. b. Current Status of the Company

i. Financial aspects

Like many other financial firms, E*TRADE suffered its worst of times during the financial meltdown back in 2007. Prior to 2007, the company made sizable investments in mortgages, mortgaged-backed securities and other asset-backed securities. The decline in the value of these assets resulted into a net loss on its financial statements.

ETFC Stock Price chart for the past 10 years.

The historical prices of the stock depicts the financial health position of the company during the financial crisis. The company has incurred significant losses and ended with a net loss of $112.6 million for the year 2012.

For the past four years, the company has been applying a back-to-basics approach to recover its position. The primary focus is to profitably grow the retail brokerage business.

Also, for the past few years, E*TRADE only has a market share of 12% which is far behind from its current competitors, despite it being an industry pioneer. ii. Operational aspect

Compared to its competitors, the actual number of physical branches that E*TRADE has is only at 30. Also, E*TRADE only have two international branches: Hong Kong and Singapore that is to cater the Asia Pacific market. Both branches employs limited staff and only provides account opening sales service and answers basic customer inquiries. Any other concerns are referred to the main customer service division. There are currently three sites that supports the back office and customer service of the company: (1) Sandy Utah (2) Alpharetta Georgia and (3) Makati Philippines. The Philippine site only has about 400 to 500 employees. Around half of it are part of the customer service team while the rest are part of the different back office support groups and a minimal number are part of the admin.

iii. Order placement and execution venues

Trade orders are placed through online via different digital channels. These include the website (E*TRADE website), mobile application (E*TRADE mobile pro), trading platform (Pro Elite and Market Trader) and E*TRADE connect.

In terms of offline channels, the order can be placed through the phone with a licensed trader and the IVR system.

Order placement over the phone:

c. Four Core Elements of Service

 Service Offering E*TRADE offers the following products and services: (1) retail brokerage accounts (2) retirement accounts and (3) stock plan accounts. Account holders are given access to different channels to execute their orders in buying or selling investment products.

The company focuses on all customers that open and maintain accounts with them. These accounts are used to do trading on equities, bonds, and mutual funds. Some of these accounts are also opened to hold shares that were either granted by the employer or acquired through an employee stock plan benefit. A customer service hotline is available 24 hours a day and 7 days a week. Customer care are also provided using online chat, and secure messaging system. There are also 30 physical branches across the country that can provide in-person branch services. A retail branch in Hong Kong and Singapore was also established to penetrate the Asian market. E*TRADE values the business relationship between them as a broker-dealer firm and the client which is the investor with dedication by making sure that it prioritizes the customer’s time and convenience.

 Funding Mechanism

E*TRADE is a listed company publicly trading in NASDAQ. The company gets their funding through the selling of its shares in the market during the initial public offering and any succeeding follow-up public offerings. Aside from that, the company charges the customers with fees for doing certain requests and trade commissions per trade executed. The customer is allowed to maintain their account for free, provided that they maintain at least one stock position or at least one dollar in it. The trade commission is not the cheapest in the brokerage industry, however, it is being justified by the excellent order routing and trade execution provided. Experienced and active traders are given access to advanced trading platforms for free as long as they have executed at least 30 trades in a quarter. The trading platform can be subscribed for a fee by other investors who did not qualify. Exclusive analyst tools and information can also be subscribed at a fee.

Another funding mechanism involves the un-invested cash deposited by the customers. The money are used by the firm to do overnight lending which gives them interest income. Generally, brokerage accounts are not interest-bearing accounts.  Employee Management System

E*TRADE has a human resource department that handles recruitments, facilitators of training and employee development programs, and handles employee grievances. For new hires, the recruitment team applies a strict process of selecting candidates for vacant positions. All incoming employees undergo a screening test to determine their behavioral and attitude towards work. A qualifying exam called LIMRA is also used to see if a possible candidate has a high chance of passing licensure exams. Only and if the candidate gets a high score on it and pass all other qualification process such as High Management Interviews (also known as HMI) will a candidate be admitted to the company as a trainee for licensure.

The company also provides classroom trainings in preparation for the licensure exams (Series 7 and Series 63). These licensure exams will qualify the employee to become a registered trader in the US. Also, product trainings are given to the employees to become knowledgeable about the US financial market and gain technical skills.

Part of the employee management system of the company is to understand the perception of the current employees towards their job. Feedbacks are being asked regularly to learn how they can improve on the employee’s job satisfaction and minimize attrition rate. Yearly performance evaluation is implemented to let the employees be aware whether they have met their personal goals and objectives. Coaching and mentoring by the managers is being provided when a need or problem arises. The company also adopts an open door policy to its current employees to make sure that feedbacks are highly appreciated and valued.

 Customer Management System Customers that opened accounts with E*TRADE are categorized according to their tiered profile in terms of assets, income and risk tolerance. Aside from the basic information, each financial and investment profile is being gathered in compliance to the Know Your Customer (KYC) policy. This is also in compliance to the US Patriot Act in which a firm needs to know and understand where the source of funds came from, their investment objective and whether certain trading products or services should be suitable for the customer. A good example is the application for option trading levels. Approval for a certain level of option trading is dependent on the knowledge and experience of the customer in it. The option principal also reviews and evaluate the investment profile of the customer to determine whether to approve or reject the application.

Clients with big assets have their own dedicated customer care hotline that can service their requests. This gives them a feeling that they are privileged and highly valued by the company. Different toll-free numbers for certain divisions are also made available for customers to reach out when inquiries require specialization. In effect, the clients will perceive that the company has trained specialists that are very skilled and knowledgeable.

d. House of Quality

e. Customer Variability

f. Strengths-Weaknesses-Opportunities-Threats (SWOT)

Strengths Weaknesses 1. Known brand 1. Lack of physical branches 2. Strong management team 2. International presence limited to Asia Pacific 3. Talented workforce 3. 4. Incoming generating corporate services group 4. 5. 5. Opportunities Threats 1. 1. Competition 2. 2. Uncertain economic conditions 3. 3. 4. 4. 5. 5.

II. Right to Left Strategic Planning Framework

a. Vision (picture of the company 5 to 10 years from now)

The company’s vision is to be one of the leading brokerage firms of choice by retail investors and to stays in lock with the customers.

b. Mission

c. Objectivities

 To increase the income

 To decrease the operation costs

 To gain more market share

 To lower the brokerage attrition rate

d. Key Results Area

e. Performance Indicators f. Strategies

1. Enhance the digital and offline customer experience

2. Expand in the Asian Pacific region

3. Provide more easy to use and innovative tools that will appeal to the retail investors.

4. Consider outsourcing the bulk of back office support and the customer service support.

5. g. Operation Program

h. Activities i. Tasks

j. Resource

III. Bottom Up Planning Strategy: SWOT Matrix

External Assessment Opportunities Threats 1. 1. Competition 2. 2. Uncertain economic Internal Assessment 3. conditions 3. Strengths SO Strategies ST Strategies 1. Brand recognition 2. Strong management team 3. Talented workforce 4. 5. Weaknesses WO Strategies WT Strategies 1. Lack of physical branches 2. 3. IV.