After looking at several internal factors, E*Trade is in an average position with room to improve. With the Internal Matrix E*Trade scored a 2. 65 which falls into the category of hold and maintain strategies of market penetration, and product development. With market penetration E*Trade needs to seek market share by increasing their marketing efforts and for product development they need to look to increase their sales by improving their services.
This is normally where a young company like E*Trade commonly would stand with much room to improve and figure out how to reach the ideal position of being in the category of market ...
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...penetration, market development, product development to grow and build. Also looking at their financial statements put them in the same boat as the Internal Matrix which is average not a very high profit and no big debts. E*Trade has a strong liquidity, which has stayed constant through the tough economic times, being able to meet maturing short-term obligations.
E*Trade having three primary retail products and service is a strength because it allows them to become experts in each section. The first one being investing and trading, second banking, and the third being lending. Since they have only have to focus on these three primary products and services their total net revenue has increased 42% in 2006, its retail and institutional commission went to $625. 3 million increasing 36%, the retail segment revenue increased 52%, and the institutional segment income increased 60%.
With all these ratio’s increasing E*Trade net income for 2006 was $629 million. Up till this past year E*Trade looked like they were heading in a positive direction financially. Comparing their 2006 financials with 2008 eight, they have been heading in a downward spiral. This is due to the company services being so closely tied to the economy. The company’s net income is the main reason for the company’s profitability currently being in a negative 21%. Their debt-to-equity ratio does not show a good condition either.
This is a result of a decrease in shareholders equity decreasing 40%. Their liquidity and activity ratios have not changed much. E*Trades current assets and current liabilities for 2008 are decreased evenly, with fairly low amounts. Activity ratio’s comparing E*Trades assets is showing that they are not earning much operating income. However, the activity value itself in 2008 has not decreased from 2006. Looking at how positive the 2006 financial statements were shows that there is hope that the company can reach that success again.
An internal strength that E*Trade has is marketing. Although their advertising expenses have increased by 13%, they are using that money wisely. They use co-branding to market its services at a discount price. One company that they partnered up with is the Hilton Hotels; they have it so that members of this hotel will receive bonus points, similar to frequent flyer miles, if they open an account with E*Trade. This enables E*Trade to reach a large and highly attractive group of potential customers that they normally might not have gotten.