Company Strategy Paper


PNC is one of the oldest commercial banks in the United States. Its origin dates back to 1800s in the US. The Company has been successful, hence becoming one of the leading financial institutions in the country.  Initially, PNC operated under the name of the Pittsburg National Corporation, which  established originally as the Pittsburg Trust and Savings Company in 1852. In 1982, Pennsylvania State amended laws to allow the statewide banking, which ultimately made the Pittsburg National Corporation and Provident National Corporation merge. The Provident National Corporation was founded in 1865 as an insurance company. The 1986 merger between the two institutions was one of the largest in the United States’ history. Both Pittsburg National Corporation and Provident National Corporation combined their shared initials of their holding companies to establish a new company called PNC Financial Corp. The products and services of the company included Cheques, Automated Teller Machines, credit facilities and savings facilities. The company makes its money through offering financial services, such as giving credits to customers.

When the banking industry emerged, a trouble-free and dependable business efficiently received deposits from investors at lower interest rates, and subsequently loaned it out to borrowers at higher rates. Due to several economic crises, emerging technology and government control, the banking industry has evolved both positively and negatively. According to Association (2011), economists assert that the fundamental economics of banking is changing and that in the next decade banking institutions are likely to be subjected to substantial structural and operational changes.

PNC has built a strong foundation, and it remains one of the top banks in the banking industry.  It has put measures in place, to deal with Porter’s five forces that include threat of new entrants, power of suppliers, power of buyers, availability of substitutes, and competitive rivalry. New entrants come into the industry with automated services and products, hence posing a substantial threat to larger companies like PNC. The company has remained strong because of the large customer base. Such threats include a company providing banking services without technically being an actual bank. For instance, companies can offer mortgages, loans and financial services to consumers without having the credentials of being a bank.

The power of supplier is a force that has an effect on the competition dynamic. Analyzing the power of supplier could be difficult, because banks do not have suppliers. Smaller banks have the ability to lure more consumers, because they emphasize on the customers’ needs and wants. The power of buyers is extremely crucial in the banking industry. Customer loyalty determines how the bank could succeed in its future transactions.  Ferreras (2011) asserts that the switching costs, associated with a consumer changing accounts from one bank to another, play a vital role in determining the number of customers per bank.  However, some banks lower their rates in order to lure customers away from other banks.

The availability of substitutes is a significant force in competition, and it is fundamental to the banking industry. Even though banks offer a wide range of services to customers, there is a herculean threat from non-financial companies that are advancing and providing financial services to customers. Non-financial companies offer cheaper services, hence threatening banks. Lastly, competitive rivalry is a threat to the industry. The competition in the banking industry is so stiff. In order to compete favorably, most banks have put in place strategic measures, such as attracting many customers through intensive advertising.

With all of the aforementioned forces, PNC uses several strategies to implement growth, efficiency and competition. The company remains successful because of the acquisitions it continues to engage in. There is a statement on its website, and the company acquired many smaller companies, hence boosting the customer base in places, such as Pennsylvania and Philadelphia. The company has brought in $264.28 billion in total assets, and 183.39 billion in deposits, to in order to remain competitive. The company remains one of the best financial institutions in the country, compared to its competitors, such as the Bank of America. The large customer base and quality services offered have given the bank a competitive advantage and age over competitors. The success the company has had, gives it a bright future. It is still stronger and moving towards further expansion. Factors, such as the change of name from PNC Bank to PNC Financial Services Group, contribute to the company’s bright future, hence building a stronger reputation.

Globalization has had a considerable influence on the banking industry. The global financing options and a reduction in regulations have enabled banks to operate beyond their borders. This has led to increased competition within the global financial institutions. Globalization has improved the technology used in the delivery of services in banks because of the targeted efficiency.

The banking industry is one of the most attractive industries all over the globe. Most individuals are always attracted to the services offered and the overall operations of the banking industry. Customers are highly attracted to the industry, as it enables them to save and invest in the vital economic opportunities. The attractiveness of the industry would remain high even in the future because of the improved services it offers each day. Technological developments have significantly improved the industry, making it more attractive among most individuals. The automated services offered would boost the attractiveness in future. The strategies adopted by PNC are reaping the required results.

The company has a strong financial base. At the end of December 31, 2010, PNC reported the total revenue of $17,096,000. The amount demonstrated a slight decrease from the total revenue reported at the end of December 31, 2009 of $19,231,000. However, a major increase from their reported number in December 31, 2008 was of $9,886,000. PNC’s net income has increased substantially over the years.  Ferreras (2011) points out that in 2008, PNC reported a total net income of $882,000, and at the end of 2010 this amount had significantly increased to a total net income of $3,011,000, and currently has a net income of $3,667,000. These numbers are highly crucial and illustrate how PNC is transforming into a successful company. Additionally, as of October 24, 2011 PNC’s earning per share on their stock was 6.88 and their dividend per share was 1.15. In December 31 2010, PNC had total assets of $264.28 billion and deposits of $183.39 billion. On December 31, 2010, there were 44, 817 employees working for PNC and 79,520 shareholders within the company. The companies’ cash and cash equivalents in the cash flow statement were ranked as being high, due to the large amounts the banks receive from customers. Unlike other industries, PNC cannot be evaluated basing on internal processes, such as defect rate, order fulfillment and delivery times. However, it could be analyzed, basing on customer service levels and techniques used.  Association (2011) reports that all PNC employees are required to engage in several customer service classes that primarily focus on pleasing the customer and making PNC a better workplace and business. The current strong overall performance does not necessitate the immediate attention to change strategies.

The company has vital resources and capabilities. Currently, it offers an assortment of banking products that include maximizing wealth and saving at a young age. PNC cares about its customers, as well as obtains new customers. Along with the dynamic products, PNC has several state of the art buildings located within 14 states in the United States. With thousands of places located within the United States, PNC has successfully created a reputable well-known brand for itself and its customers. This has led to the acquisition of customer loyalty. The increased commitment in community service acts has allowed them to pair up with different ventures and alliances, which have consequently expanded their business.

It is evident that PNC has the proper resources that allow it to be powerful in the marketplace. However, there is space for improvement and growth. According to Moyer (2000), PNC has achieved a competitive advantage within the banking industry because of the excellent customer services and large assortments of products, which have made them one of the top banks within in the United States. However, PNC has failed in providing more of a convenience for their customers, such as longer hours, 24/7 banking services. This resource is not rare, as one of PNC’s competitors, TD Bank, is primarily known for the convenience it illustrates for its customers. TD Bank is open 7 days a week, and provides a 24/7 banking phone service to customers, who have drastically increased the clientele of TD Bank, as well as its sales. Even though PNC is trying to imitate this resource by having some of its locations open 7 days a week, I do not think that it would succeed. All of their locations have longer hours, and PNC will see a dramatic increase in their sales, as well as an increase in obtaining new customers. An argument may be that they will have to pay their employees more, this is true, but on a financial standpoint, PNC will still become more successful, because it would prospectively gain more customers that would offset the costs of paying its employees extra money for working overtime. Substantially, if PNC adapted this resource, it would create a distinctive competence, because it already has breathtaking products.

 SWOT analysis focuses on the company’s resources that include strengths, weaknesses, opportunities and threats within the market or industry. PNC’s SWOT analysis is as follows:

Table 1: DATA MONITOR: The PNC Financial Services Group, Inc. (2011). PNC Financial Services SWOT Analysis, 1-8. Retrieved from EBSCOhost.


  • Strong Franchise Value
  • Visibility
  • Strong Focus on Cost Management
  • Sustaining Profit Margins
  • Adequate Capital to cover its risk exposure


  • Deteriorating asset quality requiring higher provisions
  • Significant exposure to RMB (the residential mortgage banking)


  • Acquisitions are likely to enhance the growth
  • Buoyant asset management and custody bank sector
  • Growing mobile banking market to help in retaining customers and arresting costs


  • Competitive pressures are likely to intensify pressure on margins
  • Increasing regulatory challenges
  • High systemic risk in the US banking industry, affecting industry’s prospect

Strong franchise value allows revenue to be readily available, since PNC owns a share of investment management firms, bank-affiliated leasing companies and government entities.  During turbulent economic times, PNC lost many assets, because customers were afraid to put their money in banks, as well as they did not have a decent credit score to receive loans. PNC has been working tremendously hard to change the loss of revenue it is currently experiencing. On the other hand, PNC has several opportunities that will allow it to expand its business and increase its revenue.  Currently, PNC is looking for ways to increase its mobile banking. PNC was the first to offer a remote deposit for business customers, as well as an account called Virtual Wallet that allowed customers to monitor their accounts via mobile phones. Mobile banking is such a monumental opportunity for PNC, because it cuts down cost, as well as keeps them up to date with all the new emerging technology capabilities. Threats terribly affect the operations of companies. One of the PNC’s principal threats is the constant restrictions that the government place on banks, such as different regulatory procedures they have to follow. Some of these procedures place a burden upon the certain products and services that PNC offers, and that ultimately affect revenue.   

The banking industry is very complicated to evaluate.  Datamonitor (2011) points out that PNC has gained customers through the determination of competitive advantages. It offers several free checking accounts to their customers, which most banks do not do, as well as other services and products at low prices. PNC’s value chain focuses primarily on distributing excellent customer service to establish the customer value. Being in an industry with not much differentiation, PNC has done a remarkable job in acquiring its customers and keeping them. 

PNC’s value chains, as well as other attributes, have certainly allowed them to attain competitive strengths, which would enable it to compete with its key rivals on the various products and services, along with its reputable name and strategic business planning. PNC is certainly at the top of the banking industry. Moyer (2000) reports that the only weakness that PNC has not makes it as competitive, as its rival TD Bank with its longer operation hours. However, this is something that upper management could rectify.


Subsequently, PNC has been successful in expanding its corporation, as well as providing products that differ from their competitors. PNC has tools that will pose it to stay afloat for the future. However, with the economic instability, you can never predict what the outcome will be. The banking industry has fallen short over the years, due to technology and the economy. PNC’s strategy to offer products to fit the customer’s needs has been vital. However, I do not think that PNC will have a competitive advantage in ten years. PNC should expand its business by investing in more locations throughout the United States, as well as become more convenient by staying open later and 7 days a week. Many banks are adapting to longer hours to stay ahead of the changing industry. If I were an investor in PNC, I would not think of purchasing stocks due to the changing industry, which does not look prominent. The crisis in the economy has a lot influenced the profitability of the banking industry, and it ultimately affects the stock market. PNC would only be successful with the adoption of current operating strategies.

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