Bank of America Corporation’s organizational structure is predominantly hierarchical, with a top executive team that directs the company’s growth and development. This corporate structure defines groupings of resources and activities, and serves as the overall design and framework that influences the company’s financial services operations. The large size of Bank of America and the global extent of its business require a structural framework that suits variations across the international market. A history of mergers and acquisitions involving other banking firms has influenced the kind of corporate structure that the company currently has. Thus, further M&A can lead to changes in the current structural design, while Bank of America’s generic strategy for competitive advantage, and intensive strategies for growth have remained largely the same through the years. In relation to Bank of America’s corporate culture, such organizational structural change requires consideration the cultures and cultural variations of firms involved in the M&As.
The effectiveness of Bank of America’s corporate structure determines how the business fares against its major competitors, such as JPMorgan Chase, Citigroup, and Well Fargo. The company maintains an organizational structure that suits the changing competitive landscape in various financial services markets. Also, achieving Bank of America’s corporate vision and mission statements imposes challenges in ensuring that the company’s organizational structural design continues to support the strategies necessary for such achievement. This corporate structure influences the resilience of the business strengths identified through the SWOT analysis of Bank of America Corporation.
Bank of America’s Hybrid U-Form Organizational Structure
Bank of America Corporation has a hybrid U-form organizational structure that combines the characteristics of a unitary (U-form) structure with other structural types, such as the H-form and the M-form. The U-form is the main enveloping structure in the business, with some of the company’s financial services operations having the H-form or M-form structure. The following are the notable structural types involved in Bank of America’s corporate structure:
- U-form corporate structure (Primary structure)
- H-form organizational structure (Secondary structure)
- M-form organizational structure (Secondary structure)
BofA’s Primary U-Form Corporate Structure. The unitary (U-form) organizational structure is the primary system in Bank of America’s structural design. All of the company’s other structural components’ banking services are contained within this unitary form. For example, BofA Securities Europe and BofA Canada Bank operate within the unitary organizational structure of Bank of America Corporation. Considering that a top-down hierarchy is one of the main characteristics of the U-form structure, the company’s financial services conform to this hierarchical arrangement. For instance, Bank of America’s corporate headquarters make the top-level strategic plans and decisions that are implemented at the lower levels of the enterprise, including divisions and subsidiaries. Thus, the organizational chart is that of a corporate structure where various subsidiaries or divisions follow strategies from the top executive team at Bank of America’s organizational headquarters in North Carolina.
BofA’s H-form and M-form Organizational Structures. In its corporate structure, Bank of America Corporation operates holding companies (H-form) and divisions (M-form). These holding companies include NB Holdings Corporation, BofA Canada Holdings, ML Cayman Holdings, and ML UK Capital Holdings, among others. Such H-form companies operate as parent organizations of other holding companies or subsidiaries, such as BofA Canada Bank. In addition, Bank of America has characteristics of the multidivisional (M-form) corporate structure, which involves multiple divisions based on factors like product/service type, or market type. For example, the company’s subsidiaries have divisions for commercial banking and capital services, among others. Thus, the corporate structure is a mixture of various forms, indicating that Bank of America’s current organizational design is a result of mergers and acquisitions in its history of organizational development and growth.
Other Organizational Structural Forms in BofA. Other organizational structure types or forms may be present in Bank of America, considering the company’s history of mergers and acquisitions. Also, as the company develops and offers new types of financial services, additional structural components are expected, potentially leading to changes in the current corporate structure. However, mergers and acquisitions remain the most direct route to creating major changes in Bank of America’s organizational structure.
Key Points on Bank of America’s Corporate Structure
Bank of America Corporation exhibits a traditional structural system through its U-form or unitary organizational structure. The hierarchical nature makes this corporate structure impose challenges in strategic management flexibility as the company expands its financial services operations into other markets. Bank of America’s organizational headquarters face challenges in ensuring the suitability of top-level strategic decisions to the operations of divisions and subsidiaries at the lower levels of the organizational structure, which may experience different requirements based on local or regional market conditions. Nonetheless, this flexibility and suitability issue is addressed through the H-form and M-form structures that are contained within the U-form organizational structure of the banking business. The H-form and M-form structures of subsidiaries provide Bank of America with some degree of flexibility. For example, the subsidiary Merrill Lynch Japan Securities Co. has flexibility in handling the dynamics of the Japanese market, despite the relative inflexibility of the U-form corporate structure. This corporate structure also directly relates to Bank of America Corporation’s VRIO/VRIN core competencies and value chain in terms of how the business provides value to customers and other stakeholders.
References
- Adams, R. B., & Mehran, H. (2008). Board structure, performance and organizational structure: The case of bank holding companies. Federal Reserve Bank of New York.
- Bank of America Corporation – Investor Relations – Frequently Asked Questions.
- Bank of America Corporation’s Annual Report for the U.S. Securities and Exchange Commission (Form 10-K).
- Cerqueiro, G., Degryse, H., & Ongena, S. (2009). Distance, bank organizational structure, and lending decisions. In The Changing Geography of Banking and Finance (pp. 57-74). Springer, Boston, MA.
- Dell’Ariccia, G., & Marquez, R. (2010). Risk and the corporate structure of banks. The Journal of Finance, 65(3), 1075-1096.
- International Trade Administration of the U.S. Department of Commerce – The Financial Services Industry in the United States.
- Sakhartov, A. V. (2016). Selecting Corporate Structure for Diversified Firms. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 11521). Briarcliff Manor, NY 10510: Academy of Management.
