Case Study:

Morgan Stanleys Return on System Noninvestment

Submitted to: Sir Asim Tanveer Submitted by: Faizan Haider F11MB002

Shaheryar Gogi F11MB019 Fahad Pervaiz F11MB037

Institute of Business and Information Technology, Punjab University

Q-1: Why did Morgan Stanley underinvest in information technology? When the stock market crashed in 2001, CEO Philip Purcell believed that the markets comeback would happen slowly. He therefore focused his business strategy on maximizing profits instead of generating revenues. Resultantly he had to cut down the costs and expenses that was one of the reasons he underinvested in information technology. Moreover, the firm assumed that top clients were not interested in online services that later came out to be wrong.

Q-2: why was the merger with Dean Witter disruptive for the company? The merger with the Dean Witter was disruptive for the following reasons: Retail Brokerage group was never accepted as an equal partner by rest of the Morgan Stanley. Retail Brokerage was not well integrated with the rest of the company. It ran on a different systems platform than the institutional brokerage side and its employees systems were integrated. Lack of technology: Tools, equipments and procedures were not upgraded to cope with the real time demand. Lack of employee satisfaction: most of the employees were not satisfied with the decisions of top management.

Q-3: why was Dean Witter and Retail Brokerage a good place to increase spending on information system? Following three objectives would explain the rationale behind this spending on information technology. Survival: to stay alive in that competitive environment, company had to invest on information technology to integrate its business units and generating revenue. Operational Excellence: company upgraded its equipment and procedures to improvise its employee satisfaction and introduce better methodology to get the whole portfolio and its history. Customer Intimacy: company improved its website for the clients and provided the clients with the best online services that led to client satisfaction.

Q-4 : if You were the James Gorman, the new head of Global Wealth Management Group, what information would you invest in? Why? Do you think Morgan Stanleys plan for an integrated client information system is worthwhile? If I were the James Gorman, I would invest in the same information system that was Management Information System. The reason was to integrate the resources of company to work efficiently and effectively. In that competitive environment, highly automated and integrated information system was the exact requirement for the companys efficiency. And same was the case with the Morgan Stanleys plan for an integrated client information system. This helped the company providing its

employees with the better portfolio history of clients. On the other hand it helped its clients to get the better online services.

Q-5: Aside from new systems, what changes in management and organization are required to restore revenue and profit growth at the Global Wealth Management Group? Following are the changes that Global Wealth Management Group requires to improve profits and revenue: Employee retention and satisfaction Flexible environment for the employees in organization. Integration of all business units. A new change into a learning organization.