Morgan Stanley's founding, expansion, and merger strategy since 1935

Morgan Stanley

History of Morgan Stanley:

Morgan Stanley, one of the leaders in making financial arrangements for the major industries of the world, is today, and has been ever since its inception, one of the premier financial institutions, and is also recognized across the world as such. Financial experts make it a point to predict that Morgan Stanley, the world's top rated investment bank, would still go a long way, and that the chances of the institution remaining in one of the top echelons are very strong indeed in the years to come. One must remember that the Morgan Stanley was established in the year 1935 as a separate entity from JP Morgan, immediately after the enactment of the 1933 Glass Steagal Act, which specified that banks and security houses must be separated. The grandson of JP Morgan, Henry Morgan, and Harold Stanley head the Morgan Stanley investment bank today. Morgan Stanley today takes the responsibility of arranging the finance for companies, industries, and even those governments that need financing of any kind. The motto of the institution seems to be that the client is one of the most important persons in a business relationship, and that Morgan Stanley is committed to creating and building and maintaining long-term relationships with its clients from all walks of life. ("History of Morgan Stanley," 2007)

Morgan Stanley first joined the New York Stock Exchange in the year 1941, and was listed publicly later, in the year 1986. In the year 1970, the Bank opened up a representative office in Tokyo, and soon enough, in the year 1971, the Morgan Stanley started to expand its already existing core business of underwriting to include activities like sales and trading, and through the 1970's, the firm introduced services and products such as real estate, mergers, asset management, and so on, all products that had not been offered by a financial institution of the kind before. During the next decade, the Morgan Stanley concentrated on expanding its operations, and accordingly, offices were opened up in cities across the world, like in Australia, Europe, Asia, while at the same time expanding its operations in London and Tokyo. Perhaps the tremendous success that the firm has enjoyed through the years may be attributed to its policy of global expansion and of offering novel services hitherto unheard of. Through the 1990's, the Morgan Stanley continued its expansion activities, and finally, in the year 1997, the Morgan Stanley entered into a merger with Dean Witter, a leading brokerage retail company based in the United States of America, leading to the creation of one of the world's leading global financial services institutions. ("History of Morgan Stanley," 2007)

It has often been stated that the Morgan Stanley has continually broken new grounds through the years, in establishing new services, new products, and in creating new concepts and ideas for other financial institutions across the world to emulate. The Morgan Stanley has traditionally provided new opportunities for investors and for financial institutions and one can go so far as to say that the growth of the Morgan Stanley institution has been and still is at a parallel with the growth of modern finance today. ("Morgan Stanley: Company History," 2007)

Why is the Morgan Stanley a Top ranked Investment Bank?

John Mack returned to Morgan Stanley as CEO in 2005 after a break, and since that time, the institution has been busily upgrading its various and several businesses. Apparently, form 2005, more and more of the firm's traders are keen on taking bigger risks than ever before, and this means that today they are able to put more of the firm's money into improvements and changes in trade. It must be remembered that today is the age when more and more brokers are attempting to focus on wealthy clients who are interested in high octane investments in their portfolio, the Morgan Stanley has concentrated on concerted efforts to launch private equity funds, on acquiring hedge funds, and also on taking minority stakes in all these efforts. Today the Morgan Stanley has acquired a name for itself as the world's 'top ranked investment bank'. ("BW 50 Morgan Stanley profile," 2007)

Much of the present success of Morgan Stanley has been attributed by various sources to the dynamic and efficient CEO Mack, as he continues to make extensive efforts to bring in improvements in the business, as well as to streamline it perfectly. Take these astonishing figures for example: in the year 2007, the New York Company of Morgan Stanley announced a record net income of $2.67 billion for the February quarter, and this figure was about 70% higher than that of the same period form last year. The after-tax gain was $109 million, while the net revenues were $11.0 billion, a remarkable 20% increase form the same period last year. In Mack's own words, "This strong performance was in large part the result of effective disciplined risk taking by our team in Institutional Securities, which helped deliver record results across our sales and trading businesses." ("More success for Morgan Stanley," 2007) This is precisely why the Morgan Stanley has remained a top ranked investment bank even today, after more than seventy years from its inception. ("More success for Morgan Stanley," 2007)

What will bring Morgan Stanley to the next level?

Morgan Stanley seems to be going places today. Its success story does not stop at its ever widening operations within the United States, or even at its widening bases outside America, but it is believed that Morgan Stanley will concentrate its energies on establishing bases in several more countries of the world than exist already. Australia, for example, has been a favorite choice for investors across the globe, and it is in Australia that the Morgan Stanley has set up some of its vital operations, and as the Australians feel, perhaps the main reason was due to the good infrastructure and its excellent support facilities. As a matter of fact, the Sydney operations of Morgan Stanley has reported that it has been witness to an increase in staff for its service center, and according to the executives based at Sydney, this sort of rapid organic growth would continue, as volumes and trading levels continue to rise and more and more roles are transitioned from Asia to Sydney, Australia. It must be remembered that Morgan Stanley has always considered Sydney an excellent location form which it would be possible to tap directly into Australia's skilled and highly productive multilingual workforce, who would be capable of providing human resources, global processing, and financial services for the region. In the year 2005 Morgan Stanly employed about 140 individuals, while today it employs about 220 people, and the number is expected to rise up to 250 by the middle of the year 2008. ("Investment Success, Morgan Stanley," 2005)

It has often been said that the Morgan Stanley story has at various times been both exhilarating as well as disturbing. The Morgan Stanley has unerringly been able to follow its instincts for garnering and generating more and more profits, by delving into hitherto unexplored areas, and by venturing into more and more risky areas of operations through the years. Although it may be said that this is one of the primary reasons for its immense success, it may also be taken as one of the reasons for the troubling sense of disturbance that it brings to investors. For example, at the fag end of the 1980's, Morgan Stanley had become more like an industrial holding company than a financial services firm, and at the time it had stakes in almost forty large companies, and also about seventy two thousand employees. All its investments were reaping forty percent dividends, and this foreshadowed the years to come for the institution. (Chernow, 2001)

Conclusion:

Today, the Morgan Stanley has come a long way, and although it still has a long way to go, it must be stated that this firm has managed to get where it has wanted to, over the years, and investors and others who have put their faith in the company have not had to face disappointment at any time. The Morgan Stanley remains today, one of the premier financial institutions of the world.