Competitive Advantage Of State Street Company

Company Background:

Company Overview:

State Street Corporation or more commonly known as State Street or ‘the group’ is a financial holding company. According to Market Line (2013) it operates through many different companies that fall under the State Street Corporation., This includes the banking subsidiary State Street Bank and Trust Company. The group provides many different services. These services include such custody, investment management, fund accounting, securities lending, hedge fund services, transfer agency services and operations outsourcing for investment managers. State Street is a global operation with many different locations. It operates in the US, Europe, Canada, the Middle East and Asia. It is headquartered in Boston, Massachusetts

To do this it needs to have a competitive advantage over its its rivals. A competitive advantage is something a company does better than its rivals that gives it an advantage over its rival. Porter (1988) states that a firm performs many activities that can contribute to a firms relative cost position and create a basis for differentiation which can create a cost advantage that gives a firm a competitive advantage over its competitors. A company’s competitive advantage and competitive strategy are both interrelated. Competitive strategy is defined by Porter (1980) as a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals. An effective corporate strategy will allow a company to gain a competitive advantage over its competitors. The most common competitive strategies as stated by Porter (1980) are 1) Overall Cost Leadership 2) Differentiation and 3) Focus. The one most applicable to State Street would be differentiation. Differentiation is defined by Porter (1980) as creating something that is perceived industrywide as being unique. State Street’s differentiation strategy is evident due to its long tradition in the industry, unique combination of skills drawn from other businesses, corporate reputation for quality, technological leadership, strong capability in research and ability to attract highly skilled labour Porter (1980). An important part of the differentiation strategy is being a leader in technology. Using technology effectively allows a company to gain a competitive advantage over its competitors. As analytics and data management increases companies need to implement effective systems and strategies. Another key element of differentiation is a customer’s loyalty. State Streets long history has allowed them to build up good relationships with