1. How did the acquisition of Countrywide fit BofAs business strategy? Be specific. What were the key assumptions implicit in...


1. How did the acquisition of Countrywide fit BofA’s business strategy? Be specific. What were the key assumptions implicit in BofA’s business strategy? How did the existence of BofA’s mission and business strategy help the firm move quickly in acquiring Countrywide?
2. How would you classify the BofA business strategy (cost leadership, differentiation, focus, or some combination)? Explain your answer.
3. Describe what the likely objectives of the BofA acquisition plan might have been. Be specific. What key assumptions were implicit in BofA’s acquisition plan? What were some of the key risks associated with integrating Countrywide? In addition to the purchase price, how would you determine BofA’s potential resource commitment in making this acquisition?
4. What capabilities did the acquisition of FleetBoston Financial and MBNA provide BofA? How did the acquisition of Countrywide complement previous acquisitions?
5. What alternatives to outright acquisition did BofA have? Why do you believe BofA chose to acquire Countrywide rather than to pursue an alternative strategy? Be specific.

On July 1, 2008, Bank of America Corp. (BofA) announced that it had completed its acquisition of mortgage lender Countrywide Financial Corp. (Countrywide) for $4 billion, a 70% discount from the firm’s book value at the end of 2007. Countrywide originates, purchases, and securitizes residential and commercial loans; provides loan closing services, such as appraisals and flood determinations; and performs other residential real estate–related services. This marked another major (but risky) acquisition by Bank of America’s chief executive Kenneth Lewis in recent years.

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Question Posted: September 13, 2012 00:43:24