1. Analyze the competitive structure of the brokerage house industry using Porter’s five forces model. What are the principle drivers of profitability in this industry? How have changing regulations, demographics, and technology impacted competition over the last two decades?

2. How does the business model of a discount broker like Schwab differ from that of a full service broker such as Merrill Lynch?

3. How was Schwab able to emerge from the pack of discount brokers established in the late 1970s to become the category leader by the mid 1990s? 

4. What are were main elements of Schwab’s competitive advantage by the mid 1990s?

5. How did the arrival of the web transform the nature of competition in the broker dealer industry? Was this a disruptive technology? 

6. How was Schwab able to make the shift from a “traditional” discount broker to “online broker”? What lessons about managing strategic change in a turbulent environment can be drawn from the Schwab case?

7. How would you characterize Schwab’s strategy during 2000-2004? What is Schwab trying to do here? What is the potential upside? What are the risks? 

8. What prompted the return of Charles Schwab? What was he trying to do strategically after his return? How successful has he been? What are the lessons here?

Founded in the mid 1970s, Charles Schwab Corporation has been one of the most successful discount brokerage houses in the US. The case traces the development of the company from its early days and looks at how it harnessed new technology and took advantage of regulatory changes to establish cost efficiencies and leadership. The case highlights innovations which enabled Schwab to gain market share from larger full-service competitors. 

In the late 1990s Schwab faced a significant challenge with the explosion of the Internet. The growth of Internet usage facilitated the emergence of a plethora of online discount brokers who were able to use lower cost structure to gain competitive advantage. The case looks at the steps Schwab took to respond to these competitors, including the establishment of its own online brand, e-Schwab. The case closes with a discussion of Schwab’s competitive strategy in the late 2000s.