International Financial Services : Bear Stearns

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NBS-3A8Y International Financial Services Coursework: Bear Stearns Case Study 1. What role did Bear Stearns’ culture play in its positioning vis-à-vis its competitors, and what role might that culture have played in its demise? Bear Stearns was based in New York and was one of the largest global investment bank, securities trader, and brokerage firm, it founded with $500,000 of capital in 1923(Stowell, 2010). In the early 1930’s, Bear Stearns had a history of aggressive market behaviour as even though it was a heavy investor, but did not cut down the number of staff or eliminated bonus, therefore Bear had more competitive compare to other prestigious because of an especial trader’s and renegade culture they had as renegade culture stemmed from its dominant position in bond trading. More over, in 1938, bond trading department created a huge profits by this trader’s culture and then Bear set the unique standard for diversity among its employees to aim for valuing initiative and tenacity over pedigree in its hiring. Bear was looking for all kind of people, and do whatever it took to make money especially candidates with PSD degrees which represent group of people are poor, smart and with a deep desire to become very rich(Stowell, 2010). Firstly, Bear Stearns lack of risk culture by using high leverage and take more risks than other companies in order to create higher profits. However, in their eagerness to reap enormous returns by investment, Bear ignored the risk of its

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