Morgan Stanley 2000 Annual Report Download - page 7
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ADVANTAGES OF INCUMBENCY
As a major worldwide provider of financial services across a broad spectrum, we
expect to continue to benefit from the vibrant secular growth in our industry.
This growth is driven by deregulation and restructuring of major industries
in the global economy; demands of investors for superior performance; greater
transparency of financial markets as a result of more and better information;
increased connectivity among markets; and continued innovation and technological
change. These trends have driven growth in financial services over the past 25 years
and now are being reinforced by the transformational impact of technology in
virtually every industry.
As we write this letter, there is not quite the euphoria over the New Economy that
existed a year ago. The 40 percent decline in the NASDAQ has been painful. It has
become clear that there is more to building a successful business than simply adding
“dot-com” at the end of a company’s name. One of the lessons of the past year is
that there is still no substitute for a sound business model based on creating and
delivering value for which customers are willing to pay and generating revenues
that exceed the costs of the business. At the same time, there is little question that
the New Economy has created tools and opportunities that no company, in any
industry, can afford to ignore. When it comes to the impact of rapidly changing
technology on financial services, we believe the advantages accrue, not to the start-
ups or the specialized firms, but to the experienced, broad-based incumbents.
It begins with the advantages of scale. With more power in the hands of customers,
their transaction costs continue to fall dramatically, placing a premium on the ability
to provide broad product offerings, add value through innovation and achieve
increasing returns to scale. Advantage accrues to financial services companies that
can make required investments to expand and innovate and readily bring together
market knowledge and expertise to meet client needs in a time of rapid change. We
believe very few firms have the breadth and depth of skills to help lead transactions
such as the $182 billion merger of Time Warner and America Online or the
$14.6 billion Deutsche Telekom multi-currency global bond offering.
DISCOVER FINANCIAL SERVICES
TRANSACTION VOLUME
(in billions of dollars)
NUMBER OF FUNDS RANKED
FOUR OR FIVE STARS
BY MORNINGSTAR