Citibank Review
CITIBANK Case Study This is a monumental assignment for any team of corporate
and financial wizards, but for the purposes of this assignment I will keep it
simple. This scenario suggests numerous barriers and hurdles that seem almost
impossible to overcome. Choosing to enter these socially, politically and
economically different markets will require ingenious marketing techniques and
an unsecured commitment to achieving success where the possibility seems
extremely dim. Given the data in the case, I would choose to enter this region
and commence a blanket introduction of credit card sales. Having traveling
extensively to this region, I can personally relate to the difficulties
presented by many of these cultures. Taking the lessons I¡¦ve learned in the
past few weeks, I believe there is an element of possibility utilizing marketing
and advertising techniques already proven in this region. Rana Talwar¡¦s closing
comments about having to make this decision alone is completely correct. Several
references in the case display the optimism and pessimism exhibited by several
members of the Citibank team. Any decision will not be without criticism, but I
believe he has all the required tools to succeed in this region. From the
outset, there are a few markets and countries that are extremely attractive and
will produce success in developing the credit card market. A few countries are
extremely dangerous and would provide several dangerous hurdles to overcome. In
the middle are a few markets that don¡¦t appear to be extremely lucrative, but
reading between the lines, provide avenues for success. I chose to analyze each
country separately and provide and finalized solution in summation. The values I
extracted from the case for my analysis are as follows: $2 million for
advertising in each country, $35 million each for infrastructure support for the
initial 250,000 customers, $25 per customer for distribution, and I used income
values for each company by taking the Competing Product Profile prices for each
company¡¦s low-end credit card expenses (Exhibit 9). Australia Assessing this
country doesn¡¦t take a degree in global economics.
It is notoriously stable,
with a Political/Economic rating of ¡§A¡¨. It possesses an annual GNP of $196.8
billion in 1998, with a fairly high 5-year inflation average of 7.1%. One of the
attractive attributes of this country is that only 10.5% of the population
carries a credit card already, and 80% of current card carriers reside in the
upper three income categories. Each Australian has an average bank balance of
$24,000 with a savings rate of 6.7%. With Australia¡¦s already established
banking industry and civilized society, I believe it possess great growth
potential for introduction of the Citibank credit card. Break-Even Analysis: $2
mil + $35 mil = 740,000 new credit card customers ƒö$75 - $25 ** (An additional
$10 million to $15 million for each additional 250,000 credit card customers) ƒö=Joining
fee and annual fee from American Express Green (Exhibit 9) Hong Kong With an
already established Credit Card business, the case suggests a few alternatives
for Citibank to expand its customer base in Hong Kong. I agree with these
comments, but I would be remiss if I did not interject a few comment s about the
economy in Hong Kong and the influence of the impending transfer of power from
the England back to the government of China at the end of the century (2000).
The case does not mention the perplexity of the change over and any impact that
would come from this political change, but I can¡¦t help but assume that it has
to play a role in the decision made in 1989. I view these decisions as having to
be ¡§immediate¡¨. I say this because the concept of cross-marketing Citibank
products into other avenues of the financial arena is a fantastic idea, but any
moves that are made must be implemented and solidified prior to the political
changeover. Citibank must recognize that attempts to enter this market near or
after the changeover in political power would result in additional barriers that
may make these implementations impossible. The immediate (1989) possess a great
opportunity for Citibank.
