Citibank Review Essays - Citigroup, Payment Systems, Credit Cards

Citibank Review Essays - Citigroup, Payment Systems, Credit Cards 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 Ive 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 Talwars 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 dont 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 companys low-end credit card expenses (Exhibit 9). Australia Assessing this country doesnt 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 Australias 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 $75 - $25 ** (An additional $10 million to $15 million for each additional 250,000 credit card customers) =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 cant 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. India I am extremely skeptical about this market. This country probably possesses the greatest challenge in the entire region. Enticing is the vast population (797 million) and enormous GNP ($222.5 million, both surpassing every country in the case analysis. Perplexing is the high