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Citibank group7


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  • 1. Citibank: Launching the Credit Card in Asia Pacific Erica Baumann Paul Davis Nathan Hahn Rebecca Leeds Lauren Lettieri
  • 2. Overview: Geography of Asia Pacific The Nature Conservancy:
  • 3. Overview: The Pacific Ocean’s Eleven
    • Hong Kong (1902)
    • Taiwan (1964)
    • Australia (1965)
    • The Philippines (1902)
    • Guam (1969)
    • Singapore (1902)
    • India (1902)
    • Malaysia (1904)
    • Indonesia (1918)
    • Thailand (1967)
    • Korea (1967)
  • 4. Overview: Citibank’s Mission Statement
    • Citibank’s mission in the Asia Pacific region was to be the most profitable provider of a wide array of financial services to an increasingly affluent and middle-income market, and to reach the rapidly growing middle-income households in this region.
  • 5. Overview: Citibank in Asia Pacific 1978-1989 1986 : Begins a period of growth in Thailand and the Philippines 1982 : Acquired Diners Club in Thailand 1978 : Citibank’s Asia Pacific Consumer Bank had established its consumer business in Asia 1981 : First foreign bank to enter the local trade finance market in Taiwan 1983 : Citibank enters the credit card market in Hong Kong 1989 : Malaysia and Australia have saturated credit card market 1989 : Talwar reintroduces the idea of a credit card launch in Asia-Pacific
  • 6. Overview: Keys Questions in Asia Pacific
    • Should Citibank launch a credit card in the Asia Pacific region, and in which countries?
    • How should the particular card launches be tailored to each specific country?
  • 7. Business Problems
    • Citibank wondered whether they could adopt a mass-market positioning to acquire enough credit card customers and still maintain its up-market positioning with the current upscale branch banking customers
    • Pricing the card too low would conflict with Citibank’s stated positioning however pricing it too high might mean low customer acceptance
    • Citibank’s management were concerned that consumers’ attitudes and credit card usage patterns differed by country
  • 8. SWOT Analysis: Strengths
    • Undisputed leader of the marketplace
    • Australia: customers see the credit card as an “important shopping tool”
    • Hong Kong: people are used to credit cards- relatively affluent population
    • India: strong economic development in late 80’s
    • Malaysia: large successful business population
    • Singapore: “one of the world’s largest center of traditional trade and services”
    • Thailand: rapidly growing nation (foreign investment)
  • 9. SWOT Analysis: Weaknesses
    • India: consumers do not like to use revolving credit
    • Indonesia: relatively poor country with small upper class; not many qualified for membership
    • Australia/Singapore: saturated market
    • Taiwan: before 1989, laws restricted credit card business
    • Taiwan: culturally not acceptable to owe people money
    • Korea: financial problems in credit card business coupled with stringent local restrictions
  • 10. SWOT Analysis: Opportunities
    • Australia: credit card in conjunction with their banking services
    • Hong Kong: want to target customers outside branch business
    • India: credit card penetration is low
    • Indonesia: upper class growing fast
    • Malaysia: culturally acceptable to revolve credit
    • Philippines: credit card penetration very low
    • Singapore: society prides on innovation and technology and see credit card as convenient
    • Taiwan: most wealthy and best educated country in region
    • Thailand: strong economy = consumer spending
  • 11. SWOT Analysis: Threats
    • Australia: AMEX and Diner’s Club seen as symbol of status
    • Malaysia: many other options to choose from in 1989 (MasterCard and Visa)
    • Singapore: “high-tech mecca” has attracted many multinational corporations
    • Taiwan: restrictive laws prohibited thus industry is in early stages
    • Taiwan: AMEX and Diner’s Club worldwide respected reputation
    • Citibank’s undifferentiated view of one marketplace
  • 12. Most Likely Case Scenario
    • Citibank will enter the market
      • ''Sometimes, when an economy is under the most stress, you get presented with the biggest opportunities,'' says Citigroup Vice-Chairman William R. Rhodes
    • Cross selling products
    • Market will accept new credit card penetration (except for few countries)
    • Targeting growing upper class market
  • 13. Most Likely Case Scenario
    • Citibank’s credit cards as symbols of status
    • Citibank’s customer base in Asia Pacific region will increase and expand
    • Customers will use their cards for a wide variety of purchases
  • 14. Most Likely Case Scenario
    • Australia: More services will be offered to maximize financial management
    • Hong Kong: Reach customers outside business segment by cross selling
    • India: Increase merchant acceptance
    • Indonesia: Incentives and higher credit limits opportunities
    • Malaysia: Build up credit for future uses
  • 15. Most Likely Case Scenario
    • The Philippines: Market program geared towards gaining acceptance
    • Singapore: Highlight convenience’s of Citibank
    • Taiwan: Promote awareness of the emerging credit card industry
    • Thailand: Two card approach to attract all customer bases
    • Korea: Will not enter due to government regulations
  • 16. Worst Case Scenario
    • Established competition beats Citibank
    • Population too poor to qualify (Indonesia)
    • Government regulation and culture limits acceptance
    • Failure of customers to fulfill payments- large debt
    • Different countries not accepting of consistent multinational strategy
    • Rejection due to national pride and culture (Taiwan)
    • Saturated markets not accepting of another credit card (Singapore)
  • 17. Best Case Scenario
    • Citibank adjusts strategy for specific countries’ needs (including options)
    • OR All countries accept Citibank’s multinational plan
    • Become a penetration leader (Philippines)
    • Utilize Singapore for latest technology
    • Government law changes opens doors (Taiwan)
    • Take advantage of some countries’ growing economy and affluence
    • Make money off of late payments and interest
  • 18. Strategy: Market Entry
    • Greenfield Market Development
    • Direct marketing program
      • Direct mail
      • Take-ones
      • Direct sales force
      • Bind-ins
  • 19. Strategy: Pricing
    • Low joining fee to induce more customers
    • Higher annual fee to provide a steady recurring revenue
    • Premium pricing for the Citigold card to attract affluent cardholders
  • 20. Strategy: Options
    • $USD as standard currency for all cards
    • Regional Card Center
      • Lower costs because of economies of scale
      • Capability to do quick work product launches in Asia Pacific
  • 21. Strategy: Business Segments
    • Non-Resident Indian Business (NRI)
      • Special offering for Indian customers who did not reside in India
    • International Personal Banking (IPB)
      • To service the growing group of affluent Asian clients with global financial needs
  • 22. Strategy: Core Products
    • Citi-One
    • Mortgage Power
    • Auto loans
    • Ready Credit
    • Citigold
    • CitiPhone
    • ATMs
  • 23. Go Decisions: Taiwan, India, Indonesia, Malaysia, the Philippines, Singapore and Thailand
    • Reasons
      • Countries growing along with infrastructure
      • Rapidly growing upper and middle class
    • Recommendations:
      • Two card approach- middle class and upscale customers targeted individually
      • Create status for credit card
  • 24. Go Decisions: Australia and Hong Kong
    • Reasons:
      • Most developed Westernized nations
      • Strong credit card and financial infrastructure
      • On average, 2 cards per person
      • Wide variety of usages – shopping  travel
    • Recommendations:
      • Two card approach
  • 25. No Go Decision: Korea
    • Reasons:
      • Regulations do not allow banks to issue cards with revolving credit
      • Only local currency credit cards allowed
      • Poor diplomatic relations
      • Infrastructure and legislation are not conducive to credit card usage
    • Recommendations:
      • To risky to enter the market
  • 26. Population Breakdown by Income: Asia Pacific
  • 27. Break Even: Asia Pacific
  • 28. Population Breakdown by Income: Malaysia
  • 29. Break Even: Malaysia