Agenda About CitigroupVision , Mission , Brand Values PEST Analysis Citi’s Business level strategyCiti’s Corporate Growth strategy Citibank SWOT Analysis (Citibank) Citibank’s Strategies & Core Competencies Competitor Analysis (Citibank)Porter’s 5 force model (Citibank)
Citigroup• Citi was incorporated in 1988.• Citi - a diversified global financial institution.• Citi is the first financial services company in the U.S. to bring together banking, insurance, and investments under one umbrella.• It provides a broad range of financial products and services to consumers and corporate customers globally.• Citi has the worlds largest financial services network.• It’s business covers 107 countries with approximately 2,000 offices in the world.
Citi in India• Citi - a premier local financial institution.• Citi - the single largest foreign direct investor in the financial services industry in the country.• A customer base of over – 1500 large corporates and multinationals, – 2500 small and medium enterprises, – 40,000 asset based financing clients and – 7 million retail customers.• It offers a comprehensive suite of products and services to both commercial and retail clients across all economic segments and lifecycle stages.
Facts about Citi India• Cash management throughputs at Citi India equal 40% of Indias GDP.• Citibank India’s e-business portal is the most visited Indian financial site.• CFIL has financed over 130,000 trucks in India.• Citigroup Global Services, is one of India’s largest BPO service providers and services Citi operations in 36 countries.• Citi - the first company in India to introduce stock options for its employees.• Citi - the first financial institution to export software services from India.• Citi has provided core funding of Rs. 15.4 crore to the Indian School of Micro Finance – the first such school in Asia.
SegmentsCiticorp Regional Consumer Banking Institutional Clients GroupCiti Holdings Brokerage and Asset Management Local Consumer Lending Special Asset PoolCorporate Treasury Other corporate expenses
Operating RegionsRegions North America Europe, Middle East & Africa Latin America Asia
Vision and Mission Vision Mission “Our goal for Citigroup is to be the most respected global financial services To be the leader in company. Like any other providing business public company, wereprocess management obligated to deliver profits services to help and growth to our customers. shareholders. Of equal importance is to deliver those profits and generate growth responsibly.”
Citi Brand Values• Citi’s corporate businesses leverage the Citi identity.• Citi’s consumer businesses worldwide leverage the Citibank brand identity.• It represents everything the pre-eminent global financial services company stands for : intelligent, engaging, human, friendly and innovative.• Across the globe, the overarching brand values of Citi are focused on preserving its reputation as the most respected global financial services company in the world.
Political Influence• Citigroup – major corporate political spender• Citigroup operates in more than 100 countries worldwide; they obey legislation specific to country• Election Cycle Trends - significant donations to 527 groups• Trade Association Activity – contributed approximately $8.5 million in corporate funds to political activities since 2002
Economical Influence• As a multinational, Citi is subject to fiscal policies employed by governments in various countries.• Incurred loss of $22 billion during Global downturn 2008.• Citi’s financial results are closely tied to the global and local economic conditions – liquidity of the global financial markets – prevailing interest rates – the rate of unemployment – the level of consumer confidence – changes in consumer spending – the number of personal bankruptcies
Social Influence• Target is Individual consumers as well as small medium businesses• The Citi Foundation is committed to maintaining economically vibrant and environmentally sustainable communities
Technological Influence• Citigroup Works with Cisco Systems to Capitalize on Digital Media – to help Citigroup identify appropriate intellectual capital to distribute to clients and employees – to help the bank develop the right advanced content delivery, multicasting, and core-networking technology to disseminate it.• Use technology for e-Business model• Early adopter of emerging technology
Generic business level strategyCiti follows “Differentiation Strategy”
Corporate Growth Strategy Vertical IntegrationHorizontal Integration Forward or Backward Corporate DiversificationConcentration Growth Related or Unrelated International Global or Multi-domestic
Citi’s diversification strategy• Diversify into related businesses under some coherent strategic theme• Potential benefits of related diversification • Cross-business sharing of expertise, capabilities and technology • Exploit economics of scope and capture synergy benefits from combining similar operations of different businesses • Enable collaboration to develop new strengths and create new competitive capabilities • Leverage use of a company’s brand name • Increase market power• Drawbacks of related diversification • Difficulties of integrating the operations of businesses with different cultures
Fundamentals of Citi’s Strategy• Client focus• Global strength• Constant innovation
History• 1812 - founded as City Bank of New York.• 1894 - became the largest bank in the United States.• 1902 - began expanding internationally and became the first major U.S. bank to establish a foreign department.• 1930 - became the largest bank in the world with 100 branches in 23 countries outside the United States.• 1976 - changed its name to Citibank.• 1981 - purchased Diners Club.• 1994 - opening of the first fully foreign owned commercial bank in Russia• 1995 - opening of the first full service branch in China• 1998 - Citibank was merged into Citigroup
Citibank• Citibank is the consumer and corporate banking division of leading financial services company Citigroup.• The company has operations in around 1,700 locations, in more than 140 countries worldwide.• Citibank offers the following products and services: – Banking services – Credit cards – Mortgages, Loans – Investments – Insurance – Small business services – Corporate/Institutional services – Asset management – Government services – Private banking
The Citicorp- Travelers merger• Path to one stop financial shop.• Citigroup – able to service consumers, corporations around the world as a universal bank.
MissionOur core mission is not to be a financial supermarket or a “shadow bank.” Our core mission is to be the global bank for institutions and individuals, and to serve our clients with distinction. We bring them unique value through our global reach and innovative solutions.
Value ChainCitibank represents both a Business-to-Consumer (B2C)and Business-to-Business (B2B) organizational model.It creates value by• limiting the intermediaries involved with the distribution of its product,• streamlining its business and• reducing costs.This value creation ultimately increases profits.
SWOT AnalysisStrengths Weaknesses•Global network •Tarnished brand name•Backing of the Citigroup •Online operations are•Innovative product offering geared towards US clients•Comprehensive selection •Issues of Corporate of financial products and Governance - Size of services. company challenges clear•Strong privacy and data focus across all divisions. policies•Good Corporate CitizenOpportunities Threats•Growth markets •Foreign exchange•Chinese market fluctuations•Online presence •Market conditions•Strengthen customer •Regulatory forces relationships by •Competition from brick community involvement and mortar banks,•Look for acquisitions that combination brick and are compelling clicks and pure play bank strategically and entities and financial financially services providers
Citibank Strategies• Position itself as US leading International Bank• A Premier local financial institution• Focus on Technology• Full Fledged platform of highest quality services• Innovative products• Focus on corporate and multinationals• Banking upon an old and trusted name• Corporate Social Responsibility
Citi @ Online• Citibanks strategic intent is to convert its traditional money management business into an e-business framework.• The goal of Citibanks strategic processes is to "be the payment/settlement site of choice in the B2B and B2C flows, as well as a provider of value-added solutions for net businesses".• Citibanks new initiative in industry exchanges and tailored solutions for industry leaders helps them differentiate themselves in these markets and gain competitive advantage by e-enabling themselves for the new e-world.
Core Competencies"A core competency is an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity." – C.K.Prahalad• Core Competencies: – Proprietary data – Operating in over 100 countries and as a local bank, serving growing companies in 78 emerging-market countries and territories – Citigroup is considered a leader in online financial services – Additionally, Citibanks technology platform supports it customers need for transaction efficiency and tangible business results.
Competitor Analysis• Bank of America: – Provides a demonstration of their online banking product – Clearly defines their policy for online banking that guarantees $0 liability for unauthorized bill pay• Wells Fargo: – E-business aggregation
Threat of New Entrants• Low / high (exceptions)• Existing loyalty to major brands• Huge Investments• Incentives for using a particular buyer (such as frequent shopper programs)• High fixed costs• Scarcity of resources• High costs of switching companies• Government restrictions or legislation• There is virtually no chance of a new entrant significantly affecting the major banks market share. The only place that new entrants may have a chance in the industry is through Internet banking, because of its low cost.
Power of Suppliers• Low to medium• There are very few suppliers of particular product categories• There are almost no substitutes in some product categories• Switching to another (competitive) product is very costly• The supplying industry has a higher profitability than the buying industry .• Opportunities: – Because of the increasing amount of technology Internet banking will begin to replace traditional banking, thus cutting personnel costs. – Incorporating investment banking into the banking industry, as some major companies are doing.• Threats: – An increase in interest rates causing a decline in bank activity. – A collapse of the Fed leading to bank failures, a repeat of the crash of 1929. – A decline in the US economy leading to a fall in the value of the dollar, thus causing an instable economy.
Power of Buyers• Medium to High• Large number of buyers• Purchases large volumes• Concentration Ratio is medium being international• Information is easily available to the customer• Switching to another (competitive) product is simple• The product is not extremely important to buyers; they can do without the product for a period of time• Customers are price sensitive
Availability of Substitutes• Low to medium• Internet• If substitutes are similar, it can be viewed in the same light as a new entrant• Presence of companies like Western Union, PayPal and Xe.com• This is not really an issue within the banking industry, because there arent really any legal alternatives, except buying a safe and borrowing from a loan shark
Competitive Rivalry• A highly competitive market might result from: – Many players of about the same size; there is no dominant firm – Little differentiation between competitors products and services – A mature industry with very little growth; companies can only grow by stealing customers away from competitors – Technologically Advanced companies – Introduction of new products by competitors• The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of $70 billion.Bank mergers are usually consummated as a cost-cutting measure but also to compete with non-bank providers of financial services.
Suggested Strategies• Strengthen customer relationships by community involvement• Communicate benefits of online presence clearly• Look for acquisitions that are compelling strategically and financially• Handle major international operations from India to gain expenses benefit• Position itself as a Global bank focusing on Indian consumers benefit• Innovative products in emerging businesses like mortgage, equity, consumer finance