BUS 317 Strategic Management Case Report Final Draft)2

BACHELOR OF COMMERCE

BUS317: STRATEGIC MANAGEMENT

STRATEGIC BUSINESS PLAN FOR CITIBANK

Names: Soh Xiaomei Jasmine (30993564)

Lim Rui Ting (31088449)

Tan Yi Hui Doreen (31064949)

Edwin Lim Zi Rui (30808501)

Class: SMa Monday Night Class (T210)

Lecturer: Mr. Frankie Yee

DISCLAIMER:

Except where we have indicated, the work we are submitting in this assignment is our

own work and has not been submitted for assessment in another course. This plan is

written for academic purposes. It is NOT a plan meant for Citibank and the information

written herein is not true reflection of Citibank’s market performance. Any use of the

information contained herein is solely at the discretion of the users and the author shall

not be held liable for any misuse of information that may affect Citibank reputation or

financial performance.

Mission Statement

“Money isn’t everything, but it can turn your dreams into reality. And the wide range of

products that Citi offers can help you do just that.” (Citi Bank, 2009)

CONTENT PAGE

1.0 Executive Summary.....................................................................................1

2.0 Current Situation..........................................................................................1

2.1 Challenges...........................................................................................1

3.0 External Environment..................................................................................2

3.1 PEST Factors......................................................................................2

3.1.1 Political-Legal..........................................................................2

3.1.2 Economic.................................................................................2

3.1.3 Socio-cultural...........................................................................2

3.1.4 Technological..........................................................................2

4.0 Internal Environment...................................................................................3

4.1 Resources............................................................................................3

4.1.1 Financial Resource.................................................................3

4.1.2 Human Resource....................................................................8

4.1.3 Physical Resource..................................................................8

4.1.4 Reputation................................................................................8

4.2 Core Competency........................................................................................9

4.3 The Markets.........................................................................................9

4.4 SWOT Analysis.................................................................................10

4.5 Implications of Assessment............................................................10

5.0 Competitor Analysis...................................................................................11

5.1 Current Situation...............................................................................11

5.2 Immediate issues to be addressed by Citibank...........................11

5.3 Information needed..........................................................................11

5.4 Analysing the competitive position of Citibank............................12

5.4.1 Porter’s 5 Forces..................................................................12

5.4.2 Implications............................................................................13

5.5 Competitive Positioning...................................................................13

5.5.1 Strategic Group Analysis.....................................................13

6.0 Target Market.............................................................................................14

6.1 Geographical Segmentation...........................................................14

6.2 Implications........................................................................................14

6.2.1 Implications............................................................................16

7.0 Development of Strategies Alternatives........................................17

7.1 Ansoff’s Product/Market Matrix......................................................17

7.2 Competitors likely responses to our recommended strategies. 18

7.3 Recommendations...........................................................................18

7.4 The Future.........................................................................................18

8.0 Implementation...........................................................................................19

9.0 Evaluation and Control..............................................................................19

10.0 References........................................................................................20

BUS317 Strategic ManagementCase Report

1.0 Executive Summary

Based on the findings of the report, some preliminary observations have been

made. Of which, the purpose of this report is to identify some of the key

challenges facing Citibank Asia Pacific and some of the recommended strategies

that can be considered by Citibank Asia Pacific in order achieve sustainability in

the Asia Pacific and global market.

2.0 Current Situation

• Financial crisis in 2008 brought about total losses amounting to $27.7 billion

• Forecasters predict strong demand for financial services in China and India due

to rapid growth in GDP, disposable income and savings

• Region’s leading retail bank with distribution network in Asia Pacific

• Chosen as the Best Regional Retail Business in Asia for 2009

2.1 Challenges

• Increasing market volatility in 2010 and will result in central banks tightening

monetary policies

• Customers are becoming more demanding and tech-savvy; and wants

convenient and efficient banking

• Strong consumer demand for mobile payment solutions; scarcity of available

NFC-enabled phones.

• Pressure for operational cost reduction and revenue generation are on top of

the list of any retail bank

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3.0 External Environment

3.1 PEST Factors

3.1.1 Political-Legal

• Destabilization of coalition governments in unstable countries (Thailand)

can negatively affect the value of their currencies

• Political tension or instability may erode investor confidence

• Singapore Company enjoys access to double taxation treaties with 61

countries including Japan, China, Germany, France, the UK and

Canada

3.1.2 Economic

• Collapse of Lehman Brothers strain financial markets further

• The business had approximately 15.1 million Citi-branded card accounts

with $17.7 billion in outstanding loan balances

• Asian economies to perform strongly in the near future

3.1.3 Socio-cultural

• High demand of personal banking services – savings account, bill-

paying services, debit and credit cards

• Quality of living standards

• Citi presence in South Korea, Australia, Singapore, India, Taiwan,

Malaysia, Japan, Hong Kong, Thailand, China and Indonesia

• Asia Regional Consumer Banking (Asia RCB) provides traditional

banking and Citi-branded card services to retail customers and small to

mid-size businesses

• Obtain mortgages and personal loans

3.1.4 Technological

• Virtual retail banking – online banking

• Increasing online channel transactions, security & fraud challenges,

regulatory demand for better credit risk management

• Mobile banking allows consumers to access online banking anytime and

anywhere

• Increasing number of Automated Teller Machines (ATMs)

2


4.0 Internal Environment

4.1 Resources

4.1.1 Financial Resource

• $94.5 billion in customer deposits, 15.8 million customer accounts and $50.1

billion in retail banking loans.

Figure 4.1:

Citigroup’s insurrance, exchanges and repayments of preferred and common stock and

trust preferred securities during 2008 and 2009 (Citi Annual Report 2009)

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Figure 4.2:

Results of Operations (Citi Annual Report 2009)

4


Figure 4.3:

Citigroup Income (Citi Annual Report 2009)

5


Figure 4.4:

Citigroup Revenues (Citi Annual Report 2009)

6


Figure 4.5:

Asia Regional Consumer Banking (Citi Annual Report 2009)

7


4.1.2 Human Resource

• Citi has over 50,000 employees across 19 countries and territories in

Asia Pacific

• Employees are well trained to ensure that the best service can be given

to the clients

• Hire promising individuals that can assist in the company’s task of

reaching their goals

• Provides excellent customer service support

4.1.3 Physical Resource

• Singapore serve as Citibank's ASEAN hub that provide for Institutional

Clients Group, Global Consumer Group, Commercial Relationship

Banking, and is also the regional headquarters for Citi's consumer

banking business for Asia Pacific, and the international operations hub

for the Global Wealth Management business.

• Singapore also serves as a key Centre of Excellence for Citi in Asia and

a strategic hub for regional management, marketing, operations and

technology expertise. Singapore hosts Citi's state of the art processing

and data centres, serving the transactional needs of Citibank branches

in more than 50 countries.

• Singapore hosts to Citi's regional global transaction services business,

where they process more than 100,000 transactions amounting to more

than USD 60 billion a day. Their regional cash processing management

unit handles close to 30,000 fund transfers amounting to USD 30 billion

a day while their regional processing hub for securities services

processes an average of 76,000 transactions amounting to USD 33

billion a day for the region. (Citi Asia Pacific (Singapore), 2010)

4.1.4 Reputation

• Citi has been in Asia Pacific for over 100 years and provides more

services in more markets for more clients than any other financial

institution in the region

• Citi offers world-class cash management, trade finance and securities

lending services

• Citibank is the region's leading retail bank with a history of innovation

and customer service. Its distribution network in Asia Pacific includes

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more than 800 branches and over 2,000 ATMs. Citibank is also the top

card issuer in Asia Pacific, with more than 15 million card accounts.

• Citi's Private Bank ranks among the world's leading wealth managers.

With over 300 private bankers and investment specialists, it acts as a

trusted advisor to half of Asia's (ex-Japan) billionaires providing

comprehensive financial planning services. (Citi Asia Pacific, 2010)

4.2 Core Competency

• Specialized strategy operates a single business, as indicated by the double

marketing and technological linkages over the length of its strategy

• Delivered on stylish and classy branches that help the company achieve

competitive advantage

• Citibank has a unique set of production regulations that makes sure that every

stage in the company’s operations is well thought of and will minimize any

useless waste on materials, time and effort of the company

• Competition is what drives Citi into creating newer and better products

• Citi recognizes and gives awards to employees who perform above standards

• The core competencies of Citibank include its personnel and corporate

competency wherein the focus is on the company’s relationship with its internal

and external environment (Sample Essay The Physical Resource of Citibank

includes the equipment they used to provide the banking needs of their clients,

2008)

4.3 The Markets

• Although mass-market driven, many retail banking products may also extend to

small and medium sized businesses

• Focuses strictly on consumer markets

• Provides a wide range of personal banking services – offering savings and

checking accounts, bill paying services, debit cards, credit cards and insurance

• Banking service targets primarily at individual consumers

• Today, retail banking is streamlined electronically via Automated Teller

Machines (ATMs), or through virtual retail banking known as online banking

• Consumer are looking for financial planning and investment

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4.4 SWOT Analysis

STRENGTH WEAKNESS

- Strong global market presence

Established brand name and

backing of Citigroup

Worldwide Consumer Banking

network

Competitors are dealing with the

same products as Citibank and

offering better products and

services

Not able to retain potential

customers due to lack of brand

differentiation

OPPORTUNITY THREAT

Credit card ownership and usage is

continually on the rise in Asia

Many consumers are looking for

better investment opportunities

Consumers are looking out for

financial planning services

Government’s restrictions on

banking regulations

Ailing consumer confidence as

Citibank (as part of Citigroup) have

to overcome negative publicity as a

result of the sub-prime losses in

2008

4.5 Implications of Assessment

• Major economic downturn affects the finance industry

• Unstable political issues of government affect investors’ and creditors’

confidence adversely

• Quality of living standards increasing rapidly – more people taking up personal

loans and applying credit cards

• More virtual and automated banking services – less ‘personal touch’ to

customer relationship

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5.0 Competitor Analysis

Brand CompetitionCitigroup, HSBC, RBS, Maybank,

Standard Chartered

Industry CompetitionJP Morgan, Credit Suisse, OCBC Bank,

American Express, DBS, POSB, UOB

Form Competition Prudential, AIA, Manulife, Great Eastern

5.1 Current Situation

Citibank is not a leader in from the market as well as consumer perspective

Customers are not able to differentiate between the products and services

between Citibank and its competitors

5.2 Immediate issues to be addressed by Citibank

Citibank is the leader in terms of global market presence

However, lack of brand differentiation among a concentrated pool of foreign and

local banks may contribute to a decline in the consumer market as consumer

switching cost is low with many substitutes available

Asian consumers may incline towards Asian banks such as Maybank, POSB

and United Overseas Bank for stability

5.3 Information needed

Information Justifications / Actions by Citibank Market share segmented

by products and services In order to evaluate major competitors and

develop product and services portfolios Range of Products

available Compare competitors strategies against

Citibank To be aware of the range of products and

services that competitors possess Strengthen the market share in key specific

markets

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5.4 Analysing the competitive position of Citibank

5.4.1 Porter’s 5 Forces

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ENTRANT THREATS- Barrier to entry is high therefore

is low threats

- Banking Act Chapter 19 (Singapore)> Applied license with MAS> Capital Requirement: equal or more than $1500M if to set up bank in Singapore, equal or less than $200M if outside of Singapore

SUPPLIERS

- Supplier bargaining power is high due to VISA, Master Card and American Express

- Partnership: AXA/Manu Life/Prudential

- Citibank Gourmet Pleasures

RIVALRY- Among Local and

Global banks (in Singapore and Asia)

- Lack of brand differentiation

- Among competitors of other sectors (investment firms/insurance companies/private companies

BUYERS- Consumers

- High bargaining power due to high switching cost

SUBSTITUTES- Insurance Companies

offers Saving products

- Credit Cards

- Investment Firms


5.4.2 Implications

Buyers • To gain competitive advantage against its competitors, Citibank

will have to differentiate its products and services through

product awareness

Entrant Threats • Citibank can aim to reduce entrant threats by considering the

feasibility of forming strategic partnership with other banks in

terms of product and services offerings

Substitutes • Citibank must be updated on the competitor’s products and

services, as well as customer’s preferences as there are a wide

variety of substitutes available to the consumer

Suppliers • Citibank can consider backwards integration to reduce

operational costs

Rivalry • Customers are constantly on the lookout for new or similar

products that offer them better value

5.5 Competitive Positioning

This helps to identify the competitors that Citibank is facing against with and their

current position in the Asia Pacific region.

5.5.1 Strategic Group Analysis

13

Citibank

Standard Chartered

HSBC

OCBC Bank

UOB

DBS

POSB


6.0 Target Market

6.1 Geographical Segmentation

• Citibank would need to focus on specific geographical market segments whose

requirements match Citibank offerings. To focus on the target country segments

is the key to Citibank’s future.

• The following matrix will help Citibank to identify the primary and secondary

countries that Citibank should focus on. The purpose of the following matrix is

to find out the top two favourable countries that Citibank would have potential

and opportunity to expand its market share in the overseas market.

High South Korea

Singapore

Japan

China

India

Medium

Taiwan

Hong Kong

Australia

Low

Indonesia

Malaysia

Thailand

High Medium Low

Competitive Position

6.2 Implications

• Priority Countries chosen to be focused on:

o The China Market has been chosen to be the primary country and

Indian Market as the secondary country

o In comparison of the net sales by region from year 2007 to 2009,

Citibank China has experienced a year of growth and profitability,

achieving a 46% increase in operating income to Rmb3.6 billion, with

net income increasing 95% from its 2007 level to Rmb1.3 billion. High

potential of growth can be foreseen if correct marketing strategy is

implemented (Citibank China, 2009)

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Ma

rket

Co

mp

etit

ive

nes

s


o Continuation of building and upholding a strong brand name by

addressing the needs in Asia

• Range of product to be focus on the chosen country

• Identify the needs and banking trend of the target country

• Identify the more profitable bank services. Personalization or innovation of the

bank service to attract more customers

• Citibank should also move on to identify micro segments. This will help to better

meet the clients' financial needs

Target Market

Segmentation Variables

China Market Citibank has always attached great importance to the

Chinese market and will continue to invest in the

market (Andrew Au, Chairman of Citibank China,

2009). Citibank had many competitive advantages on

the basis of which it had established a unique strategy

that excluded joint ventures. In 1997, a wide variety of

new potential services included credit cards, RMB

(Chinese currency) banking, and various fee-based

services (Citibank N.A. In China, 1997).

As many foreign organizations are entering China

market to do businesses, these organizations will

require a banking partner that can help you

understand the intricate dynamics that make up

China's many different regions and markets.

Local and overseas companies will also require wide

range of financing solutions, trade services for

importing and exporting in China and extensive range

of renminbi services.

Indian Market Foreign banks, which currently account for five per

cent of total deposits and eight per cent of total

advances, are devising new business models to

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capture the Indian market (Banking stocks: The

consolidation call, 2006).

There is a case being made for mergers between

banks with a distinct geographical presence coming

together to leverage their respective strengths.

The surge in globalization of finance has already

begun to gain momentum with the technological

advancements which have effectively overcome the

national borders in the financial services business.

Widespread use of internet banking will widen frontiers

of global banking, and make marketing of financial

products and services on a global basis possible.

6.2.1 Implications

Citibank is the leader in terms of global market presence

However, lack of brand differentiation among a concentrated pool of foreign and

local banks may contribute to a decline in the consumer market as consumer

switching cost is low with many substitutes available

Asian consumers may incline towards Asian banks such as Maybank, POSB

and United Overseas Bank for stability

16


7.0 Development of Strategies Alternatives

7.1 Ansoff’s Product/Market Matrix

The table below illustrates some of the strategies that Citibank can undertake:

CURRENT PRODUCTS NEW PRODUCTS

Exi

stin

g M

arke

t

Market Penetration Product Development

• Gain new customers

• Leverage on customers currently

banking with other banks

• Positioning brand awareness on

demographic groups like

elderly/children

- Form partnerships

with other service providers

to promote usages of its

banking services

- Begin to target or

concentrate more on tech-

savvy customers to better

serve them

• Increased value for existing

customers

Innovate and develop existing products

and services to suit customers individual

needs and preferences

Upsell more products and services to

the customer and thereby increasing

average expenditure per customer

Develop expanded product lines

Adapt Citibank products currently

offered in the other regions to suit

the global group of customers

New

Ma

rket

s

Market Development Diversification

Tap onto developing nations and provide

banking services for this group of people

Merger and Acquisitions

Joint Ventures

17


7.2 Competitors likely responses to our recommended strategies

• Competitors with similar profile are most likely to follow suit with similar

strategies so as to secure/maintain market share

• Competitors that are not in direct competition with Citibank are not likely to

respond to the change in strategies

7.3 Recommendations

• “The Citi that never sleeps” tagline should be changed; it informs the customer

of its 24-hour, 365-days a year availability but it does not motivate the customer

to engage its products and services.

• Citibank should attempt to overcome the negative publicity in recent years by

exposing themselves to more corporate social responsibility programmes

• Citibank Asia Pacific should introduce products and services that will relate to

the nature of the country the market it is in

7.4 The Future

The future banking market will have to transform in response to change of

customer preferences to quality products, personalised and prompt services.

Globalisation of the globe and growing government policies has increased

competition. Banks are forced to go international and even merger to react to

the cost-cutting trends.

The market can expect non-banking competition to grow, as companies like

Wal-Mart, Tesco, Carrefour and others look to grab market share by

encouraging their existing customers to bank with them. These companies

provide most services online, and deposits/withdrawals provided in local stores

at very low cost.

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8.0 Implementation

• Ongoing (Present - end 2012)

- Product Development

- To adapt to host countries customer preferences

- Investment on technology to stay ahead of competition in offering

better services to customers

• Short Term (1 – 2 years)

- Market Penetration

- To adapt to host countries customer preferences

- Investment on technology to stay ahead of competition in offering better

services to customers

• Long Term (3 – 5 years)

- Market Development

- Diversification

- Improve Citibank outlets, phone banking and internet customer service

quality to differentiate itself from competitors

- Develop or acquire new brands to enhance current portfolio in order to

attract and retain customers

9.0 Evaluation and Control

• The successful implementation of the strategies depends not only on the

management and employees of Citibank, but is also dependent on the following

factors:

- Awareness of Citibank – Company, Products, Services

- Attitude/Preference changes in customers

- Recognition Rate for Citibank amongst business partners and customers

- Sales and Profits (in current market and new market

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10.0 References

1. A China outlook, from Citi’s CEO of China. 2009.

http://www.financeasia.com/News/144191,a-china-outlook-from-citis-ceo-of-

china.aspx (Accessed on 10 July 2010)

2. Citibank N.A. In China. 1997,

http://www.asiacase.com/ecatalog/NO_FILTERS/page-GLOBAL_S-504716.html

(Accessed on 10 July 2010).

3. Banking stocks: The consolidation call. 2006,

http://www.thehindubusinessline.com/iw/2006/07/30/stories/2006073000260600.ht

m (Accessed on 10 July 2010).

4. Citi Asia Pacific, 2010, http://www.citigroup.com/citi/global/asiapacific.htm

(Accessed on 11 July 2010)

5. Citi Asia Pacific (Singapore), 2010, http://www.citigroup.com/citi/global/sgp.htm


6. Sample Essay The Physical Resource of Citibank includes the equipment they

used to provide the banking needs of their clients, 2008,

http://ivythesis.typepad.com/term_paper_topics/2008/11/sample-essay-27.html


7. Citi Annual Report 2009, 2009, http://www.citigroup.com/citi/fin/data/ar09c_en.pdf,


8. Citi Bank, 2009, http://www.docstoc.com/docs/18592949/Citi-Bank, (Accessed on

11 July 2010)

9. Citibank China, 2009.

http://www.citibank.com.cn/CNGCB/APPS/portal/loadPage.do?tabId=Financial

Services&path=/prod/det/citibanking.htm (Accessed on 10 July 2010)

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Documents

BUS 317 Strategic Management Case Report Final Draft)2