Citibank Case StudyTable of content 1.0 Background of the Companys case...3 2.0 SWOT Analysis3 3.0 Citibanks Distinctive Competencies..7 3.1 Resources...8 3.2 Capabilities...9 3.3 Core Competence, Competitive Advantages and Sustainable Competitive Advantages....10 4.0 Citibanks strategies in place11 4.1 Corporate-Level.11 4.2 Business-Level12 4.3 Functional-Level.13 5.0 Recommendation13 References...14 1.0 Background of the Companys case On June 16, 1812 City Bank of New York (now called Citibank) opened for business in New York Citywith only $2 million of capital. Through many different leaders and economic environments over the course of its rich history, Citibank continues to grow and prosper. On October 8, 1998, all Citicorp and Travelers Group divisions merged to become Citigroup Inc. Citigroup is todays pre-eminent financial services company, with some 200 million customers accounts in more than 100 countries. Citigroup is the first US bank with more than $1 trillion in assets, offering a variety of deposits and loans, credit cards, investment banking, brokerage, and a host of other retail and corporate financial services. 2.0 SWOT Analysis STRENGHTGlobal networkThrough its operation in around 100 countries, Citibank has created a global network that has proved robust in the face of economic slumps affecting many Western economies. Although hindered by loan defaults particularly in Argentina and Brazil, and the subsequent rises in provisions, the bank has been buoyant in certain European markets and furthered its geographical reach through strategic positioning in Russia and the Pacific Rim, particularly China.Backing of the CitigroupCitibank has the undoubted advantage over many of its rivals, of having the financial backing and support of Citigroup, the hugely successful financial services company. The support this company provides means Citibank can approach ventures and business opportunities with considerably less trepidation than independent companies. The group is likely to benefit from an adventurous strategy, so long as it has the sustainability to survive the consequences when the groups ventures do not go to plan. Citigroup provides Citibank with the sustainability required in such circumstances.Innovative product offering Innovative product offerings enable Citibank to remain at the forefront of numerous markets. The bank has continually developed partnerships to enhance its geographical and sector reach. For example, the bank formed a partnership with Westdeutsche Landesbank Girozentrale. The aim of the deal was to reduce the settlement risk with foreign exchange transactions resulting from trading across various time zones. | WEEKNESSESTarnished brand nameAlthough Citigroup has been one of Wall Streets strongest performers over recent years, and has achieved strong shareholder value since its creation, its brand has been severely tarnished since 2002 due to the ongoing investigations into its banking practices, particularly in its investment banking subsidiary, Salomon Smith Barney. After examinations into a number of Wall Street banks regarding conflicts of interests, regulators indicated that Citigroup, due to wrongdoings at its Salomon Smith Barney investment banking operation, will be hit with the hardest punishment, with the fine likely to be around $500 million. Although this is punishment for the group as a whole, particularly its investment banking operations, such a high-profile investigation sheds investor doubt over all practices of the group, ultimately also tarnishing the Citibank brand. Online operations are geared towards US clientsMuch of Citibanks online operations are geared towards US clients. This is a major weakness in Citibanks armory, as it has worldwide operations, but not a sufficient Internet presence to compliment its branch business. In the increasingly competitive market that is online banking, Citibank needs to improve its online facilities for its international customers, or risk losing them to more dedicated companies. | Opportunities Fundamental opportunities for Citibank would be to expand on their existing good reputation, exceptional customer service, and enhanced web features. Citibank brings considerable value to potential alliance partners. Theyre interested in their brand, their financial services expertise, their global presence, their strong customer relationships and position as a trusted provider, as well as their knowledge of specific industries and international markets. The regionalization and specialized processing centers that Citibank has developed has provided them with scale and continual improvement opportunities. | Threats Citi faced many strategic challenges. As discussed in the case study, Citibanks challenge was how to manage the vendors and suppliers and ensure that they understand Citibanks strategy and would not exploit the Banks strengths of the information base.As Chemdex Corporation realized, even as the company managed to secure millions of dollars in venture capital to build a thriving network of suppliers and users, all connected through digitized transactions, success was still elusive. The problem was that Chemdex lacked an essential ingredient for network success: strong relationships with its trading partners (http://www.chemdex.com) | 3.0 Citibanks Distinctive Competencies Based on Porter (1980) generic strategies, Citibank opted for a differentiation strategy for its home banking service by offering a superior web banking option with powerful and relevant functionalities wherein customers can access/operate their banking accounts on the net with full confidence and ease. As shown in figure 1, Citibank has successfully used strategies that built a resources and capabilities to shape a distinctive competencies which lead at the end to competitive advantages and then a superior profitability. Figure 1: The roots of Competitive Advantage (Adopted from Dr. Aabangs slides) 3.1 Resources Citigroup's resources include tremendous market power in various markets, coupled with significant market share, economy of scale, high levels of revenue, partnerships, brand recognition and identity, and human capital. Through aggressive acquisitions, Citi has rapidly expanded, creating an economy of scale and leveraged its tremendous resources to reap significant revenue. Citigroup possesses tangible resources and assets such as facilities and further developed additional intangible assets such as technology, reputation, and organizational culture as it became more skilled at expansion and acquisition. Human capital was increased during Citi's growth phase, presenting additional resources in the form of skills, and capacity for communication and collaboration. The company's IT investment and systems represent valuable assets. This includes the e-business platforms serving as key resources for the company to further penetrate corporate accounts and expand competitive positions . From a resources perspective Citigroup is on the industry forefront, possessing an array of assets that facilitate success. Other resources include: diversified offerings, proven customer relationships and customer focus, back end and consultant capabilities, and acquisition experience. Despite Citigroup's macro level financial success, however, there are underlying issues present. (Article Source: http://EzineArticles.com/5794447). 3.2 Capabilities The drivers in this framework are opportunities and capabilities. Opportunities refer to the set of demands of customers for the financial services (products) Citibank could potentially provide across the geographies in which customers generate demands. Capabilities refer to the ability of Citibank to provide services competitively in the locations where potential customers have demands. These capabilities will be identified below in terms of expertise, know-how, and spillovers that provide a firm with the ability to exploit its opportunities. These drivers determine both strategy and organization, and both are energized by incentives based on measured performance. Figure 2 identifies the basic framework linking strategy, organization, incentives and capabilities (Besanko,Dranove,-andShanley,.1996). (Adopted from: Baron, D. P. and D. Besanko. 1996. Global Strategy and Organization, working paper. Besanko, David, David Dranove, and Mark Shanley. 1996. The Economics of Strategy. New York: Wiley). 3.3 Core Competence, Competitive Advantages and Sustainable Competitive advantages Citibank differentiated itself from competitors by using their customer service effectively. They offered several services to their clients. Citibank offered telephone hotlines, customer relations managers to give individual attention to their customers, and service experts. Citibank also continued their investment in technology for the front and back end of the banking systems. Citibank committed to an e-business strategy-Connect, Transform and Extend-was to web enable its core services, develop integrated solutions and reach new markets. (McCauley & Khan, 2002, p.1). Citibank was also committed to its customers. According to the case study, Citibanks vision was to become the worlds leading e-business enabler". Citibank had over 268,000 employees located in over 100 countries and their focus was to embed their services into the everyday lives of the local population. A bank that had roots in the country as deep as any local indigenous bank, building a broad customer base, offering diverse products, actively participating in the community and recruiting staff and senior management from the local population. In addition to being committed to employees and customers around the world, Citibank has strong brand recognition and continues to invest in technology. To position itself strongly within the technology sector, Citibank formed alliances with Oracle, Commerce One, Inc., SAP AG, Wisdom Technologies and Bolero.net to help transform its company to an e-business model. 4.0 Citibanks strategies in place Internal analysis, along with the external analysis of the companys environment, gives managers the information to choose the strategies and business model to attain a sustained competitive advantage (Abang Nawawis Lecture Slides, 2011). 4.1 Corporatelevel Citibanks global presence translated to a huge transactional business and required supporting more than 200 data centres, which did basic, repeatable processes. Regionalization The transformation process involved consolidating all the data centres within each country and moving them to Singapore. On the operations side, Citibank began with the regionalisation of cash and trade, which afforded Citibank a complete focus on the process. Internalizing the Web Within Citibank, there was a programme to promote the e-workplace. The processing centers in particular had taken off through integrating the web into their business processes. The transformations in the processing cycle were taken further to focus on transforming workflow automation; employees now had access to information without the need to make phone calls, check paper files or send faxes. Straight-Through Automation Citibank was continuously pushing the limits of straight-through automation by constantly deploying various initiatives. For example, Citibank had conducted some artificial intelligence projects such as pre-populating forms with historical data, which dramatically reduced error rates. 4.2 Businesslevel Citibank competing in the global transaction services marketplace. Citibank was the leading bank that had invested hundreds of millions of dollars in the infrastructure required to move and monitor cash balances online. 4.3 Functional level strategies Citigroup was dedicated to creating products that catered to different industries and business needs by taking appropriate action, whether it was to start e-business groups or invest millions of dollars in online technology. By 2000, business clients demanded an online product that would streamline and improve traditional payment processes. The case study provided a few examples of what customers demanded. They wanted electronic invoicing, automatic application of payments to account receivables, online payments guarantees and digital receipts stored online. Other requirements included multi-currency payment management and payment by invoice and currency. 5.0 Recommendation Potential growths in e-business are always existent and continued developments are always necessary. More and more companies are choosing to do everything from banking to purchasing to advertising online. Citibank must continue to align themselves with the right partners in order to maintain their standings in the e-business sector. Company executive Tom Edgerton stated, In the future, it wont be what your company can do, but what the network of companies you work with can provide. In order for Citi to continue to grow, it must evolve in its e-Business model and develop constant updates to its online products. In conclusion, as the case study eludes, Citis online products allow customers of different industries to connect to Citibank around the world. The addition of using technology partners allows the company to continue building new global infrastructure to deliver products and services online. Finally the new technological advances by Citi have helped the company integrate new products together in many ways that was not possible before 2000. These additions have helped the company to cater to different markets and in different industries, in the meaning be able to respond to the rapid changes of all industries. References Porter, M.E (1980) Competitive Strategy, New York: The Free Press. Timmers, P. (1998) Business models for electronic markets. Focus theme EM, Electronic Markets, Volume8, No.2. Timmers, P. (1999) Electronic Commerce: Strategies and models for Business to Business Trading, John Wiley and Sons Ltd. Baron, D. P. and D. Besanko. 1996. Global Strategy and Organization, working paper. Besanko, David, David Dranove, and Mark Shanley. 1996. The Economics of Strategy. New York: Wiley. Finance Asia, May 2001. Processing Comes to the Fore, p. 83