AMERICAN EXPRESS
Do you really know American express?most people think of the firm as credit card company.many also know that it was among America most successfull and admired corporations in the 1980s.during that period it more than triped its revenues,earned anaverage return on shareholders equity of better than 15 percen ayear,and was cited as the most admired financial services firm in fortune surveys of top executives every years.but where did that revenue and earnings growth come from?what strategies guided the success of american express?
Corporate strategy-two avenues toward growth
American express corpooration has traditionally focused main business,financial service and travel.As James D Robinson 111,the CEO of American express,point out, it helped open up the savings and investment side of the equation by acquistions shearson loeb rhoades and investors diversified service [IDS] the acquistion also helped american express appeal to a new segment of the financial service markets.while the firms credit cards and others service were targeted primarly at upper income groups IDS sold annuities,life insurance and mutual funds to middle income.IDS proved asuccesful to addtion american express.however ,was generated by internal expantion into new,though related,businesses and marked segment indeed,adaptability and an entrepreneurial spirits has become the keystone of corporate strategy at American express.
Busines-level competitive strategy
campaign began such as Master card and visa proliferated by offering cheaper annual fees and enticing lines of credit American Express managed to increase its share of cards outstanding inthe united states and its share of domestic charge volume grew.American Express improve its performance inthe face increasing competiton by finding ways to differentiate its cards from others on the basis of superior service.
for example;
1.service center answer the phone[the standart is seven second]
2.how long it take to replace lost card[48 hours is the goal]
3.reguler training for line employees and their managers and their managers toensure that new ideas for improving customer service are put into practice.
Marketing strategy
certainly,effors to improve service quality do little to give the firm acompetitive advantage,by promotion and advertising thus,American Express spends as much as 250 million dollar ayear-twice as much as master card visa combined-remainding people and convincing them that American Express cards offers more service and prestige than any competitors.
more important American Express works diligenly to keep abreast of customer wants and tofind way satisfy them.the company also mantains and updates weakly aprofile of 450 attributes.this information is used tosegment the market based on income lifestyle characteristics and to determine what service attributes appeal most to each segment.American Express marketing managers have used the information gained through their ongoing market analiysis card at spesific customers segments.
finnaly,AMEX is also pursuing growth by attempting to improve the penetration of its credit cards and financial service into global markets where demand growing faster than it is domistically.consequenly the company is actiely to improve its international competive by engaging in lobbying activities aimed at changing goverments trade and economic policies for example services in future tariff agrements and to find ways to solve the third world debt crisis.
Implementation
among the keys to American Express success is that top management has clearly demontrated its commitment to the firm strategic principles and that the organization structure policies,and process are designed to enable and encourage employees to perform in ways that are consistent with those principles
more subtantively the organization and its internal processes are designed to facilitate and reward behavior that is consistant with the company strategis thrust.to encourage innoation enterpreneurial actions by bussines and marketing managers,for instance decetion making autority is relatively decentralised. the firm tries to hire strong,ambitious managers and give them substantial fredom tomanage their own businesses and to react quakly to new opportunites in the environtment,the company also constanly monitors its employees perfomance,and its ties financial rewards promotion to that performance.as result,American Express strategies are more than just plans on paper,as its record of continuing growth and profitabily reflects.
