Business Strategy & Financial Strategy for Charge/Credit Card Company

Abstract

Charge / Credit card market is very competitive in Taiwan which grew from nothing in 1989 to 44 Million cards by the end of 2004. With the brutal competition in this industry, issuers tend to lower their profit margin to trade for the higher market share. What is their ultimate objective? How they prioritize their business strategy and finance strategy in different competition stage?\r\n\r\nUnderstand the credit card market and prospect segmentation definitely play a big role for issuers to scope their target prospects then design the right product to fit their selected cardmembers’ needs. Compare the world leading card issuer Citibank with the largest issuer in Taiwan Chinatrust Commercial Bank, what make the world’s largest issuer can not be the number one in Taiwan? What is the impact on different business strategy and financial strategy? How regulator should react to proper discipline the over-heated credit card market?\r\n\r\nFrom financial analytical method perspective, what should be the right measurement to be used in the credit card market? ROI, NPV or RORC?\r\n\r\nIn this thesis, I also cover the discussion between “Niche Market but High Margin Approach” and the “Mass Market but Low Margin Approach” together with the importance of the organizational impact. To provide a insight on the different strategy to be used in the different business developed stage.\r\n\r\nWith all the above, I put together the conclusion and suggestion of my own to the Charge / Credit Card business.

Chapter I - Introduction 1\r\n1.1 Research Motivation 3\r\n1.2 Research Objective 4\r\n1.3 Research Scope 5\r\n1.4 Research Limitations 5\r\nChapter II: Industry Analysis 8\r\n2.1 Overview 8\r\n2.2 Charge / Credit Card Market Information 11\r\n2.3 Market Segmentation 13\r\n2.4 Investment Strategy 17\r\n2.4.1 Citibank 17\r\n2.4.2 Chinatrust Commercial Bank 27\r\n2.4.3 Comparison between Citibank and CTCB 36\r\n2.4.4 Regulator’s Role 38\r\nChapter III : Financial Analytical Method 39\r\n3.1 Strategy Quality Plan - Market Share 39\r\n3.2 Investment Optimization Link with ROI / NPV 45\r\n3.3 The RORC 47\r\nChapter IV : Discussion and Analysis 51\r\n4.1 Niche Market but High Margin Approach 51\r\n4.2 Mass Market but Low Margin Approach 54\r\n4.3 Organizational Impact 55\r\nChapter V : Conclusion and Suggestion 59\r\nBibliography 62