American Express Company Value Enhancing Strategies
American Express Company (Amex) in an American financial organization that specializes in processing payments, credit cards, and provide travel-related services across the globe. Over time, the company has established itself as one of the top brands in financial service provision. The company has excellent significantly in its operation, as seen in its USD 27 billion cash position and a market capitalization of USD 97 billion. It has a strong financial ratio of 1.86, which places it a pole position of liquidity. The financial ratio is higher than its liabilities; thus, it is capacitated to manage its debt obligations. Compared to its competitors, the company has a lower solvency ratio. Its excellence can also be attributed to its low financial risks. The company has reported an increase in its return on assets ratio, as well as a significant net profit margin. Despite the successes, AMEX has a large pool of opportunities. The company also needs to leverage its capital structure, which can be vital in reducing the company’s expenditure.
Though AMEX has been successful, there are several strategic alternatives that the company can take to improve its profits. In my opinion, some of the possible corporate strategic alternatives for the company include internationalization and diversification. Diversification at AMEX would aim at introducing new products in the market or pursuing new markets for its products (Mayer et al.). Diversification would help the company in balancing in the face of market transformation and support effective resource utilization. A diversification strategy can, however, be costly as failing to focus on a single entity can contribute to losses. Diversifying to numerous segments can also deprive some segments of the required resources. The internationalization strategy would support AMEX’s entry into foreign markets. The global strategy can be advantageous for AMEX as it can reach a new customer base and expanding its brand. The strategy can be expensive, running a company in a foreign country to the problem of culture.
Of the two alternative strategies, I would propose to the firm to undertake the internationalization strategy. Adopting this strategy can be beneficial for the company in several ways. It creates new markets by reaching out to new regions and more customer based. The strategy can also be vital in increasing the diversification of the company by targeting the new foreign markets with new products that are in demand in the region. To gain a competitive edge over the competition, the company must expand to regions where competitors do not operate. Competition edge is also obtained through improving its company brand image in new ecosystems. This strategy aligns with AMEX’s vision of improving customer lives through providing the needed services. Increasing customer based through the strategy will also fulfill its mission of being the best global financier as the largest card issuer.
The company has a substantial financial reserve. Therefore, to improve on performance, the company needs to reduce its funding on reserve. The reduction in its financial reserve implies that the company will have more funds in circulation, thus booting on productivity. Increasing capital flow increases overall productivity, thus increasing capital for the management of the newly acquired companies.
To succeed in the industry, the company can promote its culture by focusing on its customers. It can encourage its mission by increasing innovation and improving its products for sustainable profitability in the market. In my perspective, Christian Worldview leadership seeks to help in skill transformation, capabilities and promoting values as well as principles. Following a Christian worldview of leadership needs the leaders at AMEX to guide the company values, and motivate the employees to act or provide services in a given way.
The best leadership initiative that coincides with the company vision and mission is empowerment. According to Zwilling, employees need to be given the necessary skills and tools to spearheading the growth of the company. The leadership motivates employees, thus improving their performance.