The History of American Express Organization
The American Express organization, which is as well referred to Amex, is a branched out worldwide financial services institution whose headquarters are situated in the City of New York. The organization is famous for its traveller’s cheque, charge card, and credit card business. The organization participates in frequent stock trades on the New York Stock Exchange (NYSE) by utilization of the ticker representation of APX. The institution is one of the 30 stocks that make up the industrial average of DOW Jones (Shanbhag & Bagwe, 2016).
The company was initially established in the year 1850. It was first an ordinary mail express institution that was set up by and merged with John Butterfield, William Fargo, and Henry Wells. The organization provided express shipments from corner to corner of the United States. At the moment, it was not recognized as the financial service organization that it is in the present days. American Express Company, by the side of William Fargo, assisted establishing the better known and recognized organization of that era known as the Pony Express Company.
Vision: The vision of American Express is to offer the best consumer experience each day all over the globe
Mission: The organization’s mission is to turn out to be crucial to its clients by providing distinct services and products to assist them in attaining their ambitions.
The goals and objectives of the firm are to develop a long-lasting relationship with their clients as it was said to be relevant to the brand and key to the business. The firm ensured that in everything they do and each interaction with the client, their objective is to offer the best consumer experience in the globe. The organization also provided that its service is established based on trust. The institution ensures that their clients trust them to deliver their promises and amend where they fall short. As a return, they won loyalty from their clients.
Capability: since the beginning of the organization they have process millions of transaction every passing day, offer services and products to consumers all over the globe, and drive more than $1.1 trillion in commerce annually. The competitiveness of the firm is based in; unique models of business, the firm relied on the dedicated professionals of their colleagues, innovated ideas, and exceptional talents, along with unparalleled services and data-driven insights. The outstanding business models serve as their strategies and policies that enable them to compete in both the worldwide market and local market.
In terms of resources, the firm has a different set of products and an enormous, global consumer base. The tools, programs, services, and products that the firm offers assists in driving commerce, manage and grow businesses, and enrich lives. Example of the services and products include Credit Card, Charge Card, Network services, Travel-related services, merchant processing and acquisition services, and other fee services such as fraud prevention services.
Present Analysis
The SWOT analysis of the American Express
As one of the leading organizations in the industry it is associated, the firm has much strength that assists in the market. These strengths do not only assist in protecting the existing market share but also helps in penetrating the new markets.
Strengths
The firm is highly successful at organizing the market strategies of its product
The organization has a well-built free flow of cash that offer resources in the hand of the firm to enlarge into other new projects.
A strapping brand portfolio – over the past years and up to date, the firm has invested a lot in establishing a robust brand portfolio. The brand portfolio is crucial to the firm because it might expand its wants into new categories of products.
Successful record track of new product development – the company has invested in product innovation.
Successful record track of incorporating flattering organizations through acquisition and mergers – the firm has successfully included several technology institutions in the last few years to make more efficient its operations and establish a consistent supply chain.
Activities automation resulted in quality consistency to the firm products and has enabled the institution to scale down and up based on the conditions of demand in the market place.
Brawny dealer community- the firm has established a culture among dealers and distributors where they do not only promote the products of the firm but also concentrate on training the sales team to illustrate to the client how they can attain maximum advantages from the products.
Favourable returns on capital expenses – Amex is comparatively prosperous at the implementation of new projects and produced products returns capital expenses by creating new streams of revenue.
Weaknesses
These are the areas where the firm can improve upon. The company can develop on its weaknesses by conducting a SWOT analysis and create a strategic positioning and competitive advantage.
The current firm’s structure is only compatible with the current model of business, thus restricting growth in adjacent segments of the product.
A high rate of attrition in the workforce – contrasted to other firms in the market American Express has an excellent standard of erosion. It has to undergo high expenses as compared to competitors on the development and training of employees.
Investment in development and research is far below the rapid developing players in the market. Though the Amex Company is spending far much above the market healthy development and research, it has been unable to compete with the most excellent players in the market in terms of innovation.
The Amex Company has not developed a mechanism of internal feedback from sales group to counter-attack the challenges of being unable to tackle threats posed by new entrants into the industry. This has lead to a small market share in the categories of niche.
The Amex products though successful in terms of sales lack exceptional and positioning selling proposition which can result in attacks from this segment from the competitors.
The Amex Company has not conducted its financial planning efficiently and accurately since its current ratio of assets indicates that the organization can utilize the funds more effectively than its doing currently.
Opportunities
The market improvement will result in the strengthening of the competitor’s advantage and permits the Amex to expand its competitiveness contrasted to other competitors.
Steady free flow of cash offers opportunities to invest in adjacent segments of products. With enough funds in the bank, the company can invest in new products and technologies.
Opening new markets as a result of an agreement with the government, this may offer the Amex an opportunity to join upcoming new markets.
American Express might expand its profitability from new policies of taxation that can impact the technique of conducting business and results in new opportunities.
The Amex may secure an opportunity to drive home its benefit in gaining share of the market and new technology in the new product grouping as a result of new policies in the environment.
Since the Amex has vast experience in the online platform, it can leverage this opportunity to secure new clients from the online channel.
Threats
Increasing levels of pay, especially movements like 15 dollars per hour and rising costs in China can result in deadly pressure on Amex profitability.
New technologies established by market disruptor or competitors could be a deadly threat to the Amex Company.
Changing the behaviour of clients from the online platform could be a threat to the Amex Firm in the current physical infrastructure.
Shortage of workforce that is experienced in particular parts of worldwide markets may pose a threat to Amex Company steady development.
Low quality and counterfeit Amex products, particularly in small income regions and emerging markets, may pose a threat to the firm.
Another threat to the existing products of Amex may rise from a new environmental rule under the agreement of Paris (2016).
Company’s Staff, People, Capabilities and Structure
Currently, and according to the 2018-2019 facts, the firm has 1.3 trillion global billed businesses, 40.5 billion dollars revenues, 60,000 numbers of employees, 115 million cards in force, 190 billion entire assets, 7 billion dollars net income, and 15 fortune global most admired organizations. Its current headquarters are situated in New York.
The Amex Company Financial Analysis
Balance Sheet
This is a financial statement that indicates an organization’s equity of shareholders, liability and assets at a particular end in time, and offers a basis for rates of computing returns and analyzing is the capital arrangement. It is merely a statement of finance that indicates what a firm owes, owns an investment from shareholders. The figure below shows the Amex balance sheet as from the year 2015 – 2020.
Income Statement
It is a financial statement that indicates the loss and profit of an organization for a given period. It also displays the firm’s administrative and selling expenditures, gross profit, costs, and revenues. The figure below shows the summary of the income statement of Amex Company for the last five years.
Cash flow Income
This is a financial statement that identifies where a cash entry is generated and where funds are being spent over a particular period. The figure below shows the cash flow income of Amex Company from 2015-2019.
The Present Marketing Strategies of Amex Company
Product
This strategy of marketing reflects a lot to the solution of consumer’s requirements. Amex Company is developing exceptional design, features, and name of products to be prominent in the competitive industry. The firm is considering the following factors to improve the strategy of products augmented, name, brand, packaging, features, variety, and quality services.
Pricing
This element of marketing strategy needs an assessment of the product’s value for intended clients. The Amex Company is concentrating on setting the list of discounts, the period of payment, terms of credit, and prices. The Amex firm decided that it has to set reduced costs than its competitors when penetrating a new market, for a better price joining strategy. This idea has enabled the company to acquire the leading share of the market based on price discounting. However, this idea as well may result in possible retaliation that may, in turn, lead to an undesired war of prices with competitors.
Place
This element of marketing strategy demands the Amex Company to ensure several essential decisions when improving its plan of distribution.
The firm has decided that there is a need for a distribution partner to assist in the requirements of clients; this ensures that the products are available to intended clients at a targeted location. Also, the firm decided to use indirect (involving intermediaries) channel of distribution to ensure it covers wider market all over the globe due to high demands. The firm has as well decided to utilize both physical and online form of distribution strategy; it has its website to sell products through the internet. This idea has made the firm ensure that it has reached all their customers in the corners of the globe both physically and through the internet. Currently, the firm is researching this element of marketing strategy; the firm is assessing different places to find out the mode of distribution that is most preferred by their clients. The firm is as well as studying the competitor’s mode of distribution to analyze the cost-benefit and conduct comparison, which may help in an efficient plan of distribution.
Promotion
Promotion can be categorized below, and above the line strategies of promotion to attain marketing goals, the Amex firm may blend on one or both. This is one of the most crucial elements of marketing strategy the Amex Company is concentrating in. in the above line of promotion alternatives, the firm is using print advertising, radio, and television. In the options of below the line promotion, the institution is utilizing direct mails, tradeshows, and catalogues.
To fulfil this element, the firm is defining clearly the exceptional selling propositions to let clients better understand the product and how it is diverse from available options. The firm is also ensuring that when posting a message of advertisement, it analyzes the message properly to make sure that the client will perceive a clear picture of the product provided. The company is ensuring that it is maintaining a high professional will of advertising by offering a prestigious brand that attracts clients all over the globe. Finally, the firm makes certain that it puts into consideration the information of the intended market such as social status, income, gender, and age so that it incorporates the suitable plan of promotion.
Ethics
In terms of organizational ethics, the Amex firm upholds 100%. The firm has established a positive relationship with their client’s lives, offers outstanding products and services that provide premium value to their consumers. The firm also upholds high standards of integrity in all its activities; it also values its individuals and rewards their results of performances. Members of the firm are good citizens in where they conduct their duties or live; the firm as well remains accountable for delivering their promises to clients.
Corporate Social Responsibility
In the approach to Corporate Social Responsibility, American Express firm attains its social commitment through grants to numerous numbers of non-profit organizations all over the globe. The areas given much attention are region that civic experience processes, historic preservation, humanitarian assistance, poverty, and disaster relief. Most countries associated with the experiences as mentioned above that the firm focuses India, Italy, Hong Kong, China, Canada, Australia, Argentina etc. Through CSR, the firm managed to shape its path due to the way it approaches its duties as a corporate citizen; this has motivated the culture of engaged clients and high-performing employees.
The organization’s executive management department holds the final duty for CSR success and progress. These leaders are continuously analyzing and reviewing goals and performances associated with Social Governance and Environmental in their relevant teams. The Public Responsibility Committee members within the board of directors of Amex firm take charge of the progress and offer additional directions. Every day the CSR team of Amex Company works together with colleagues throughout the firm to shape and track the efforts of the firm.
Environmental sustainability
In regards to environmental sustainability, the firm has not been lagging but participating in a significant percentage. The firm’s key initiatives of the environment circulate lowering its influence and operating sustainably. Amex has finally implemented a program of environment, established like two decades ago. The program comprises of three elements which are sustainable utilization of resources, waste reduction, and energy conservation.
Energy conservation: to perform more effectively, the firm has installed lighting system, building controls, energy-effective technology to manage usage electricity. The firm also encourages green construction design, as it is apparent in its project in Australia, (Sydney).
Waste Reduction: additionally, the firm is encouraging its clients to reduce the consumption of paper, and providing strong programs of recycling. The Amex firm looks for techniques to lower the wastage even in the lunchroom, it has proposed green program in its cafeteria by incorporating the use of fryer oils for biodiesel fuel, utilizing bulk condiments, sustainable seafood, and providing organic foods.
Natural resources: the Amex organization makes every effort to respect the existing natural resources when conserving fuel, water, and land, as well as constructing new facilities.
To make sure that these programs are adhered to, the Amex firm established an office responsible for an environmental organization, headed by superior executives at the organization. The firm is also holding its purveyors answerable for their policies of environment, by analyzing the impacts of the environment and the duties of its chain of supply.
Leadership
The Amex Company is dedicated to enlightening the agility, speed, and innovation needed to succeed in the financial services market that is competitive. In the last two years, the firm created a new academy teaching about leadership skills. The idea increased the firm’s level of dedication to innovating their development and learning offerings. This year the company is celebrating the impact created by the establishment of a leadership academy across the United Kingdom, which is not after profit. The firm is also delivering the first woman leader in the Amex organization academy in South Africa, which intends to develop and uplift women leaders. The firm has also established another academy in Singapore. It is also exciting to hear that over 850 leaders from the academy of Hong Kong, Singapore, India, and the UK are tackling major issues that are said to be complicated.
Several members from the AMEX academy like Ani, Gaspard, and Carl are pointing out the lessons they learnt. First, The Leadership versatility Index (LVI) is a system that assets you to identify the weaknesses and strengths to be able to act on them and finding a balance between them. Second, identifying diverse strategies of communication and how to utilize them with a variety of stakeholders is a crucial step in the process of leadership. Third, Businesses and organizations must play a role in the community in which they perform their activities. Finally, the fourth, a reliable and authentic leader, is flexible in the methods that they utilize with their groups. It will identify the required balance to lead them, provide the specific condition in which they are conducting their operations.
Diversification
It is the process of making a firm to be widely known or diverse. Several actions have to be undertaken for a company to be distinct. The AMEX Organization has performed some activities that have made it different. The activities include;
The firm invests in underrepresented talents. Additionally, the firm is dedicated to develop and attract skills that are underrepresented through targeted enrollment training efforts programs. The firm also holds two central annual meetings to bring together Hispanic superior leaders and Black Americans for networking and discussions. Approximately 30% of the firm’s excellent management in the United States is minorities. This activity has played a significant role in the firm is diverse.
The firm is committed to encouraging women advancement; the firm affirms that they are proud to have women making up more than half of their workforce all over the world. Also, 21% of the firm’s board of directors is women, and more than 41% of women are present in the executive committee. The firm also strives to make sure that women have sponsorship, tools, and resources required to be successful. For example, the firm has invested in women’s society in several ways, such as the Global Conference of women and talking about how to continue to empower and elevate women across the organization.
Supporting the Community and LGBTQ in the last sixteen years, the firm has scored 100% on the equality index of human rights operation. The ranking is based on the practices and policies that support LGBTQ.
Mentorship: the firm offers a one-year-long program of mentorship to well-performing colleagues in the United States. The program equips colleagues with the knowledge and skills they require to play better to the firm. The company also encourages colleagues to be free to discuss their advancement in career.
Strategies for competing in global markets
Developing a strategy to conduct business globally requires a similar kind of market and planning assessment necessary for success in the local industry. The firm has established several steps that assist it to compete in global markets. They include:
Generate a healthy game plan: the firm has developed a most excellent game plan that has sustained it in the global markets regardless of stiff competition available.
Carry out a market assessment: the firm has conducted both secondary and primary research of the market, unlike many organizations, performs secondary research only. The analysis has dramatically assisted the firm what the best countries for their product, rules and regulations that may restrict joining a new market, potential channels of distribution, and price competitiveness.
Analyze competitors: this is another responsibility that the firm has carried out and has helped a lot. The company has analyzed its competitors not only in the US but also in the entire world. This has helped the firm to be able to enter into new markets in different countries with ease.
Future prediction of the Firm
Based on the past and present assessment of the American Express Organization, I see a good future. AMEX firm has been doing outstandingly well having a return on equity of 26.4%, this is considered above the average of financial organizations by 13%. I think the firm should anticipate the best performance to progress in this manner for the next five years with an estimated ROE of approximately 25%.
References
Jaworski, B. J. (2018). Commentary: advancing marketing strategy in the marketing discipline and beyond. Journal of Marketing Management, 34(1-2), 63-70.
Keller, K. L., & Brexendorf, T. O. (2017). Measuring brand equity. Handbuch Markenführung, 1-32.
https://buildchange.org/5-lessons-on-leadership-from-the-amex-leadership-academy/