.. lion to $15 million for each additional 250,000 credit card customers) =Joining fee and annual fee estimated from American Express Green (Exhibit 9) Philippines I believe this country has room for expansion in the credit card market. There are some negative detractors to entry. A large portion of the population is in the last three categories of earnings (82% of the population earns less than $12,500 annually). The estimated growth rate is a dismal 0.5% annually. In addition, it possesses the lowest political and economic ranking D, with comments about turmoil and communist insurgency. Impressively, the upper category of annual income possesses 50% of the credit cards currently in circulation on the Philippines.
Socially, the Philippines places a great esteem on the financial affluence, and the entry of a affluence credit cards such as Citibank, will have great market attraction to the effluent portion of the population. Due to the political unrest, I would be extremely reluctant about market entry. Break-Even Analysis: $2 mil + $35 mil = 616,667 new credit card customers $85 – $25 ** (An additional $10 million to $15 million for each additional 250,000 credit card customers) =Joining fee and annual fee estimated from American Express Green (Exhibit 9) Singapore Next to Australia, this market is extremely prosperous, developed and stable enough to support immediate market entry. It appears that Singapore is experiencing a political and economic boom. With a political ranking of B, it appears politically stable to entry.
A large GNP ($23.8 billion) when compared to its small population (2.7 million), the population appears to be lucrative. Inflation has a 5-year average of only 0.7% and a literacy rate of 87% (one the highest in the region). This represents a population that has an understating about financial basics and could provided endless potential for credit card customers. In addition, 100% of the credit cards already in circulation are owned by only 10% of the population, there is a fantastic potential to exploit the lower 90 of the population. Market entry should be reactive easy with a formulated financial plan aimed at economical use and ease for this sector of the population.
Break-even Analysis: $2 mil + $35 mil = 435,294 new credit card customers $110 – $25 ** (An additional $10 million to $15 million for each additional 250,000 credit card customers) =Joining fee and annual fee estimated from American Express Green (Exhibit 9) Taiwan I am impressed by the Political and Economic ranking of A. The GDP of $95.8 billion is one of the highest in the region, with an impressive 9.3% 5-year growth rate. These values reflect a market that is stable and growing. This represents a market that is able to support entry of another financial institution. Similar to Singapore, people who reside in the upper three categories of annual income own 100% of the existing credit cards. This leaves the lower income market subject to entry.
Couple this with the attractiveness of the Citibank name, and I believe the entire income arena is attractive for entry. Break-Even Analysis: $2 mil + $35 mil = 402,299 new credit card customers $112 – $25 ** (An additional $10 million to $15 million for each additional 250,000 credit card customers) =Joining fee and annual fee estimated from American Express Green (Exhibit 9) Thailand The population numbers reflect a market that is suitable for entry, in a converse nature as compared to Taiwan and Singapore. Seventy five percent of the existing credit cards are owned by people in the lower three categories of annual income. This leaves the upper three, lucrative levels of income wide open for market penetration. Additionally, a strong Political ranking of B and 7.2% growth rate reflect a stable economy.
Break-Even Analysis: $2 mil + $35 mil = 462,500 new credit card customers $105 – $25 ** (An additional $10 million to $15 million for each additional 250,000 credit card customers) =Joining fee and annual fee estimated from American Express Green (Exhibit 9) Market Entry Strategy I recommend entering this market. First, I would exploit a commodity not discussed in this case. Guam. Guam, a U.S. territory, is geographically located in such a manner that startup, and continuous operations could be directed from the immediate region. There is already an established Citibank corporate office on Guam, and this would make the initial implementation easier for Rana Talwar to orchestrate.
I would entry the pacific region in 3 phases. In Phase 1, I would establish entry into Australia and Singapore. Based on the literacy rate and outstanding infrastructure, I would focus my initially marketing and advertising campaigns on mass media, such as television, radio and newspapers. Supplemented with take-ones, I believe the majority of the population could be easily canvassed. Depending of the success of these initial offering, the telephone systems of both countries seem to be able to support a direct marketing plan, should the need arise.
In Phase 2, I would enter Taiwan. This country is extremely stable with excellent growth and savings rate. With a literacy rate of 90%, and marketing approach utilizing mass media would be extremely effective. In Phase 3, I would enter Malaysia and Thailand. The middle incomes of these countries comprise the majority of the existing credit cards customers. I believe there is significant growth potential at the lower and upper income levels of the financial spectrum.
I would take a cautious approach to launching in this market. The political environments in both countries pose some interesting risk problems. The person I select to run the operation in these countries will have an in-depth knowledge of the political environment existing there and have experience tackling these challenges. Lastly, I would avoid entry India, Indonesia and the Philippines. These markets are extremely volatile.
The political risk is too extreme and could result in financial disaster. Rana Talwar has in interesting challenge ahead, convincing his country managers to accept his proposal. First, he should scrutinize the existing country managers to ensure they have shown the flexibility needed for the expansion of this project. Next, he should rely on the success of the Citibank Corporation, focusing on the positive attributes achieved by Citibank in these regions. Rana should focus on the positive aspects of the country analysis, and encourage the managers that success is well within their grasp, and the studies prove the potential for success in each of the countries targeted. And lastly, the acquisition of a financial advisor who specializes in credit card development would be a wise investment for entry into this market.