Capital One's strategy was to become dominant in the credit card market by efficiently using technology & determining when the profits eroded, empowering the organization to offer better products than its competitors using mass customization.
Capital One's strategy depended on the management and effective use of information regarding the customer what is termed as "Information Based Strategy". Information on customers was analyzed using statistical analysis to determine what kind of offer could be given to what kind of customer and how the customer would respond.
The strategy consisted of Identifying a typical customer based on the credit worthiness and by applying various tests to the right sample of the population. They also used an advanced risk management model to decrease the risk of default payments. Mass customization and direct marketing was used for building the lending business and they used innovative methods to analyze market behavior. Being the number one entry to the industry resulted in the firm's success.
Company Policies:1)Hire the brightest & retain them by giving them responsibilities and high compensation2)Break conventional wisdom by making new decisions3)Use technology efficiently to solve existing problemsOrganizational structure:The company was organized in a functional manner as follows:1)Marketing and Analysis: Responsible for marketing and credit risk involving determination of which offers to send to which customers, based on the IBS strategy.
2)Human Resources: Responsible for hiring the best students from the top schools to get the best brains. Rigorous interview process lead to choosing high performing employees.
3)Operations: Responsibilities included creating lists of potential customers, created and mailed direct mail pieces, handled incoming card applications and processing, collections, recoveries and payments as well as fraud detection.
4)Corporate Governance: Functions included legal activities, compliance activities, community relations, investor relations, brand advertising etc.
The functions support the company's overall strategy. The firm dominated the...