Citibank's Asia Pacific Consumer Bank has thought of launching credit card business as a way of growing future revenues. Card could prove to be excellent way to overcome distribution limitations imposed on Citibank, on the other hand, the management of New York questioned the wisdom of issuing cards in the markets. Now Citibank Asia Pacific Consumer Bank has to establish plausible strategies for issuing cards such as positioning, pricing and how to launch in Asia Pacific.
In this paper, I would like to present the overview of the credit cards industry and conduct the resource-based analysis for Citibank. Finally I will present recommendations for Citibank about issuing credit cards in Asia Pacific.
Industry Analysis (See Exhibit 1)
Barriers to Entry: Barriers to entry into credit card business by new competitors are extremely low. Most local banks in each country have relationship with Visa and Masters and can easily issue their Visa and Master.
Also local financial institutes can issue Visa and Master as well. Most of them have already had local infrastructure to manage credit card business and can use Visa/Master's network as well. However their target customers belong to below middle class, which is different segment from those of Citibank.
Rivalry among Existing Competitors: The number of credit card brands are limited: American Express (Amex), Dinners Club International (Dinners), Visa, Master and some local cards such as JCB and Euro Card. But a number of banks and financial institutes issue a variety of credit cards by being franchisee of Visa and Master. Therefore, the competition in this industry is very intensive. However, the targets of Amex and Dinners are upper or upper-middle class while focal banks and financial institutes target below middle class. The important point is Amex and Dinners try to expand their customers by adding new...