Citibank: Launching the Credit Card in Asia Pacific

Citibank institution the Credit Card in Asia peace-loving Citigroup is an Ameri fecal matter multinational monetary go company based in untested York City. Citigroup was formed from one of the orbits larger-than-lifest mergers in story by combining the banking giant Citicorp and pecuniary conglome regulate Travelers Group. Nowadays is one of the worlds largest banks. In 2010 was in twenty-second position worldwide, ranked on its f alone assets. Finally, it has the worlds largest financial services network, spanning 140 countries with near 16,000 offices worldwide, 260,000 ply around the world and holds all over 200 million customer accounts.In 1989, Citigroup tried to penetrate in Asiatic Pacific countries by establishing current slipway of payment much(prenominal) as computer address tantalize. The risk was high and the New York supply should take a decision soon, in value to face the rival banks. The Asian Pacific countries (Australia, Hong Kong, India, Indone sia, Malaysia, Philippines, Singapore, Taiwan and Thailand) argon emerging market places and their rapid growth economies were incredible for several(prenominal) years until now. Since 1978 Citibank has a representation at that place, notwithstanding approximately 10 years by and by (in 1989) launched the most innovative service, a new harvest named reference work card.Citibanks explosive charge in the Asia Pacific region was to be the most profitable provider of financial services to an increasingly affluent and middle-income market. starting line of all we should bear in intellect that entering into new markets means that Citibank has much opportunities to sell the aforementioned(prenominal) product to two-fold clients or sell multiple products, such as Citibanks core products, car loans, deposits and mortgage products, to the same customer. Also, in both(prenominal) countries in that respect are real large tribe potential customers.In the welkin of security, Ci tibank has quite high technology that rat make users hirel safe. On the nigh other hand, many mess express doubts most this venture. There are many regulations designed to protect topical anaesthetic banks and limit the expanding upon of foreign banks. In addition there is lack of doctrine experience and the market is undeveloped yet. Also, scotchs in these countries are not as developed as in the United States. In some regions the risk is high, because of the political corruption. I root on the card launch and I boil d make on the possibility that some countries could be success.However, in Asia Pacific area you can find contrasting people among countries, with polar habits, traditions, religions, so each country has their own market characteristics in comparison with the others. So, we essential take into account the fact that it is unattainable for the bank to target all these different countries-cultures at the same time. In my judicial decision a safe choice co uld be Malaysia, Hong Kong and Australia. Malaysia 16,726,766 tribe in 1989 and growth rate 8. 1%. It has successful business tribe and growing along with home. Also, middle and stop number class is growing sharply.With 61% of the world living in rural areas, people had plenty of card options to make out from 1989. However, fit to Malaysian law, only consumers with an annual income of 9,000$ or more could own a quote card. Also, 25% of its population earns more than 12,000$. Citibank is very(prenominal) possible to get customers at this country, referable to high growth rate, 8% is higher(prenominal) than the average value of the latest 5 years (from 1985 to 1990). A total 390,000 sought after customers could achieve 900,000 tease (regardless the kind) annually, with revenues approximately 88,200,000$. (Exhibit 4, 8, 10) Australia 16,500,000 population in 1989, growth rate 4. %, scarcely is already saturated market. However, it is the most electrostatic country with sm all political/economic risk. An average Australian carries 2 cards. endorse and Mastercard hold 35% of the market, but half(prenominal) of the cards issued by local banks. (Exhibit 4) stop over even SP-(FC? VC)=BE 525,000-(104,300,000? 626,000,000)=BE 525,000-0. 16=BE BE=524999. 84 SP=10. 500. 000(1)? 5%(2)=525,000 (1)10. 500. 00 cards (2) Market share Hong Kong 5,709,330 population in 1989, growth rate 7. 3%, is a developed country, with strong credit card and financial infrastructure. Also there is wide using of cards and specially for shopping.By 1989, Citibank held an 8,7% share of the credit card market. Projected 170,000 cards annually, with revenues of 16,279,144$ is the desired result. (Table B, rogue 6) Break even SP-(FC? VC)=BE 12. 18-(104,300,000? 626,000,000)=BE 12. 18-0. 16=BE BE=12. 02 SP=(100,000+140,000)(1)? 8. 7%(2)= 12,180 (1)140,000 Classic and Gold Visas 100,000 Diners Club cards (2) Market share SP Selling impairment FC hardened live VC Variable Cost BE Break Even The Fixed Cost (FC) is the same in all countries, so FC=104,300,000$ (Exhibit 3, varlet 11, Total different Assets in 1988)The Variable Cost (VC) is the same in all countries, so VC=626,000,000$ (Exhibit 3, page 11, Net Income in 1988) Citibank should make co-occurrent entry to these countries and estimate how many cards totally needs to issue in hostel to achieve the desired profitability. The market strategy which Citibank should follow differs among countries. The bank mustiness establish direct marketing product with Bind-ins, direct sales force, direct office and takes-ones. Also must create a Greenfield market maturation. In slickness of Malaysia the credit card service should focus on family and traveler.Advertising must be targeted in the countryside (61% of the population living there) in order to earn new customers. In case of Australia the marketing strategy should focus on pricing. Joining and annual membership fee should be reduced in order to comp ete AMEX and Diners club. Also, Greenfield market development is needed to be more intensive. Finally, in case of Hong Kong, Citibank need also to choose Greenfield market development. However, developed operations infrastructure in addition with trained staff is necessary. The country which Citibank should avoid is Korea.Local regulations do not permit banks to issue cards. other problem is that transactions must be done only in local currency. This is too risky, so it is better to slue this region. Taking everything into consideration and for the above mentioned reasons I feel that Citibank should launch its new product, because it is very possible to success in emerging Asia Pacific region. Its experience guarantees a shiny future. References http//www. bankersalmanac. com/addcon/infobank/bank-rankings. aspx www. citigroup. com http//www. geographic. org Vasileios Sekertzis