Citibank Case Study

Table of content
1.0 Background of the Companys case...3
2.0 SWOT Analysis3
3.0 Citibanks Distinctive Competencies..7
3.1 Resources...8
3.2 Capabilities...9
3.3 Core Competence, Competitive Advantages and Sustainable
Competitive Advantages....10
4.0 Citibanks strategies in place11
4.1 Corporate-Level.11
4.2 Business-Level12
4.3 Functional-Level.13
5.0 Recommendation13
References...14
1.0 Background of the Companys case
On June 16, 1812 City Bank of New York (now called Citibank) opened for business in New
York Citywith only $2 million of capital. Through many different leaders and economic
environments over the course of its rich history, Citibank continues to grow and prosper. On
October 8, 1998, all Citicorp and Travelers Group divisions merged to become Citigroup Inc.
Citigroup is todays pre-eminent financial services company, with some 200 million customers
accounts in more than 100 countries. Citigroup is the first US bank with more than $1 trillion in
assets, offering a variety of deposits and loans, credit cards, investment banking, brokerage, and
a host of other retail and corporate financial services.
2.0 SWOT Analysis
STRENGHTGlobal networkThrough its operation in around 100 countries, Citibank has created
a global network that has proved robust in the face of economic slumps affecting many Western

economies. Although hindered by loan defaults particularly in Argentina and Brazil, and the
subsequent rises in provisions, the bank has been buoyant in certain European markets and
furthered its geographical reach through strategic positioning in Russia and the Pacific Rim,
particularly China.Backing of the CitigroupCitibank has the undoubted advantage over many of
its rivals, of having the financial backing and support of Citigroup, the hugely successful
financial services company. The support this company provides means Citibank can approach
ventures and business opportunities with considerably less trepidation than independent
companies. The group is likely to benefit from an adventurous strategy, so long as it has the
sustainability to survive the consequences when the groups ventures do not go to plan. Citigroup
provides Citibank with the sustainability required in such circumstances.Innovative product
offering Innovative product offerings enable Citibank to remain at the forefront of numerous
markets. The bank has continually developed partnerships to enhance its geographical and sector
reach. For example, the bank formed a partnership with Westdeutsche Landesbank Girozentrale.
The aim of the deal was to reduce the settlement risk with foreign exchange transactions
resulting from trading across various time zones. |
WEEKNESSESTarnished brand nameAlthough Citigroup has been one of Wall Streets strongest
performers over recent years, and has achieved strong shareholder value since its creation, its
brand has been severely tarnished since 2002 due to the ongoing investigations into its banking
practices, particularly in its investment banking subsidiary, Salomon Smith Barney. After
examinations into a number of Wall Street banks regarding conflicts of interests, regulators
indicated that Citigroup, due to wrongdoings at its Salomon Smith Barney investment banking
operation, will be hit with the hardest punishment, with the fine likely to be around $500 million.
Although this is punishment for the group as a whole, particularly its investment banking
operations, such a high-profile investigation sheds investor doubt over all practices of the group,
ultimately also tarnishing the Citibank brand. Online operations are geared towards US
clientsMuch of Citibanks online operations are geared towards US clients. This is a major
weakness in Citibanks armory, as it has worldwide operations, but not a sufficient Internet
presence to compliment its branch business. In the increasingly competitive market that is online
banking, Citibank needs to improve its online facilities for its international customers, or risk
losing them to more dedicated companies. |
Opportunities Fundamental opportunities for Citibank would be to expand on their existing good
reputation, exceptional customer service, and enhanced web features. Citibank brings
considerable value to potential alliance partners. Theyre interested in their brand, their financial
services expertise, their global presence, their strong customer relationships and position as a
trusted provider, as well as their knowledge of specific industries and international markets. The
regionalization and specialized processing centers that Citibank has developed has provided
them with scale and continual improvement opportunities. |
Threats Citi faced many strategic challenges. As discussed in the case study, Citibanks
challenge was how to manage the vendors and suppliers and ensure that they understand
Citibanks strategy and would not exploit the Banks strengths of the information base.As
Chemdex Corporation realized, even as the company managed to secure millions of dollars in
venture capital to build a thriving network of suppliers and users, all connected through digitized
transactions, success was still elusive. The problem was that Chemdex lacked an essential

ingredient for network success:

(http://www.chemdex.com) |

strong

relationships

with

its

trading

partners

3.0 Citibanks Distinctive Competencies

Based on Porter (1980) generic strategies, Citibank opted for a differentiation strategy for its
home banking service by offering a superior web banking option with powerful and relevant
functionalities wherein customers can access/operate their banking accounts on the net with full
confidence and ease. As shown in figure 1, Citibank has successfully used strategies that built a
resources and capabilities to shape a distinctive competencies which lead at the end to
competitive advantages and then a superior profitability.
Figure 1: The roots of Competitive Advantage
(Adopted from Dr. Aabangs slides)
3.1 Resources
Citigroup's resources include tremendous market power in various markets, coupled with
significant market share, economy of scale, high levels of revenue, partnerships, brand
recognition and identity, and human capital. Through aggressive acquisitions, Citi has rapidly
expanded, creating an economy of scale and leveraged its tremendous resources to reap
significant revenue. Citigroup possesses tangible resources and assets such as facilities and
further developed additional intangible assets such as technology, reputation, and organizational
culture as it became more skilled at expansion and acquisition. Human capital was increased
during Citi's growth phase, presenting additional resources in the form of skills, and capacity for
communication and collaboration. The company's IT investment and systems represent valuable
assets.
This includes the e-business platforms serving as key resources for the company to further
penetrate corporate accounts and expand competitive positions . From a resources perspective
Citigroup is on the industry forefront, possessing an array of assets that facilitate success.
Other resources include: diversified offerings, proven customer relationships and customer focus,
back end and consultant capabilities, and acquisition experience. Despite Citigroup's macro level
financial success, however, there are underlying issues present. (Article Source:
http://EzineArticles.com/5794447).
3.2 Capabilities
The drivers in this framework are opportunities and capabilities. Opportunities refer to the set of
demands of customers for the financial services (products) Citibank could potentially provide
across the geographies in which customers generate demands. Capabilities refer to the ability of
Citibank to provide services competitively in the locations where potential customers have
demands. These capabilities will be identified below in terms of expertise, know-how, and
spillovers that provide a firm with the ability to exploit its opportunities. These drivers determine

both strategy and organization, and both are energized by incentives based on measured
performance. Figure 2 identifies the basic framework linking strategy, organization, incentives
and capabilities (Besanko,Dranove,-andShanley,.1996).
(Adopted from: Baron, D. P. and D. Besanko. 1996. Global Strategy and Organization,
working paper. Besanko, David, David Dranove, and Mark Shanley. 1996. The Economics of
Strategy. New York: Wiley).
3.3 Core Competence, Competitive Advantages and Sustainable Competitive advantages
Citibank differentiated itself from competitors by using their customer service effectively. They
offered several services to their clients. Citibank offered telephone hotlines, customer relations
managers to give individual attention to their customers, and service experts. Citibank also
continued their investment in technology for the front and back end of the banking systems.
Citibank committed to an e-business strategy-Connect, Transform and Extend-was to web
enable its core services, develop integrated solutions and reach new markets. (McCauley &
Khan, 2002, p.1).
Citibank was also committed to its customers. According to the case study, Citibanks vision
was to become the worlds leading e-business enabler". Citibank had over 268,000 employees
located in over 100 countries and their focus was to embed their services into the everyday lives
of the local population. A bank that had roots in the country as deep as any local indigenous
bank, building a broad customer base, offering diverse products, actively participating in the
community and recruiting staff and senior management from the local population.
In addition to being committed to employees and customers around the world, Citibank has
strong brand recognition and continues to invest in technology. To position itself strongly within
the technology sector, Citibank formed alliances with Oracle, Commerce One, Inc., SAP AG,
Wisdom Technologies and Bolero.net to help transform its company to an e-business model.
4.0 Citibanks strategies in place
Internal analysis, along with the external analysis of the companys environment, gives managers
the information to choose the strategies and business model to attain a sustained competitive
advantage (Abang Nawawis Lecture Slides, 2011).
4.1 Corporatelevel
Citibanks global presence translated to a huge transactional business and required supporting
more than 200 data centres, which did basic, repeatable processes.
Regionalization
The transformation process involved consolidating all the data centres within each country and
moving them to Singapore. On the operations side, Citibank began with the regionalisation of
cash and trade, which afforded Citibank a complete focus on the process.

Internalizing the Web

Within Citibank, there was a programme to promote the e-workplace. The processing centers in
particular had taken off through integrating the web into their business processes. The
transformations in the processing cycle were taken further to focus on transforming workflow
automation; employees now had access to information without the need to make phone calls,
check paper files or send faxes.
Straight-Through Automation
Citibank was continuously pushing the limits of straight-through automation by constantly
deploying various initiatives. For example, Citibank had conducted some artificial intelligence
projects such as pre-populating forms with historical data, which dramatically reduced error
rates.
4.2 Businesslevel
Citibank competing in the global transaction services marketplace. Citibank was the leading
bank that had invested hundreds of millions of dollars in the infrastructure required to move and
monitor cash balances online.
4.3 Functional level strategies
Citigroup was dedicated to creating products that catered to different industries and business
needs by taking appropriate action, whether it was to start e-business groups or invest millions of
dollars in online technology. By 2000, business clients demanded an online product that would
streamline and improve traditional payment processes. The case study provided a few
examples of what customers demanded. They wanted electronic invoicing, automatic application
of payments to account receivables, online payments guarantees and digital receipts stored
online. Other requirements included multi-currency payment management and payment by
invoice and currency.
5.0 Recommendation
Potential growths in e-business are always existent and continued developments are always
necessary. More and more companies are choosing to do everything from banking to purchasing
to advertising online. Citibank must continue to align themselves with the right partners in order
to maintain their standings in the e-business sector. Company executive Tom Edgerton stated, In
the future, it wont be what your company can do, but what the network of companies you work
with can provide. In order for Citi to continue to grow, it must evolve in its e-Business model
and develop constant updates to its online products.
In conclusion, as the case study eludes, Citis online products allow customers of different
industries to connect to Citibank around the world. The addition of using technology partners
allows the company to continue building new global infrastructure to deliver products and
services online. Finally the new technological advances by Citi have helped the company

integrate new products together in many ways that was not possible before 2000. These additions
have helped the company to cater to different markets and in different industries, in the meaning
be able to respond to the rapid changes of all industries.
References
Porter, M.E (1980) Competitive Strategy, New York: The Free Press. Timmers, P.
(1998) Business models for electronic markets. Focus theme EM, Electronic Markets, Volume8,
No.2.
Timmers, P. (1999) Electronic Commerce: Strategies and models for Business to
Business Trading, John Wiley and Sons Ltd.
Baron, D. P. and D. Besanko. 1996. Global Strategy and Organization, working
paper.
Besanko, David, David Dranove, and Mark Shanley. 1996. The Economics of
Strategy. New York: Wiley.
Finance Asia, May 2001. Processing Comes to the Fore, p. 83