BACHELOR OF COMMERCE

BUS317: STRATEGIC MANAGEMENT

STRATEGIC BUSINESS PLAN FOR CITIBANK

Names: Soh Xiaomei Jasmine (30993564)

Lim Rui Ting (31088449)
Tan Yi Hui Doreen (31064949)
Edwin Lim Zi Rui (30808501)

Class: SMa Monday Night Class (T210)

Lecturer: Mr. Frankie Yee

DISCLAIMER:

Except where we have indicated, the work we are submitting in this assignment is our
own work and has not been submitted for assessment in another course. This plan is
written for academic purposes. It is NOT a plan meant for Citibank and the information
written herein is not true reflection of Citibank’s market performance. Any use of the
information contained herein is solely at the discretion of the users and the author shall
not be held liable for any misuse of information that may affect Citibank reputation or
financial performance.
 Mission Statement

“Money isn’t everything, but it can turn your dreams into reality. And the wide range of
products that Citi offers can help you do just that.” (Citi Bank, 2009)
 CONTENT PAGE

1.0 Executive Summary.....................................................................................1

2.0 Current Situation..........................................................................................1

2.1 Challenges...........................................................................................1
3.0 External Environment..................................................................................2

3.1 PEST Factors......................................................................................2

3.1.1 Political-Legal..........................................................................2
3.1.2 Economic.................................................................................2
3.1.3 Socio-cultural...........................................................................2
3.1.4 Technological..........................................................................2
4.0 Internal Environment...................................................................................3

4.1 Resources............................................................................................3
4.1.1 Financial Resource.................................................................3
4.1.2 Human Resource....................................................................8
4.1.3 Physical Resource..................................................................8
4.1.4 Reputation................................................................................8
4.2 Core Competency........................................................................................9

4.3 The Markets.........................................................................................9

4.4 SWOT Analysis.................................................................................10
4.5 Implications of Assessment............................................................10
5.0 Competitor Analysis...................................................................................11

5.1 Current Situation...............................................................................11

5.2 Immediate issues to be addressed by Citibank...........................11
5.3 Information needed..........................................................................11
5.4 Analysing the competitive position of Citibank............................12
5.4.1 Porter’s 5 Forces..................................................................12
5.4.2 Implications............................................................................13
5.5 Competitive Positioning...................................................................13
5.5.1 Strategic Group Analysis.....................................................13
6.0 Target Market.............................................................................................14

6.1 Geographical Segmentation...........................................................14

6.2 Implications........................................................................................14
6.2.1 Implications............................................................................16
7.0 Development of Strategies Alternatives........................................17
7.1 Ansoff’s Product/Market Matrix......................................................17
7.2 Competitors likely responses to our recommended strategies. 18
7.3 Recommendations...........................................................................18
7.4 The Future.........................................................................................18
8.0 Implementation...........................................................................................19

9.0 Evaluation and Control..............................................................................19

10.0 References........................................................................................20
 BUS317 Strategic Management
Case Report

1.0 Executive Summary

Based on the findings of the report, some preliminary observations have been
made. Of which, the purpose of this report is to identify some of the key
challenges facing Citibank Asia Pacific and some of the recommended strategies
that can be considered by Citibank Asia Pacific in order achieve sustainability in
the Asia Pacific and global market.

2.0 Current Situation

• Financial crisis in 2008 brought about total losses amounting to $27.7 billion
• Forecasters predict strong demand for financial services in China and India due
to rapid growth in GDP, disposable income and savings
• Region’s leading retail bank with distribution network in Asia Pacific
• Chosen as the Best Regional Retail Business in Asia for 2009

2.1 Challenges
• Increasing market volatility in 2010 and will result in central banks tightening
monetary policies
• Customers are becoming more demanding and tech-savvy; and wants
convenient and efficient banking
• Strong consumer demand for mobile payment solutions; scarcity of available
NFC-enabled phones.
• Pressure for operational cost reduction and revenue generation are on top of
the list of any retail bank

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3.0 External Environment

3.1 PEST Factors

3.1.1 Political-Legal
• Destabilization of coalition governments in unstable countries (Thailand)
can negatively affect the value of their currencies
• Political tension or instability may erode investor confidence
• Singapore Company enjoys access to double taxation treaties with 61
countries including Japan, China, Germany, France, the UK and
Canada

3.1.2 Economic
• Collapse of Lehman Brothers strain financial markets further
• The business had approximately 15.1 million Citi-branded card accounts
with $17.7 billion in outstanding loan balances
• Asian economies to perform strongly in the near future

3.1.3 Socio-cultural
• High demand of personal banking services – savings account, bill-
paying services, debit and credit cards
• Quality of living standards
• Citi presence in South Korea, Australia, Singapore, India, Taiwan,
Malaysia, Japan, Hong Kong, Thailand, China and Indonesia
• Asia Regional Consumer Banking (Asia RCB) provides traditional
banking and Citi-branded card services to retail customers and small to
mid-size businesses
• Obtain mortgages and personal loans

3.1.4 Technological
• Virtual retail banking – online banking
• Increasing online channel transactions, security & fraud challenges,
regulatory demand for better credit risk management
• Mobile banking allows consumers to access online banking anytime and
anywhere
• Increasing number of Automated Teller Machines (ATMs)

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4.0 Internal Environment

4.1 Resources
4.1.1 Financial Resource
• $94.5 billion in customer deposits, 15.8 million customer accounts and $50.1
billion in retail banking loans.

Figure 4.1:
Citigroup’s insurrance, exchanges and repayments of preferred and common stock and
trust preferred securities during 2008 and 2009 (Citi Annual Report 2009)

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Figure 4.2:
Results of Operations (Citi Annual Report 2009)

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Figure 4.3:
Citigroup Income (Citi Annual Report 2009)

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Figure 4.4:
Citigroup Revenues (Citi Annual Report 2009)

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Figure 4.5:
Asia Regional Consumer Banking (Citi Annual Report 2009)

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4.1.2 Human Resource

• Citi has over 50,000 employees across 19 countries and territories in
Asia Pacific
• Employees are well trained to ensure that the best service can be given
to the clients
• Hire promising individuals that can assist in the company’s task of
reaching their goals
• Provides excellent customer service support

4.1.3 Physical Resource

• Singapore serve as Citibank's ASEAN hub that provide for Institutional
Clients Group, Global Consumer Group, Commercial Relationship
Banking, and is also the regional headquarters for Citi's consumer
banking business for Asia Pacific, and the international operations hub
for the Global Wealth Management business.
• Singapore also serves as a key Centre of Excellence for Citi in Asia and
a strategic hub for regional management, marketing, operations and
technology expertise. Singapore hosts Citi's state of the art processing
and data centres, serving the transactional needs of Citibank branches
in more than 50 countries.
• Singapore hosts to Citi's regional global transaction services business,
where they process more than 100,000 transactions amounting to more
than USD 60 billion a day. Their regional cash processing management
unit handles close to 30,000 fund transfers amounting to USD 30 billion
a day while their regional processing hub for securities services
processes an average of 76,000 transactions amounting to USD 33
billion a day for the region. (Citi Asia Pacific (Singapore), 2010)

4.1.4 Reputation
• Citi has been in Asia Pacific for over 100 years and provides more
services in more markets for more clients than any other financial
institution in the region
• Citi offers world-class cash management, trade finance and securities
lending services
• Citibank is the region's leading retail bank with a history of innovation
and customer service. Its distribution network in Asia Pacific includes

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more than 800 branches and over 2,000 ATMs. Citibank is also the top
card issuer in Asia Pacific, with more than 15 million card accounts.
• Citi's Private Bank ranks among the world's leading wealth managers.
With over 300 private bankers and investment specialists, it acts as a
trusted advisor to half of Asia's (ex-Japan) billionaires providing
comprehensive financial planning services. (Citi Asia Pacific, 2010)

4.2 Core Competency

• Specialized strategy operates a single business, as indicated by the double
marketing and technological linkages over the length of its strategy
• Delivered on stylish and classy branches that help the company achieve
competitive advantage
• Citibank has a unique set of production regulations that makes sure that every
stage in the company’s operations is well thought of and will minimize any
useless waste on materials, time and effort of the company
• Competition is what drives Citi into creating newer and better products
• Citi recognizes and gives awards to employees who perform above standards
• The core competencies of Citibank include its personnel and corporate
competency wherein the focus is on the company’s relationship with its internal
and external environment (Sample Essay The Physical Resource of Citibank
includes the equipment they used to provide the banking needs of their clients,
2008)

4.3 The Markets

• Although mass-market driven, many retail banking products may also extend to
small and medium sized businesses
• Focuses strictly on consumer markets
• Provides a wide range of personal banking services – offering savings and
checking accounts, bill paying services, debit cards, credit cards and insurance
• Banking service targets primarily at individual consumers
• Today, retail banking is streamlined electronically via Automated Teller
Machines (ATMs), or through virtual retail banking known as online banking
• Consumer are looking for financial planning and investment

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4.4 SWOT Analysis

STRENGTH WEAKNESS

- Strong global market presence  Competitors are dealing with the same
 Established brand name and products as Citibank and offering
backing of Citigroup better products and services
 Worldwide Consumer Banking  Not able to retain potential customers
network due to lack of brand differentiation

OPPORTUNITY THREAT

 Credit card ownership and usage is  Government’s restrictions on banking

continually on the rise in Asia regulations
 Many consumers are looking for  Ailing consumer confidence as
better investment opportunities Citibank (as part of Citigroup) have to
 Consumers are looking out for overcome negative publicity as a result
financial planning services of the sub-prime losses in 2008

4.5 Implications of Assessment

• Major economic downturn affects the finance industry
• Unstable political issues of government affect investors’ and creditors’
confidence adversely
• Quality of living standards increasing rapidly – more people taking up personal
loans and applying credit cards
• More virtual and automated banking services – less ‘personal touch’ to
customer relationship

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5.0 Competitor Analysis

Citigroup, HSBC, RBS, Maybank,

Brand Competition
Standard Chartered

JP Morgan, Credit Suisse, OCBC Bank,

Industry Competition
American Express, DBS, POSB, UOB

Form Competition Prudential, AIA, Manulife, Great Eastern

5.1 Current Situation

 Citibank is not a leader in from the market as well as consumer perspective
 Customers are not able to differentiate between the products and services
between Citibank and its competitors

5.2 Immediate issues to be addressed by Citibank

 Citibank is the leader in terms of global market presence
 However, lack of brand differentiation among a concentrated pool of foreign and
local banks may contribute to a decline in the consumer market as consumer
switching cost is low with many substitutes available
 Asian consumers may incline towards Asian banks such as Maybank, POSB
and United Overseas Bank for stability

5.3 Information needed

Information Justifications / Actions by Citibank

 Market share segmented
by products and services
 Range of Products
available
 In order to evaluate major competitors and
develop product and services portfolios
 Compare competitors strategies against
Citibank
 To be aware of the range of products and
services that competitors possess
 Strengthen the market share in key specific
markets

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5.4 Analysing the competitive position of Citibank

5.4.1 Porter’s 5 Forces

ENTRANT THREATS
- Barrier to entry is high therefore
is low threats

- Banking Act Chapter 19

(Singapore)
> Applied license with MAS
> Capital Requirement: equal or
more than $1500M if to set up
bank in Singapore, equal or less
than $200M if outside of
Singapore

SUPPLIERS
- Supplier RIVALRY
bargaining power - Among Local and BUYERS
is high due to Global banks (in - Consumers
VISA, Master Singapore and Asia)
Card and - High bargaining
American Express - Lack of brand power due to high
differentiation switching cost
- Partnership:
AXA/Manu - Among competitors of
Life/Prudential other sectors
(investment
- Citibank Gourmet firms/insurance
Pleasures companies/private
companies

SUBSTITUTES
- Insurance Companies
offers Saving products

- Credit Cards

- Investment Firms

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5.4.2 Implications

Buyers • To gain competitive advantage against its competitors, Citibank

will have to differentiate its products and services through
product awareness
Entrant Threats • Citibank can aim to reduce entrant threats by considering the
feasibility of forming strategic partnership with other banks in
terms of product and services offerings
Substitutes • Citibank must be updated on the competitor’s products and
services, as well as customer’s preferences as there are a wide
variety of substitutes available to the consumer
Suppliers • Citibank can consider backwards integration to reduce
operational costs
Rivalry • Customers are constantly on the lookout for new or similar
products that offer them better value

5.5 Competitive Positioning

This helps to identify the competitors that Citibank is facing against with and their
current position in the Asia Pacific region.

5.5.1 Strategic Group Analysis

Citibank

Standard
Chartered

HSBC

OCBC
Bank
DBS
UOB
POSB

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6.0 Target Market

6.1 Geographical Segmentation

• Citibank would need to focus on specific geographical market segments whose
requirements match Citibank offerings. To focus on the target country segments
is the key to Citibank’s future.

• The following matrix will help Citibank to identify the primary and secondary
countries that Citibank should focus on. The purpose of the following matrix is
to find out the top two favourable countries that Citibank would have potential
and opportunity to expand its market share in the overseas market.

High South Korea

China
Market Competitiveness

Singapore
India
Japan
Taiwan
Medium Hong Kong
Australia
Indonesia
Low Malaysia
Thailand
High Medium Low
Competitive Position
6.2 Implications
• Priority Countries chosen to be focused on:

o The China Market has been chosen to be the primary country and
Indian Market as the secondary country

o In comparison of the net sales by region from year 2007 to 2009,

Citibank China has experienced a year of growth and profitability,
achieving a 46% increase in operating income to Rmb3.6 billion, with
net income increasing 95% from its 2007 level to Rmb1.3 billion. High
potential of growth can be foreseen if correct marketing strategy is
implemented (Citibank China, 2009)

o Continuation of building and upholding a strong brand name by

addressing the needs in Asia

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• Range of product to be focus on the chosen country

• Identify the needs and banking trend of the target country

• Identify the more profitable bank services. Personalization or innovation of the

bank service to attract more customers

• Citibank should also move on to identify micro segments. This will help to better
meet the clients' financial needs

Target Market
Segmentation Variables
China Market  Citibank has always attached great importance to the
Chinese market and will continue to invest in the
market (Andrew Au, Chairman of Citibank China,
2009). Citibank had many competitive advantages on
the basis of which it had established a unique strategy
that excluded joint ventures. In 1997, a wide variety of
new potential services included credit cards, RMB
(Chinese currency) banking, and various fee-based
services (Citibank N.A. In China, 1997).
 As many foreign organizations are entering China
market to do businesses, these organizations will
require a banking partner that can help you
understand the intricate dynamics that make up
China's many different regions and markets.
 Local and overseas companies will also require wide
range of financing solutions, trade services for
importing and exporting in China and extensive range
of renminbi services.

Indian Market  Foreign banks, which currently account for five per
cent of total deposits and eight per cent of total
advances, are devising new business models to
capture the Indian market (Banking stocks: The
consolidation call, 2006).

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 There is a case being made for mergers between

banks with a distinct geographical presence coming
together to leverage their respective strengths.

 The surge in globalization of finance has already

begun to gain momentum with the technological
advancements which have effectively overcome the
national borders in the financial services business.

 Widespread use of internet banking will widen frontiers

of global banking, and make marketing of financial
products and services on a global basis possible.

6.2.1 Implications
 Citibank is the leader in terms of global market presence

 However, lack of brand differentiation among a concentrated pool of foreign and

local banks may contribute to a decline in the consumer market as consumer
switching cost is low with many substitutes available

 Asian consumers may incline towards Asian banks such as Maybank, POSB
and United Overseas Bank for stability

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7.0 Development of Strategies Alternatives

7.1 Ansoff’s Product/Market Matrix

The table below illustrates some of the strategies that Citibank can undertake:

CURRENT PRODUCTS NEW PRODUCTS

Existing Market

Market Penetration Product Development

• Gain new customers Develop expanded product lines
• Leverage on customers currently Adapt Citibank products currently
banking with other banks offered in the other regions to suit
• Positioning brand awareness on the global group of customers
demographic groups like
elderly/children
- Form partnerships
with other service providers
to promote usages of its
banking services
- Begin to target or
concentrate more on tech-
savvy customers to better
serve them

• Increased value for existing

customers
Innovate and develop existing products
and services to suit customers individual
needs and preferences
Upsell more products and services to
the customer and thereby increasing
average expenditure per customer
New Markets

Market Development Diversification

Tap onto developing nations and provide Merger and Acquisitions
banking services for this group of people Joint Ventures

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7.2 Competitors likely responses to our recommended strategies

• Competitors with similar profile are most likely to follow suit with similar
strategies so as to secure/maintain market share

• Competitors that are not in direct competition with Citibank are not likely to
respond to the change in strategies

7.3 Recommendations
• “The Citi that never sleeps” tagline should be changed; it informs the customer
of its 24-hour, 365-days a year availability but it does not motivate the customer
to engage its products and services.

• Citibank should attempt to overcome the negative publicity in recent years by

exposing themselves to more corporate social responsibility programmes

• Citibank Asia Pacific should introduce products and services that will relate to
the nature of the country the market it is in

7.4 The Future

 The future banking market will have to transform in response to change of
customer preferences to quality products, personalised and prompt services.

 Globalisation of the globe and growing government policies has increased

competition. Banks are forced to go international and even merger to react to
the cost-cutting trends.

 The market can expect non-banking competition to grow, as companies like

Wal-Mart, Tesco, Carrefour and others look to grab market share by
encouraging their existing customers to bank with them. These companies
provide most services online, and deposits/withdrawals provided in local stores
at very low cost.

8.0 Implementation

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• Ongoing (Present - end 2012)

- Product Development
- To adapt to host countries customer preferences
- Investment on technology to stay ahead of competition in offering
better services to customers

• Short Term (1 – 2 years)

- Market Penetration
- To adapt to host countries customer preferences
- Investment on technology to stay ahead of competition in offering better
services to customers

• Long Term (3 – 5 years)

- Market Development
- Diversification

- Improve Citibank outlets, phone banking and internet customer service

quality to differentiate itself from competitors

- Develop or acquire new brands to enhance current portfolio in order to

attract and retain customers

9.0 Evaluation and Control

• The successful implementation of the strategies depends not only on the
management and employees of Citibank, but is also dependent on the following
factors:
- Awareness of Citibank – Company, Products, Services
- Attitude/Preference changes in customers
- Recognition Rate for Citibank amongst business partners and customers
- Sales and Profits (in current market and new market

10.0 References

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1. A China outlook, from Citi’s CEO of China. 2009.

http://www.financeasia.com/News/144191,a-china-outlook-from-citis-ceo-of-
china.aspx (Accessed on 10 July 2010)

2. Citibank N.A. In China. 1997,

http://www.asiacase.com/ecatalog/NO_FILTERS/page-GLOBAL_S-504716.html
(Accessed on 10 July 2010).

3. Banking stocks: The consolidation call. 2006,

http://www.thehindubusinessline.com/iw/2006/07/30/stories/2006073000260600.ht
m (Accessed on 10 July 2010).

4. Citi Asia Pacific, 2010, http://www.citigroup.com/citi/global/asiapacific.htm

(Accessed on 11 July 2010)

5. Citi Asia Pacific (Singapore), 2010, http://www.citigroup.com/citi/global/sgp.htm

(Accessed on 11 July 2010)

6. Sample Essay The Physical Resource of Citibank includes the equipment they
used to provide the banking needs of their clients, 2008,
http://ivythesis.typepad.com/term_paper_topics/2008/11/sample-essay-27.html
(Accessed on 11 July 2010)

7. Citi Annual Report 2009, 2009, http://www.citigroup.com/citi/fin/data/ar09c_en.pdf,

(Accessed on 11 July 2010)

8. Citi Bank, 2009, http://www.docstoc.com/docs/18592949/Citi-Bank, (Accessed on

11 July 2010)

9. Citibank China, 2009.

http://www.citibank.com.cn/CNGCB/APPS/portal/loadPage.do?tabId=Financial
Services&path=/prod/det/citibanking.htm (Accessed on 10 July 2010)

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