Andre Simatupang_CitiBank

8/10/2019 Andre Simatupang_CitiBank

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Adi Surya 1306356015Andhika Arum Utari 1306419483

Andreas Hotmanri Simatupang 1306356091Ari Nur Widiatanti 1306356116

BUSINESS MODEL INNOVATIONStrategic Management


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Business Model

A companys business model sets forth how its strategy andoperating approaches will create valuefor customer, while at

the same time generate ample revenues to cover costs and

realize a profit.


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Business Model INNOVATION

Hence, companies consider business model

innovationas an opportunity

to build sustainable competitive

advantage (Teece, 2010).

Product innovation no longer offerssufficient competitive advantage indifferentiating successful companies

(McGrath, 2011).


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Background

HOW

When

is one company that redefined

customer value, found new ways to structure

their value creation processes and captured

that value with great returns.


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Case Background

Following an intense competition in 2000, Citibankstarted to establish its e-business strategy

An internet platform should enable all customers withsimilar needs to conduct business online.

Citibanks e-business strategy - Connect, Transformand Extend. The ultimate goal was to build a single Web-

enabled platform for all customers with similar needs.


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Competitive Landscape of Corporate Banking

Citibank wasfounded in1812 as City

Bank of New

York

Third largest

bank companyof the UnitedStates. Their

online servicesdivision is

among themost

successful (15million users)

Transformation from

traditionalbanking to

online bankingcauses by

growing globalmarkets.

E-servicesbecame a

necessary toolfor clients to

avoidpaperwork.


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Citis Mission: Enabling Progress

Common Purpose

One team, with onegoal: serving our

clients andstakeholders.

ResponsibleFinance

Conduct that istransparent,prudent anddependable.

Ingenuity

Enhancing our clients' livesthrough innovation that

harnesses the breadth anddepth of our information,global network and world-

class products.

Leadership

Talented people with thebest training who thrivein a diverse meritocracy

that demands excellenceinitiative and courage.


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Porters Generic Strategy


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Citibanks Strategy: Differentiation

Customer service (web and telephone payment capabilities). I.e. 24 hr callcentre: 021-252 999

Customized internet payment application platform. I.e. Citibank Online.Instead of token, they use OTP.

Investment in technology to support front end and back end electronicsystems.

Three core products. I.e. Transaction, Corporate Finance, and Treasury

Market Service.

Unified platform and group wide expertise.

Online investment applications for short term investments (treasuryvision).


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SWOT Analysis

STRENGTH

- Global Market

- Banking of the Citigroup

- Innovative product offering

- Comprehensive selection offinancial product

- Strong privacy and data process

- Good corporate citizen

WEAKNESESS

- Tarnished brand name

- Issues of corporate governance

OPPORTUNITIES

- Growth markets

- Chinese markets- Online presence

- Strengthen customer relationship

by community involvement

- Look for acquisition that are

compelling strategically and

financially

THREAT

- Foreign exchange fluctuations

- Market conditions- Regulatory forces

- Competition from BRICK, etc.


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Porter Five Forces

Rivalry

1. Many players withlittle differentiation

2. Mature industry

3. New product

Threats of New Entrance

1. Existing loyalty to major brand

2. Huge investment, High fixed cost

3. Scarcity of resources

4. High cost switching company

Power of Buyers

1. Large number of buyers

2. Purchase large volumes

3. Customer are price sensitive

4. Switching to another competitive product issimple

Availability to Substitutes

1. Presence company, such as: Western Union, PayPal

2. If substitutes are similar, it can be viewed in the samelight as a new entrant

Power of Supply

1. There are a very few suppliers of particularsproduct categories

2. Switching need high cost

3. Supplier industry has higher profitability thanbuyer industry


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Value Creation and Value Capture

E-BusinessStrategy fromCitibank meetcustomer needsCustomer value

added INCREASE

In the beginning,Citibank investedhuge of money tocreate ElectronicStrategy

But, with huge ofcustomer, thisstrategy gain hugeprofit


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Citibank E-Business Strategy

Value ChainManagement

DeliveredCustomer Value

DramaticallyRedesign

Customer Base

CitiDirect Connecting customerand Citibank everywhere every

time Easy Access

1. Build new globalinfrastructure deliver e-products more quickly &efficiently

1. Regionalization cash &trade focus

2. Internalizing the web3. Straight-through

automation


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Value creation:1. E-Business strategy E-

Chanel, E-Payment and WebBase

Value capture:1. At the beginning, Citibank must invest huge money to create E-

Business but, with its huge market share, at last, total cost will

be low


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Positioning

Which basic customer need are we trying to fulfill?

Corporate Customer Customer whose not senstive to price

How can we establish and retain a unique positionin our customersminds ?

Citibank preferred to emphasise its customer service response time, technology and support

taking over some of the back-office functions of its customers


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Product and service logic

Web-enabled financialproducts

Citibank e-Business Structure

Which products andproduct features arenecessary to become

indispensable and

strengthen citipositioning ?

Embed Citibank as the trusted brand withincommunities

Build a network of strategic partners Help customers to serve themselves

Web-enable core services

Create knowledge-based e-services

e-Us

What is the uniqueproduct benefit citi offerits customers?


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Added value logic

How citi design its value creation processes to effectively andefficiently bring our offers to the market?

CONNECT

TRANSFORM

EXTEND

What are citi core competencies and core processes on which citito focus and which allow citi to create value

Proprietary Data

Operating worlwide Leader in online financial services

Great Technology Platform

qualified and experienced staff at Citibank


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Sales and marketing logic

How do we attract customers?

Global Reach

Strong Brand

How do we retain customers?

Citibanks Alliance Strategy


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Profit formula

Citi empower local, regional and global customers and the

B2B2C marketplace and provide solutions to help them take

advantage of the efficiencies and opportunities created by e-

commerce, this strategy is using differentiation strategy.


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Suggested Strategies

Strengthen customer relationship by community

involvement

Communicate benefits of online presence clearly

Look forward for acquisition that are compelling strategically

and financially

Handle major international operations from to gain expense

benefit

Position itself as a Global bank focusing on customer benefit

Innovative product


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- Thank You -

Documents

Andre Simatupang_CitiBank