Citicorp – 1998

Fred David

Case Facts:

Citicorp is a bank – holding company and the sole shareholder of Citibank, N.A.,
the largest bank in the United States. Citibank has more credit card customers around
the world (56 million) than any other bank. Citicorp had 93, 700 employees at year-end
1997, including 54, 800 persons outside the United States. These employees work in
over 3,000 locations in 98 countries and territories worldwide. Their vision is to become
world’s largest and best bank holding company providing all banking and financial
products and quality services to individuals, businesses, communities, institutions, and
nations globally.

In the year 1998 the Citicorp faced a terrible dilemma by which their total revenue
dropped thoroughly. Based from the gathered data of Fred David in the year 1996 the
total net income was 1.40 percent. Prior to the year 1998 it fell from 1.22 percent of total
net income and the happenings continued

Statement of the problem:

 They expand aggressively or being focused heavily on international markets

through acquisition and merger because they visualized on becoming most
influential in terms of providing the best bank throughout the country.
 The company’s universal banking model failed to achieve their positive
projections of success when Citigroup was formed in 1998.
 Citigroup’s many missteps have inflicted heavy losses on its shareholders.

Alternative course of action:

 Focused and have a formal vision on what the Citicorp wish to accomplish.
 …….
Summary

Citicorp’s consolidated statement of income and consolidated balance sheet

declined to $3.6 billion. Even consumer loads declined in 1997 to $108 billion in 1996,
while the company’s long – term debt increased to $19.8 billion

Recommendations:

 Continue to divest markets such as Japan and parts of Europe where rates are
expected to remain lower than in the US for an extended period of time.
 Develop a formal vision and mission that clearly states what Citicorp wishes to
accomplish and what business they are focused on.
Swot

http://fernfortuniversity.com/term-papers/swot/nyse/1035-citigroup-inc-.php

Strengths

 Highly skilled workforce through successful training and learning programs.

Citigroup Inc. is investing huge resources in training and development of its
employees resulting in a workforce that is not only highly skilled but also
motivated to achieve more.
 Successful track record of developing new products – product innovation
 Successful track record of integrating complimentary firms through mergers &
acquisition. It has successfully integrated number of technology companies in the
past few years to streamline its operations and to build a reliable supply chain.

Weaknesses

 The marketing of the products left a lot to be desired. Even though the product is
a success in terms of sale, but its positioning and unique selling proposition is not
clearly defined which can lead to the attacks in this segment from the
competitors.
 Financial planning is not done properly and efficiently. The current asset ratio
and liquid asset ratios suggest that the company can use the cash more
efficiently than what it is doing at present.
 Not highly successful at integrating firms with different work culture. As
mentioned earlier even though Citigroup Inc. is successful at integrating small
companies it has its share of failure to merge firms that have different work
culture.

Opportunities:
 The market development will lead to dilution of competitor’s advantage and
enable Citigroup Inc. to increase its competitiveness compare to the other
competitors.
  Government green drive also opens an opportunity for procurement of Citigroup
Inc. products by the state as well as federal government contractors.
 New trends in the consumer behavior can open up new market for the Citigroup
Inc.It provides a great opportunity for the organization to build new revenue
streams and diversify into new product categories too.

Threats:

 Liability laws in different countries are different and Citigroup Inc. may be
exposed to various liability claims given change in policies in those markets.
 Intense competition – Stable profitability has increased the number of players in
the industry over last two years which has put downward pressure on not only
profitability but also on overall sales.
 Growing strengths of local distributors also presents a threat in some markets as
the competition is paying higher margins to the local distributors.