Citibank: Launching the Credit Card in Asia Pacific

Cost of Goods Sold – totaled $3,294,000.00 for year 6, and from years 6 to 7 grew +32.8% or $1,048,000.00.

3. What are the consequences of Capital One’s IT strategy for expansion into different segments of the credit card industry, and into other industry’s?

2. What is the total cost? How much of the total cost are labor costs? Capital costs?

Bank of America is the largest US bank founded in 1904, it has expanded through several acquisitions. By the end of 2009, Bank of America was the market leader serving 82% of the US population and over 53 million customers. They are positioned as number one in online and mobile banking. Their mobile banking services were launched in 2007 and have gained 4 million customers in less than three years. Acquisitions made by Bank of America prior to the financial crisis caused a very strong drop in their stock price.

4. For the most recent year, what is the amount of cost of goods sold in the

5. In the Citibank example, how did Citi use existing laws to alter its business mode?

Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units

* The Flow Controllers total product variable costs are $128,000, the Flow Controllers total fixed costs are

Total annual purchases were approximately $250, and about $60 million to be sourced through Materials Department

The total amount of the costs which should be matched with Revenues for 2003 is $71,129. This is done by taking the capitalization amount shown above (217,520), dividing it by the 200,000 unit estimate, and multiplying it by the units that were sold in 2003. The calculation is shown below.

* We assume the cost of capital to be a stated annual rate to facilitate calculations;

10. My total variable costs look something like this. The one highlighted in green color.

2. The total expected cost per unit was $205.7 per unit and the actual cost per unit was $211.93 per unit. See Exhibit 2.

Citibank should launch the card product in Asia for several reasons. Firstly, Citibank can ride on the rapid economic development in the region via credit card products. Secondly, it is also an excellent way to overcome distribution limitations imposed on foreign banks in the region. Thirdly, it allows Citibank to expand its customer base from the upper income segment to include the rapidly growing middle-income households, which is consistent with its global growth strategy and mission in Asia Pacific. Fourthly, by introducing credit cards, Citibank will be able to cross-sell other product lines such as Auto Loans and Ready Credit

In 1996, Citibank was an emergent banking institution attempting to increase its market share in the competitive Los Angeles area. In order to do so, the bank’s strategy was to focus slightly less on their financial growth, and much more on providing “a high level of service to its customers”. Management viewed this paradigm shift as “critical to the long term success of the franchise”.