Capital And The Rivals Of The Business

Capital and the Rivals of the Business

1. What is Capital One’s business and who are their competitors?

– Capital one is a financial services company that specializes in credit cards, banking, auto loans, and home loans and savings products. The company was founded in 1988 then concentrated in mass marketing of credit cards. It encourages supplier multiplicity as one of its core features and driving force to assist create mutually beneficial relationship with the minor groups as well as women related businesses. The company has its branches in the United States, UK and Canada. Its direct competitors include bank of America Corporation (BAC), discover financial services LLC (DFS), American express company (AXP). Similarly, there are other competitors such as Barclays bank and other financial competitors who tend to offer similar products though they might be different in some way.

2. What is their strategy to grow profitably and compete? Give examples.

– Capital one is different from its competitors as it deployed the technology at the core of the business while others started with a business model and then tried to computerize it. The company uses the technology to analyze and understand its customers as well as how they work, in order to provide products to various kinds of customers with different prices and characteristics. This factor has greatly contributed to its high profits and improved customer service, as they understand their customers well. For instance, the company developed data machines that could made detection of frauds easier as well as identifying the risk of each product. In addition, the company concentrated on internet advertising, as many credit cards users could be gotten online easily. This move gave the company a great reward of 2.5 million customers who signed up. Credit cards are highly proffered on the internet and they replaced other forms of payment such as cash, checks and fund transfers.

3. How do they use information to implement their strategy? What kinds of information do they use and where does it come from?

Capital and the Rivals of the Business

– The company greatly appraises information technology that assists it to slice its data, analyze and make recommendations to make appropriate decisions concerning the market. For instance, they applied this strategy at signet bank in US and proved to be very fruitful in terms of the bank margin. Despite the credit card industry having low conversion rates resulting from direct marketing activities, the company utilizes the information technology to improve customer relations intensity. At the same time, the company designed credit cards with digital fingerprints of consumer character; this made them easily accessible to many people. In addition, the data machine could design cards to involve the left out borrowers while still maintaining low lending rates.

– Capital one targets personal information of their potential customers in order to know the people who can afford to pay back the money lendered to avoid bad debts resulting from wrong information about their customers. The data is collected from the post office address files and credit checking agencies such as Equifax and Experian, which offer reliable and useful data. However, due to their diversity in product offered, they may approach any relevant organization that can offer useful information.

4. List and describe the information technologies used to support their strategy?

5. Describe their notion of a “scientific test”. Contrast this approach to product development and launch with a more traditional approach that a manufacturing company might use.

Capital and the Rivals of the Business

References:

David M. Kroenke, Using MIS, University of Washington Prentice Hall Publishers, 2006

Ulrich, Karl T and Eppinger, Steven D. Product Design and Development, third Edition, McGraw-Hill publishers, New York. 2004.

Capital and the Rivals of the Business