American Express: Strategies And Risks Analysis: Strategic Risk Management

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American Express -- Strategies and Risks Analysis Strategic Risk Management Lumin Wang Oct 10, 2017 Executive Summary: The American Express Company is a global financial service company headquarter in Manhattan, New York City. The company was founded in 1850, and is one of the 30 components of the Dow Jones Industrial Average and S&P 100(Wikipedia). It went to public on New York Stock Exchange in 1978. The company is best known for its credit card, charge card, and traveler's cheque businesses. Its business segments are including: • U.S. Consumer Services: It offers products and services to customers and small business in United States. It also provides travel services to card members. • International Consumer…show more content…
They maintain direct relationships with both their Card Members (as a card issuer) and merchants (as an acquirer), and we handle all key aspects of those relationships. Through contractual relationships, they also obtain data from third-party card issuers, merchant acquirers and processors with whom they do business. Their “closed loop” allows us to analyze information on Card Member spending and build algorithms and other analytical tools that we use to underwrite risk, reduce fraud and provide targeted marketing and other information services for merchants and special offers and services to Card Members through a variety of channels, all while respecting Card Member preferences and protecting Card Member and merchant data in compliance with applicable policies and legal requirements” (2016…show more content…
Spending on their cards, which is higher on average on a per-card basis versus their competitors, offers superior value to merchants in the form of loyal customers and larger transactions. Because of the revenues generated from having high-spending Card Members, they have the flexibility to invest in attractive rewards and other benefits for Card Members, as well as targeted marketing and other programs and investments for merchants. This creates incentives for Card Members to spend more on their cards and positively differentiates American Express cards (2016 10-K). Image: American Express Business Model vs. VISA business model • Consumer services strategies: ο Designing card products with features that appeal to their target customer base ο Using incentives to drive spending on our various card products and generate loyal Card Members, including our Membership Rewards program, cash-back reward features and participation in loyalty programs sponsored by their cobrand and other partners ο Providing exceptional customer service, digital resources and an array of benefits across card products to address travel and other needs ο Developing a wide range of partner relationships, including with other corporations and institutions that sponsor certain of our cards under cobrand

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