Capitol One Case Homework Questions

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

Capitalone’s business is to issue credit cards to customers, to enablethem make their purchases with the aim of paying the amount creditedin future as installments.

    1. Banks

    2. Sacco

    3. Money lending institutions

    4. Private financing institutions

    5. Individual investors.

    6. The government

  1. Per the case study, what is one of their major strategies to grow profitably and compete? (list)

    1. Conduct a research study on the need for credit cards

    2. Investigate on the targeted population.

    3. Observe the current market entry barriers

    4. Market your product through public medias and social medias such as internet

    5. Investigate what the rivals are doing?

    6. Take advantage of the neglected population. For instance how Capital One realized that among the rejected population that was assumed not to be able to pay for the credit cards there was a potential group and yet considered unable.

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

Information Employed in the Capital One Credit Card Process

Sources of This Information

Interaction with new credit card holders

The company’s website

Transactional information

Credit card holders

Level of credit risks

Demographic data

Combination of data from the firms various transaction systems to create a longitudinal view of patterns of use.

decision support system

Call center personnel and Capital One consumer Web sites with scripts that are employed when interacting with new credit card applicants

A model for credit card risk assessment

  1. List and describe the information technologies used to support their strategy? (table)

IM/IT Enabling Information System

Description

enterprise-wide transaction processing systems

capture each and every customer transaction documenting how much was spent by the customer where and when

enterprise-wide transaction processing systems

capture data concerning payment history, such as which customers pay off their cards immediately and which ones do so in installments overtime with interest

decision support system

brings together data from the firms various transaction systems to create a longitudinal view of patterns of use.

  1. 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 to determine how much product to produce. (table)

Traditional Manufacturing Approach

Capital One’s Scientific Testing Approach

Use of application forms filled to check the number of applicants

Use automatic online checker to determine the number of online applicants

Use of verbal and advertisement boards in marketing their credit cards

Use of social sites such as facebook, twitter and google to market their products

Manual checking of a customer’s transaction history

Use of wide transaction processing system to monitor a customer’s transaction history

Reference

Bender,R. (2013). Corporate Financial Strategy. Hoboken: Taylor andFrancis.