Strategic Factor Analysis Summary Citigroup

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Company Background:

Citigroup Inc. is today's pre-eminent financial services company, with some 200 million customer accounts in more than 100 countries. Major brand names under Citigroup's trademark red umbrella include Citi Cards, CitiFinancial, CitiMortgage, CitiInsurance, Primerica, Diners Club, The Citigroup Private Bank, and CitiCapital.

According to Forbes Global 2000, it is the world's biggest company and the most profitable financial services firm. Its formation was announced on April 7, 1998 through a merger of Citicorp and Travelers Group. As per the Wikipedia, the company employs approximately 358,000 staff around the world, and holds over 200 million customer accounts in more than 100 countries. Its largest shareholders include funds from the Middle East and Singapore.

It is the world's largest bank by revenues as of 2008. But Citigroup had huge losses during the global financial crisis of 2008, and was rescued in November 2008 in a massive bailout by the U.S. government.

Business Divisions:

Citigroup is organized into three major business groups - Global Consumer, Corporate and Investment Banking, and Global Wealth Management. In addition to two stand-alone businesses, Citigroup Asset Management* and Citigroup Alternative Investments.

The Global Consumer Group is comprised of three sub-divisions, Cards (credit cards), Consumer Finance, and Retail Banking. The credit card business on average delivers about 40% of the profits of this group. Citigroup is the largest provider of credit cards in the world, a position long held by Citicorp, and increased by many acquisitions of card portfolios. The Consumer Finance Division (called Citifinancial) accounts for about 20% of the consumer group's profits. Citibank is about the fifth largest retail bank in the United States, and it has branches in countries throughout the world. The biggest part of retail banking however is Banamex, the largest bank in Mexico, which Citigroup owns. Overall the Global Consumer group contributes more than half of all the profits for Citigroup.

The Global Corporate and Investment bank consists of two subdivisions, capital markets & banking, and global transaction services. This division essentially handles large corporate cash management, lending, and Investment Banking. Citigroup's investment bank is one of the largest, frequently topping many League Tables.

The final division is called Private Client Services, a euphemism for a stock brokerage. This division is branded Smith Barney, and is the second largest stock broker in the world. It usually contributes however, only around 6% of Citigroup's profits.

Through its subsidiaries, Citigroup offers banking, lending, insurance, investment, mortgage, asset management. Citigroup sets itself apart from its top three competitors: JP Morgan Chase & Co., Bank of America Corp. and Deutsche Bank AG by the extent of its global breadth.

(source: http://en.wikipedia.org/wiki/Citigroup)

ENVIRONMENTAL ANALYSIS - External:

Here we will analyze the effect of various environmental factors and to see what trends are like to affect the industry in which the it is operating in a Brief manner.

Demographics and Societal Trends

Citi is available worldwide. But the factors like lifestyle changes age distribution of population, life expectancies etc are the factors, which is of much importance. It will include study of following factors:
- population size and distribution
- age distribution
- education levels
- income levels
- ethnic origins
- religious affiliations

Citigroup has a wide array of customers. They are extremely diversified in the products and services that they offer. They offer loans and banking services to everyone from low-income, sub-prime customers, to extremely high-wealth individuals and everywhere in between. Depending on the brand name, Citigroup will target specific demographics and cater their products to them. CitiFinancal focuses on community-based lending where decisions are made at local branch offices. In contract, SmithBarney offers financial planning and advisory to high net worth clients. In general, Citigroup attempts to target a wide range of demographics and attempts to offer each group competitive packages and services. The education level and income levels are increasing. All these are positives for the Citigroup.

Globalization

Globalization means operating in the world economy as a single economy. Globalization is a compulsion now. A convergence of expectations is happening globally. And as barriers fall further, technology advances rapidly, customers talk more to each other on the back of a robust telecom network, the ranks of the Universal Customers will only swell. Thus it will bring good growth for Swatch due to liberalization in many parts of globe. In future there will be huge growth in emerging economies such as China, India, Brazil and other countries.

Political and Legal Regulation

- Legal risk means probability of having losses due to change in laws or interpretation of the law (Risk Glossary, 2006). Capital One is affected by legal and political environment locally and globally, as it aspires to be a multinational company. One typical feature of the financial industry is that it is heavily regulated business. It is subject to federal, state and international laws related to the financial services, which may limit or change the operations of Citigroup. It is also facing possible risks from the outcomes of certain credit card industry litigation. (Goliath Knowledge on Demand, 2006). Certain legislations requiring additional disclosures for credit cards and other types of consumer lending must be followed. Such Legislation places further restrictions on the practices of credit card issuers and consumer lenders. Moreover, the ...