American Express is one of the most respected companies within the United States. Their cards have wonderful services that have historically appealed to the elite and affluent of American society. Where American Express has a major weakness in how their business progresses as a whole is their approach to making their services less “American” and being accepted at more globally recognized cities. Having traveled a great deal, this seems to be the best direction for American Express to travel to in the future for their business model. This paper will explore why American Express should take this approach and what aspects of their current and prior practices are working and not working for their business model.
Beginning with the SWOT Analysis, one has to take a look at the Strengths, Weaknesses, Opportunities, and Threats, (SWOT Analysis, 2016). American Express’ strength is surely their established brand that caters to the wealthy and they should not branch out to other sectors of wealth because that is not what they are good at. They have built their business on those who can pay their credit card bills every month rather than those who tend to frequent revolving credit cards within the United States. This is American Express’ strength is their prestige, (American Express: Our Story, 2016). American Express’ Weakness is their lack of global presence. This is a mistake that many American companies make when they assume that the prestige of being American is enough. In American Express’ case, they have to globalize like the rest of the world. This is their primary weakness and they need to address it immediately. Pertaining to Opportunities, American Express has an opportunity to be the premiere global credit card brand and appeal to those first class status individuals all over the world. The problem is that their cards are not accepted in many affluent countries, which inconveniences their wealthy customers who are American too, (Amex’s New Strategy: Return to the Old Strategy – Focus on the Affluent, 2015). This is an enormous opportunity for American Express to gain new wealthy clients and to keep current clients who travel abroad a great deal. American Express’ threat is making their brand too accessible. They have built their reputation on the affluent and they need to keep their market there, but expand that market to wealth of other nations. This is what they are good at and this is their business. To expand beyond their class is an enormous mistake.
The PESTEL analysis pertains to the Political, Economic, Social, Technological, Legal, and Environmental factors that an organization faces, (PESTEL Analysis, 2016). American Express is at the whim of the banking institutions and interest rates within the United States, thus, this is arguably their Political and Economic factor in this analysis. The financial sector is a risky one in the United States due to the crack downs pertaining to money laundering and white collar crimes. American Express has their major risk because their business is linked to financial services. For the Social sector of this analysis, American Express has the branding down to a science in America and attracts many that want the prestige and membership benefits that they offer their clients. Additionally, their black card has achieved a great social status consistent with the elites that have the credit score to use it. Technology for American Express makes them have to be careful with confidentiality hacks that are becoming commonplace in the industry and also keeping their cards being approved in a system that is sophisticated. Aspects such as these are crucial to American Express’ business. Environment does not play an enormous factor in American Express’ business model because they are not a farming business. Lastly, Legal pertains to the confidentiality of their cards, which their customers expect. American Express has to be careful to invest in the necessary software to keep their client’s information safe.
American Express has systematically grown their brand based on prestige, elegance, and posh travel benefits, (American Express: Our Story, 2016). This is why they have such valued membership and applications every year. They also provide their customers the chance to work up their ladder of prestige as they settle into their careers and are making more money. American Express prides itself on relationships that are long term and providing superior customer service, (American Express: Our Story). What has made American Express who they are is their focus on the “unique value” approach. They have played into the mechanism of showing their customer why their cards are the premiere credit card on the market and why their customers should not use any other card. This method is going to be the key in taking American Express’ business to other global markets because they need to focus on their high class level of sophistication.
In order for their “unique value” approach to be successful in my recommendation to go global is that they desperately need to build which retailers accept their cards. For example, the wealthy couple that will be eating at the restaurant overlooking the Parthenon in Greece needs to be able to pay for their $500 with their American Express. American Express needs to make this a reality in locations all over the world and particularly in Europe. The world’s first class hotels, restaurants and designer boutiques should be given a percentage discount per transaction in order to accept American Express in order to make it more available to the international elite. Once American Express does this and then markets their presence at major events such as the World Cup and the Olympics, they will see a great increase in the international sophistication of their brand and will also have the internationally affluent as members of their credit card programs.
Works Cited
“American Express: Our Story.” American Express. 2016. Web. 30 March 2016.
“Amex’s New Strategy? Return to the Old Strategy – Focus on the Affluent.” Pymts.com. 27 February 2015. Web. 30 March 2016.
“SWOT Analysis.” Investopedia. 2016. Web. 30 March 2016.
“What is PESTEL Analysis? A Tool for Business Analysis.” PestleAnalysis. 2016. Web. 30 March 2016.
