I. Case Summary
The passing of the Financial Services Modernization Act of 1999 repealed the Glass-Steagall Act, and the rescinding of the 1956 Bank Holding Company Act. “The legislation spurred a flood of mergers and acquisitions” by permitting banking, insurance, and securities firms to be affiliated/associated with one another, as a result it became extremely profitable and advantageous for financial institutions to consolidate and diversify their holdings. In doing so a financial firm was capable of offering a multitude of financial products and serviced through one encompassing entity. The particular market segment that this case analysis discusses is the J.P. Morgan Chase credit …show more content…
Entry (very difficult / impossible): Due to the market power of monoliners, like American Express and the oligopolies of Visa and MasterCard it is nearly impossible to enter the credit market without the affiliation of one of these firms. Another barrier is the brand loyalty customers’ exhibit towards the established parent organization of existing credit card companies.
Rivalry (Intense): Larger credit card issuing institutions have consolidated the industry, resulting in the top 10 firms controlling 78 percent of the total market. As a consequence of the market consolidation rivalry has intensified, since customer retention, introductory rate offers, and value propositions have become the most important issues of the day.
(b) Firms Strengths Analysis • Through two large mergers CCS became one of the larger issuers in the credit card segment of the financial industry. • CCS parent company, J.P. Morgan Chase, has a strong international and investment banking presence. • CCS has a diversified credit card portfolio comprised of affinity, cobranded, agent and secured card products. CCS is most notably a very strong competitor in the cobranded credit card arena. • CCS offers for clients the industry leading secure internet platform. This platform provides bill consolidation for the corporate and business sector. • Internet presence through chase.com