Capital And The Rivals Of The Business

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

·        Capital one is a financial services company that specializes in credit cards, banking, auto loans, and home loans and savings products. The company was founded in 1988 then concentrated in mass marketing of credit cards. It encourages supplier multiplicity as one of its core features and driving force to assist create mutually beneficial relationship with the minor groups as well as women related businesses.   The company has its branches in the United States, UK and Canada. Its direct competitors include bank of America Corporation (BAC), discover financial services LLC (DFS), American express company (AXP). Similarly, there are other competitors such as Barclays bank and other financial competitors who tend to offer similar products though they might be different in some way.

2.      What is their strategy to grow profitably and compete? Give examples.

·        Capital one is different from its competitors as it deployed the technology at the core of the business while others started with a business model and then tried to computerize it. The company uses the technology to analyze and understand its customers as well as how they work, in order to provide products to various kinds of customers with different prices and characteristics. This factor has greatly contributed to its high profits and improved customer service, as they understand their customers well. For instance, the company developed data machines that could made detection of frauds easier as well as identifying the risk of each product. In addition, the company concentrated on internet advertising, as many credit cards users could be gotten online easily. This move gave the company a great reward of 2.5 million customers who signed up. Credit cards are highly proffered on the internet and they replaced other forms of payment such as cash, checks and fund transfers.

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

·        The company greatly appraises information technology that assists it to slice its data, analyze and make recommendations to make appropriate decisions concerning the market. For instance, they applied this strategy at signet bank in US and proved to be very fruitful in terms of the bank margin. Despite the credit card industry having low conversion rates resulting from direct marketing activities, the company utilizes the information technology to improve customer relations intensity. At the same time, the company designed credit cards with digital fingerprints of consumer character; this made them easily accessible to many people. In addition, the data machine could design cards to involve the left out borrowers while still maintaining low lending rates.

·         Capital one targets personal information of their potential customers in order to know the people who can afford to pay back the money lendered to avoid bad debts resulting from wrong information about their customers. The data is collected from the post office address files and credit checking agencies such as Equifax and Experian, which offer reliable and useful data. However, due to their diversity in product offered, they may approach any relevant organization that can offer useful information.

4.      List and describe the information technologies used to support their strategy?

• The company focuses on both the higher credit risk as well as low credit risk people of the market. To do this, they clearly understand the data properly, this ensures that most of their debtors actually pay back hence earning a healthy profit. In addition, they deploy an information-based strategy that gathers information, loads into their systems and analyzing it. This ensures their products appeal most of their customers as well as considering different kinds people tastes and preferences.
• In addition, they have a well-managed data warehouses and mining infrastructure meant to support their information-based strategy. This data is shared among the various company branches to enhance decision-making. For instance, the various branches in UK and US can easily access this data to assist in understanding their respective customers. In terms of data cleaning mechanisms, they use a trillium software package then analyze the data with business intelligence software to assist in making well-informed decisions. At the same time, this data analysis assists in customer service as they adapt products and the charges depending on the profile of various kinds of customer, this assists in avoiding losses from customers who cannot afford to pay.

5.      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.

• The scientific test involves use of windows based software to program device tests, capture test data as well as modifying the available data. The testers are used for production, quality control and final test. For instance, the capital one company utilizes the software to analyze and capture data about the potential credit card customers. Similarly, the company has carried various experiments that involved thousands of accounts and conducted by its competent analysts and marketers. In 2000, the company carried 45 000 tests that assisted in understanding various segments of customers and minimize fraudsters cases, which are prevalent in America. More so, the company became the largest internet advertiser thereby attracting millions of online customers, who have become its regular customers.
• The capital one company focuses on information technology as its core component to improve their business performance, this assists them to bridge the gap between the traditional disparities between the IT and business functions. The relationship between the IT and the business remains at its best in the capital one, hence the improved company performance over the years. In addition, the IT employees are highly aggressive and competent; this has seen the great performance of the company in terms of its profitability and facing its competitors. More so, the company has involves each of its employees in their discussions, in order to make informed decisions and decide on the appropriate strategies.
• Product development approach involves the creation of an idea, designing the product and engineering the information to bring forward necessary contribution. Secondly, the market should be researched and analyzed, in order to understand various segments of customers and assist in creation of new products and their respective prices. This assists to address the changing customers’ tastes and preferences. The traditional approach involves setting up the company then trying to computerize the data later. More so, it focuses on the manual analyses of the data without using sophisticated soft wares or information related strategies.

 REFERENCES:

David M. Kroenke, Using MIS, University of Washington Prentice Hall Publishers, 2006

 Ulrich, Karl T and Eppinger, Steven D. Product Design and Development, third Edition, McGraw-Hill publishers, New York. 2004.