Last updated: March 20, 2019
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Executive Summary

Citigroup is a large company because of a number of factors. It has a strong presence not only in the US market, as its domestic market, but also in international market, especially in India and countries in East and South-East Asia. As a multinational company, Citibank has established acquired many firms and merged with key business partners. Citigroup also constitutes a large company because the complexity of its business structure and operations. Citigroup’s horizontal and vertical diversification resulted to the addition in the hierarchy of business units in both directions. As such, management activities becomes a complex and challenging feat since the company has to ensure consistency in the operations of its different business units but also allow room for customization based on the recognition of market differences. It also has to deal with various issues arising from the dealings of its various business units to retain brand equity. Citigroup also constitutes a large company because it operates with multi-billion dollar worth of capital and assets derived and allocated to its different international operations.

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Citibank constitutes one of the business units of Citigroup. Although, it constitutes a large company in itself when compared to the other players in the banking and finance sector of the US and international markets, it achieves an even bigger business force by constituting one of the operating units of Citigroup. Citigroup through Citibank exemplifies the complexity in the operation of large business firms. Citibank has to deal with a number of challenges such as comparative competitive positioning to determine how it can achieve its desired market and industry position and development of competitive advantage to ensure that its activities target its goals and objectives.




Development of Citigroup as a Large Global Business Firm

Citigroup constitutes one of the leaders and top performing firms in the banking and finance industry in the United States and the global market. Citigroup also constitutes a large business firm because of the scale of its operations encompassing the US and other international markets as well as the diversification of its products and services.


Citigroup started as City Bank, which was established in 1812 to serve the banking and financing needs of merchants and businesses in New York. Initially, the firm operated with a capitalization of $2.8 million as capital. After a century of exclusive operation in New York, City Bank decided to expand its market and add more banking and financing services to meet emerging needs of its market. In 1929, City Bank has become the world’s largest commercial bank. During this time, the company has already accumulated assets worth $1 billion and established business branches in Western Europe, South Asia, and East Asia. By 1976, City Bank made its first name change to Citibank, to match the change in name of the parent company to Citicorp, to capture the internationalization of the business. In 1998, the parent company again underwent a name change to Citigroup to mark its development of a new system of organizing financial services and serving the banking and financing needs of international clients, which it achieved through a horizontal merger with Travelers Group to enhance its global presence through business and leisure travelers. In 1999 and 2003, Citigroup developed its e-business operations by introducing online banking to the US market and online business banking respectively. In 2001, the company emerged as a top global firm in terms of profitability. In 2003, the global company needed to establish high standards of service and achieve consistency in product and service delivery in its global operations. (Citigroup, 2007) At present, the business firm continues to expand into other international markets and diversify its global products and services to maintain its top position in the global market and to achieve a leadership position.

Goals and Objectives


Citigroup has always espoused a long-term orientation (Porter, 1998), which is expressed through the firm’s more than a century of operation. As such, Citigroup has two fundamental goals, continued viability and global presence. Viability refers to the aggregate of processes to ensure that the company remains profitable and continues to operate in the next century. Global presence pertains not only to the presence of the company in many countries and regions but also enhanced competitiveness in the global market. (Porter, 1998) Citigroup seeks to achieve not only international competitiveness but also global leadership. Specific objectives include further expansion in the US market since its operations are limited to New York, California, Florida and Illinois, entry into highly competitive markets such as Western Europe and East Asia, and the first mover entry (Brooke, 2002) into untapped markets with high growth potential. Citigroup also plans to intensify the diversification of its products and services through horizontal and vertical acquisitions (Porter, 1998) to be able to address not only the emerging and changing needs of its existing market but also to capture the needs and demands of its potential markets. In the next years, Citigroup plans to become a one-stop provider of quality financial services in the global market.

Issues, Problems and Challenges

Issues and problems experienced by Citigroup in the achievement of its goals and objectives revolve around the complexity of its operations as a large business.

One major challenge that the company faced is the integration of its various business units under a common direction and core business values (Brooke, 2002; Joyce and Woods, 2002). The company expands vertically through the acquisition of existing small to medium but promising banks in different markets. This means that the company has to ensure the effectiveness of the merger and the adjustment to ensure that customers are not inconvenienced by the change in business ownership of the banks but at the same time ensure customer recognition of the change in the relationship of the bank to the acquired smaller bank. In California, bank clients are familiar with free checking services, which Citibank does not offer in its other markets. However, with Citigroup’s acquisition of Golden State Bancorp, a California based bank, the Citigroup needed to retain this service as a means of operating in the same level as the local competitors of the acquired bank. (Mittlemann, 2005) Through the retention of free checking together with enhanced service efficiency, the company observed no adverse effects on customers since there was no major switching that occurred. Similar challenges are expected to occur in the international markets. This means that Citigroup has to continuously assess and reassess its various business units operating in different markets to balance global operations based on the core business values of the company to achieve high brand equity but at the same time providing leeway for the business units to accommodate the distinctive needs and demands of the different markets.

In addition, Citigroup expands horizontally through the acquisition of business units, with direct or indirect relations to its present business operations. This means the need to devise means of ensuring unification and consistency of business values (Brooke, 2002; Joyce and Woods, 2002) since the emergence of negative perceptions of the business units could adversely affect the company. Citigroup Global Markets Inc., which comprised one of the horizontal business units of Citigroup, became linked to the Enron litigation in 2002 (Mittlemann, 2005). Actual involvement of the business unit is a smaller more issue compared to the impact of the scandal to the brand equity of Citigroup and it business units. As such, the company paid fines to the SEC and the state of New York to settle all charges against the company. This means that operating a large and highly diversified company involves diligence in learning about all aspects of a company planned for future acquisition together with continuous management efforts.

Business Strategies

To achieve its business goals and objectives, Citigroup engages in a combination of a number of strategies. To facilitate its expansion into the global market, the company applies vertical diversification through the mergers and acquisitions of business units. Moreover, Citigroup achieves entry into foreign markets through the application of a first mover strategy, which means that apart from challenging existing players in developed banking and finance markets, the company also seeks entry into untapped markets as the first international bank to enter the market to facilitate its global competitive advantage. Citigroup applies horizontal diversification to expand its products and services to become a one-stop firm (Brooke, 2002) for the different service needs of consumers.

In delivering its services worldwide, Citigroup has established and developed its digitized services in just the last decade. Through the introduction of online direct services, the company is not only able to tie up the global transactions of its different business units to achieve cohesion but also to provide added value especially to undeveloped markets where it has applied firs mover advantage. (Citigroup, 2007)

To ensure efficiency in Citigroup’s service delivery, it launched a training program for its global managers and employees (Joyce and Woods, 2002) in 2003 to ensure consistency in the quality of services delivered and efficiency in service delivery.

Comparative Current Position & Strategies

To achieve its goals and objectives, Citigroup has to consider the activities of its closest competitors to determine ways of developing its competitive advantage. In the case of Citibank, this has three major competitors in the US market, which are Bank of America Corporation, Wells Fargo & Company, and Wachovia Corporation. A comparison of these four players in the banking and finance sector shows comparative similarities and differences.

Similarities revolve around the large operations of these competitors in terms of volume of capitalization and assets, business diversification, and market reach. As large companies, these operate with billions worth of capital and assets, business units in different US states and international markets, and diversified services and service delivery channels.

There are also differences including the ranking of these companies in terms of retail deposits and services. Citigroup reported the lowest retail deposits to place the company in the fifth position in terms of retail deposits, with Bank of America at the top position. The three competitors of Citibank also offers free checking in their banking services, which the company only offers in limited branches such as in California where customers are used to this type of checking services (Mittlemann, 2005).

Although Citibank and its competitors have made a number of mergers and acquisitions, the expansion of Citibank’s competitors were limited to the US market while Citibank aimed for expansion into the global market. Bank of America’s leadership in retail deposits is largely due to its objective of expanding its market to include the low-income rural communities allowing the company to gain individual and industrial clients. Wells Fargo & Company focused on financial services and sought to expand into other states through brand building, which explains the construction of museums in a number of states to introduce its brand to these markets. Wachovia Corporation applies a similar strategy as Wells Fargo by creating community relations and brand equity necessary for multi-state expansion by sponsoring an annual PGA event. (Mittlemann, 2005)

A customer perception and satisfaction survey (Business Wire, 2003) showed that Bank of America ranks first as a banking and finance corporation with Citibank at the second spot, and Wells Fargo at the third slot. This means that based on the survey, Bank of America has achieved the highest effect of its brand equity building activities, especially because it has reached out even to low income communities unlike the other banks that focused on urban business customers. This means that Citibank needs to develop an expansion strategy for the US market that either mimics Bank of America’s strategy but with an added value or engage in unique value adding activities.

Although Citibank may have lower rankings in various aspects in the US market, the company carries first mover advantage in many international markets as well as a potential huge market share by being a business unit of Citigroup. This means that Citibank already has an international operation when compared to its closest competitors in the US market that remained domestically based. In terms of future direction, Citibank targets a dual, multi-level strategy that differentiates the company from its domestic competitors, consistent with the differentiation strategy of the larger company Citigroup.

On one hand, Citibank needs to enhance its position in the US market by considering the offering of free checking for all its branches and the different kinds of bank accounts to offer similar services to its competitors as well as create added value to the domestic market through additional services and service channels together with its international banking competencies to allow the company to tap into the large international retailers in the US corporate market. On the other hand, the company also needs to consider further developments in its international markets to enhance its first mover advantage against its US competitors and other international players as well as establish high brand equity for the company and its products and services in the global market.



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Operation. Cheltenham: Nelson Thornes Ltd.

Business Wire (2003). Bank of America, Citibank, Wells Fargo Top Vividence    Customer Experience Rankings; Vividence Study Highlights Striking Changes    and Challenges in Online Banking. Retrieved November 18, 2007, from
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Joyce, P., & Woods, A. (2002). Strategic Management: A Fresh Approach to

Developing Skill, Knowledge and Creativity. London: Kogan Page Limited.

Mittlemann, J. (2005). Citigroup. Brown University. Retrieved November 18, 2007, from

Porter, M.E. (1998). Competitive advantage: Creating and sustaining superior     performance. New York: Free Press.