Alpen Bank Analysis

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Key Issues
Even though there is no guarantee for a desired 5 million Euro annual profit, Carle and the upper management have to make a final decision on the credit card launch in Romania. The issues Alpen bank has to address are: * Positioning – What is the target market; most affluent current customers and/or the growing middle class customers. Once the target market is determined Alpen has to determine what the best way of customer acquisition is: should they go for all entries presented in Table B or should some be eliminated. * Cost – The customer acquisition costs, fixed costs, variable costs and the breakeven point for required customers. * Processes - Qualification process, repayment agreement, and interest rates have to be geared towards Romanian social and economic standards. Analysis

Given the economic conditions and details described in the case launching a credit card presents the bank with an opportunity to take over a larger market share of the credit card business and gain customer equity. The case does not present enough information in order to clearly identify the best positioning of the credit card in the Romanian market if launched during the given period. It is especially important to further study the economic and social factors in order to assess the risks associated with entering the middle class branch. According to Exhibit 5, presented in the case, the middle class consists of 18% and is almost equal to the 17.9% of all Affluent classes. Given that the information presented in Tables A and B is accurate, adding middle class customer market may make it possible to achieve desired profit and breakeven points as early as within the first 2 years. The same process will be slower should Alpen chose to stick with only the Affluent customer base. Hence, entering the Middle class customer market is more risky due to unstable social and economic factors such as job stability, consumer spending behavior (according to the case...
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