Capital One Environmental Analysis

Capital One Jeremy Keator Dr. Philip Friedman Business Administration Capstone – BUS 499 3/04/2010 Conduct an External Environmental Analysis, and identify key environmental forces that have immediate strategic implications for Capital One. The key environmental forces that could have immediate strategic implications for Capitol One in my opinion will stem from the following segments; Sociocultural, Political, Economic. To date the economy isn’t in good condition, people are being laid off, companies are going belly up, and families across the nation are being kicked out of there homes by the very companies that are responsible for the state of the economy. Despite the very well known troubles the middle class
One of Capital Ones internal weaknesses is its annual expenditures on advertising fees in comparison to the company’s major competitors. In 2004 Capital One spent $285 million and then another $5.4 million on advertisements that 30% of a poll taken didn’t even care for while 12% liked it a lot, many professionals gave the opinion that much of the profits have been consumed by marketing ((Hitt, M., Ireland, D., Hoskinsson, R. 2009. pg. 70). Capital Ones large collection of sub prime customers also shows itself as a weakness. During the recession of 2001 - 2004 and new laws coming to light concerning the declaration of personal bankruptcy Capital One decided to stop depending on sub prime customers as they are more likely to declare bankruptcy or default on payments. The tightening of controls combined with the cut back of dependency on sub par customers caused Capital One to suffer a smaller profit margin, raising interest rates, and a 40% drop in its shares (Hitt, M., et. al. 2009. pg.
Capital Ones international position seems to only exist in the UK and Canada though once it held offices in Spain, France and South Africa but had decided to pull out as progress wasn’t being seen according to the text (Hitt, M., et. al. 2009. pg. 65). Michael Hitt and gang tell us that “Capital One is the United Kingdoms seventh largest credit card issuer, and among the top ten of the same in Canada” (Hitt, M., et. al. 2009. pg. 66). In my opinion they seem to have a secret weapon enabling them to target anyone in any market as long as they can feed IBS information, it enhances their marketing capabilities and ability to pump out programs for individuals attracting a variety of folk. That being said they need to make sure they don’t rely to heavily again on sub prime consumers in say China or India being that it’s a new game to those folk and they easily stumble into the payment default zone. Those cultures may not go crazy with credit, it may be a whole new trend, you mat have to hi them with the lack of use charge. All in all as long as they can feed IBS they seemingly will do well in their foreign