J.P. Morgan Chase Case Write-Up
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The passing of the Financial Services Modernization Act of 1999 repealed the Glass-Steagall Act, and the rescinding of the 1956 Bank Holding Company Act.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 card division, otherwise known as Chase Cardmember Services (CCS).
II. Strategic Issue
The dilemma that JP Morgan Chase’s (CCS) division is facing is how to capture new customers/clients to the credit card market and how to go about attaining and maintain a profitable “revolvers” versus “transactors” customer base. The credit card industry market is divided into three major market segments: individual, business, and corporate. Individuals – Individual customers choose their credit card based upon their individual needs, whether it maybe; cash back, incentive programs, or organization affinity. Businesses – Business level banking decisions are usually based upon banking relationships and banking services provided. Corporations – Due to a large amount of card holders decisions are based upn ease of bill settlement and serviced provided. As a result of the disparity in the market segments it would be nearly impossible for one firm in the credit card serviced industry to provide for the needs each and every segment simultaneously. Therefore, credit card issuer’s, based on comparative advantage, become the leader in a specific segment of the credit market. Each firm is able to compete in the...
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