Western Union was established as a telegraph company in the mid-19th century, and began money transfer operations in 1871. Its telegram and business communication services ceased in 2006, but by this time the money transfer business had long been Western Union’s main revenue source. After at least a decade of continuous profitability, Western Union has long been a leading telecommunications company. The company is currently a leading player in the global cross-border money transfer market with a market share of 17%. This Case Study examines the way the company has maintained its original focus on the electronic transmission of information while optimizing the specifics of its operations in response both to changing technology and the way that economic migration has driven demand for consumer-to-consumer money transfer services. Summary
•Western Union has focused on data communication rather than voice telephony. •In the late 19th century the company had a near-monopoly in the US telegraph market. •Later, it diversified into money transfers, which became its only business in 2006 after the telegram became obsolete. •Currently, it has a 17% share of the global cross-border money transfer market. •The increasing volume of economic migration from lower to higher income countries is a multi-decade trend. •Migrants often send remittances to their home countries, the global value of which is expected to reach $400bn in 2012. •The money transfer service offered by Western Union and competitors is particularly well-suited to the remittance market, and the company's expanding global office network allows it to generate revenue from it. •Regulation and increasing competition are key challenges going forward.