Ibe: Analysis of American Express

[pic 1]                                                                                                                     [pic 2]

A Report on

American Express Co and its Internal Environment Analysis

         Submitted By:

                                                                                                                   Abhisek Pattojoshi (PGP31004)

                                                                         Section - A

DECLARATION

I, Abhisek Pattojoshi, do hereby declare that the report is my individual effort and that no part of the report is copied from published/unpublished sources without prior citation.

Executive Summary

American Express Company is a global brand that deals with credit card businesses primarily and offers its employees with a plethora of products and services. Through this report, there is an approach to understand the enterprise, evaluate its internal environment and identify the recent trend in performance of the company, serving the interests of its stakeholders. By understanding its vision and mission, an attempt has been made to gauge if the value systems being practiced by the organized is sustainable and in line with the company’s philosophy. The reporting structure, organizational hierarchy, board and management professionalization, and other factors impacting business decisions have been analyzed. Knowledge is supreme and through the knowledge based capital that Amex possesses, which includes its trademarks, patents and R&D initiatives, it has been able to generate productivity advantage and market dominance. People are at the heart of its business, and thus Amex, lays special emphasis not just for its employees through training and development and best practices, but also for its HR professionals through its “HR for HR” program. This has reflected in its positive brand image where a significant number of stakeholders have positively accepted Amex as the place to work at. Its brand equity and performance, of late, has been on a decline following its break-up with Costco. Its shares and EPS are on a decline, with investors not showing great confidence on its recovery. However, with Walmart joining up the game, it could be a different ball-game altogether. Only time will tell.

Company Overview

Amex, or American Express Company, is a multinational financial services corporation, known primarily for its credit card and traveler’s cheque businesses. It is headquartered in Manhattan’s Three World Financial Center, in the United States.

Vision and Mission

Vision: Work hard every day to make American Express the world’s most respected service brand.

Mission: Leverage our local and global expertise to be a leading provider of payment solutions for our customers by delivering high-quality, innovative and world-class products and services, while maintaining the highest standards of ethics and governance.

Value System

Amex’s code of conduct document depicts the business ethics principles applicable to all employees. Its “Blue Box Values” guide all the actions and decisions by the management and employees. The below values reflect what they stand for as a company:

1. Customer Commitment, to make a positive difference in the lives of the customers
2. Quality, to deliver premium value to all
3. Integrity of highest standards
4. Teamwork, across boundaries to meet overall objective of the company
5. Respect for People, by developing and rewarding them
6. Good Citizenship, in the communities we live and work
7. A will to win, in every aspect of business
8. Personal Accountability, in the commitments

Operating Principles:

1. Offer to the customers a superior value-proposition
2. Best-in-class economics operating model
3. Build the Amex Brand

Management Structure and Corporate Governance

Below chart shows the board of directors at the helm and the reporting structure of the N1 and the N2 management layer. The connecting lines depict the flow of hierarchy from N2 (at the bottom) to N1 to CEO.

[pic 3][pic 4][pic 5]

Source: http://www.theofficialboard.com/org-chart/american-express

Quality and Composition of the Board: The board consists of renowned leaders, former chairman and CEOs of diverse-profile companies like Xerox, Novartis, IBM and Monumental Sports & Entertainment, to name a few.

The board is diverse, engaged and independent, possessing a mix of experiences, skills, expertise and qualifications to help the company function efficiently in the complex business environment.

Number of directors: 12

Amex’s Corporate Governance Principles deals with the composition of board, frequency of meetings, qualifications necessary, share ownership guidelines with directors and provide ways to shareholders for putting across their concerns to the board.