...Performance management A Citibank case study Made by: Bryan Rinders, Marten Moolhuizen, Alrawahi Hemi, Yihai Wang and Yikun Du Prefatory note The report is based on the analysis of a classic management case that about the Citibank and the strategy performance management tool it performed, the balance scorecard. After analyzed the Citibank case, our research group came up the question: What are the main reasons Citibank fails to measure customer satisfaction and what can be done to change this, and the other steps we have to take in order to answer the question. We would like to thank all those who have given us their generous help, commitment and enthusiasm, which have been the major driving force to complete the current paper. However, we should thank every member in the team at first. Everyone in the group tried their best to find sources and materials, finish their own part in time. And thanks to our university and all the teachers who give us academic knowledge and skills. This proposal is mainly finished by ourselves. There must be some mistakes, because of our carelessness and limitation of knowledge. We are sincerely looking for your feedback. Yihai Wang, Marten Moolhuizen, Bryan Rinders, Alrawahi Hemi and Yikun Du 2015.10.20 Enschede Executive Summary The reason why this proposal is made is because of a change in strategies in 1995, the California division of Citibank decided to implement a new performance scorecard to measure a more efficiently performance...
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...Final Exam Questions Course 62.601 (Customers and Markets) Fall 2014 / Professor Tao (Tony) Gao Question 1: I recommend CDT to introduce accessories for music, movies and video game fans as a new category of products. These accessories include posters, clothes, cups, and so on. These accessories related to a specific movie or famous star, for instance, a T-shirt with a theme of Star Wars. As CDT is a store for music lover and movie lover, this new category can attract these customers’ attention when they looking for their entertainment products. Based on the customer survey, 56% of customers are between 18 and 36 years old, these young customers more like to purchase the accessories for collecting. The accessories for music and video are a new trend that more and more famous singers and movie companies like to release some accessories about their music and movies to earn more money. It provides a new way for CDT to compete with these mass merchandise stores. These merchandise stores are only sell CDs and movies, they do not sell these accessories. In addition, these accessories are high profit products. If CDT introduces this new category, it will bring high profits to CDT. It is a good category for CDT’s long-term business. The digital downloading and piracy significantly affect the sales for CDT’s traditional business. However, the new category will not affected by digital downloading and piracy, so it may be a good way for CDT to focus on it. Question 2: 1. Introducing...
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...organization-wide strategic planning, management and communications system” which among other things “align the work people do with organization vision and strategy (1)”. In the case of Citibank, although the rational for the scorecard may lean towards the strategic planning end, the manner in which it was developed and the manner in which it is ultimately being used currently, as a bonus determinant, falls much more in the end of gauging operational performance. In order to ensure that the scorecard is also useful to Citibank as a strategic planning tool, it is important that the senior managers not only use the results to improve their management techniques but also to identify areas of weakness of the organization. Citibank’s approach in California was geared towards providing “relationship banking coupled with a high level of customer service (2)”. They recognized that there was a strong correlation between customer satisfaction and the profitability for the bank due to the fact that the customer’s expectations and demand for high quality services increased simultaneously with their increasing net worth (2). Therefore, the intent of the scorecard was to evaluate branch performance on both financial and non-financial metrics in the hopes that Citibank managers would align their branch management approaches with the Citibank strategic mission to prioritize relationship banking and customer service. Including customer service on the scorecard underlined the importance of...
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...Wardhawala, UID# 702101630 a) What is Relationship Banking? Those financial services in which a bank attempts to meet a customer's needs with a complete package of facilities. The package may include most or all of services such as cash management, credit cards, deposits, loans, money market investments, etc., that may be summarized on a single bank statement. What is the new Performance Scorecard? While financial measures typically were the way Citibank measured success in the past, they recognized a need to measure customer service as well, and thus developed a Performance Scorecard. The six different types of measures the Performance Scorecard evaluated were: financial strategy implementation customer satisfaction control people standards Citibank felt it was necessary to update the previous evaluations to include non-financial measures because they recognized that these measures may in fact be more critical to the long term success of the franchise. As a result, by adding the non-financial measures to the current measures, Citibank was able to reflect competitive dimensions in the bank's strategy. Why is the Customer Satisfaction Score metric an important component? Customer satisfaction indicator was important not only for meeting ever-increasing expectations of highly-sophisticated clients, but also for achieving strategic goals of the division, and staying competitive. Citibank’s current strategy focused on customer service as a key differentiator. Hence, Customer...
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...money management business into an e-business framework. This case discusses how Citibank is using its traditional assets and integrating Internet initiatives into its e-business strategy to create sustainable competitive advantages. Competition in the cash and trade business is becoming intense and a new breed of competent and aggressive competitors is vying for the market, including technology companies interested in B2B e-payment. Citibank is responding to the competition by continually evolving its e-business strategy--connect, transform, extend. Also looks into the challenges that Citibank e-Business Group is facing in developing a single global web platform for the corporate market. The focus is on how Citibank is developing an e-business product that would serve the highly segmented market and how to encourage these markets to use a global single platform online. At one end of the spectrum are multinationals and top-level domestic corporates that operate sophisticated treasuries, and at the other end are companies and small- and medium-size businesses that are not yet ready to upgrade and transform their systems. Question 1 Economic * At the time of the global current crisis that we still see relevance of today, it put significant downward pressure on interest rates as treasuries around the globe adjusted their rates. * Citibank revenues as the global crisis forced the firm to record losses. * Citibank has to rethink its strategies to avoid buyouts, bailouts,...
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...RESEARCH PAPER NO. 1488 Strategy, Organization, And Incentives: Global Corporate Banking At Citibank David P. Baron David Besanko April 1998 RESEARCH PAPER SERIES GRADUATE SCHOOL OF BUSINESS STANFORD UNIVERSITY Research Paper No. 1488 STRATEGY, ORGANIZATION, AND INCENTIVES: GLOBAL CORPORATE BANKING AT CITIBANK David P. Baron and David Besanko Stanford University and Northwestern University April 1998 Abstract This paper addresses the interplay of strategy, organization, and incentives in a global company. The basic framework takes one step further Chandler’s perspective that structure follows strategy by incorporating incentives chosen in response to both strategy and organization. The analysis of these three components of corporate policy is guided by a model of organization developed in earlier papers (1996, 1997). The perspective is that strategy is based on matching opportunities and capabilities. Capabilities reside in an organization’s shared know-how, and organization structure serves to mobilize a firm’s capabilities in pursuit of opportunities. How organization structure mobilizes capabilities depends on the complementarities among its activities and the pattern of spillovers that underlie its capabilities. When the activities include both complements and substitutes, and when the pattern of spillovers is complex, a mUlti-dimensional organization is required to manage the interrelationships. In multi-dimensional organizations the incentive...
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...Citibank Case: Questions and Answers 1) Why has Citibank introduced a performance scorecard? The article comes straight to the point articulating that Citibank introduced a performance scorecard for the sole purpose of “highlighting the importance of a diverse set of measures in achieving the strategic goals of the division”. Because Citibank was competing with Bank of America and Wells Fargo, at the least, they had to set themselves apart within the banking sector. Citibank wanted to “build a profitable franchise by providing relationship banking combined with a high level of service to its customers”. Because customers expected service to grow along with the net worth of the company, the adaption of the new performance scorecard was essential in staying competitive. Managers saw this performance scorecard as a way for people to have a broad view of the business that ultimately would be critical to the success of the company. The article goes on to state that the new performance scorecard was to “reflect the importance of non-financial measures as leading indicators of strategy implementation. It complemented existing financial measures with new measures reflecting important competitive dimensions in the bank’s strategy”. Because the performance scorecard focused on 6 different dimensions (financial, strategy implementation, customer satisfaction, control, people, and standards), it provided a holistic approach to how the people at the company were doing. Performance scorecards...
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...activity-based cost model using the information in the case 2. What causes any shifts in reported product costs and profitability? 3. Based on your analysis in Question 1b, recommend three distinct actions that Wilkerson’s managers could implement to improve profitability? 4. What concerns, if any, do any have with the cost estimates you prepared in the answer to Question 1b? PREPARE: Case study Komandor. Prepare the following questions for class discussion: 1. Consider each of the following alternatives: a. Capitalize the consulting fees; in other words, following the practice preferred by the Polish authorities. b. Allocate the consulting fees to the plastic products bought by Komandor. c. Allocate the consulting fees to the metal products bought by Komandor. d. Hire a tax official as a “consultant” to ensure that Komandor receives a clean tax audit. e. Don’t invoice Poland for the consulting fee; just deduct the expense in Canada. For each option, estimate the expected cash flow consequences relative to the desired (prohibited) alternative of deducting the full $200,000 cost in Poland. Also, identify the advantages and disadvantages of each approach. 2. In light of your answers in Question 1, which alternative should Komandor adopt, and why? Case: Barrows Consumer Products (Written assignment) PREPARE: Case study Barrow Consumer Products. Prepare AND SUBMIT the following questions: 1. What are some of the factors causing the...
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...Denise Gail Watson MSL735 Homework – Week 5 September 12, 2012 Citibank Plans for Changing Staffing Needs The year the Citibank HR manager was given to assess the staffing needs in Australia were important to the success of the bank in this location. It gave time to formulate a plan for the recruitment and selection in hiring of personnel through assessment of all facets of expatriate issues. This would include the recruitment, selection and take into the account of cultural suitability and adjustment that will automatically occur when an expatriate comes to work from another country. Recruitment and selection would be pivotal in creating Citibank as a global presence in Australia. Recruitment is defined as searching for and obtaining potential job candidates in sufficient numbers and quality so that the organization can select the most appropriate people to fill its job needs. Whereas, selection is the process of gathering information for the purposes of evaluating and deciding who should be employed in particular jobs. (Dowling, Festing & Engle, Sr., 2009) It is important to note that recruitment and selection are discrete processes and both processes need to operate effectively if the firm is effectively to manage its staffing process. For example, a firm may have an excellent selection system for evaluating candidates but if there are insufficient candidates to evaluate then this selection system is less than effective. Both processes must operate effectively...
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...Citibank Indonesia - Case Study According to the case study, Mr. Mistri is not new to the banking industry, he has been part of the organization for many years, and also has proved to be a successful executive in his current and prior roles. The budget submitted by Mr. Mistri was a reflection of his concerns about the risk return ratio of his branch, which is the return in terms of risk for a specific time period, oil prices decreasing based on the recession Indonesia is going through, and the high staff turnover, a situation that he also considers a serious constraint to the growth of the branch. Raising a budget when your corporate office requires revision of the original is not an easy task. You can’t be too conservative, but being too aggressive is also a big risk. If it was a fairly easy decision, Mr. Mistri would have been the first one interested in raising the forecasted budget, not just because it measures the overall success of his operation, but also based on the incentives he would receive. In the case of a country manager, compensation based on performance could range up to approximately 70% of their base salary. The only thing that makes me question Mr. Mistri’s approach to his original budget is the fact that he decided to operate with a sovereign self-impose risk limit that is lower than the one approved from the corporate office. I understand he is responsible for both, managing risk and generating profit, but he might be too conservative in the eyes...
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...BANKING AND FINANCE ETHICS IN THE FIELD OF CORPORATE POLICIES Corporate Ethics The broad area dealing with the way in which a company behaves towards, and conducts business with, its internal and external stakeholders, including employees, investors, creditors, customers, and regulators. In certain national systems minimum standards are required or recommended in order to eliminate potential conflicts of interest or client/employee mistreatment. Corporate Policy A formal declaration of the guiding principles and procedures by which a company will operate typically established by its board of directors or a senior management policy committee. Imbedded in corporate policy are the company's mission statement, objectives and the principles by which strategic decisions are to be made. It also forms the basis for measuring performance and ensuring accountability at all levels of the company. Financial Institution (PBCom) Company Policies: 1. PBCom First The PBCom First Policy applies to all situations where an actual or potential conflict of interest exists. Being employees of the Bank, it is every employee’s duty to ensure that their personal interests do not conflict with the duties, which they must perform for the Bank, or with the duties which the Bank performs for its clients. When such situation occurs, employees must put the Bank’s interest over and above other interests. 2. Disclosure of Information The disclosure...
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...Too Big To Fail Chapter 19 Setting This chapter starts with Lloyd Blankfein, CEO of Goldman Sachs (GS), thinking about his company’s future. Stock market is dropping and the regulators still haven’t decided on what, when and how to fix the financial system. Henry “Hank Paulson” the US Treasury Secretary at the time, strongly believes the only way to build confidence in the market place was to have the government pass the Trouble Asset Relief Program (TARP). He had a big task ahead of him because it would be difficult to get lawmakers to agree his plan. Currently Wachovia another well known bank is in crisis. Its two month old CEO, Bob Steel, is trying desperately to broker a deal without government intervention, with either Citibank or Wells Fargo and Company (WFC) to save his bank. In the meantime, investors’ confidence in Morgan Stanley is waning and the company is urgently trying to close a deal with the Japanese company Mitsubishi to get more capital on the books. Companies across the board are trying to become more liquid in the tight credit market. Major Players Hank Paulson is trying his best to reach an agreement with Congress, so he can get TARP passed as quickly as possible. He dislikes politics but knows he has to work with the politicians or his bill would die. His solution to the financial crisis is TARP and working with lawmakers would be the only way to get this done. To get Congress on board, he would also have to work with the chairwoman of the Federal...
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...Impact of Social Media on the Financial Services Industry: In today’s age everyone is well aware of the significant impact that social media has had on our lives in the way we communicate, socialise, conduct business and view the world. This case study however, will attempt to narrow the scope of this theme, by looking specifically at the way in which social media has influenced the financial services industry. The evolution of social media has facilitated a change in the nature of the relationship between institutions and consumers within the financial services sector. Not all of these changes have, however, had a positive effect on financial institutions. Media convergence and the growth of user-generated content has blurred the lines between different platforms of media, and the distinction between producers and consumers (Australian Communications and Media Authority, 2011). Social media outlets such as YouTube provide a platform for individual users to become producers by distributing content that can be viewed anywhere in the world. As a result, anyone with an internet connection has access to more knowledge and information than any time previously in history. This has impacted the financial services sector as non-mainstream media platforms are increasing awareness of the risky and often corrupt practises of financial institutions, particularly within the banking industry. For example, Peter Schiff, an American stockbroker and CEO of Euro Pacific Capital, has used...
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...Stage 2 Developing Table of Contents Stage 2 DevelopingTable of Contents 0 Table of Contents 1 1.1 Key factors in case study 2 1.2 Likely financial needs of the clients 7 1.2.1 Savings 8 1.2.2 Insurance 8 1.2.3 Investment 8 1.3 Suggestions how the needs can be resolved 9 1.4 Likely providers 9 1.5 Relevant products and services 11 1.5.1 Savings 11 1.5.2 Insurance 14 1.5.3 Investment 15 1.6 Reviewing the customer service provision 17 1.6.1 Citibank 17 1.6.2 AXA 19 1.6.3 Lloyds TSB Bank 19 1.6.4 NS&I 20 1.6.5 HSBC 22 1.7 Reviewing the extent to which funds are protected or at risk 22 1.7.1 Savings 23 1.7.2 Investments 23 1.7.3 Insurance 23 1.7.4 Pension 23 1.8 Identifying the criteria on which to base the decisions 24 1.9 Justification for selection 25 1.9.1 Benefit-needs analysis 25 1.9.2 Comparison with other providers, products and service 26 1.9.3 Tax implications 27 1.9.4 Risk implications 29 1.9.5 Analysis of the customer service commitments 30 1.9.6 Compensation analysis 30 1.10 Conclusion 31 References 34 1 Key factors in case study In the case, I will give you a brief introduction about key factors in this case. My clients are Duncan Kenndy and Elaine, a retired couple. Duncan Kennedy is a 64 years old man. And he is a retire government...
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...1 http://online.wsj.com/article/BT-CO-20120405-708286.html * April 5, 2012, 10:23 a.m. ET By Alan Zibel Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--A U.S. bank regulator on Thursday cited Citigroup Inc. (C) for failing to comply with a federal law that requires banks to establish protections against money-laundering but didn't impose a fine. The Office of the Comptroller of the Currency said that Citi's U.S. banking unit showed deficiencies in its compliance with the bank-secrecy act, which requires banks to report on suspicious activities and maintain other protections against money laundering. Citi neither admitted nor denied the regulator's allegations and entered into a consent order with the regulator to fix the problems. Though the regulator didn't issue a fine, it still has the right to do so. The regulator said the bank had numerous weaknesses, including problems identifying and monitoring high-risk customers. In response, Citi said that the bank has "taken significant steps" in developing plans to manage the risk of money-laundering risks. "Because of these actions, many of the issues highlighted in the OCC's order have already been remediated or are in the process of being remediated," the bank said. "Furthermore, we are developing a plan to address the remaining OCC requirements. " -By Alan Zibel, Dow Jones Newswires; 202-862-9263; alan.zibel@dowjones.com 2 http://www.fool.com/investing/general/2010/07/22/citigroup-strengths-weaknesses-opportunities-threa...
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