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Social Strategy at American Express

Solution Id Length Case Author Case Publisher
2647 1787 Words (7 Pages) Mikolaj Jan Piskorski, David Chen Harvard Business School : 712447
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The senior vice president at AMEX, Leslie Berland, had two main agendas while meeting the company’s vice chairman, including ideas for Small Business Saturday, a shopping break regarded at the company and to discuss the company’s upcoming social strategies. After being formed in 1850 to transport currency and other valuables, the company eventually stepped into the financial services industry. In early 2007, OPEN Forum was launched as a means of social strategy, which was gradually followed by Members Project, Members Know, and social media platforms, including Twitter and Facebook. In November 2010, a small number of members of the AMEX came up with the concept of Small Business Strategy, which was based on inspiring the shoppers to support small businesses. With innovation and rapid alterations, AMEX's position boosted over time, and Gilligan, the vice president, was stuck between two options, including broad; constructing relationships with social platforms to provide differentiated customer offers and deep; strengthening existing relationships with Foursquare and Facebook.

Following questions are answered in this case study solution:

  1. How does AMEX’s business strategy differ from the business strategies that Visa and MasterCard and issuing banks pursue?

  2. What impact does Members Project have on AMEX’s profit and on the cardholders’ social relationships?

  3. What impact does Members Know have on AMEX’s profit and on the social relationships of its cardholders?

  4. What impact does OPEN Forum have on AMEX’s profit and on the social relationships of cardholders? What impact does Link/Like/Love have on AMEX’s profit and on the social relationships of cardholders?

  5. Should AMEX pursue the “broad” option or the “deep” option first?

Case Study Questions Answers

1. How does AMEX's business strategy differ from the business strategies that Visa and MasterCard, and issuing banks pursue? 

As compared to the 44 million members of American Express, Visa appealed to almost 111 million cardholders, and Mastercard interested around 98 million members. A regular yearly charge by American Express is considered to be $13,832, whereas, for Visa consumers, it is indicated to be $4,292 and $3,458 for MasterCard users. 

American Express opted for a distinct strategy than that of the central competitors, including Visa, issuing banks, and MasterCard. Along with supervising trade settlements, they also distributed their own cards and managed the finances. This implied that the employer would get to know both buyers and sellers and would be able to assist both parties in making judgments. Meanwhile, Visa and MasterCard primarily focused on bank settlements, whereas banks and other financial institutions, such as Chase and Bank of America, dealt with card issuing and service provider administration. As a result, neither Visa nor MasterCard had access to the actual transactions between consumers and businesses. Additionally, Visa and MasterCard charged a reduced fee (in accordance with the card used, around 2% of the total transaction), which usually came at the price of providing cardholders with fewer advantageous advantages. This was done to attract more businesses.

The direct engagement between American Express and customers and companies, which provided a huge competitive advantage, was a fundamental emphasis of Chenault's approach to digital transformation. He thought that the firm would be able to offer value to both in a manner that no other company could, particularly as a catalyst for digital commerce. To do this, Chenault gave the corporation the assignment of identifying the digital transformations that were essential to its existing operations. The goal of Chenault's Enterprise Growth section was to promote innovation in fresh business sectors. Additionally, he exhorted HR directors to integrate social and digital activities into their M&A, public relations, customer service, and hiring processes.

In order to discuss the possibilities of American Express resources with venture capitalists, start-ups, and established businesses, Chenault routinely visited Silicon Valley. Several new collaborations that developed as a result of these forays helped the company acquire Revolution Money, now renamed Serve, which was a payment network created to simplify inter-person financial transactions.

2. What impact does Members Project have on AMEX’s profit and on the cardholders’ social relationships? 

With the introduction of the Members Project, a project developed by the Global Advertising and Brand Management team under the direction of Chief Advertising Officer John Hayes, American Express continued to set the standard for innovation in 2007. This marketing strategy used social advertising and corporate social responsibility to create an exclusive online network for cardholders on the American Express website. Cardholders had been boosted to deliberate, vote, and outline rules for projects associated with causes. The most captivating concept obtained enormous funding.

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