Mission, Vision and Corporate Strategy of American Express

The company did not charge interest on outstanding balances, but did have a high annual fee to cardholders which outpaced the fees of traditional credit history cards. The card was also not broadly accepted; the company positioned it to become exclusive in between retailers in addition to consumers (Donaton and Levin, 1992, p. 1).

Howard Clark became chairman of American Express in 1961, having worked for your company simply because 1948. Under Clark, the company kept a low profile and concentrated its efforts in the highly successful TRS organization segment. Until 1965, American Express was operated as a joint-stock association exactly where shareholders were directly responsible for losses. The company was not immune to scandal under Clark's tenure: it suffered via a salad oil swindle involving a warehousing subsidiary in 1963, but Clark was in a position to show an operating income improve via his retirement in 1977. At that time, the company had posted operating earnings increases each year for 30 years (Teitelman, 1992, p. 38).

James Robinson III succeeded Clark in 1977 and it was under Robinson that the company went via its most tumultuous years. Robinson was a graduate in the Georgia Institute of Technology as well as the Harvard Business School. He worked at Morgan Guaranty Trust, then at an investment bank, and he joined American Express in 1968.

 

In his job with American Express in charge of the American Express Bank. Right after a couple of along with a half years, he moved to the travel unit where, 2 years later, he was promoted to president with the company. In 1977, he assumed the role of chairman. Robinson was to oversee the business via scandal and its first operating loss, and analysts consider his presence to be as important a point inside the company's performance during the 1980s and early 1990s performance as almost any other influence (Spiro and Byrne, 1992, p. 31).

Within the credit card arena, American Express faces competition from Visa, MasterCard, Discover and, of course, income and checks. During the 1980s, the company issued its personal credit score card, the Optima card, which offers cardholders the exact same rewards as credit history cards from competitors. There's an annual fee to your card, but preferred consumers pay as small as 12 percent interest on outstanding balances, compared to rates as high as 18 and 19 percent for bank credit rating cards (Woolley, 1992, p. 65). The new bank card suffered financial issues during the 1980s, however, and posted losses of more than 155 million during 1991 (Spiro and Byrne, 1992, p. 30).

Marshalls and T.J. Maxx proved a challenge to American Express, which had to fend off a move by the retailers to stop accepting the card in 1991. Both retailers entered into negotiations with American Express following both had tested not accepting the card at many of their locations. As a result of the negotiations, both retailers chose to continue accepting American Express (as well as Visa and MasterCard). Right after the incident, American Express announced a decrease inside the top rate that tiny retailers pay. To qualify, retailers must have less than 20 million cash in charges annually, and transmit their charges electronically. In return, their rate dropped from 4.5 percent to 3.98 percent.

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