Firm Analysis: American Express Company

Firm Analysis: American Express Company Student’s Name Institutional Affiliation Introduction American Express Company ranks among the top global financial service providers mainly dealing with credit services. The company’s most selling products and services include charge and credit card products, expense management products and services, consumer and business travel services, and the traveler’s cheques. American Express Company is also involved in the provision of other pre-paid products and services, provides network services for B2B partners, marketing and trend analysis fee prices and also consultation services and customer loyalty programs. The company is considered among those doing well in the global market, with the major achievements being reached with how American Express is managed, operates, and dedicated to serving its clients. It has managed to redefine its strategies in the financial business field thus making the company remain relevant in the global financial market for a long period. The analysis of the American Express Company provided herein focuses on the strategic management and performance structure of the company that has been the steering power to its success in the global financial market. History and Background Information American Express Company was originally founded on March 18, 1850, as an American financial corporation, aiming at providing financial-related services to companies. It was formed through the consolidation of three companies with the same objective of enhancing services in the transportation of goods, valuables, and species in the designated places. The major routes of operation were the New York City, Buffalo, New York, and some points in the Midwest. The companies that merged to form American Express Company were the Livingston, Fargo & Company formerly known as the Western Express, Wells & Co, formerly known as Livingston, Wells & Co, and the Butterfield & Wasson Company. The American Express Company was first formed as an unincorporated association of investors with the headquarters located in New York. The investors were headed by Wells as the president of the company and Fargo as the secretary general. The company managed to flourish in the market under the management of these two founders. At the time the American Civil War was ending, American Express Company had managed to open about 900 offices in 10 states of America (Tikkanen, 2017). This attracted a high competition in the region, resulting in the formation of Merchant Union Express Company in 1866. The tough competition among these two companies in the American financial market resulted to their amalgamation in November 1868, forming the American Merchant Union Express Company which later in 1873 was renamed as American Express Company with the Fargo succeeding as the company’s president. Currently, American Express Company is leading in issuing of personal, small business, and corporate credit cards in most parts of the world. The most selling services of the company are credit cards, corporate and personal travel planning services, and tour packages. The company provides agency services for hotels and rental reservations in most parts of the United States and globally as well. Currently, the American Express Company is operating in more than 40 countries with the highest rating of the customer's positive responses. The company is also currently producing its own business-related magazines through the newly established publishing division, which is also considered critical in the company’s journey of growth. Company’s Ownership, Shareholders, and Stakeholders The ownership of the American Express Company is mainly defined in terms of the number of shares owned by the stakeholders. For instance, 67.65 percent of the company is considered to be institutional ownership, which greatly influences the price movement of the shares in case of sell off or acquisition of the shares by the institution. According to the company’s shares profile of the year 2018, institution shareholders hold up to 49.32 percent of the total company shares, mutual fund holders has 37.07 percent, while the individual stakeholders have 0.74 percent of the company’s shares (CNN Business, 2018). This statistic indicates that the majority interest of the company is greater than typical figures for most companies within the Financial Conglomerates Industry. The smart money will, therefore, view this stock as an important holding of the company. The insiders of the American Express Company form an important group of stakeholders especially in formulating key decisions related to financial use of the company. The company has a significant figure of about percent of its shares owned by the members of the public. This size the retail investors to actively participate in policy formulation that influences returns by the company’s shareholders such as executive remuneration and directorate appointments. The company’s policies also provide the public shareholders with powers to decline proposed acquisition or merger that may not have a positive influence on the company’s profitability (Simply Wall St, 2018). The public companies also own about 17.62 percent of the total shares of the American Express Company. Most of these companies are mainly invested due to their existing strategic interest or interested in investing to enhance their capital gains. The increasing demand of public companies to buy shares in the American Express Company creates a need for further investigation of the impacts of the investing companies on the company’s strategic plans and the long-term returns of the shareholders. Functions of the Board of Directors and Company’s Leadership American Express Company is established under a very able hand of the board of directors and other leadership teams which ensures its success in the American and global market. The chairman of the board and the entire American Express Global Business Travel Greg O'Hara has significant experience in investing in the travel industry. Under the chairman, there is the Chief Executive Officer and the chief legal officer who is also the corporate secretary and the global head of mergers and acquisitions. The activities conducted by the global operation delivery team of the American Express company which mainly include GBT Traveler Care and the HRG Operations are held by the chief operating officer of the company. The president of the American Express Company is responsible for customer-facing organizations as well as the management of the sales and the clients. Other crucial responsibilities conducted by the company’s board of directors is the coordination of the company’s business development marketing, development of the technical architecture and product plan, organizations for global business consultations, business meetings and events and technology advancement within the organizations (Global Business Travel, 2019). These activities are assigned to the senior vice president of the corporate strategies, an individual with a vast knowledge in the designated responsibilities. The combined effort of all the members of the board of directors and the entire leadership of American Express Company have ensured the success of the company through their contributions in making sound business decisions and ensuring credibility, transparency, and devotion in their work. PESTEL Analysis of the Company The Forces that American Express Company has identified that have ensured its success in both the local and global market include political, economic, social, technological, environmental, and legal forces. The government intervention, for instance, is among the major factor to consider for the expansion of the business both locally and globally. For instance, the company has expanded its market by opening a new branch in North Carolina. The decision has been affiliated with the fact that the state government is offering lower tax rates for companies to enhance employment and productivity in the region’s economic activities. The United State is currently recovering from economic crunches experienced in 2008, which resulted in high credit losses among the service providers. From this experience, the consumers are adopting the culture of saving rather than borrowing money. The economic slump of the country in the year 2009 forced the American Express Company to cut down about seven thousand managerial level jobs. This was to facilitate the slashing of the cost of running the company with $1.8 billion. However, with the recovery of the U.S. economy, the company has managed to increase its sales with a large transaction volume of transaction of the American Express cards. Despite the experienced seasonal fluctuations of the state economy, the company has managed to retain high sales over the years and still hold a large number of employees especially at the managerial level. American Express Company have managed to maintain a close relationship with its consumers through the provision of personalized, localized, and community-tailored products. The production of the company is mainly based on sustainability rather than affordability of the products, a positive aspect that every consumer will focus on. The company has also managed to adopt modern technologies like the development of online networking websites. This technology has provided an effective medium for selling the company’s products and services through the online medium channels, a trend adopted by most of the U.S. consumers. Online transactions have created broader interactions with the consumers, enabling the company to develop new skills in offering services and developing loyalty schemes through mobile applications. The curre...