Case Presentation

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Case Presentation American Express
Interactive Prepared by Bankim Desai Bernard
Djomani Anjana Nayak
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Agenda

• ? Description
• Analysis
• Diagnosis
• Prescription
• Prognosis

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Description - History
American express founded in 1850 as an
Express Delivery Company.
Introduced the Worlds first travelers cheque in
1891.
Entered into travel business in 1915.
Travel Related Services Banking (AMEX
Bank) Financial Services (AMEX Financial).
Currently
The largest business travel agency in the World.
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Description Corporate Structure
1997 numbers Revenue 17.76 billion Net
income 1.99 billion of employees 73,620
American Express (AXI)
AMEX Financial Advisors
Travel Related Services
AMEX Bank
Relationship Services
Small Business and Consumer Travel
Consumer Cards
TRS International
Corporate Services Group
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Description Corporate Services Group
AXI Expense
AXI Travel
AXI Purchasing
Corporate Services Interactive (CSI)
American Express _at_Work
B2B Commerce Network
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Analysis Porters Model
Threat of Substitutes Click and order solutions
Suppliers
Buyers
AXI Intense competition within brick mortar
Shortage of travel counselors (added pressure
from other Industries). High cost to recruit and
train Travel counselors.
Reduced Commission From Airlines Pressure from
corporate Clients to reduce travel Cost.
Threat of New Entrants ?
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Analysis AXIs Goals/Objectives
Maintain their leadership in the travel services
industry.
Provide increased value to customers.
Secure profitability.
Given industry trend, a transformation is needed
to achieve goal.
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Analysis Transformation Chronology
1997
1998-1999
1999
2001
1915
Brick mortar Business model
AXI travel launched
Expense Management Purchase Solution launched
American Expense _at_work launched
MarketMile launched
Extend
BEGIN new line of business or create
new business models
ADD functionality and features or improve
performance
Enhance
ADD new products and services or
ENTER new markets
Expand
LEAVE business or market or drop offering
Exit
American Express Interactive business model kept
evolving.
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Analysis Transformation Strategy
Key Stakeholders
AXI
Capital
Return
CSI Sonia Sharpe (General Manager)
Corporate Traveler, Arranger, CIO
Ariba, Commerce One
Concur Technologies
GetThere, Ventro
TRADEX, ec-content
Microsoft
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Analysis Transformation Strategy
Technological Alliance
AXI
Capital
Return
CSI Sonia Sharpe (General Manager)
Online Travel Services
Online Travel Services
Expense Management
E-Purchasing
B2B Digital Market Place
Corporate Traveler, Arranger, CIO
Ariba, Commerce One
Concur Technologies
GetThere, Ventro
TRADEX, ec-content
Microsoft
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Analysis Transformation Strategy
Dedicated Entity Formed
AXI
Capital
Return
CSI Sonia Sharpe (General Manager)
Part of the team Co-located in Redmond, WA.
Expense Management
Online Travel Services
B2B Digital Market Place
E-Purchasing
Corporate Traveler, Arranger, CIO
Ariba, Commerce One
Concur Technologies
GetThere, Ventro
TRADEX, ec-content
Protect CSIs entrepreneurial essence.
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Analysis Transformation Strategy
Customer involvement in Service development
AXI
Capital
Return
CSI Sonia Sharpe (General Manager)
Corporate Traveler, Arranger, CIO
Ariba, Commerce One
Concur Technologies
GetThere, Ventro
TRADEX, ec-content
Microsoft
Early Intense involvement of future customers
in service definition reduces risk of
application rejection. Key players in customer
organization are better prepare for their
stewardship role.
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Analysis Ingenious Marketing Strategy
Pre-announcement one year prior to
launce. Lock-in customers.
Set the technological standard.
Speed to market. Alliance with a
major firm that has reach to almost all desktops.
(Microsoft). Implement AXI travel as
a hybrid product. (keep existing
phone Based services). Special
promotions (mileage rewards) to sustain a high
level of online solution usage.
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Analysis Transformation Strategy
Profitable Business Model
Cost
Revenue

• Reduce cost to
• produce ticket by 50.
• ? Reduce processing time.

• Implementation fee.
• Consulting fee.
• Transaction fee.
• ASP hosting fee.
• Maintenance fee.

CPT Index 100 70 50
Average Ticket 1994
After Cost Improvement 1998
Interactive (AXI Travel) 2001
Pricing model designed to motivate customers to
shift their current Practice to the online model.
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Analysis Challenges Solutions

• Convert the hybrid offering to a complete online
  
• reservation system and keep momentum
• offer loyalty reward program.
• How to manage very volatile technology context
• through alliance?
• Drafting a future of CSI with American Express.
  (?)

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Diagnosis
Strategic dilemma role of CSI and e-business
venture process at AXI
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Prescription

• Keep CSI as a separate entity.
• Use CSI as a technological sensor and
  incubator for AXI.
• Integrate the e-ventures that fit with the
  existing AXI structure.
• Have a proactive portfolio management of the
  myriads of alliances that
• do not fit with basic AXI structures.

Environment
Capital
CSI Proactive portfolio management
AXI
Returns technological sensing
TRS
AMEX Bank
AMEX Financial
Integrate the business that fit
Inject equity in proportion with strategic
importance
Need to hire special talent.
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Prognosis

• AXI will remain on top of technology trends
  affecting
• travel related services industry structure and
  players
• profitability.
• The myriads of alliances built through CSI will
  require
• AXI to appoint special talent to handle the
  needed
• portfolio management activity.

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