2. Competitive strategy and digital business strategy

2. Identify competitive strategy and digital business strategy the company has followed and provide recommendations/suggestions with clear justifications (week 2 topic).

According to Michael Porter, competitive strategy is the search for a favourable competitive position in an industry, with the aim to establish a profitable and sustainable position against the forces that determine industry competition (Porter, M. 1988 p.1).

MICHAEL PORTER’S COMPETITIVE FORCES MODEL

Traditional competitors - American Express operates in a dynamic and highly competitive sector with strong competitors, in order to continue to be able to compete the company should build sustainable differentiation by adding value to their customers this can be by continually simplifying customer experience and by personalising rewards/incentives.

New Market entrance - The banking industry continues to be an oligopolistic industry but there has been a significant increase of technology companies as new entrants in the banking sector. In order to fend off new market entrants American express should continue to increase their digital innovation capacity as technology will continue to change the banking sector.

Substitute products and services - With the increased credit and payment options available to customers such as Buy now pay later, PayPal and the many credit card providers on the market, it is important for American express to continue to increase their utility by creating value that goes beyond their product by deeply integrating themselves into consumers’ day-to-day lives.

Customers - The bargain power within the banking sector is high due to the many substitutes available to customers. From personal experience, customers are often quick to mention, moving to competitors when unsatisfied. Surely the internet also plays a big role in the bargaining power of customers as it allows them to have easy access to a variety of choice and information, and an easier application process.

Suppliers - American Express relies on suppliers to provide them with material for their cards, office appliances, the various software’s the company uses and so on. The company's wide brand recognition gives them great bargaining power with suppliers which in return benefits AmEx in terms of prices, quality and flexibility. American Express has a highly customer centric digital business strategy which is executed through their website, across social media channels, TV ads and influencers. The company understands that customers search, compare, share and shop 24/7 and therefore the best customer experience is required in order to give customers the best online experience. The digital business strategy used helps cater to exceeding customer expectation through their vision of providing the world’s best customer experience every day, this is implemented by focusing on the language essential, which is to keep all digital communication simple and clear, to always talk about customer needs, and no the companies need, to be human, to use the customer’s language and not the companies language, and to make it feel real. Furthermore the businesses digital strategy ensure to highlights the companies promise of providing powerful backing.

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Although American Express has a good external digital business strategy it is recommended that the company improves their internal digital business strategy in order to streamline documentation process as often times are unable to access customer document when needed resulting in having to contact the customer to resent document that is already in hand of the business but a different department as this causes frustration to the customer and employees.