Capital One

(Part 2)

 

Question 3: Define Capital One’s business-level and corporate-level strategies and evaluate each for their potential for continued success.

Capital One’s business-level strategy is demonstrated in its auto industry. COAF combined with ONYX Acceptance Corporation (ONYX) was a complementary strategic alliance where each entity’s resources came together to create a competitive advantage for Capital One’s auto industry.

Capital One’s corporate-level strategy is demonstrated by its large portfolio of different products it has acquired. By Capital One moving from just a credit card issuer to a true banking competitor enabled it to be able to fund its own growth internally.

 

Question 4: Evaluate the strategic fit of Capital One’s recent acquisitions.

 

North Fork Bancorp is the most recent acquisition with Capital One. The move has given the firm a higher level of diversification that is needed in the credit card industry. In 2005, Capital One made three acquisitions ONYX Acceptance Corporation, eSmartloans, and Hibernia National Bank. Capital One Strives to diversify their portfolio. The firm uses moderate related diversification strategy to combine their resources to run their businesses. The purchase of Onyx helps strengthen their relationship with dealerships. The only issue is the automobile industry is currently very weak. There are many dealerships that have closed due to the recession.

Capital One’s most recent acquisition was of the Washington, D.C. metro area bank. Chevy Chase Bank. With this acquisition, I feel is a good strategic fit since Capital One is headquartered in the DC area, in McLean, VA. As reported on the Chevy Chase website the following information:

We are striving to make the integration of Capital One Bank and Chevy Chase Bank as convenient and rewarding as possible for you. As one of the top 10 banks in the country, with nearly 1,000 branches and over 2,000 ATMs in Maryland, Washington, D.C., Virginia, New York, New Jersey, Louisiana and Texas, we look forward to bringing you even greater convenience, service and value in the future. (ChevyChase.com)

I feel that this move will only lend to strengthen Capital One as a true banking institute.

 

Question 5: Describe the key strategic issues raised by the company’s acquisition strategy.

 

A strategic issue raised by the company’s acquisition strategy was its ability to keep pace and fund all its businesses accordingly. This was a huge motivator for Capital One to move into acquiring traditional brick and mortar banks. This would allow Capital One to fund its endeavors at a cheaper rate than through its internet baking that was more costly.

 

Question 6: Assess Capital One’s international position.

 

Capital Ones international position seems to only exist in the UK and Canada though once it held offices in Spain, France and South Africa but had decided to pull out as progress wasn’t being seen according to the text (Hitt, M., et. al. 2009. pg. 65). Michael Hitt and gang tell us that “Capital One is the United Kingdoms seventh largest credit card issuer, and among the top ten of the same in Canada” (Hitt, M., et. al. 2009. pg. 66). Hitt, et al., (2009) reported the following concerning Capital One’s international position, “acquired a home equity brokerage company in the United Kingdom, the Hfs Group, to strengthen its Global Financial services (GFS) subsidiary in the British market”. (p. 65). I feel that like all other acquisitions Capital One has made smart calculated and strategic moves that have helped it to climb to the top of the banking industry.

 

References:

 

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2009). BUS 499: Strategic management: Competitiveness and globalization, concepts and cases: 2009 custom edition (8th ed.). Mason: OH: South-Western Cengage Learning.

No author. n.d. Acquisition new. Online. Retrieved March 9, 2010.

 

 

Capital One