The Launching of Credit Card in Romania - Essay Example

The bank which is launching the card is Alpen bank. The objective of the research is to find out whether the launch of credit card into the country will be worth and whether such a launch will be able to generate the sufficient amount of revenues so that the feasibility of the new product is proved in terms of entry-decision. SWOT analysis is carried out to find out the relevant opportunities and issues about the establishment of new credit card business. Market positioning of the bank is analyzed for the successful establishment of the credit card business.

SWOT Analysis Strengths The strength of the bank comes from its affluent customers. Majority of customers of the bank belong to the upper strata of the society. Having affluent customers also means that they are more frequent with the use of credit card and the purchase amount is also high. Weaknesses The major weakness of the credit card business comes because of the low growth potential. The growth potential of credit card business is very low in Romania compared to other emerging markets. Lack of consumer experience in terms of management of credit card and related monetary transaction is another weakness, because of which majority of customers opt for cash transactions.

The country has suffered a three year long recession which has affected the life style of the common people. Consumers have become price sensitive and opt for cutting budgets with the objective of saving money. This is a weak link for the credit card business because it is a general perception among consumers that holding credit cards leads to higher amount of purchases as compared to cash purchases. Another issue in credit card business is that, most of the times credit card is used for exclusive cash withdrawals rather than using it for real purpose that it purchase.

Apart from this, since credit card business is relatively new and unknown to the customers of Romania, huge investments will be needed with respect of advertising, direct marketing and support infrastructure. Opportunities The opportunities from this credit card business can be explained in terms of the political, social and other related factors affecting the country and the credit card industry as well; Political- legal policies, procedure and other corporate obligations in the country are not very stringent, which will help in the smother transaction of the business.

Economic- the economic environment of Romania has improved since 2006, after the country entered into the European Union. Since then, the microeconomic trends have been positive and with the increasing income, the disposable income of the households has also increased. This shows the opportunity of the credit card business to bank on the increased economic conditions of the country. Socio-cultural- with the increase in the economic status, it is expected that one third of the Romanian population will prefer branded products.

This will increase the overall use of credit cards in the country. Technological- with the advent of globalization, more are more companies have stated to market their products and services into more emerging and developing markets. As the availability of technology has become cheaper and readily available, the credit card business can tap on this opportunity. Since credit card business will need technological assistance, the company can use the latest technology available to gain a sustainable competitive advantage over the competitors.

Environmental- the use of credit cards is totally free from creating environmental hazards. The use of online transactions will also decrease the use of paper which will influence the environment in a positive manner. Threats Similarly, the threats from this credit