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Indonesian Expansion of Financial Products Retailer - Coursework Example

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The paper “Indonesian Expansion of Financial Products Retailer ” considers it a promising strategy for COF, due to rapid industry's technological changes, short-lived commodity life cycles, and borderless markets promoted by globalization, stable political climate and market's steady growth…
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Indonesian Expansion of Financial Products Retailer
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Download file to see previous pages As part of its international expansion strategies, the Capital One Financial Corporation (COF) has decided to venture into the Indonesian market. This report aims at expounding the company, proposed strategy for the market entry in the Southeast Asia region. 
COF was started by Richard Fairbank and Nigel Morris in 1988 branching off from Signet Banking Corp. It later expanded in 2005, acquiring the Hibernia National Bank of New Orleans and the North Fork Bancorporation of New York in 2006, while Chevy Chase Bank was purchased in 2008. The global financial crisis resulting from the subprime mortgage market adversely affected the company and it subsequently sold off its affiliate, the GreenPoint Mortgage to stem the losses (Goldfarb and Appelbaum, 2008). Nevertheless, COF needed a $3.56 billion federal stimulus loan in late 2008 to regain stability but was able to repay by mid-2009 (Capitalone.com, 2010). 
COF international expansion started in Canada mainly focussed on the credit market business where like in its domestic US operations it largely relied on direct mail marketing hence is the largest client for US Postal Service and Canada Post. The firm has also expanded in the UK market but has disembarked from the Spanish, French and South African markets after poor returns and acute competition.
COF has managed to survive the turbulent economic crisis despite its lack of diversification characterized by a monoline structure due to its foresight of accumulating a large capital base and a consumer database dubbed Information Based Strategy that accumulates client preferences thus is able to tailor its products according to their tastes. The company has diversified into other banking products though still managed to endure despite issuing a credit to the ‘subprime’ market although with very limited limits.
Although developing countries always strives to encourage foreign direct investments (FDI), Djiwandono (1998) argues that the injection of capital may lead to instability in the event the flow is stemmed or reversed during moments of global crisis. Similarly, the FDI exposes the local economies to the fragilities of the international markets.  ...Download file to see next pagesRead More
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