Capital One Environmental Forces

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Capital One Melvin Jackson Professor Shawn Richmond Sr. Seminar in Business Administration May 31, 2010 Identify and describe the key environmental forces that have immediate strategic implications for Capital One. Two key environmental forces that have immediate strategic implications are political and economic. Legislators have been rallying consumer support to reform credit card policies due to the failing economy. Since so many consumers are without jobs or have taken pay cuts in the last few years, the ability for them to repay their debts is severely diminished. Credit card companies had been charging outlandish interest rate. Several class action suits have been filed against Capital One and are still pending. Two…show more content…
Capital One, paid $520 million in cash and stock, has received a $3.56 billion investment from the Treasury Department as part of the government's effort to stabilize the banking industry. Capital One, a McLean firm, got Chevy Chase's 250 branches -- the wealthy region's largest branch network. Capital One has pursued a strategy in recent years of buying regional banks to get access to their deposits, which the company uses as a cheap source of funding for its credit card operations. Chevy Chase brought with it $11 billion in deposits, increasing Capital One's deposit base by about 10 percent. Sources said Capital One was attracted to Chevy Chase by the quality of its local banking operation and planned to wind down its national mortgage lending business. Chevy Chase was a risky acquisition for Capital One. Capital One would recognize a loss of $1.75 billion largely on the value of risky mortgage loans it acquired with Chevy Chase. The customer base Capital One has received as a result has grown tremendously. It seems that the first year of the acquisition has proven to be profitable and that Capital One made a wise…show more content…
One problem that can arise is the influx of issues that the purchased company was dealing with prior to the acquisition. There are some things that are only revealed once the merger has been completed. Capital One seems to be making well-calculated and conservative acquisitions. Assess Capital One's international position. Capital One does not have much of an international position. It has offices in the UK and Canada. The offices it held in Spain, France, and South Africa have been closed. Canada only operates in the credit card market and has been named one of Toronto’s top employers. The UK headquarters is located in Nottingham, England. The success that Capital One is enjoying in the US, Canada and the UK seems to be enough right now. The effort and resources necessary to become international would be too much to undertake right now in the middle of a recession recovery effort. References http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/What-the-new-credit-card-law-

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