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Economics of Business Strategy - Case Study Example

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Economics of Business Strategy

The managerial practices of the company are more products oriented so as to facilitate the customers, and provide them with different opportunities for making most out of their purchasing power. The company has also restricted itself from applying such policies where chances of bankruptcy are dominant, and have shifted towards consumer service. The management in particular operational management related to the decision making is widely practiced and encouraged by the company, the employees at the mediocre level, are involved with decision making, however such employees work within certain monetary limit. All this has made the company achieve laurels, 'We continued to strike what we believe is an appropriate balance between achieving our net income growth targets and investing in our future. In 2004, we delivered record earnings while increasing spending on marketing, promotion, rewards and card member services by 30 percent from a year ago. This increase came on top of a stepped-up level of investment spending in 2003' (Audit Repot 2004).
American Express has incorporated different management strategies for optimization of their performance, and economic gain. The bank has implemented several different policies that minimized and reduced the indirect cost (goods and services other than raw materials, or "direct" expenses). The company's adopted policy has been to reduced and control expenses, such as office supplies, computer equipment, express delivery, and telecommunications. 'Our new survey and drafted policies shows that we as banking giant see the light at the end of the tunnel for an economic turnaround' (Anr Williams, senior vice president and general manager, U.S. Middle Market, American Express Corporate Services). The general manager further added that, 'At the same time, financial executives say that bank is challenged by rising expenses, and they're searching for new ways to control them - regardless of the economic climate'. The bank is involved in Expenses Management, and focused mainly upon corporate cost-saving strategies. The company believed that cutting indirect costs and generating new revenue sources were equally important strategies in improving the financial health of their organization.
The bank has encouraged and motivated their employees to participate enthusiastically towards compliance to those policies, the employees are urged to submit timely expense reports, desired employee adherence. 'Over the past several years, the institution have made strides in taking control of spending for travel, office supplies, computer equipment and other indirect expenses', (Anr Williams). 'But the push for profitability in these tough economic times has prodded the institution to expand their cost-control expertise and implement more effective solutions - such as new technology and innovative payment systems'. The web technology has emerged as an effective solution to cater for the surging expenses, the technology provided improved control and greater efficiency, and is being adopted by all the departments of the institution.
The institution has adopted following practices for improving expenses management, and variety of strategies have been implied for streamlining the processes. The effective strategies are ...Show more

Summary

American Express has adopted substantially a comprehensive model of motivation and has applied it within all administrative levels. The efforts applied by the management and the employees depends upon the magnitude of the reward, with addition of the perceived energy that an employee believes is fundamental for making the chances of receiving the incentive brighter…
Author : waltonprosacco
Economics of Business Strategy essay example
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