Citigroup Essay

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Citigroup is one of the most diversified financial services companies in the world. It was incorporated in 1998 through a merger between Citicorp and Travelers Group. It operates globally and has established competitive advantage in its global presence, broad distribution, valuable brands, unmatched scale, and efficiency and product breadth. The company operates through these operating divisions: global consumer, corporate and investment banking, global wealth management and alternate investments.

Citigroup gained its global presence by aggressively acquiring other organizations, especially in Asia and Latin America. At the same time, Citigroup invested in strategic alliances in order to enter China’s emerging credit card market. Citigroup has an asset base of over $1.8 trillion. In 2007 the company was ranked first in Forbes 2,000 global companies and 8th in the Fortune 500. Citigroup has more than 200 million customer accounts. Achieving economies of scale provided Citigroup with competitive advantage and allows it to capitalize on opportunities across geographic markets.

Citigroup has invested in increasing its product portfolio and establishing a strong global brand name. Citigroup offers individual and institutional clients a diversified range of financial products and services. Customers range from small and medium-sized enterprises to fund and securities services as well as government services. This wide range of services enhances the company’s cross-selling opportunities and increases its resistance to temporary downturns in demand for one product segment or business. CEO Vikram Pandit claims that the Citigroup brand is unparalleled in the world. Moreover, Citigroup has managed to achieve economies of scale and scope. It claims to have the largest pool of talent in the financial services business. Through continuous investment in talent and human capital, Citigroup has managed to expand its operations globally.

Although Citigroup has established a well-recognized global brand name, it has reported a decrease in profits since 2005. The net profit for fiscal year 2006 was $21,538 million, a decrease of 12.4 percent over 2005. Moreover, the company’s net profit margins also declined during the same period. The net profit margin declined from 29.4 percent in 2005 to 24 percent in 2006. This decline in operating profits indicates ineffective cost management as well as problematic leadership in the management of operations. Furthermore, a decline of this value restricts availability of resources and prohibits pursuit of growth projects.

Moreover, Citigroup reported a decline in net interest margins. Citigroup’s net interest margin in 2006 was 2.65 percent, down 41 basis points from 2005. This decrease in the margins of the group may show declining profitability of the lending business of the company. Net interest margin declined primarily due to a shift in customer liabilities from savings and other demand deposits to certificates of deposit and e-saving accounts. This decrease in net interest margin caused a decline in the group’s net interest revenues during fiscal year 2006.

Citigroup has also been in the news for unethical business behavior. The company was linked to the Enron scandal. Its bankers had advised and assisted Enron along the way to its initial success, and made huge profits. They also advised Enron when it had already started on the slide to bankruptcy, making large sums by organizing the deals that deceived the investing public. Citigroup was also forced to shut down its private banking operations in Japan due to improper trading practices and lax anti–money laundering procedures. The Financial Services Authority said that the bank had brokered deals on such items as artworks without properly informing customers about the possible risks. This had an effect on the reputation of Citigroup in southeast Asia and Citigroup was required to close all its offices in Japan.

Citigroup has managed to overcome these associations with corruption by refocusing the corporation to become a socially responsible organization. This has allowed it to rebrand its name and image to create a competitive advantage in the markets in which it is operating. This strengthened Citigroup’s presence globally as it was able to bring its global reach together with its local depth. The transformation of the organizational culture and its detachment from the corruption scandals aims at improving teamwork, encouraging respect, and reinforcing a supportive culture that drives performance in order to enable Citigroup to be the financial services industry’s employer of choice.

Citigroup was weakened by but survived the 2008 financial markets tumult.


  1. Citigroup, (cited March 2009);
  2. Louise Cooper, “Scandal-hit Citigroup Rebuilds its Image,” BBC News, March 14, 2005, (cited March 2009);
  3. Eric Dash, “Blue-Light Specials at Citigroup as its New Chief Plans a Revival,” New York Times (May 9, 2008);
  4. Datamonitor, “Report on Citigroup’s Company Profile,” March 2008, (cited March 2009); C
  5. arol Lomis, “Can Anyone Run Citigroup?” Fortune (v.157/9, 2008);
  6. Steve Maguire and Nelson Phillips, “ ‘Citibankers’ at Citigroup: A Study of the Loss of Institutional Trust after a Merger,” Journal of Management Studies (v.45/2, 2008);
  7. “The Real Scandal at Citi,” Newsweek (February 26, 2007);
  8. Christopher C. York, Andra Gumbus, and Stephen Lilly, “Reading the Tea Leaves—Did Citigroup Risk Their Reputation During 2004–2005?” Business and Society Review (v.113/2, 2008).

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