American Express Annual Report Analysis
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One of America's oldest corporations, American Express has changed its mission, vision and corporate strategy many times over its 150 year history. Formed originally as a freight forwarder by Wells and Fargo (along with other partners), the company has since become notable for its participation in the "stored value" marketplace. Examples of this are traveler's checks, which the consumer pays for at the time of purchase and which "store" the value of purchase until they are used. American Express is now recognized as a charge card company as well as a travel services company. During the 1980s and 1990s the company went through a series of changes in strategy which were eventually completely undone, and the company is now refocusing its operations on its core business units. This research considers the company's performance, the industry, and the company's management, and whether this company would make an attractive investment option.History and Nature of American Express' Business American Express was begun in 1850; the traveler's check was invented in 1891. The first American Express card was issued in 1958. The traveler's check and the American Express card formed the staple of American Express business for the period leading up to 1980. Travel Related Services (TRS), as the two came to be known, were the core business of the company. The American Express card was not a credit card in that the balance had to be paid each month. Also, unlike bank c
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The Industry
Harvey Golub has taken a different approach to the company than his predecessors. His comments in 1996 regarding the business policies of MasterCard and Visa helped to launch a lawsuit by the Department of Justice against the two companies which may well change the entire credit and charge card industry. Golub is not shy about expressing his desire to compete more directly against MasterCard and Visa, and has noted that outside the United States, 43 banks work directly with American Express (within the United States, banks are prohibited from entering into such agreements with American Express due to MasterCard and Visa bylaws) ("Change in Mastercard," 1999, p. 16).
In addition to the federal lawsuit, major retailers have filed a lawsuit against Visa and MasterCard challenging debit card acceptance policies. Debit cards are used by customers in place of credit cards, and result in funds being deducted directly from customers' checking accounts rather than being charged to a customer's credit card account. These cards are sometimes referred to as "electronic check cards." Often, transactions on these cards are guaranteed by the customers' credit card accounts so that if there are nonsufficient funds in th
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Approximate Word count = 5832
Approximate Pages = 23 (250 words per page)
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