Environmental Sc Specific Environment Essay
The existing competitors of American Express include Discover Financial Services, Visa, Inc., and MasterCard Worldwide. Unlike American Express and Discover, Visa, and MasterCard do not finance, which means these companies are intermediaries and “they don’t directly finance credit card transactions” (Thangavelu, 2015). That being said, Discover is more in American Express’ strategic group because they both issue cards and work within the same strategic group, so American Express and Discover compete more directly.
Not only are there current rivals in every industry, there is always the threat and opportunity for potential entrants to come into the industry. But not just anyone can enter an industry easily, as there are barriers to entry that will prevent some competitors to entering a market. American Express has worked hard to establish a competitive advantage and create a product differentiation. Because American Express is in the closed-loop network, being the issuer and acquirer, they attract more of an affluent customer base who are more likely to spend more on their transactions. Unlike other card companies, American Express relies on their primary source of revenue being the discount fee that they charge the companies that accept its cards. “These fees are charged as a percentage of the charge amount processed for the merchant” (Forbes, 2014). With that being said, this means American Express…