Case Discussion and Internet Exploration Questions

Closing Case Citigroup — Building a Global Financial Services Giant

Website — http://www.citicorp.com

Case Discussion Questions

What is the rationale for the merger between Travelers and Citicorp? How will this merger create value for (a) the stockholders of Citigroup and (b) the customers of Citigroup's global retail bank?
In 1997 the World Trade Organization brokered an agreement to liberalize cross-border trade and investment in global financial services. What will be the impact of this deal on competition in national markets? What would you expect to see occur?
Does the 1997 WTO agreement represent an opportunity for Citigroup or a threat?
How is Citigroup trying to build a global retail brand in financial services? What assumptions is this strategy based on? Do you think the assumptions and strategy make sense?

Internet Exploration Question

This case focuses on the rationale behind the recent merger of Citicorp and Travelers. In 1998, Citicorp and Travelers joined to create a company with annual revenues of $50 billion and assets in excess of $700 billion. Prior to the merger, Citicorp was one of the world's most global banks, and had spent 20 years building global distribution channels for its financial services. Travelers was the largest property-casualty and life insurance company in the U.S., but was essentially locked out of global markets. Prior to 1999, world markets were essentially closed to insurance products sold by foreign firms. However, on March 1, 1999, the World Trade Organization brokered an agreement involving over 100 countries that opened their banking, insurance, and securities markets to foreign competition. To take advantage of this opportunity, Travelers needed a global retail distribution system. Merging with Citicorp seemed like the ideal solution.

Travelers and Citicorp are now combined and are pursuing global markets with vigor. A key element of Citicorp's global strategy for its consumer bank has been the standardization of operations around the globe. This strategy has been effective and has helped Citicorp establish strong positions in many foreign markets. The combined company hopes to take this strategy to a new level with the addition of Traveler's portfolio of insurance products and services.

This case illustrates how quickly global markets can become available through a change in trade norms and regulations. Travelers is now exposed to tremendous global opportunities through the agreement brokered by the World Trade Organizations and its merger with Citicorp. Once a firm enters global markets, its mindset has to change from a domestic mindset to a global one. One way that the managers of a firm can accomplish this is by increasing their awareness of global issues on a daily basis. The Journal of Commerce is a daily newspaper that focuses on international trade and related issues. Visit the Journal's website at {http://www.JOC.com/}. Spend some time navigating the website and answer the following questions. First, what seems to be the principle mission of the journal? Second, would the top managers at Citicorp and Travelers benefit from looking at the journal on a daily basis? If so, why? Finally, what sections of the journal would be of most interest the top managers at Citicorp and Travelers? Explain your answer.

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