Leadership styles and different communication styles.

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Organizational Behaviors

Lack of proper communication and feedback from leaders

Prepared By

Vinod Krishnan, ID # 90434

Western International University

MGT 340/Organizational Behavior

Instructor: GEORGE STRAGALAS III

TABLE OF CONTENTS

The Issue 1

Industry Context 1

Organization's Overview 4

Organization's Hierarchy Structure 5

Leadership Hierarchy Chart 6

American Express's current strategy in historical context 7

External Environment Assessment 8

Internal Environment Assessment 9

Strategy Evaluation 10

Recommendations 10

References 12

APPENDIX I 13

APPENDIX II 14

The Issue

Different leaders have different leadership styles and different communication styles. The lengthy lateral hierarchy leadership structure of American Express makes it even more complicated for the employees to get proper communication and feedback from their top leaders. Decisions affecting the employees are taken at different hierarchy level and are not properly communicated to the affected employees.

The lack of proper communication from the top leaders of the company and the individual departments to the employees of the company has been one of the reason for lesser job satisfaction and that in turn accounts for increased turnover and absenteeism and reduced productivity.

An overview of American Express's history, coupled with a review of its organization hierarchy structure and its leadership style to a more balanced leadership style is shared.

Finally, an external and an internal environment assessment of the leaderships and communication styles needed to succeed in the credit card industry is analyzed to offer an evaluation and recommendation for advancement in the credit card industry.

Industry Context

In the early 1850's travel was done by horseback, carriages, wagons, trains and by steam ships. Transportation of small packages of gold, silver was proving to be very expensive. The transportation of packages from one end to the other end of the United States was profitable. American Express was founded on March 18, 1850 at a mansion house in Buffalo, New York; it was no means a start-up company in the modern sense. Three men who established American Express- Henry Wells, William G Fargo, and John Butterfield were old hands in the Express business. Each was engaged in his own Express enterprise, and the three enterprises were competing for business along the routes in New York. As the railroads grew, these men could see the frontier and the raise of demand for Express services. They were not just at the right place at the right time, but they were shrewd businessmen who could backup their ambitions with the capital necessary to achieve some degree of scale in Express business. The three enterprises merged to form American Express.

Initially, American Express was not in the market of financial services though most of its business partners were banks. Wells partnered with the banks to introduce American Expresses money order. The "Money Order" launched by American Express in the year 1882 received tremendous response from the consumers. Approximately 12,000 money orders were sold in less than a month. The "Money Order" concept provided American Express an opportunity to build alliances with railroads and drug stores and to enter into the European market.

Berry introduced the "Travelers Check" sold in denominations of $10, $20, $50 and $100. American Express launched the concept in July 1891. Before the end of the year, American Express had sold 248 Checks with a total transaction amount of $10,000. To date American Express reports approximately $6,000,000 in annual Travelers Check sales.

American Express started to flourish in the market of travel and tourism. It started branches all over the world with the travel concept. It opened branches in Australia, France, Germany and the other European countries.

In 1910 Francis F Flagg led American Express into the international trading market thus creating the first foreign exchange transactions in the United States.

Although the banking industry encountered a setback, American Express was able to sustain its sales through money orders.

During the World War I, American Express had to close most of the European branches. American Express tired to serve the people to the maximum extent it could. The organization had to lay off most of its European employees, and consequently revenue was reduced.

Post-World War I, American Express reopened all its European branches. American Express started the first military banking facility. Services offered were loans, savings account, demand accounts and certificates of deposit. Within a short span, there were 194 military banking facilities established. The company once again started thriving. The traveler's checks, money orders and foreign exchange transactions bought a dramatic change in the revenue.

October 1st, 1958 American Express launched its first credit card after many debates. Prior to the launch, the American Hotel Association was the first organization to offer American Express an opportunity to generate 150,000 cards with 4500 participating establishments. American Express added another 40,000 people to its base of future card members.

The word got into press that American Express was planning to issue its own card, the company was inaugurated with request from potential card members, many of whom wanted cards with lucky members. Unanswered mails began to pile up at head quarters, yet the company still had not decided what kind of fee the card might carry, and all of the critical operations-application processing, credit approvals, sales, billing and collections-were still being established. Even so, by the launch date of October 1, American Express had issued more than 250,000 cards carrying a fee of $6 and there were 17,500 establishments signed to accept the American Express card. The $6 fee was decided upon because it was $1 higher than the fee for diners club. (Massengill, 1999, p.250).
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Accomplishing the launch on time was a Herculean feat, and it was not without its drawbacks. One senior executive at the time said, "We have made every mistake we could possibly have made in getting it going," Launching the card was expensive; start-up expenses in excess of revenues in 1958 amounted to $2,498,166. Establishments signing up to accept the card were catalogued-not in sophisticated database- but on 3x5-inch index cards. Workers in the mailroom at 55 Hudson Street struggled to deal not only with correspondence but also with cash, since many applications included a $5 bill to cover ...

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