Alliance Data System Corporation Essay Sample

Paper Type:  Essay
Pages:  7
Wordcount:  1831 Words
Date:  2022-11-22


Alliance Data System Corporation is an international company which offers data-oriented marketing solution. The company offers marketing services to numerous companies worldwide. Its success has been attributed to different factors, some of them emanate from within the firm, and some are external. Alliance Data System Corporation has employed diverse systems to run their daily activities to ensure that the demands of their clients are met without any complaints. It is worth to note that, when a firm is set up, there are numerous factors from the surrounding the environment which will either affect the company positively or negatively. The following are the surrounding factors which influence the company.

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Demographic Segment

This is the surrounding of the business which is determined by the socioeconomic status. The environment in which alliance data System Corporation was set up in was friendly to the business idea, and it welcomed it, this made the business to flourish and proper thus spreading out to other locations.

Economic Segment

For a firm to flourish, it must ensure that the environment in which it is set up in is economically endowed, this will ensure that the clients to be served by the firm are available. Alliance Data System Corporation is situated in a place surrounded by companies which are financially endowed, and they need their products to be marketed in the global market. This served as a great stride of Alliance Data Company towards their success. Banking institutions present within the proximity of this firm made it possible for the company blossom since clients who needed their services and had no money could take loans from the bank.

Political/Legal Segment

Every business operates within a legal framework put in place by the existing government in the area of operation. Governments have a role in playing in controlling the environment under which business is set up. Taxes imposed by the government plays a significant role. Taxation imposed by governments on companies or products influences the forces of demand. It is noted that the revenue paid by the company in the fourth quarter of 2017 increased from $2.11 billion to $4.88 billion. This had a negative impact on the profitability of the firm. There was a notable increase in the charges for marketing services in Alliance data System Corporation. The rise was meant to cover the money lost by paying an increase in revenue.

Policies put in place by governments to regulate immigration have a significant impact on businesses. In the United States of America for instance, the serious debate on immigration policies have elicited different responses. Some experts have argued that foreign and illegal immigrants from Mexico have strained business systems in the states, on the other hand, the presence of the immigrants have expanded the market for goods and services marketed by Alliance Data System Corporation.

Socio-Cultural Segment

It encompasses several factors that are associated with a perception among the target market segment. Ethnicity and other cultural trends in a particular group of people in the society can influence the marketer's decision and company that produces required services. In the US for instance, online marketing was not common before but currently is the leading marketing platform. This shift is attributed to the increasing number of people accessing the internet using phones. Through the internet, one can check what he or she needs to buy and make an order without being available physical at the place where the products are.

Education and language within the environment of the business play a major role in the development of the business. The surrounding population has been enlightened on the importance of internet marketing. With the enlightenment on how to use this platform, the company has expanded its territories thus making a profit.

Technological Segmentation

After the start of Alliance Data System Corporation, there has been an emergence of other firms offering the same services. This is attributed to the advancement of technology. The company which has incorporated advanced technology in running its business activities is likely attracting more customers as compared to the ones using obsolete technology. For instance, a customer looking for an insurance company for the property like vehicles, houses and other high-value possessions will opt for more advanced technology companies that those that are less technological. They will be willing to pay a premium for the service that is fitting their desires and preferences (Base et al., 2019).

Global Segment

Diversity creates diverse preferences in terms of needs and wants of the customers. Companies should do a thorough screening of potential countries before they identify the potentially viable market for the products and services they offer. Analysts will use some indicators to classify different countries as either go or no go at all. Those countries that may meet some of the requirements may be categorized as countries of interest.

With the aid of technology, marketing services have been globalized, such that when one is in Canada, he or she can order for anything in Australia through internet market and the goods will be delivered to the desired destination with an appropriate cost.

General Environment Analysis

The presence of the competitor will drive the industry to make responsible decisions that can respond to the competitor's mode of operation. Serious analysis of the competitor is made before any decisions are made. A customer is also an important element considered as a driving force of a firm. The needs and preferences of the customers require processes that avail the products and services in a manner that the customer will be satisfied. This increases the chances of loyalty to the company. In general, driving forces alter the behaviours of the industry, thus requiring firms to respond accordingly (Chauhan, Chauhan & profile, 2019). Technology like the use of the internet in the business world has enabled companies to streamline their operations effectively, reducing costs of operations and thus meeting most of the customer requirements

Driving Forces

In every business organization, there are both internal and external factors driving towards success. Internal factors are manipulated by the company management to fit into the demands of the potential and existing customers. The external factors, on the other hand, influences the operation of the firm in various ways and in some instances, the organization has little influence over them. The environment under which firm operates has a legal framework that always varies from place to place.

Description of the Industry

Alliance Data System Corporation is an organization which centres around encouraging and overseeing collaborations between its customers and their clients through different appropriation channels, incorporating into the store, lists, and on the web. Its services include the approval and settlement of exchanges offers and other information with the purpose to offer the desired service or goods to the client (Edwrds, Shirrod and Callahan, 1996)

Depending on the prevailing conditions of the market on a particular date, the transacted services in the organization tend to vary, for instance on 2/19/2019, the shares of the firm exchanged was 387,480 as compared to 595,900 shares which are always transacted, this shows that the prevailing conditions in the market were not favourable.

Income Statement (In Thousands)

  • Total Revenue 7719400
  • EBITDA 2061200
  • Operating Income 1645500
  • Net Income 788700
  • Revenue per Share 138.59
  • EPS from Continuing Operations 14.1
  • EPS - Net Income - Diluted 14.1
  • Share Outstanding 55400
  • Weighted Average Shares Outstanding - Basic 55700
  • Weighted Average Shares Outstanding - Diluted 55900
  • Earnings per Share - Basic 14.17

Industry Dominant Economic Features

The most pronounced economic features of alliance data System Corporation are the market size/revenue, competition, profitability, and the life cycle according to 2017 report the company's revenue was $7.719 billion. This was equivalent to 1.3% increase from the previous year. The strategies which have been put in place by the company anticipates having an increase in their income at the rate of 1.1% for the next three years. By 2022, the projection of the industry revenue is $23.345billion. The net income of the firm currently is $7.87 billion. The market survey conducted by the market experts projects continued profit in the firm for the next five years (Edwards et al.,1996). This is a positive sign to the firm, and they will have enough time to survey what they should incorporate into their system to ensure that they do not make a loss even after the elapse of five years of profit as estimated by market researchers.

Currently, the firm has employed 11 analysts to carry out the market research to ensure that there notable profit within the industry.

Market Size

Market analysis is a detailed process that entails collection of data collection that helps in choosing whether the company's product anticipated to be producing will meet the needs of the customers, the forces of demand and supply regulate variation in the size of the markets and the net product sales. In 2017, the share outstanding in Alliance Data Corporation stood at $55.4 million. Taking into consideration the upward trend of marketing services there is an expectation of more increase in the shares of the company as more people would love to join a growing business opportunity.

Market Growth Rate

This is the speed at which the market is expanding. As mentioned earlier, the corporation grew by1.3% over the last two years at an average rate of 1.2%. The market is projected to expand and diversify at an approximate rate of 1.1% annually for the next three years. This appreciation is primarily linked to the surge of premium services offered to a firm with special needs. Analysis of the market suggests different trends which the company has to heed in order to register good returns in future.

Industry Trends

Customer loyalty programs is one of the latest trends in the industry. The company is using incentives to ensure that he retains the existing clients. This system is vital in this business era since new firms offering the same services in the market are arising and if Alliance Data Corporation does not find a way to maintain their customers they will lose them hence the collapse of the business (Stewart, 1994). The organization needs to adapt to the ever-changing environments if they must survive. Any business that does not respond to the trends cannot survive the competitive world. Companies should respond to market risks and innovate way to adapt to the changes in the industry. The organization should have mechanisms that quickly allow them to adapt to the environment to tackle an opportunity or any treat that may arise.

The Five Forces Analysis

This part focuses on the five forces operating in the alliance data system corporation. These forces include:

  1. power of suppliers,
  2. new entrants threat,
  3. power of buyers,
  4. the intensity of rivalry
  5. power of substitute products.

Threat of new Entrance

In recent years, there are new players who entered the market to compete with the Alliance Data; they include Capital one and Santander. These firms offer the same services as alliance data. If the existing does not incorporate the emerging trends in the way of delivering services, new firms will overtake them in the market.

Power of Suppliers

Power of suppliers means the pressure suppliers can put on enterprises by increa...

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