MEMORANDUM
 MBNA's
Earnings:
MBNA
is the largest independent credit card issuer in the world. Recently,
MBNA posted their profits for the last quarter of 2001. They earned
$524 million, a growth of 25% over the prior year. In order to stay
on top of the competition, MBNA is thinking of expanding into possibly
Canada and Europe. MBNA is expected to be one of the top 35 stock
performers in 2002.
Is There Any Reason To Be Concerned?
One concern with the company
is that its stock price declined 12%. Some people think that it is
nothing to worry about. MBNA has been through tough times before
and they have gotten through them. In fact, the decrease in stock
price may be good for investors. As long as the stock price is low,
it may be a good idea to buy some stock. MBNA has been a very successful
business. There are a lot of long time cardholders. This gives
it an advantage over its rival competitors.
Competitors Troubles:
A lot of MBNA's competitors
have been having a tough time lately. One example would have to be
Providian
Financial. Due to some account write-offs
and many cardholders failing to make payments, they received a decline
of 95% in fourth quarter earnings for 2001.
What About The Economy?
In 2001, over 2 million people
lost their jobs. Layoffs may stick around for a while. There
is a good chance that Alan Greenspan will vote to raise short-term rates
in order to hinder growth.
Consistency Is Key:
One thing that MBNA has going
for it may be the fact that they haven't changed management since they
started in 1982. They don't take many risks. As new companies
enter the world, MBNA has stayed constant and way ahead of these new companies.
Future Ambitions:
In the future, MBNA is going
to have to expand in order to keep up with the new technology and the competition.
One plan is to move into other foreign countries, outside of Britain.
At the moment, 10% of MBNA's business comes from Britain and Canada.
There are hopes that this global business will gradually rise to 25% of
MBNA's total business as they set up businesses in mainland Europe.
Comparison To Duncan's:
Duncan's Uncertainty Model
states whether a company has low or high dynamism, and whether a company
has low or high complexity. Dynamism is a term used to describe how
fast things change in respect to the elements around them. MBNA has
had the same management for the entire 20 years that it has been in business.
MBNA doesn't take too many risks either. MBNA has low dynamism.
There is a uniform style to MBNA. It is not complex. It does
the job that needs to be done, and plans out what it will need to do in
the future. I consider MBNA to be low/low in the model.
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