Six Sigma, Sustainability & Innovation at American Express
This paper examines three strategic recommendations for American Express (NYSE: AXP) following a down year in 2015 marked by revenue declines, customer losses, and unfavorable exchange rates. The first recommendation addresses the application of Six Sigma methodology to the company's direct marketing program and credit quality assessment processes, two areas where measurable outcomes make the technique particularly effective. The second recommendation focuses on sustainability improvements, including remote work policies and waste-reduction initiatives. The third recommendation calls for the creation of cross-functional innovation teams designed to develop new products and revenue streams. Together, these three strategies offer American Express a structured path toward reversing its earnings decline and reducing its vulnerability to external shocks.
- Introduction: American Express Overview: Company profile, revenue figures, and business scope
- Six Sigma Analysis and Recommendation: Applying Six Sigma to marketing and credit assessment
- Sustainability Analysis and Recommendation: Remote work and waste-reduction sustainability initiatives
- Innovation Analysis and Recommendation: Cross-functional teams to develop new products and revenue
- Conclusions: Synthesizing all three strategic recommendations
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Each recommendation is grounded in the company's specific business context — Six Sigma is tied to direct marketing and credit assessment, not applied generically.
- The paper maintains a clear three-part structure that moves logically from process improvement to sustainability to innovation, building a coherent strategic argument.
- The conclusion synthesizes all three recommendations concisely, reinforcing how each contributes to reversing American Express's 2015 earnings decline.
Key academic technique demonstrated
The paper demonstrates applied business analysis: it takes an established management framework (Six Sigma) and maps it onto the specific operational characteristics of a real firm. Rather than describing Six Sigma in the abstract, the author identifies which company processes — direct marketing and credit quality assessment — have measurable outcomes that make them suitable candidates, showing disciplined scope-matching between theory and application.
Structure breakdown
The paper opens with a brief company profile establishing financial context, then devotes one section each to Six Sigma, sustainability, and innovation. Each section follows the same pattern: introduce the concept, explain why it fits American Express, and deliver a concrete recommendation. The conclusion restates all three recommendations and links them to the company's broader strategic vulnerability, providing effective closure.
Introduction: American Express Overview
The organization in question is American Express (NYSE: AXP), a major credit card and financial services firm. The majority of the company's business involves issuing consumer credit cards used to purchase a wide variety of goods and services. According to the company's latest annual report, it is also engaged in network services, merchant acquisition and processing, fee services, travel-related services, expense management products, and stored value/prepaid products. The company operates globally, but the bulk of its revenues come from developed markets, and in particular North America. American Express had revenues of $32.8 billion in 2015, down from 2014 levels, and net income of $5.163 billion, also down from prior years. The company's ROE and ROA both declined in 2015 relative to the two prior years (2015 Annual Report).
Six Sigma Analysis and Recommendation
Six Sigma is a management technique primarily used to improve processes — in either manufacturing or services — in order to reduce the error rate, with the long-term objective of reducing that rate to near zero. As described, the "fundamental objective of Six Sigma is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects" (iSixSigma.com, 2016). Initially, Six Sigma projects are fairly large in scope, because there are major issues that can be identified within an organization's processes. Over time, Six Sigma projects become more incremental in nature, finding minor ways to improve existing processes until the objective of near-zero error rates is achieved.
American Express has a few core competencies that distinguish it. One is marketing, because of the importance of ensuring that American Express cards are accepted in as many locations as possible. Six Sigma can be applied to marketing — direct marketers in particular have found Six Sigma techniques helpful because of the nature of the feedback they receive and how it allows them to easily quantify return rates. Amex conducts direct marketing, and therefore can apply Six Sigma techniques to this aspect of its business. The key is that Six Sigma can only be used where outcomes are measurable, which is why direct marketing is more suitable than other forms of marketing (Six Sigma Online, 2016). Finding new customers is an important part of the company's business.
The organization is also adept at assessing credit quality. This is a core competency for any lender, essential to ensuring adequate return and limiting bad debt. Assessing credit quality is inherently quantitative in nature and lends itself well to Six Sigma techniques. If American Express can implement Six Sigma in both its direct marketing program and its credit quality assessments, it will be able to acquire more new customers, lower the cost of acquiring each customer, and ensure that new customers carry higher credit quality. Lowering customer acquisition costs while also reducing bad debt charges would improve the company's bottom line.
References
2015 American Express Annual Report. Retrieved April 17, 2016.
Boyar, S., Maertz, C., Pearson, A., & Keough, S. (2003). Work-family conflict: A model of linkages between work and family domain variables and turnover intentions. Journal of Managerial Issues, 15(2), 175–190.
iSixSigma.com. (2016). What is Six Sigma? Retrieved April 17, 2016 from https://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/
Six Sigma Online. (2016). Six Sigma and its use in marketing. Retrieved April 17, 2016 from
Always verify citation format against your institution’s current style guide requirements.