Chase Sapphire is a rewards credit card offered by JP Morgan Chase Co that is a part of the financial services industry in the US. The card offers its users the ability to collect points with their purchases and reap benefits from those points. The PESTLE analysis of Chase Sapphire covers the dynamics of the financial sector in the US and the effect of business environment on the performance of the company.
Political Factors
The US is regarded as having overall stable political environment, which experienced few events that caused short term disruption to this solidity. However, there were no long term conflict or violence outbursts in the region that hinted at the possibility of an unstable political foundation. Chase Sapphire has been able to grow due to the continued political stability.
The policies related to credit cards and regulations for managing the financial services are important. The guidelines provided by the government are used to define the framework within which the credit card offers can be developed. In addition, the tax policies of the government affect the credit card policies as the deduction of taxation is conducted under those policies.
Economic Factors
The economic progress of a country determines the demand for credit card and the ability of the people to maintain acceptable credit score. During recession, people are struggling to manage the household expenses and there is a likelihood of increasing debt and missed payments. In such cases, the financial service industry is disrupted as there is risk of non-payment.
GDP growth and decline indicate the degree of development of the financial sector. Since Chase Sapphire is focusing on the affluent customers, high degree of economic stability is important for the company as it would create opportunities for expanding customer base. When people are able to gain higher income, they are expected to invest in financial services.
Chase Sapphire has been able to flourish despite inflation due to its points and reward system. It is offering cash back offer which is deemed as a favorable option during inflation as the users can regain some portion of the amount that has been spent (Holzhauer, 2022). However increasing inflation may require the users to reconsider their budgetary decisions.
Another economic factor that affects the financial services is the level of interest rate. A high interest rate discourages the customers from using credit services, while a manageable interest rate is more likely to facilitate users to engage in financial transactions. Chase Sapphire has an interest rate of 20%-27%, which users can avoid by making payment within deadline.
Social Factors
The consumer loyalty has become a challenge for the financial industry as people find it easier to shift from one service provider to another. Based on the rewards system and the associated perks, Chase Sapphire aims to target the preference of the customers for a credit card that allows them benefits and also has lower cost as compared to other companies (Shell, 2018).
Chase Sapphire has been able to establish a unique position in the market by introducing a credit card for the affluent people belonging to Generation Y segment. Since this section of the population has the highest ratio of people, the launching of the credit card was aligned with the needs of these customers.
The focus of the company was on developing a product that the millennials found appealing. As evident through the number of customers, Chase Sapphire has been able to achieve this goal. The use of an introductory bonus and travel miles has appealed to the people who were finding it difficult to have access to credit cards which offered such benefits.
Increased spending in the domain of traveling is beneficial for the firm as the reward points are calculated based on the miles. Any major event that changes the social dynamics is also taken into consideration by the company for making decisions. For instance, during the pandemic Chase Sapphire the customers were offered flexible payment schedules and fee waiver (Gravier, 2022).
Technological Factors
The consumer data protection and privacy is of critical importance and it requires presence of robust IT system. Chase Sapphire has established a secure domain for maintain customer data privacy and reduce the chances of information breach. Moreover, it is investing in the development of digital presence of the card through social media platforms and mobile app (JPMorgan Chase & Co, 2023).
Technology is required to enable the user to connect with the service without any disruption. Availability of IT infrastructure facilitates the people to use credit cards for managing their payments. Chase Sapphire has been able to incorporate technology as a part of the operations allowing the customers to make payments digitally and keeping the track of their payments.
JP Morgan that is managing the business operations of Chase Sapphire uses updated technology to understand consumer trends and analyze the available data to identify any possible risks (Davenport & Bean, 2019). Artificial Intelligence also allows the management to examine customer profile and align the services with customer needs.
Legal Factors
The consumer laws have to be deftly followed by the company when managing the credit card operations. In addition, the laws governing the credit card industry have to be taken into consideration while devising different services and offers for the card holders. The issuance of the card is another area where law needs to be considered to conduct a fair analysis of eligibility.
The company needs to follow the US employment laws as well while managing its business operations. The compensation offered to the employees, fair hiring and equity based workplace treatment are some of the areas of consideration for Chase Sapphire.
Environmental Factors
The management at Chase Sapphire focuses on sustainability and encourages the customers to be a part of the recycling efforts by providing them with the prepaid envelope. The card holders can use that envelope for sending the old metal cards to the company instead of discarding the cards themselves (DeMarco, 2022). This lowers the risk of harm to the environment.
Conclusion
Chase Sapphire has positive growth prospects due to the stable political and economic situation in the US. Moreover, targeting millennial segment and offering rewards has benefited the company to develop a loyal customer base.
References
Davenport, T. H., & Bean, R. (2019). AI At JPMorgan Chase—Breadth, Depth And Change. Forbes. Retrieved from https://www.forbes.com/sites/tomdavenport/2019/11/12/ai-at-jpmorgan-chasebreadth-depth-and-change/?sh=c93bb8a110bb
DeMarco, J. (2022). How to destroy a metal credit card. Bank Rate. Retrieved from: https://www.bankrate.com/finance/credit-cards/how-to-dispose-of-metal-credit-card/#:~:text=Mail%20it%20back%20to%20your%20issuer,-Sending%20your%20expired&text=According%20to%20a%20representative%20from,proper%20disposal%20in%20the%20future.
Gravier, E. (2022). Chase cardholders could have payments deferred, fees waived, credit lines increased if affected by coronavirus. CNBC. Retrieved from: https://www.cnbc.com/select/chase-coronavirus-assistance/
Holzhauer, B. (2022). How using a cash-back credit card can fight against inflation. CNBC. Retrieved from: https://www.cnbc.com/select/how-cash-back-credit-card-can-fight-against-inflation/
JPMorgan Chase & Co (2023). Sapphire benefits. Retrieved from: https://account.chase.com/sapphire/benefits#:~:text=Each%20Sapphire%20card%20comes%20with,Protection%20and%20Extended%20Warranty%20Protection.
Shell, A. (2018). Chase Sapphire: New checking account offers credit-card-like perks. USA Today. Retrieved from: https://www.usatoday.com/story/money/2018/09/13/chase-sapphire-checking-account-offers-sapphire-credit-card-type-benefits/1291936002/