In the following report, I will address issues surrounding the success of Capital One, such as:

„h Does Capital One enjoy a competitive advantage?

„h How was competitive advantage achieved?

„h Why were the opportunities identified by Signet / Capital One first exploited by a relative outsider -- a small regional bank under the guidance of consultants rather than bankers?

„h Is the advantage sustainable? Can other banks erode the advantage?

„h What are some of the other applications of Capital One's information-based strategy?

Does Capital One enjoy a competitive advantage?

„h The existing banks felt that they were achieving economies of scale with their large customer base and did not want to change their structure.

Is the advantage sustainable? Can other banks erode the advantage?

Capital One does enjoy a competitive advantage, the source of which lies in the company's organizational structure, talented employees, and their Information-Based Strategy followed by test and learn. Yet, as noted previously, the opportunities in the market were not impossible to identify by opportunistic outsiders, just as the sources of Capital One's advantage are easily identifiable.

a company that emerged from a Great Idea of the founders Rich Fairbank and Nigel Morris, definitely enjoy a competitive advantage. A competitive advantage arises when a company outperforms the competitors in its market, in that the firm's product does not only create positive value, but it creates more value than its competitors. Capital One's competitive advantage is evident in that the bank has been outperforming most of its competitors in terms both of market share and of margins. Also, Capital One's stock price has more than doubled since it's 1994 IPO, significantly outperforming both the market as a whole and the banking sector.

„h By increasing their customer base, banks were able to spread high fixed costs across their large number of accounts, thus enabling them to lower prices through economies of scale.

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