Visa
Strategy Report

Brian Shain
Angel Rojo
Nick Gentili
April 19, 2013

Contents
Executive Summary .................................................................................................................. 3
Company Background .............................................................................................................. 4
Financial Analysis .................................................................................................................... 6
Liquidity & Solvency ..................................................................................................... 6
Profitability & Shareholder Returns .............................................................................. 6
Stock Performance ......................................................................................................... 7
Competitive Analysis (Five Forces Framework) ..................................................................... 10
Internal Rivalry ............................................................................................................ 10
Entry & Exit .................................................................................................................11
Substitutes & Complements .........................................................................................11
Supplier Power ............................................................................................................. 12
Buyer Power ................................................................................................................. 12
SWOT Analysis ....................................................................................................................... 14
Strengths ...................................................................................................................... 14
Weaknesses ................................................................................................................. 15
Opportunities ............................................................................................................... 17
Threats ......................................................................................................................... 18
Strategic Recommendations ................................................................................................... 20

2

Executive Summary
Visa (NYSE: V) operates the largest payment network in the world. Consistently profitable, Visa went public in 2008 in the largest American IPO of all time, and since then, the stock price has appreciated by approximately 400%. Despite being tied heavily to consumer spending, Visa’s revenue has been growing at over 13% annually and is expected to continue to do so into the future.
Visa’s strengths lie in its financial solidity, numerous partnerships around the world, and ability to leverage its size in an industry that experiences economies of scale. Advancement in mobile and electronic payments as well as the expansion of credit and debit card usage in the developing world means there is ample opportunity for future growth. However, Visa does face challenges, such a recent antitrust lawsuit alleging Visa fixed prices. The world’s largest developing market, China, remains closed to Visa, and the Dodd-Frank Act has hurt Visa’s U.S. debit card market share along with posing numerous other risks to Visa’s core business.
The card provider and transaction processing industry is more competitive than ever before, with major card providers scrambling to develop the most advantageous partnerships and outbid each other for business. Bank consolidation and the advent of collective bargaining for merchants have hurt Visa’s position at the negotiating table and it must now accept lower fees. Newly popular electronic payment processing companies currently exist as complements to Visa’s business, but have the potential to become competitors in the future.
In order to