Capital One 1996 Annual Report Download - page 16

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Industry Choice
Drives Destiny
14
The fortunes of a company are tied to the fortunes of its industry. The path to profitability is smoother in
some industries than in others. Indeed, perhaps the most important determinant of a company’s profitability
is the structure of its industry—the competitive environment, the nature of the consumer buying decision, the
industry growth rate. And industry structures change over time, creating great vulnerabilities or opportunities.
Most companies take industry as a given and manage within the industry’s constraints. At Capital One, industry
is a variable. We have pursued credit cards because the industry is fast growing and profitable, and offers great
opportunities to apply our information-based strategy. But we are not a credit card company. We are a technolo-
gy-driven, information-based marketing company. We are actively working to take our strategy into selected
other industries which meet two key criteria: an attractive industry structure and profitable opportunities to
leverage our information-based strategy. Our management team, which includes many former strategy consul-
tants, constantly scans evolving industry landscapes in search of growth opportunities for Capital One. Exploit-
ing rapidly changing industry structures is an essential prerequisite to achieving sustained, profitable growth.