1.
What kind of global information infrastructure will be
critical for Mondex to be successful?
In order to
determine what global information structure Mondex
needs to acquire someone must understand the nature of the business. Mondex is competing
in the electronic payment industry that is a new market with little or no
standards. The established payment
systems such as credit cards have made a significant impact on how consumers
buy. Also debit cards manage to
penetrate this market. Mondex is not necessarily trying to compete with credit
cards but tries to establish a market niche for an electronic payment system
that are used for smaller purchases. There
are a couple of issues that Mondex has to address in
order to establish a global information infrastructure. One key issue is to establish a working
understanding of local regulations in terms of how the market for electronic
payment systems is regulated. Even
though Mondex is trying to establish a global
presence by using a British model it is essential to fully understand the
global market. Think globally but act
locally is a motto Mondex should live by. Since there are different currencies involved
the issue arises how can Mondex be transferred or
used across borders? Is it feasible to
have a payment system for small amounts that work internationally?
2.
Does Mondex raise any privacy
concerns in the
Yes, Mondex has made the claim in the past that each transaction
was supposed to be anonymous. Howerver, it turned out that this is not the case. In several cases the payment could be traced
back to the buyer. In June 1996, the Fair Trading Office noted the following
“It appears the customer is identified to the trader, as in paragraph seven above
and, ultimately, the bank, by the 300 previous transactions. Each of these will
soon be superseded by further transactions and drop off the end of the list.
These can be monitored by the bank and could be used for marketing purposes.
This is the audit trail and ultimately could be sold to business users for
third party marketing.” This was of
course damaging to Mondex. One way Mondex
responded to this was not to claim that the transaction were anonymous. Mondex argument also goes in the direction in claiming
since the transaction is safe and secure there is no need for the retailer to
further look into personal data. Mondex has been a poor communicator in terms of addressing
these issues. Mondex
needs to ensure that all the transactions should be a close to anonymity as
possible. The card issuer should not
keep data on the client or should ensure that the existing data is secure.
3.
If you were to give some advice to Mondex
at this point, what would it be? How do you manage a firm that is simultaneously
a small startup and a major global player? What are the critical success
factors for management?
In my opinion Mondex is trying too much too fast. Mondex is a small
start-up company with in my opinion a usable product that has not been tested
in detail in one market. Also Mondex is trying to establish itself on a global market
without realizing that each time Mondex is starting
an operation in a different country it has to face new issues. In order for Mondex
to be successful it has to understand the consumers better. As stated in the case, in each country the
reason for using Mondex is different and their seems to be very little correlation between the
countries in terms of why the Mondex card is used or
rejected. The critical success factor is
to gain in depth understanding for the different markets and market
segments. I think Mondex
is running the risk to spread itself thin and also does not seem to have a
solid understanding of its client base.
The management probably has to better understand why someone should use Mondex when there are literally hundreds of similar, maybe
less convenient but nonetheless similar cards in use today. Also, from a consumer perspective there is
little to be gained. The card needs to
be carried around just like cash. The
carrier needs to remember a PIN and loses all the money when the card gets
lost. There are literally no real
incentive programs for the card. Mondex has to establish a product identity where the
consumer understands that he/she can use the Mondex
card for a special purpose.
4.
Assuming that Mondex cannot be
effectively marketed globally due to the limited resources, what factors should
guide Mondex International in focussing
to market segments and what these segments might be?
Clearly Mondex is dangerously under funded with a global market
presence and little or product recognition.
Mondex’ key to success is to make the consumer
understand why it is not just another card in their wallets. Also, Mondex should
immediately get out of the internet business since nobody would be willing to
install a card reader if a credit card is just as convenient with a better
customer protection service. Mondex is in my opinion a product for a niche market. The Mondex card
could for example team up with gas stations or convenient stores or vending
machines. Since everyone uses a vending
machine and people are always annoyed not having the right amounts, the Mondex card would be ideal.
In addition, Mondex could save some basic data
on customer purchases an inititia a reward program, such
as “buy 10 cokes and get one free” so everyone would use it not only for
convenience but also because they are being rewarded.
5.
What risks are associated with the current hardware and
software design of Mondex?
There are a
couple of security issues with Mondex. The hardware for example can fail and the
saved information on the card is being lost.
The card could upload too much money or not enough money. In short there is the potential for data loss
and therefore loss of real money. In
addition, as with any software there is the potential that hacker figure out
the design and the software that is being used on the chip. This could cause major problems. One major argument made by Mondex security is that it would cost more to manipulate
the system than actually gaining from it.
However, this seems a little bit naïve, since the system has not been
extensively used for criminal entities to gain interest in it. However, I think as long as Mondex stays small in terms of market share, there is a
real chance that nobody seems will take interest in defrauding Mondex.