4 Business Domestic Environment Jennifer Gately American Public University BUSN310: Business Theory


Business Domestic Environment

Jennifer Gately

American Public University

BUSN310: Business Theory

Dr. Gerald

October 19, 2022

Citigroup Inc.

Citigroup Inc. is a multinational financial service corporation and investment bank in America. Citigroup was established as a result of a merger between the financial conglomerate travel group and Citicorp in 1998. The corporate headquarters are located in New York City (Cable News Network, n.d.). The merger was a significant step of the two corporations, which was considered an actual global business model and financial supermarket that was feared, emulated and envied.

Summary of Citigroup Financial Services Industry

Citigroup Inc. operates in the financial and banking sub-industries, offering a wide range of financial services to corporate customers. The company’s services include corporate banking, investment banking, cash management services, products, and retail brokerage. it has been into business since 1998 up to 2009 when the company official announced it slipped into two new companies, Citi Holding and Citicorp (Moore, 2017). The attribute that makes the company the least admired financial company is the massive loss that the company suffered in 2008.

Domestic Government Financial Regulations

Regulations might either causes short-term disturbance to financial services companies, or benefit financial services companies in the long term. The united state regulations involving financial matters are aimed at addressing the issue of anti-usury lending, fraud prevention, money laundering and privacy, among others (Ball et al., 2020). These regulations include Regulation P, which ensures that consumers’ private information is protected. The Bank Secrecy Act of 1970 prevents money laundering, the Truth in Saving Act, the Expenditure Fund Availability Act and the Financial Institutions Regulatory Control Act of 1978.

Effect of Government Regulation on Business

Some government regulations benefit financial service companies like the Securities and Exchange Commission, which ensures market security. Such regulations are essential in attracting more investors into the company and ensuring the company is financially stable. Other regulation does not benefit the financial company and instead causes loss. Such government regulations include environmental regulations like the Environmental Protection Agency. Some of these regulations are a barrier to a financial company where the company has to incur the licensure and compliance costs to avoid trouble with regulatory agencies like the Consumer Financial Protection Bureau.

Business Theory

David Besanko, in microeconomic theory, provides an argument on the relationship between public policy and competitive strategy. Besanko and other economists suggested that capital structures and financial services are different. Reducing entry barriers like government regulation increases deposit interest rate and reduces loan costs, leading to high economic growth (Besanko & Cui, 2018).

Ways to Reduce Regulatory Barriers

Citigroup Inc. can overcome these barriers by building trust by shifting from an augmented finance company to an autonomous driven company more aligned to regulation. This will ensure that the company wins the trust of consumers and the industry regulators. Companies should view regulators as an asset important in helping the business eliminate regulatory barriers. Besanko, in his arguments, notes that reducing barriers is the divine way to high economic growth that translates to companies’ development and growth.


Ball, K., Canhoto, A., Daniel, E., Dibb, S., Meadows, M., & Spiller, K. (2020). Organizational tensions arising from mandatory data exchange between the private and public sector: The case of financial services. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2020.119996

Besanko, D. A., & Cui, S. (2018). Regulated Versus Negotiated Access Pricing in Vertically Separated Railway Systems: Online Appendix. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3308127

Cable News Network. (n.d.). World's most admired companies 2010: Worst In Management Quality. CNNMoney. Retrieved October 13, 2022, from https://money.cnn.com/magazines/fortune/mostadmired/2010/best_worst/worst5.html

Moore, M. T. (2017). Redressing Risk Oversight Failure in UK and US Listed Companies: Lessons from the RBS and Citigroup Litigation. European Business Organization Law Review. https://doi.org/10.1007/s40804-017-0087-x