Thursday, November 22, 2007

Western Union Empire Moves Migrant Cash Home
Published: NYT, November 22, 2007

Talk about an example of innovating across the whole business design (target customers; desired outcomes for these customers; value proposition in the context of competition; and value capture mechanisms including how to secure your position) to drive organic growth……..

WASHINGTON, Nov. 21 — To glimpse how migration is changing the world, consider Western Union, a fixture of American lore that went bankrupt selling telegrams at the dawn of the Internet age but now earns nearly $1 billion a year helping poor migrants across the globe send money home.

Migration is so central to Western Union that forecasts of border movements drive the company’s stock. Its researchers outpace the Census Bureau in tracking migrant locations. Long synonymous with Morse code, the company now advertises in Tagalog and Twi and runs promotions for holidays as obscure as Phagwa and Fiji Day. Its executives hail migrants as “heroes” and once tried to oust a congressman because of his push for tougher immigration laws.
“Global migration is the cornerstone of how we’ve grown,” said Christina A. Gold, Western Union’s chief executive.

With five times as many locations worldwide as McDonald’s, Starbucks, Burger King and Wal-Mart combined (a huge “hidden asset” to build from), Western Union is the lone behemoth among hundreds of money transfer companies. Little noticed by the public and seldom studied by scholars, these businesses form the infrastructure of global migration, a force remaking economics, politics and cultures across the world.
Last year migrants from poor countries sent home $300 billion, nearly three times the world’s foreign aid budgets combined.

Western Union’s dominance of the industry casts it in a host of unlikely new roles: as a force in development economics, a player in American immigration debates and a target of contrasting attacks.

Its unparalleled reach gives millions of migrants a safe way to transmit money, and may even increase the amounts sent. But critics have long complained about its fees, which can run from about 4 percent to 20 percent or more. And the company’s lobbying for immigrant-friendly laws has raised the ire of people who say it profits from, or even promotes, illegal immigration.
Western Union tracks migrants so closely that it has made pitches to illegal immigrants just released from detention camps. Its agent in Panama offered customers legal aid to keep them from being deported.

After settling a damaging lawsuit that accused it of hiding large fees, Western Union set out a few years ago to recast its image, portraying itself as the migrants’ trusted friend. It has spent more than $1 billion on marketing over the past four years, selectively cut prices and charged into American politics, donating to immigrants’ rights groups and advocating a path to legalization for illegal immigrants……….

………The Philippines requires each outbound migrant to attend a predeparture seminar. Western Union paid to offer migrants instructions on sending money home. “We tell them about the services of Western Union,” said Steve Peregrino, the marketing director in the Philippines, “with the basic idea of seeking out Western Union when they go abroad.” In and around the waiting room, reviews are positive…………
……….Western Union’s founders set out in 1851 to build the first telegraph giant. A decade later, they had linked the coasts, a feat celebrated in a Zane Grey novel and a Hollywood film, both called “Western Union.” Airmail and faxes left telegrams obsolete, and the company went bankrupt in 1992.

It emerged two years later with a focus on its money transfer service (its fundamental strength) and was acquired in 1995 by the Colorado corporation First Data. Flush times followed. Fueled by the surge in migration, international money transfers were growing by 20 percent a year.

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