In Photoshop, I've got in my character menu Horizontal and Vertical scaling. In Illustrator I don't have it, but I need it. I know I can stretch the entire text-box in AI to simulate character scaling, but that doesn't apply to the following cases:
EDIT: I do realize that to stretch an individual character, the text can be outlined, and the character can then be transformed; however, I'd say this should be a last resort, since it's irreversible, and changing the text afterward requires a complete redesign.
Illustrator has horizontal and vertical scale options just like Photoshop. But because Adobe are... special... they thought it would be fun to hide a lot of their settings and leave no clue that they are there.
Open up the flyout menu with the button at the top right of the character settings window. Choose "Show options", which is Adobe speak for "Stop hiding the tools I need, you crazy people". This shows the boxes for text scaling, as well as moving text up and down from the baseline, character rotation, language and things like superscript/subscript, underline, strikethrough, etc.
About half the Illustrator windows have useful tools hidden behind "show options" like this, and you need to "show options" each one individually.