Strategy formulation and implementation: Service line credit card

• Main Author: Bautista, Johnny B.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2089
• Institution: De La Salle University

At the start of its operations, PFSI was determined to achieve its corporate objective of 10% Return On Investment by having 5, 00 cardholders with an average credit limit of PHP15, 000. An allowance of 10% was allocated for bad debt. In December 31, 1997, the audited income statement registered a net loss of more than PHP500, 000. A major portion of the loss was due to bad debts. The number of past due accounts, that is, unpaid accounts of over 60 days, started to climb at an alarming rate. This alerted management and the company intentionally decreased its efforts in card sales and card usage. Efforts were focused on improving collection. In June 1998, the company created the Accounts Recovery Department to collect past due accounts of more than 150 days. It also implemented new credit evaluation policies and procedures to decrease bad debt. In the last quarter of 1998, the company resumed activities to increase card sales and card usage. It re-launched direct marketing activities and conducted an information campaign to pre-need sales associates regarding the opportunities available through the credit card. Furthermore, the branch offices were furnished marketing materials and sales paraphernalia to increase the awareness of the customer base. The corporate objective of a 10% ROI remains the same, but the company has modified its strategies to ensure that this objective is attained. The company intends to strengthen its presence in selected areas to make local residents more aware of the credit card. It has increased the incentive package for sales associates in order to be more competitive in the industry Today, the company is more cautious in evaluating application. Collection activities are intensive and other collection channels are now available. The company intends to achieve its corporate objective by using the generic strategy of cost leadership. It plans to implement the specific corporate strategies utilizing its branch offices as marketing and customer service channels and improving basic credit evaluation and collection. The company will draw on the industrys threats and opportunities, and its strengths and weaknesses implement its strategies. It will tackle the threats of increasing unemployment, rising inflation, and gaining acceptance of the electronic cash (e-cash). It will take advantage of the opportunities it can reap from rising population, passing of the Credit Card Fraud Bill, increasing popularity of the Electronic Commerce, and the changing perception of loans among Filipinos. It will deal with its weaknesses of lacking experience in the credit card business, obtaining data on customer purchases, and evaluating the performance of its sales associates and convert them into strengths. It will harness its strengths on its database of customers, network of nationwide officers, numerous sales agents from affiliated companies, and its competitive commission structure for sales associates to protect itself from the threats present in the industry. Through these strategies, the company expects to attain its objectives and reach its corporate vision of “seeing Filipino families enjoy a good quality life made possible through excellent products and services which contribute to national progress.