Case Study AFPSLAI MBEAB Extension Office

1. Case StudyAFPSLAI MBEAB Extension Office Instituting Improvement for an Upgraded Business Setting By: Simplicio B Lumantas Jr & Sandra G Dofitas MBA-Ex11

2. SUMMARY Who: AFPSLAI Where: MBEAB, Lapulapu City When: March 18, 2009 What: Turn out of customers in an extension office

3. PROBLEM/ISSUE • This case study is about the low turn-out of customers at the extension office of the Armed Forces and Police Savings and Loan Association (AFPSLAI) in Mactan Air Base, Lapu-lapu City.

4. KEY CHALLENGES • The study aims to identify the reasons behind the low turn-out of customers at AFPSLAI's extension office in Mactan Air Base, Lapu-lapu City. • To find ways to attract more customers to patronize AFPSLAI products in the area.

5. SCOPE • This study is limited only to the AFPSLAI extension office in Mactan Air Base, Lapu-lapu City and does not include other extension offices of AFPSLAI in the country.

6. INTRODUCTION

7. ABOUT AFPSLAI • A private, non-stock and non-profit savings and loan association established and registered with the Securities and Exchange Commission in 1972. • This P36.6 billion (at year-end 2007) organization is supervised by the Bangko Sentral ng Pilipinas.

8. ABOUT AFPSLAI • To date, there are 21 branches and 72 extension offices nationwide with more to be established in strategic locations to serve more than 408,800 members from the AFP, PNP, BJMP & BFP to include their retirees and respective dependents.

9. MISSION OF AFPSLAI • To promote the culture of savings and responsible borrowing among members and to make available to them at reasonable cost a wide range of products and services in order to uplift their economic well-being and improve their ability to serve the nation and society.

10. FACTS

11. FACTS • Since the establishment of the extension office in 2003, earnings in terms of loans have been minimal than projected. • There are apparent competitors in the area where it is located.

12. FACTS • Some other loan institutions in the area catering to the same customer base attract more customers than AFPSLAI. • This extension office is about a 30-minute ride away from the main branch in Cebu City

13. FACTS • Average number of approved loan application at the extension office is only about 25-30 per month, a very low number considering the large customer base in the area. • Average number of served customers for the overall transactions is 600 - 700 per month • Other loan institutions in the area offer full service to its customers.

14. FACTS • POTENTIAL MARKET IN THE AREA (the whole Mactan Island)-About 2500 personnel coming from the following: PHILIPPINE AIR FORCE - 60% PHILIPPINE NATIONAL POLICE – 13% Retirees & Pensioners from the AFP AND THE PNP – 11% PHILIPPINE NAVY – 7% PHILIPPINE ARMY – 3% BUREAU OF FIRE PROTECTION – 3% BUREAU OF JAIL MGMT AND PENOLOGY – 2% DEPENDENTS – 1%

15. SUMMARY OF FINDINGS

16. SUMMARY OF FINDINGS • The AFPSLAI extension office in Mactan offers very limited service to its customers as compared to other loan institutions in the area. • Limited office hours- only 4 hrs daily • There are two personnel assigned in the office to serve its clientele but one is currently detailed in the main branch.

17. SUMMARY OF FINDINGS • The office is sometimes left closed when no other employee is sent to takeover in the absence of the Mactan personnel • Tellering is only done every Wednesday. • There is a limited amount allowed for withdrawal and deposits of savings.

18. SUMMARY OF FINDINGS • Strict compliance of AFP Policy on Single Borrower’s Limit (SBL) and other requirements • The EO uses an off-line/stand-alone system for member’s data inquiry purposes only. • Loan applications are forwarded to the main office for approval and usually takes about 2 – 3 working days to be approved

19. SUMMARY OF FINDINGS • Customers opt to transact at the main branch due to the limitations of services in the extension office • Recommendations based on feedbacks from customers had been raised by the extension office personnel to management but were not taken into action

20. RECOMMENDATIONS • Offer more services to customers such as daily tellering. • Extension office should be on-line with its main offices in Manila and Cebu • Pre-processed loan application and its respective supporting documents be faxed to the main branch for approval & further deposit the loan proceeds to the borrower’s passbook/account

21. RECOMMENDATIONS • Additional officers to serve the clients. • Offering of innovative products peculiar to the customers in the area. • Conduct of agressive marketing to customers thru continuous information drive focusing on AFPSLAI's strength and wide range of products. • Provide a Civilian Field Rep (CFR) to follow-up the transactions gathered during the marketing drive

22. CONCLUSION • Customer satisfaction and convenience are the keys to capture the market in the area. • Some limitations on the services does not serve the purpose of the office’s existence with the presence of competitors in the area. But the policies that is beyond the control of the management may also be a hindrance to capture the market.

23. CONCLUSION • Management has to give weight on the recommendations and suggestions that are coursed through the personnel in-charge by clients and allow the extension office to implement improved procedures without sacrificing the internal control. • Limited tellering services is the most common complaint of the clientele and must not be taken for granted. A client who intends to make multiple transactions (ex. cash withdrawal and Loan application) may prefer to transact in the main branch rather than in the EO.