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Eastern Credit Union

EASTERN CREDIT UNION 35

EasternCredit Union

Whatis a Credit Union?

Acredit union is a simple yet compelling organization. A group ofpeople join together to save money, make loans to one another atreasonable rates of interest. Compared to other financialinstitutions a credit union is unique because it follows a philosophyof self help, member control and economic democracy. The members arecommitted to improving themselves socially and financially.

Unionbackground

Establishedin 1973, after Bermudez Employees Credit Union was dissolved, EasternCredit Union is a major credit union in Trinidad and Tobago. Itsinitiators included twenty-two people from a biscuit company. Itsmain operations were initially based in El Socorro, San Juan andAranguez where businesses such as Flavorite, Holiday Foods and YKKZippers, among others, existed. By accommodating the businesses inits fold, ECU was able to establish a growth and market consolidationapproach, which are still identified with the union up to today(Williams 2013, P. 444). This move enabled the union to establishbase in the whole country inculcating major values and ideals thatare an embodiment of Trinidad and Tobago.

VisionStatement

Wewill be the premier financial co-operative regionally with aninternational presence, exceeding members’ economic and socialexpectations.

MissionStatement

Weare a dynamic financial co-operative delivering superior qualityservice to our membership in accordance with sound businesspractices.

Themission is aligned to the firm’s strategic plan as it calls forquality delivery of services to its members. The firm plans toachieve productivity and business success factors through a strategicplan of pricing and marketing strategy.

Corporate objectives

Financial objectives

Non-financial objectives

The firm aims to reduce loan delinquency among members

The firm aims to enhance its image as an outstanding union

The firm aims to enhance its financial position in the credit union sector

The firm aims to take part in community contributions and co-operative engagements

The firm aims to grow its revenue and loan provision by enhancing its structures

The firm seeks to offer advisory services to members and to train them on investment issues (Chouthi 2012, P. 1).

The firm aims to support its members financially

Criticalsuccess factors

*adequatecapital access,

*excellentmember and customer relationships,

*innovationand value addition on cooperative products, *constant technologicalreviews and integration

Uniqueresources

Thecooperative has assets exceeding US $ 1.5 billion with ordinaryshares exceeding the one billion mark in US dollars.

Corecompetencies

Thecooperative possesses excellent human resource procedures andpolicies in additional constant adherence to PEARL standards fieldsin which it has received major accolades in the cooperative industry(ECU 2012, P. 1). In addition, the cooperative boasts of a strongcommunity development program, which puts it ahead of the rest.

Financialratios

FinancialStatements are historic summaries drawn from records of the creditunion. These statements indicate how resources have been managed inthe past as well as current financial conditions.

Financial Statements Analysis is a method of evaluating the CreditUnion’s operations and financial position by studying financialratios.

2012

%

2011

%

Profitability

55.36

54.32

Return on Average Loans

12.51

12.57

Return on Total Assets

6.0

6.0

Return on Investments

2.35

1.75

Growth in Total Assets

8.65

7.8

Growth in Shares

8.25

8.6

Growth in Loans

5.4

5.5

Growth in Institutional Capital

8.9

7.3

Delinquency

.51

.74

Loans to Total Assets

69.7

71.9

Loans to Shares

94.2

96.74

ROE

12.51%

12%

ROA

6.21%

6%

Liquidity Ratio

18%

14%

Profitability

Boththe gross and net profit margins have improved significantly as aresult of growth in sales over the year without any drastic increasein cost

AssetTurnover:

Theratio indicated how efficiency assets are used to produce sales,figures slow a small difference but remained the same after roundingoff computation. The company role has improved over the year theratio indicator its has now gathering money from long term investmentwe expect this to continue as more returns in building depositsinvestment.

Liquidity:

Liquidityis a company’s ability to pay bills when they are due and to meetunaccepted needs for cash. All ratios that relate to liquidityinvolve working capital because debts are paid out if workingcapital. shows an increase in both current andquick ratios. The primary reason for the above indicated that assetgrew at a faster rate than current liabilities.

Thecompany debt to equity ratio has generally remained constantindicating that has enough current assets tomatch are liability. The company believe the level of financialresource is good but may choose at any time to raise additioncapital. Through debt or equity financing to strengthen its financialposition, facilitate growth or flexibility to take advantage ofbusiness opportunities that may occur.

MarketShares

BCG

Stars QuestionMarks

Loans

Investments Medical

LincuDebit Card

CashCow Dogs

EasternCredit Union Analysis

Thepestle analysis shows the factors, which the company has no controlover that affect the success of a company

PESTLE ANALYSIS

Political

  • Potential change of current administration

  • Knowledge exchange policies

  • Change management leadership style

  • Develop 3-5 year strategic plan

The Company may see changes in its policies concerning loan provisions and availability

Economic

  • Recession

  • Competitive advantage maintenance

  • Knowledge exchange Interest rates on loans need to reflect that of sector.

  • Interest rates on Investment will be low as the country is coming out of recession.

  • Unemployment rate has reduced but labour remains a challenge as more persons are getting educated and seeks jobs with greater benefits.

  • Inflation

  • Unemployment, more skilled workers

Economic growth will stimulate the development and success factors of the firm while recessions will influence service delivery of the firm negatively

Social

  • Culture

  • Changing demographics

  • Social networks

  • Availability of ready financing for those who can’t afford which allows the less fortunate to acquire assets.

  • Corporate and Social Responsibility is an image of the organization through the ages of its customers.

Changing dynamics and lifestyle in the country will see an increase in the membership of the firm

Technological

  • System management

  • Availability of technological solutions

  • Advancement in technology via online shopping, online payments, debit cards (no more walking around with physical cash)

  • Being more innovative

Financial and management systems will help the firm achieve growth

Legal

  • Safety and compliance issues

  • IPR

  • Data protection

  • Pay taxes, employment laws, OSHA, Maternity, etc

Policies advocated by the Central Bank will see major developments in the service delivery of the firm

Environment

  • Protection agenda, Go Green (use less paper in business transactions)

Increased social responsibility activities and safety measures

Implications

  • Staff roles will change with the development of key performance indicators and institutional strategy.

  • Company will move towards a service and consumer oriented structure.

  • Improved risk management measures.

  • Create a plan to keep skilled workers

SPICC

Looksat the micro-level factors that affect the business success factorsof a firm.

Suppliers

Strong

Knowledge policies

Publics

Competitive advantage maintenance

Knowledge exchange

Intermediaries

Changing cultures among agencies

Legal constraints in picking agencies

Markets and Customers

Homogenous market

Large pool of customers

Competition

Strong competition

TheSPICC shows that the firm is strongly positioned in the market withstrong suppliers and customers.

Mc Kinsey 7’s

7S’s

Strategy

Long term strategy on attracting more customers

Deals with customer demands strongly

Achieves the objectives through a participation strategy

Marketing is a strong component of the firm

Re-engineering systems to promote greater efficiency.

Structure

The executive implements the firm’s long term objectives

Strong flow of information between departments

Decision making process is centralized, but with different delegation strategies

Skills

Culture

Interpersonal skills key to the success of the firm

Constant monitoring of skills and performance

Promote higher level of competitiveness

Systems

Strong management and financial systems

PEARLS systems

Constant monitoring of systems

Up to date technological trend

Shared Values

Integrity and professionalism are key to success

Honest and trust

Provides frameworks for diversity

Improving delivery, Technological Interventions for greater membership satisfaction.

Style

Participative leadership style

Teamwork is key

Staff

Skills required

Well trained staff / relevant knowledge in their field well paid staff.

The7S’s shows that the company has a strong pool of staff and usetechnology effectively thus, its ability to achieve success in ashort period.

MARKETINGMIX

7 P’s

Price

  • Understand persons financial habits

  • Survey the competition

Product

  • Multiple products to improve member lifestyle, loans, medical, pension

Promotion

  • Marketing principles and strategies aligned to promote products

Place

  • Improve regional reach

  • Website allows people to apply for loans, make transactions when they are not physically in the building.

Process

  • Multiple processes within financial and management systems

  • Deal with customer queries, enquires complaints via telephone, email.

Physical Environmental

  • Vehicle with Company Logo, Staff Uniforms, Marketing Manager to organize unique selling experience

People

  • Develop External Relationships (Customers, Suppliers)

Becauseof the firm’s strategic position in the credit union sector, itoffers services at low prices, promotes its products, and offerscountless products thus, its marketing matrix offers a strongbusiness success factor.

Porter’smodel

Themarket has numerous competitors such as Police Credit Union and Cityof Port Spain Union, high switching costs, customer loyalty is low,and a firm may find itself bankrupt very easily

Competitors

Thefirm encounters highly competitive rivalry from Police and Port ofSpain Credit Unions. The union serves the members of the force thus,it does not offer direct competition to in termsof membership. However, the union has established a consumerdivision, which draws membership from other companies

Customeranalysis

Easterncredit union

Withtotal assets of more than $1 billion and a credit portfolio of morethan $900 million, the union has over 145,000 members who benefitsfrom low cost loans, Bureau exchanges, money transfer, equity shares,certificate of deposits, and ATM LINX services. In this regards, thefirm continues to exert its pressure in the provision of services toits customers who have showed loyalty. The union is one of thelargest in Trinidad with an extensive customer base hence, itmanages to compete favorably with other unions. Prices are a keyfactor in the Credit Union sector hence, firms that offer servicesat low prices often benefit from large accumulation of clients.

PoliceCredit Union

Theunion mostly derives its customer base from the forces thus, it hasa market niche in a common area. However, the union offers someservices to other people who do not belong in the force. In thisregards, the union has a loyal customer base that it can use toobtain a larger market share.

COPOS

Although the union is a competitor to the , itdoes not offer a strong competition like the Police Union. However,the union has strong services and product lines, which help it togain customers. With favorable prices and a strong marketing policy,the firm has created a strong customer situation that may create astrong competition for other companies. However, the union’s lackof enough finances means that it has not managed to create a strongniche for its customers.

Point of Comparison

Eastern Credit Union

Police Union

Port of Spain

Reputation

+

0

Quality

+

+

0

Services offered

+

0

Market Share

0

0

0

Financial resources

+

+

0

Product line

+

0

0

Customer service

0

0

+

+Strong competitive position

  • Worse competitive position

0Medium or average position

Portfolioanalysis

Analysesthe attractiveness of the industry and the capacities andopportunities of the firm to compete favorably with other companies.

High

Reach

Low

High

Focuson Loans and Financial services

SWOTanalysis

This shows the major opportunities, threats, strengths and weaknessesthat the firm encounters in its endeavor to deliver services

Police Credit Union

Strengths

  • The firm has numerous competitive advantages in the people it targets such as police officers.

  • The firm has strong distribution reach and awareness.

  • Quality management systems

  • Strong cultural and behavioral management dynamics.

  • Quality services

Weaknesses

  • Gaps in cash flows

  • Lacks a strong supply chain

  • Encounters numerous market vulnerabilities

  • External factors affect the core activities of the firm

Opportunities

  • Strong technological development.

  • Has a niche target market

  • Strong business development and volumes

Threats

  • Lack of sustainable financial backing

  • Critical gaps in internal management and structure

City of Port of Spain Credit Union

Strengths

  • Strong in fixed assets

  • (they own a lot of properties)

  • Quality experience and customer care

Weaknesses

  • Gaps in cash flows

  • Lacks a strong supply chain

  • The firm lacks a presence reach

Opportunities

  • Competitors may seek to acquire or merge

  • Financial trends and technological advancements

Threats

  • Lacks knowledge of its competitors intention

  • implementation new laws will restrict investment

Eastern Credit Union

Strengths

  • Solid financial basis

  • Good brand name associated with profitability and community responsibility.

Weaknesses

  • Loan delinquencies among members

  • The credit union’s are govern by the policy that they can only lend up to two times the member’s shares.

Opportunities

Acquire or merge with smaller credit union to create a larger net income base.

  • The company has the chance to venture into the whole country, region and the international market, and establish itself as a national Cooperative Society.

Threats

  • The cooperative faces competition from other cooperatives within the country for the same members and customers.

  • In relation to the global financial crisis, the cooperative may see its generation of revenues and profitability plummet.

  • New central Bank laws governing Credit Unions

Futurestrategic plans

Thefirm’s plans involve strong strategic plans on marketing andpricing strategy. In addition, after the portfolio, PESTEL, and SPICCanalyses, the company needs to cultivate a strong technology systemand human resource capacity that will drive the company’s successfactors. Promotion of its products and marketing is needed to sustainnet income The company identifies qualified human capacity,technology, strong pricing strategies, and marketing practices thatwill drive its sales upwards. Furthermore, the company plans tomaintain a high dividend payout over the next 3-5 years.

Part2

TheEastern Credit union will have a new financial objective ofincreasing its revenues through enhancing the market sale offurniture and electronics. Although it is targeting thesales of furniture to bring income to the business, the business willalso have the following financial and non-financial objectives.

Financial Objectives

Non-Financial Objectives

Reducing loan delinquency among its members

Enhancing its image as an outstanding union

Enhancing its financial position in the credit union

Taking part in community development

Growing its revenues through targeting furniture and electronics business

Training its members on investment issues

Supporting its members financially

Training groups on how to become good budgeters and planners

Increasing its credit limit to members

Increasing its share in the market

TargetMarket

Thetarget market for electronics and furniture will still be Trinidadand Tobago. This market has been chosen because the credit union isalready conversant with the region. Since it offers credit servicesin the market, it will be easier for the credit union to have an easyestablishment of its other operations because it has some creditcustomers, who already know about its dealings. Market penetration inthis market will be easy since the business will be capable ofconvincing its credit customers to purchase electronics andfurniture. For instance, it will be easy to convince a member of thecredit union who wants to take a loan to purchase furniture orelectronics to purchase electronics and furniture from the union.Besides, market penetration will be exceedingly easy since themembers of the credit union stand at a better chance of convincingother consumers in purchasing furniture and electronics from theunion since the members already have clear information concerning thecredit union. On the other hand, market penetration for furniture andelectronics will be easy for the credit union since it has alreadystudied the market, in terms, of customer preferences, designs anddemand concerning electronics and furniture. The target populationwill be individuals, who ae working and aged between 25-45 years.

MarketSegmentation

Themarket will be segmented into individuals with high incomes and thosewith low incomes. This will help in providing furniture andelectronics that are affordable to all individuals in the market.Besides, affordability will be made easier by the credit union sinceit will provide credit to those customers without cash in order tofacilitate their purchasing power. Therefore, the credit union willbe capable of offering furniture and electronics to both high incomeearners and low income earners.

Differentiation

Differentiationis vital in ensuring that the products that the credit union sellsare unique in the market. In this regard, differentiation will beexceedingly easy for furniture, but will be somehow difficult for theelectronics. For the furniture, the union will come up with newdesigns that do not exist in the market. This will ensure that thefurniture is differentiated from the ones already existing in themarket. On the other hand, the union will differentiate itselectronics from the already existing ones in the market by puttingthe union name on the electronics. This will help customers indifferentiating the electronics of the union from those from othermakes.

USPand Positioning

TheEastern Union will have a Unique Selling Price for the electronicsand furniture the unique selling price for the electronics andfurniture will be 5% less than the existing price of electronics andfurniture. This will be critical in making customers switch to usingthe electronics and furniture that are sold by the credit union thisis because customers will justify their switch to saving of 5% ofwhat they could have spent by purchasing the brands of the unioncompared to other brands. On the other hand, the positing of thefurniture and electronics will also make a difference in sales. Thecredit union will operate both physical store and an online store.The physical stores will be located in different areas in order toensure that the union successfully reaches all consumers, who need topurchase its products. Besides, the online store will take care ofcustomers, who will not be in a position to access the physicalstore. On the online stores, customers will be capable of viewing thedifferent electronics and furniture that they may require topurchase. On the other hand, customers will be capable to make theirorder requests from the online stores.

Mediumand Long Term Strategy

Theunion will not commence selling all types of electronics at once, butwill commence selling all kinds of furniture. The reason for this isbecause it will want to study the market and understand what type ofelectronics are fast moving and the ones that move slowly. Therefore,the medium strategy will be selling a few electronics and all kindsof furniture in order to study, the products that are fast moving. Onthe other hand, the long term strategy will be increasing revenuesthrough the sale and distribution of fast moving electronics and allkinds of furniture.

7P’s

Price

Understand whether the person can afford, if not provide a loan

Product

Differentiated in order to enable customers to identify them furniture will have unique designs, while electronics will bear the name of the union

Promotion

Price reduced by 5% and loan facilitation to increase affordability

Place

Many physical stores to increase accessibility and online store to allow online purchasing and selling

People

The union will create relationship with suppliers and customers

Process

Different processes for customers that would require credit facilitation in purchasing the products. Besides, online operations in order to work on customer order requests and feedbacks

Physical Environment

Physical stores stocked with furniture and electronics bearing the logo of the union. Besides, sale representatives and managers to streamline the selling process

7S’s

Strategy

Medium strategy of identifying fast moving electronics

Long term strategy of selling only fast moving electronics and all kinds of furniture

Marketing is a critical tool in meeting the strategy

In order to promote efficiency in its strategies, the union encourages feedback

Structure

The CEO implements the objectives of the union

There is free flow of information amid the different units of the union

Communication is vital amid all the departments

Staff

Must possess the necessary skills and receive training as time goes or when necessary

Skills

Both personal and interpersonal skills are highly encouraged

Staffs must have the necessary skills in operating in an area

Systems

The management and financial systems are strong

The online system is also strong in enhancing online operations

Internal systems are in place to ensure controls and proper management

Shared values

Professionalism is highly valued in the union

Trust is also critical

Integrated culture is the basis of the union

Style

Teamwork is highly valued and participatory leadership is incorporated in the union’s management

7C’s

Credibility

Since the business will operate online, it will be credible since customers will have an opportunity of getting online and communicating with the representatives of the business

Cash

The union will scale its cash through operating an online store, where it will provide its furniture designs and samples of electronics it will sell

Cost Effective

It is cost effective because it will deal with customers, who are already members, which implies there will be less marketing costs

Customers

The union will have a website, which will help in keeping in touch with customers

Connections

The union will be keen to respond to customer feedbacks in order to facilitate strong connections. Besides, the same will be with suppliers

Close

The union will be close to its clients through constant communication with its sales representatives

Customer Service

In ensuring proper customer service, the union will provide more information on its website through the FAQ section. Besides, it will hire and train representatives that will be capable of tackling customer issues

Ansoffgrowth strategy

Market Development Strategies

  • New customer segments

  • New geographic markets

Diversification Strategies

The union will use the internet in supporting

  • Diversification into associated business

  • Upstreaming integration with suppliers

  • Diversification into unrelated business

Market Penetration Strategies

  • The union will use the internet for

  • Customer value improvement

  • Growing the market share

  • Customer loyalty improvement

Product Development Strategies

The union will use the internet for

  • Promoting the sale of furniture and electronics

  • Selling furniture and electronics online

NewMarkets

ExistingMarkets

ExistingProducts NewProducts

SalesForecast and Budget

Itis forecasted that the sales for the first three years will hit$78,000, $89,000, and $103,000 respectively. The expenditure for thethree years will be $52,000, $43,000 and $26,000 respectively foryears one to three. On the other hand, the operating profits for thethree years would be $26,000, $46,000, and $77,000. The budget forthe marketing strategy will total up to $5,432,000.

PromotionalPlan

Inorder for the union to increase its revenues through the sale offurniture and electronics, it will need to have a well developedpromotion plan. The promotion plan of the union will be such thatfor the first three months, the union will email its members tonotify them of its intention to commence dealing with furniture andelectronics. After a period of another one month, the union willcarry out a survey from its members so as to find out the designs offurniture and the kinds of electronics that customers would like tohave. It is after this that the union will analyze the results of thesurvey and make a proper determination of the furniture andelectronics to deal with. On the other hand, the union will then hiresales representatives to represent it at various physical stores.

PromotionalGantt Chart

Emailingmembers

First3 months

Conductingof survey

Next3 months

Hiresales Representatives

1month

ImplementSales

Theobjectives of the union are specific since they target a particulararea the objectives target the growth of revenue through selling offurniture and electronics. They are measurable because they arequantifiable they give an estimate of projected revenues andexpenditures. Besides, they are assignable since they specify how theobjectives will be attained. On the other hand, the objectives arerealistic since they can be achieved with the available resources. Inaddition, they are time related because they specify the time overwhich the results will be accomplished.

Assumption

Oneof the assumptions made is that all customers that will use credit inpurchasing the electronics or furniture will be capable of repayingtheir credit without failure. Another assumption is that all membersof the credit union will be in a position to talk about the productsof the union to the non-members in order to increase the customerbase. Besides, an assumption that the union will make profits withinthe first three years has been made.

Contingencies

Oneof the contingencies that might occur in the future entails worseningof the economic situation for instance, a recession may occur in thefuture. This will affect the union since customers that purchaseproducts through credit facilitation may not be in a position torepay their loan within time. Besides, the profits and revenuesforecasted by the union may not be realized because of the hardeconomic times. On the other hand, demand for electronics andfurniture provided by the union may change emanating from anemergence of a new entrant in the market that offer a better dealthan the union. This will lead to a decrease in the sale revenuesprojected by the union.

ReferenceList

Chouthi,S, (2012, April 12), bad loan ratedown to10.7%,&nbspTheTrinidad Guardian Newspaper,Retrieved March 8, 2014, fromhttp://guardian.co.tt/business-guardian/2012-04-12/eastern-credit-union-bad-loan-ratedown-107.

ECU,(2012), Newsletter,&nbspEasternCredit Union,Retrieved March 8, 2014, fromhttp://www.easterncutt.com/images/Newsletter/Newsletter2014/Dec%202013%20issue2%20for%20web.pdf.

Katwaroo-Ragbir,S, (2013), The Role of Regulation in the Development of the Trinidad&amp Tobago Microfinance Sector, Journalof Emerging Trends in Economics &amp Management Sciences,4(2).

Kotler,K Keller, M Brady, M Goodman, T Torben (2012), Marketing Management

Ogawa,M, S, Park, M, J,, Singh, M, D, &amp Thacker, M, N, (2013),FinancialInterconnectedness and Financial Sector Reforms in the Caribbean(No. 13-175), International Monetary Fund

Williams,E, S, (2013), F INTERNATIONAL AND NATIONAL ECONOMIES, WorldBanking Abstracts,29(6),444.