2. MSC-14-17-460 2
1. CONTENTS
1. Contents 2
2. Executive Summary 5
3. Migrant Worker Remittance Overview 7
4. Marketing Accountability 8
5. Gross Profit MARGIN / Gross margin. 9
5.1 Conclusions 9
5.2 Possible Responses - Price reduction 10
6. Net profit margin/ Profit margin 10
6.1 conclusions 11
6.2 Possible Responses - Product (increase repeat purchases ) 11
7. Return on Capital Employed (ROCE) 12
7.1 Conclusions 12
7.2 Possible Responses - Efficient Promotions 13
8. Return On Assets – ROA 13
8.1 Conclusions 13
8.2 Possible Responses - Price & People 14
9. Return On Investment – ROI 14
9.1 Conclusions 14
9.2 Possible Responses -Promotion & Place 15
10. Current Ratio 15
10.1 Conclusions 16
10.2 Possible Responses - Price & process 16
11. Net growth of sales 16
11.1 Conclusions 17
11.2 Possible Responses - Product & Price 17
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12. Possible marketing mix decisions that could be used to improve the identified
business issues 18
13. Identify and assessing non- financial performance measurements/ used by Western
Union Services (Task 2) 19
13.1 Traditional Financial Performance 19
14. The Balanced Score card 20
15. A Balanced score card for Western Union Services 21
15.1 Financial perspective 22
15.2 Customer Perspective 22
15.3 Internal Business 23
15.4 Innovations & Learning 24
16. Issues related to Non-financial performance indicators 26
17. an integrated promotional campaign to meet the marketing objectives – Task 3 27
17.1 WU Business Goals 27
18. Profitable Segments of Western union Money TRANSFER services 28
19. Profitable WU Segments 28
20. The WU campaign for December 2014 29
20.1 The Objectives (SMART) 29
20.2 The Promotion 29
20.3 Budget 30
21. Expected consumer engagement percentages 31
22. The integrated promotional campaign 31
22.1 Advertising 32
22.2 Sales Promotions 33
22.3 Personal Selling 34
22.4 Technology enabled direct marketing 35
23. Accordingly 36
ANNEXURE 1 37
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24. Company Profile 37
25. Western Union company Profile 38
ANNEXURE 2 40
26. Income Statement (annual) for THE WESTERN UNION CO - WU 40
ANNEXURE 3 42
27. Balance Sheet (annual) for THE WESTERN UNION CO - NYSE :WU 42
Income Statement Balance sheet 45
ANNEXURE 4 46
APPENDICES 1 48
28. Banking and Financial Services Industry Overview 48
29. legal money transfer organizations lose out on profits. 49
APPENDICES 2 50
30. SWOT 50
Strengths 50
Weaknesses 51
Opportunities 51
Threats 52
APPENDICES 3 53
Analysis of the WU BCG Matrix 54
APPENDICES 4 55
31. Reconciliation of Non-GAAP Measures 55
32. References 56
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2. EXECUTIVE SUMMARY
Greater accountability for marketing expenditure is one of the biggest issues facing the
marketing community today, as CEOs and CFOs lose patience and threaten to cut budgets.
This report evaluates the business performance of Western union Money transfer services by
analyzing key financial statements & non- financial performance measurements.
The report also provids a detail insight as to how Western union money transfer services can
improve accountability for their marketing expenditure with a integrated promotional
campaign to meet the marketing objectives.
Subject matter
This report provides an analysis and evaluation of the current
and prospective profitability and financial stability of
Western union money transfer services (WU).
Methods of analysis
Methods of analysis include horizontal analyses as well as
ratios such as Current, Gross Profit Margin, Net Profit
Margin/ profit margin,ROCE ,ROA & ROI to Balance score
card to name a few
Findings
All calculations can be found in the appendices. Results of
data analyzed show that all ratios have declined /negative
growth or unhealthy in the year of 2013 . In particular,
comparative performance is very poor in the areas of profit
margins.
Conclusions
The report finds the prospects of the company in its current
position as at end 2013 is average. The major areas of
weakness require further investigation and remedial action by
the management of WU.
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Limitations of the report.
The report also investigates the fact that the analysis
conducted has limitations. Some of the limitations include:
The brand equity is not taken in to consideration when
evaluating this fortune 500 company which is 160 years old.
changes in general economic conditions and economic
conditions in the regions and industries in which we operate,
including global economic and trade downturns, or
significantly slower growth or declines in the money transfer,
payment service, and other markets in which WU operate,
including those related to interruptions in migration patterns;
political conditions and related actions in the United States
and abroad which may adversely affect the business and
economic conditions as a whole;
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3. MIGRANT WORKER REMITTANCE OVERVIEW
Channeling ‗Migrant Worker Remittance‘ to the receiving country is a profitable business
venture; it increases the fee income base.
According to statistics of Sri Lanka Bureau of foreign employment (SLBFE), migrant
worker remittance have become the major source of foreign exchange earner ( Net income )
to Sri Lanka, since 2009, bypassing all other sources ( Export income of Garments, Tea,
Rubber , Coconut & Gems ) which have been dominating over the past decades.
Approx 250,000 migrant workers depart annually seeking foreign employment to various
destinations. Amongst, Middle East being the highest employment providing region,
dominated by Kingdom of Saudi Arabia (KSA) & Kuwait being the top 2 destinations for Sri
Lankan migrant workers. Having identified the importance and significance of worker
remittance to the country, the Government of Sri Lanka (GOSL) too has introduced many
migrant worker benefit schemes to encourage even greater inflow of foreign exchange to the
country. Source CBSL 2014 publications
As per the chart the housemaids in Sri Lanka continues to contribute as the highest number of
individuals leaving SL to work abroad. Source -SLBF
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4. MARKETING ACCOUNTABILITY
―Marketing is increasingly under pressure to make the most of its brands, its investments, and
its organization. In the boardroom, leaders ask for accountability and assurance that every
dollar spent on marketing is contributing to long-term profitable growth. Although this
pressure is particularly intense in tough economic times, the topic is increasingly relevant
even in good times. ―
By Markus Koch and Michael Dunn : Marketing Accountability
WU‘s marketing division must respond through disciplined planning, rigorous measurement
and evaluation, and continuous improvements in performance to meet its business objectives.
They should be able to link cause and effect of investments, to diagnose performance
problems in a timely way, and make fact-based decisions on how to increase Return on
Investment.
―In the past, it was OK for the age-old quote about half our advertising dollars being wasted.
That‘s not good enough anymore. The stakes are too high.‖
--Jim Spanfeller, CEO, Forbes.com
Hence taking in to considering the need to be accountable for investing in the right tools and
content (effectiveness) and optimizing the ratio of investment and output (efficiency) the
performance of Western union Money transfer services were analyzed by their key financial
statements from 2009 to 2013.
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Analyzing Western union money transfer services (WU) from 2009 to 2013
5. GROSS PROFIT MARGIN / GROSS MARGIN.
This financial metric is used to assess WU's financial health by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings.
Calculated as:
Where: COGS = Cost of Goods Sold
• Profitability measures look at how much profit the firm generates from sales or from
its capital assets
GROSS PROFIT MARGIN
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Sales
5,542.00 5,664.80 5,491.40 5,192.70 5,083.60
Cost Of Goods
3,235.00 3,194.20 3,102.00 2,978.40 2,874.90
GROSS PROFT
MARGIN 42% 44% 44% 43% 43%
Table 1
5.1 Conclusions
As per WU ,the company has not been growing in terms of GP Margin .
This means that for every dollar that WU earns on money transfer services, it really has only
$0.42 at the end of the day as per 2013 GP Margin.
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Horizontal analysis YOY of sales and COGS
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010
Sales -2% 3% 6% 2%
Cost Of Goods 1% 3% 4% 4%
Gross Profit -7% 3% 8% 0%
Table 1.1
According to the PL the cost of goods have been increasing from 2009 to 2013 YOY, but in
the year of 2013 GP margin has taken a negative 7% dip due to prices been revised and cut
down to support the financial crisis around Europe. With the 5year analysis of the PL, WU
has a stable gross profit margin with room to improve with the USD been stable.
5.2 Possible Responses - Price reduction
WU should look in to more avenues to curtail its cost with regard to the C2C product, IT
solutions may donate slightly but still the company relies on the foreign exchange gain factor
which is out of WU‘s reach.
6. NET PROFIT MARGIN/ PROFIT MARGIN
A higher profit margin indicates a more profitable company that has better control over its
costs compared to its competitors.
Net Profit Margin
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Net Income
798.40 1,025.90 1,165.40 909.90 848.80
Sales 5,542.00 5,664.80 5,491.40 5,192.70 5,083.60
Net Profit
Margin
14% 18% 21% 18% 17%
Table 2
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6.1 conclusions
Net profit margin in WU has been on a more declining percentage from the year of 2011 to
2013.The low profit margin in the year 2012 & 2013 indicates pricing strategy and/or the
impact competition has on margins. Also the interest expenses have reached a very high as
per below table.
Table 2.1
WU has a net income of $0.14 for each dollar of sales in the year 2013 , $0.18 & $0.21 for
the year of 2012 & 2011 respectively. As WU grows, its expenses will at times grow along
with it, maybe at a greater rate than sales. As the expense of a company rises, the net profit
margin may decrease. Even attempts to compensate the added expenses with an increase in
the sales price of the product, may result in a decrease in the quantity of sales but money
transfers may not be as willing to use the product at the higher price as competitors offer far
more greater rates.
6.2 Possible Responses - Product (increase repeat purchases )
WU should increase its sales by not increasing the price but by attracting more customers to
have repeat purchases .It is also very important that WU explores new markets to increase
sales.
Horizontal analysis YOY of Non-Operating Income & Interest Expense
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010
Non-Operating Income -18% -74% 377% 124%
Interest Expense 9% -1% 7% 8%
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7. RETURN ON CAPITAL EMPLOYED (ROCE)
Return on Capital Employed (ROCE)
ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Earnings
Before
Interest and
Tax (EBIT)
$926.90 $1,168.80 $1,274.60 $1,145.20 $1,131.50
Total
Shareholder's
Equity
$1,104.70 $940.60 $894.80 $582.70 $353.50
ROCE 84% 124% 142% 197% 320%
Table 3
7.1 Conclusions
A ROCE of 84% means that it uses every USD1 of capital to generate 84Cents in
profit
It is noteworthy to mention even though the shareholders have been investing money more
and more to the company, the cost have gone up with the years. As per the above figures WU
has been investing more efficiently in the past years (2009 to 2012) compared to the year
2013.
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7.2 Possible Responses - Efficient Promotions
WU has to keep on deploying its capital more efficiently like the company has been doing
through the years except for the year 2013. In terms of a marketing mix perspective it is
advisable to cut down cost on Promotions and maybe review the cost per product.
8. RETURN ON ASSETS – ROA
ROA gives an idea as to how efficient WU‘s management is at using its assets to generate
earnings.
.Return On Assets – ROA
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Net
Income 798.40 1,025.90 1,165.40 909.90 848.80
Total
Assets
$10,121.30 $9,465.70 $9,069.90 $7,929.20 $7,353.40
ROA 8% 11% 13% 11% 12%
Table 4
8.1 Conclusions
The assets of the company are comprised of both debt and equity. Both of these types of
financing are used to fund the primary money transfer operations of the company. This figure
gives investors an idea of how effectively WU is converting the money it has to invest into
net income.
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When you really think about it, management's most important job is to make wise choices in
allocating its resources.
Anybody can make a profit by throwing a ton of money, but very few managers are good at
making large profits with little investment.
8.2 Possible Responses - Price & People
WU management should concentrate on more cutting down cost such as from research cost of
sales and invest on experienced mangers which will directly impact WU on the long run by
making good investment decisions which will then impact the profitability of the company .
9. RETURN ON INVESTMENT – ROI
Return on investment ROI
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Income After
Depreciation &
Amortization
$1,107.40 $1,330.00 $1,385.00 $1,300.10 $1,282.70
Total
Shareholder's
Equity
$1,104.70 $940.60 $894.80 $582.70 $353.50
ROI 100% 141% 155% 223% 363%
Table 5
9.1 Conclusions
WU investors have not got a positive return from their investment in the year 2013.However
in the earlier years the investment has been positive from a slow decline from the year 2009.
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9.2 Possible Responses -Promotion & Place
The shareholders‘ funds should be invested more efficiently to have more profits from its per
dollar investment. WU should look at investing its SEND COUNTRY (place) promotional
activities in more profitable corridors.
10. CURRENT RATIO
Changes in WU‘s current ratio over a period of years can point out problems and successes.
A declining current ratio could be pointing to WU‘s financial problems. An improving ratio
could be the result of a brighter future or an overstocked warehouse due to inventory is
considered an asset.
Current Ratio = Current Assets : Current Liabilities
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Total Current
Assets 5,343.50 4,891.10 4,462.10 4,792.60 4,074.30
Total Current
Liabilities 4,126.20
3,889.10 3,928.60 3,512.20 3,409.30
Current Ratio 1.30:1 1.26:1 1.14:1 1.36:1 1.20:1
Table 6
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10.1 Conclusions
As per the current ratios it suggest that
In 2013 it would imply the firm has $1.30 of assets to cover every $1 in liabilities
In 2012 it would imply the firm has $1.26 of assets to cover every $1 in liabilities
10.2 Possible Responses - Price & process
These are close to healthy ratios, ideal level would be to have 1.5 : 1 (1.5 assets to cover
every $ 1 in liabilities)WU does have just enough assets to cover its liabilities .It is
noteworthy to mention WU does not maintain Stock .WU should maintain sufficient cash
& equivalents. In terms of a product mix WU has to control the overall price of the
product and its related process such as customer focus ,research & design.
11. NET GROWTH OF SALES
Horizontal Analysis YOY : Sales Net growth
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Sales
5,542.00 5,664.80 5,491.40 5,192.70 5,083.60
Sales Net
growth% -2% 3% 6% 2% -
Table 7
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Table 7.1
11.1 Conclusions
The negative growth of the sales in 2013 which is negative 2% has directly impacted directly
to the income after tax which is negative 17% for the year 2013.
11.2 Possible Responses - Product & Price
WU needs to concentrate of sales but come with a strategy to increase number of sales rather
than increasing price, as this would have a negative impact by having customers go to
competitors with better prices.
Horizontal analysis YOY : Net income after tax
Details Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010
Income After Depreciation
& Amortization
$1,107.40 $1,330.00 $1,385.00 $1,300.10 $1,282.70
Net income after tax
growth -17% -4% 7% 1% N/A
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12. POSSIBLE MARKETING MIX DECISIONS THAT COULD
BE USED TO IMPROVE THE IDENTIFIED BUSINESS
ISSUES
At any given point what generates profits falls down to the below points
The right product
Sold at the right price
In the right place
Using the most suitable promotion
to reach the right customer
segment
Are the right people selling the
service
Do we have the right process in
place to serve the customer
Do we have the right signage to
attract the customers & to stand
tall above the competitors
To create the right marketing mix, WU has to meet the following conditions:
The product has to have the right features - for example, it must be a fast money transfer
product.The price must be right. Consumer will need to choose WU ,rather than their closest
competition and have repeating customers to produce a healthy profit.
The service must be in the right place at the right time. Making sure WU is freely available
with the money transferring communities.The target group needs to be made aware of the
existence and availability of the service through promotion.
The process and the people must be in the right palace in the right attitude as well as the
evidence needs to match up to its corporate image.
To improve the profitability of WU and to generate immediate profits would be to altar the
price and improve more sales .
If WU could bring down the transfer fee charges and offer good exchange rates which gives
more benefit to the end receiver the company will see immediate repeat purchase & new
users joining the network hence making the profitability grow due to higher usage .As per all
the other factors WU seems to be in control and if there is anything more to add to
profitability, promotional activities and its funding should be done with more efficiency
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13. IDENTIFY AND ASSESSING NON- FINANCIAL
PERFORMANCE MEASUREMENTS/ USED BY WESTERN
UNION SERVICES (TASK 2)
Financial performance measures are traditionally backward looking. This is not suitable in
today's dynamic business environment. The solution is to use both financial and non-financial
performance indicators. The optimum system for performance measurement and control will
include ,Financial performance indicators (FPIs) - it is still important to monitor financial
performance, e.g. using ROCE, ROI, ROA etc..
Non-financial performance indicators (NFPI‘s) - these measures will reflect the long-term
feasibility and health of the organization. Eg: Balance score card
13.1 Traditional Financial Performance
They only tell what has happened over a limited period in the immediate past
They give you no indication of what is going to happen in the future
They do not relate to the strategic management of the business etc
The financial measures show the impact of the firm‘s policies and procedures on the
firm‘s current financial position and its current return on shareholders
The nonfinancial factors show the firm‘s current and potential competitive position
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14. THE BALANCED SCORE CARD
Traditional financial measures, like return on investment, could not provide an accurate
picture of a company's performance in the innovative business environment of the 1990s.
Rather than forcing managers to choose between "hard" financial measures and "soft"
operational measures—such as customer retention, product development cycle times, or
employee satisfaction—they developed a method that would allow managers to consider both
types of measures in a balanced way. "The balanced scorecard includes financial measures
that tell the results of actions already taken, -
1992 by Harvard Business School Business Review article
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15. A BALANCED SCORE CARD FOR WESTERN UNION
SERVICES
Theme Goals Measurement
Financial
Profitability , To maximize
profitability per transaction‘
Per Transaction Costs
Grow revenue / to see
significant revenue from new
product launch
GP Margin /Revenue Growth on
Selected Product Lines
To achieve a higher return on
investment ROI, ROCE
To improve our cash flow‘ Creditor Days
Customer
To delight our targeted
customers
Customer Satisfaction Survey Results
Attract New Customers How many new registrations
Service time Minutes to hand over money
To grow our business in a
selected target group‘
Customer Acquisition From Target Group
Internal
Business
Downtime Server down time
Increase network
Number of new locations
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Market Share by Product and
Segment
Percentage by product and region
penetration
Product Research &
Development time
Number of new Products per Year /
Success Rate new products
Innovations &
Learning
Employee participation on
training programs
Basic Training rate /Advanced Training
rate
Improve Employee
Satisfaction
Absentee Rate
Table 8
15.1 Financial perspective
In particular, designers were encouraged to choose measures that helped inform the answer to
the question "How do we look to shareholders?" Examples: cash flow, sales growth,
operating income, return on equity – Simons,Robert L
15.2 Customer Perspective
15.2.1 Customer satisfaction survey results
Currently WU does have customer survey system which is online ,however I strongly feel
that this general questioner does not match all its global partners hence I suggest a customer
survey unique to each country or corridor capturing its culture .Yet this system should be
online as well as with the agents for over the counter users of WU services
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15.2.2 Minutes to hand over money
A general WU trnx can be completed from a send and receive point of close to 12 minutes.
Yet this time is benchmarked in competitive and a high performance atmosphere internal
core systems such as a core banking system at a bank is not included .
I suggest a when time is calculated the time the customer fills in a form and the time a
customer get the money to his or her had should be calculated which gives the real idea of the
overall time spent to acquire the money sent.
15.2.3 Suggestions
Objectives Measures
To dominate our major markets Market Share
Table 9
To achieve sustained competitive success however, companies need to be focusing on far
more than their current products and customers. Companies should strive to continually
surprise their customers with products which meet needs that they never even knew they had
(Hamel and Prahalad, 1996:118). In competing for future success, organizations need to be
continually developing the value propositions to be made available to their customers for
years to come which will in return increase market share.
15.3 Internal Business
15.3.1 Number of new locations
One of the main objectives for WU is to increase their presence in the globe .sometimes new
locations are within a range of few meters, which can be argued about the consumer
conveyance factor.
Going forward the number of locations should be calculated per city locations as an average
for the number of citizens in that area .
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15.3.2 Server down time
All transactions cross over the central server in the US .it is estimated more than 100
transactions a minute pass through this server.
In many instances when the server was down for a few hours there has been major panic
creating financial losses to the company.
Server downtime must be maintained at zero levels and all servers down times must be
monitored closely to prevent future issues.
15.3.3Suggestions
Objectives Measures
To continually challenge competitor products in
the market place
Time to Market for Next Generation of
Products
Table 10
Seek competitive advantage through the rapid development of new products that effectively
make current products obsolete..Within the financial services industry, objectives and
measures relating to delivery channel usage are playing an increasing role in identifying
competitive strategies.
15.4 Innovations & Learning
‗When it comes to specific measures concerning employee skills, strategic information
availability, and organizational alignment, companies have devoted virtually no effort for
measuring either the outcomes or the drivers of these capabilities‘ (1996a: 144).With issues
such as human capital (Stewart, 1997), employee empowerment (Simons, 1995), and the
‗strategizing‘ contribution of the individual (Hamel, 1996) increasingly on the management
25. MSC-14-17-460 25
agenda, the Learning and Growth quadrant has an important role to play in the control of
modern business.
Business is about quality, cost and delivery, no matter what the service or product is. All
major strategic elements of the business must be measured and integrated into the business
plan. These should in turn be balanced by the capability of the organization and the goals set
for its improvement.
15.4.1 Absentee Rate
Means in an organization the percentage of workers who do not report to work ,if the staff or
the work force is happy the attendance rate will be higher or more towards the green side.
The majority of employers have limited ability to accurately and regularly track how much
absenteeism is reducing their bottom line earnings. Absence management systems track
absenteeism, manage absence policies and work schedules, and control overtime, allowing
management to recoup lost earnings .Reducing absenteeism will also help employers meet
production and service demands without requiring an increase in headcount.
15.4.2 Suggestions
Objectives Measures
To value our staff‘ Employee Retention Index
To maximize productivity Output per Head
Table 11
Although most businesses would agree with the logic of investing in skills training and
efficient information systems, it is not always clear how to identify the strategic significance
of ‗soft‘ issues such as team value, creativity cultures and per head productivity.
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16. ISSUES RELATED TO NON-FINANCIAL PERFORMANCE
INDICATORS
• Decisions often appear to have been made on the basis of quantitative information;
however qualitative considerations often influence the final choice, even if this is not
explicit.
• Conventional information systems are usually designed to carry quantitative information
and are sometimes less able to convey qualitative issues. However the impact of a
decreased output requirement on staff morale is something that may be critical but it is
not something that an information system would automatically report.
• Qualitative information may be incomplete & cost of collecting and improving
qualitative information may be very high.
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17. AN INTEGRATED PROMOTIONAL CAMPAIGN TO MEET
THE MARKETING OBJECTIVES – TASK 3
17.1 WU Business Goals
Western Union is a global money transfer business with 80% of its revenue derived from the
consumer-to-consumer (C2C) business segment.
The majority of this C2C segment is comprised of the migrant worker who earns money in
one country and uses the money transfer services to send funds to family in another country.
This mission would be achieved by restructuring the organization from a US centric, product-
line organized corporation to a decentralized one with three regional divisions. five core
goals, for Western Union as follows:
1) Increase productivity with no revenue decreases
2) Develop a global brand Strengthening consumer money transfer
3) Enhance global network distribution, especially in south east asia
4) Execute on service excellence.
5) Generating and deploying strong cash flow for Shareholders
Pls see attachments for a SWOT of Western union Services.
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18. PROFITABLE SEGMENTS OF WESTERN UNION MONEY
TRANSFER SERVICES
WU has 3 primary segments
19. PROFITABLE WU SEGMENTS
Segment Revenues as at 2013
Consumer to Consumer 80%
Consumer to business 11%
Business to business 7%
Other 2%
Table 9
The workings are attached in the appendix with regard to the profitable segment search under
Reconciliation of Non-GAAP Measures
29. MSC-14-17-460 29
As per above findings It was decided to promote WU services to the Consumer to Consumer
segment as it is the most profitable segment in south east Asia as well as Sri Lanka from a
inward transactions point of view.
Source: McKinsey ―Perspectives on Worldwide Payments‖,
As per the McKinsey ―Perspectives on Worldwide Payments‖, findings it is worthy to invest
on the CASH segment of the above said C2C segment, making the WU inward cash receiving
customers in Sri Lanka a NICHE market.
Pls see the CASH COW Product Details in APPENDICES 3 (BCG Matrix) which highlights
the most profitable product.
20. THE WU CAMPAIGN FOR DECEMBER 2014
20.1 The Objectives (SMART)
To Increase revenue from ―Western Union Services ― Avg Rs 816,000/- to
Rs 1,680,000/- by end of January 2015
To Increase number of transactions Avg 1,700 - to 3,500 by end of January 2015
20.2 The Promotion
Branded gift items according to the value of the transaction will be given to all Western
union customers between 15th
December 2014 to 16th
January 2015.
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Branded Caps for transactions below Rs 30,000/-
Branded Bags for transactions above Rs 30,000/-
20.3 Budget
20.3.1 Current revenue situation
Average Number of transactions per month 1,700
Average Commission per Transaction (Commission +WU Forex Income) Rs 480/-
Average Earned Commission per month 1,700 trnx X Rs 480 Rs 816,000/-
20.3.2 Projected revenue from the December 2014 festive season
Projected Number of transactions per month 3,500
Average Commission per Transaction Rs 480/-
Projected Commission to be earned 3,500 Trnx X Rs 480 Rs 1,680,000/-
(Note: foreign exchange gains per inward remittance will be an additional revenue)
20.3.3 Estimated Cost
Cost for a branded Cap (2000 Nos X Rs 177.50/-) Rs 355,000/-
Cost for a branded Bag (1200 Nos X Rs 205/-) Rs 246,000/-
Flex Banner 8‖ X 3‖ Rs 1080/- X 77 branches Rs 83,160/-
Brouchers (100,000 x Rs 1) Rs 100,000/-
Art Work for the flex banner Rs 30,000/-
Others Rs 85,840/-
Total Cost Rs. 900,000 /-
31. MSC-14-17-460 31
According to E. St. Elmo Lewis on advertising principles; "The mission of an advertisement
is to attract a reader, so that he will look at the advertisement and start to read it; then to
interest him, so that he will continue to read it; then to convince him, so that when he has
read it he will believe it. If an advertisement contains these three qualities of success, it is a
successful advertisement". E. St. Elmo Lewis
Using a system like AIDA gives a general understanding of how to target the identified
market segment effectively.
21. EXPECTED CONSUMER ENGAGEMENT PERCENTAGES
Mix A – Attention I – interest D – desire A – action
Advertising 40% 60% 70% 30%
Sales Promotions 30% 20% 10% 20%
Public Relations 5% 5% 5% 5%
Personal Selling 20% 10% 10% 40%
Direct Marketing 5% 5% 5% 5%
Table 10
22. THE INTEGRATED PROMOTIONAL CAMPAIGN
Mix Classification Activities
Expected income from
activities as per
objective (AIDA
based)
Advertising
BTL Brouchers LKR 600,000.00
TTL
FB & PABC
website
LKR 240,000.00
Sales Promotions Push Strategy Branch Staff LKR 420,000.00
32. MSC-14-17-460 32
Public Relations All public related
activity
All public
related activity
LKR 210,000.00
Personal Selling Sales force
Sales Force
activities
LKR 160,000.00
Direct Marketing
Technology enabled
direct marketing
ATM Displays LKR 50,000.00
Table 11
As per above table (table 11) a mix is a must to ensure that each medium complements each
other in terms of achieving the said promotional objectives and must be repeatedly exposed to
the message. Integration will avoid any contradictory or confusing messages and provide
greater direction, synergy, efficiency and accountability. Consumers may respond better and
the increased effectiveness and consistency will result in a high degree of brand recall and
profits
22.1 Advertising
"I believe today's marketing model is broken. We're applying antiquated thinking and work
systems to a new world of possibilities."
Jim Stengel, CMO, Procter & Gamble
22.1.1BTL
Between the campaign period the printed 100,000 brochures will be used in street campaigns,
paper insertions to create awareness.
22.1.2 TTL
During the time period the same campaign will be running on the corporate facebook page as
well as the bank website, which will have a web banner taking a click to other related details
of the campaign.
33. MSC-14-17-460 33
22.1.3 Measurement of BTL & TTL
Once the number of clicks ,visits & pages are understood as per table 12 ,at the end of a day
or end of the campaign period we can covert and see out of all the transactions paid out what
percentage these modes have contributed .
TTL Measurement Details
PABC website &
FB Page
Visits Number of times visitors have come in to the site
Pages per visit How many pages has 1 user visited
Clicks How many times people clicked the web banner
Table 12
22.2 Sales Promotions
22.2.1 Push Strategy
The branch staff are advised to promote this campaign and earn a commission on each WU
transaction the introduced customer receives
The WU received from will have an area to mark the introducer‘s employee number and once
the transaction is completed and the correct details are given by the customer about the staff
member Rs 25/- will be paid for each transactions. The teller will enter the transactions and
tag the transaction on the core banking system under the employee number to collate
information
22.2.2 Measurement of the Push Strategy
After the end of the promotion or during the promotion the number of transactions and the
commission earned via those transactions can be tracked and sorted to see the most efficient
staff members as well as the cost the bank incurred running a push strategy.
This data can be used in the future to decide between a push or a pull campaign
34. MSC-14-17-460 34
Employees Number
Introduced
customers NIC
Money transfer
control number
Earned
commission
2096
840032019v 563-214-2086 LKR 25.00
620032019V 344-076-3272 LKR 25.00
Total payment to : EMP 2096 LKR 50.00
Table 13
22.3 Personal Selling
22.3.1 Sales Force activities
The PABC sales force will be asked to do various campaigns in selected towns at selected
locations in those cities .Each sales team or staff member will have special numbers
mentioned in their leaflets to monitor or direct the leads to proper channels .
22.3.2 Measurement of Sales Force
If anyone is interested the given special numbers will be maintained by a call centre or the
sales team itself which can be monitored centrally.
some other standard ways of measuring the performance of a sale force
Number of
Attempts
Number of
Contacts
Number of
Conversations
Appointments
Scheduled
New Meetings
Number of
Proposals
Closed deals
New Measures
Call Effectiveness
Change in Win Rate
35. MSC-14-17-460 35
22.4 Technology enabled direct marketing
"In 2001, [direct marketing] was seen as the decidedly unsexy stepchild to general
advertising. Although dependent on many of the same creative capabilities found at general
agencies, direct suffered from a perception that it was all about data manipulation, statistical
analysis and offerings.… But the current era of accountability and demand for return on
investment has changed all that: direct marketing now garners the greatest share – roughly a
quarter of marketers‘ budgets in the U.S.…surpassing even newspapers and broadcast TV."
Advertising Age, October 2005
22.4.1 ATM Displays
With the technology rapidly evolving ATM machines have become faster with touch
sensitive HD screens enabling to advertise at Zero cost.
A WU flyer to be displayed on the screen of an ATM informing the current promotion and
making that a touch sensitive icon taking the customer to the WU Receive money via card
less cash technology area.
22.4.2 Measurement of transactions
When a WU transaction is received via an ATM with cardless cash technology, the customer
needs to go to the branch with his receipt to collect the gift items. However the transactions
can be easily recalled and accounted for as the transactions are done online.
Activity Measurement Details
ATM
Displays
Visits
Number of times visitors have pulled out money from the
WU ATM TECHNOLOGY
Clicks
Number of times visitors have come in to area and seen the
promotion
Table 14
36. MSC-14-17-460 36
23. ACCORDINGLY
Considering the entire report, it reveals Western Union, with its global footprint and highly
trusted brand value even though the organization‘s financial performances are in average
condition, is well positioned to benefit from improving economic conditions, build a
meaningful digital business and compete effectively against both existing peers and
newcomers alike
it should be given special attention on improving cost effective transfer methods. Time has
come for WU‘s to believing in measuring marketing activities, product performance and
profits,. which will give a stable growth for the company.
Remittance industry is going through a new technological era where consumers are moving
towards new technology with far cheaper transfer methods.
Conducting research on introducing new technological products in to the market will help to
increase the market share and improves its profits.
Implementation of new strategies can grow a better workforce for the organization to ensure
the products and services provided are in line with customer requirements because which
matters the future of the company.
Therefore considering the above suggestions and marketing exercises, will make WU grow
healthier in the forthcoming years.
37. MSC-14-17-460 37
ANNEXURE 1
24. COMPANY PROFILE
Pan Asia Bank is a Public Limited Liability Company incorporated in Sri Lanka on the 6th
of
March 1995 under the Companies Act No.17 of 1982 and re-registered under the Companies
Act No. 07 of 2007. Pan Asia Bank is 100% locally owned licensed commercial Bank
registered under the Banking Act No.30 of 1988 and is listed on the Colombo Stock
Exchange. With a branch network of 78, Pan Asia Bank has established presence in most of
the prominent cities in the island. Furthermore FITCH Rating (Lanka) Limited has affirmed a
national Rating of 'BBB(lka)' - Outlook 'Positive' for Pan Asia Banking Corporation PLC, in
2013.
PABC is the latest primary agent to represent Western union money transfer services in Sri
Lanka .
(Pan Asia bank Annual report 2013) (Pan Asia bank Annual report 2013)
38. MSC-14-17-460 38
25. WESTERN UNION COMPANY PROFILE
The Western Union Company provides consumers and businesses with fast, reliable
and convenient ways to send and receive money around the world (receive only in Sri
Lanka)
Network : 515,000 agent locations in 200 countries and territories
In 2012, completed 231 million consumer-to-consumer transactions worldwide,
moving $79 billion of principal between consumers, and 432 million business
payments
In 2012, Western Union moved money into Sri Lanka, from 179 countries, compared
to only a few when the service was first offered in 1995 – a record that bears
testimony to the level of trust in Western Union
As per records 1.1 Million (approx) transactions valued at Rs. 42 Billion (approx) has
been routed via Western Union to Sri Lanka in the year of 2012, which is a 58%
market share from the ―Cash to Cash ― Transaction Segment
Sri Lanka : Over 5,500 locations, operated by retail Agents including banks, post
office, retail & telecommunication sector
45. MSC-14-17-460 45
Total
Liabilities &
Shareholders
Equity
$10,121.30 $9,465.70 $9,069.90 $7,929.20 $7,353.40
Total
Common Equity
$1,104.70 $940.60 $894.80 $582.70 $353.50
Shares
Outstanding
552.2 596.5 619.1 655.8 692.1
Book Value
Per Share
$2.00 $1.58 $1.45 $0.89 $0.51
http://ir.westernunion.com/investor-relations/fundamentals/balance-sheet/default.aspx
Income Statement Balance sheet
46. MSC-14-17-460 46
ANNEXURE 4
Horizontal YOY analysis of PL
Details 12/31/2013 12/31/2012 12/31/2011 12/31/2010
Sales -2% 3% 6% 2%
Cost Of Goods 1% 3% 4% 4%
Gross Profit -7% 3% 8% 0%
SG&A, R&D, and
Dept/Amort Expenses 5% 14% 10% -1%
Income After SG&A,
R&D, Dept/Amort Expenses -17% -4% 7% 1%
Non-Operating Income -18% -74% 377% 124%
Interest Expense 9% -1% 7% 8%
Pretax Income -21% -8% 11% 1%
Income Taxes -10% 31% -54% -17%
Minority Interest
Investment Gains/Losses
Other Income/Charges
Income From Cont.
Operations -22% -12% 28% 7%
Extras & Discontinued
Operations
Net Income -22% -12% 28% 7%
Income Before Depreciation &
Amortization -13% 0% 7% 3%
Depreciation & Amortization
(Cash Flow) 7% 28% 9% 14%
Income After Depreciation &
Amortization -17% -4% 7% 1%
47. MSC-14-17-460 47
Average Shares -8% -4% -5% -5%
Diluted EPS Before Non-
Recurring Items -18% 11% 11% 10%
Diluted Net EPS -15% -8% 35% 12%
48. MSC-14-17-460 48
APPENDICES 1
How does WU work
28. BANKING AND FINANCIAL SERVICES INDUSTRY
OVERVIEW
Year 2013 was one of the most challenging years for
the entire Banking and Financial Services industry in
recent times. Though the yield curves were high at the
beginning of the year, the banks had to move interest
rates downwards in accordance to policy directive from
the industry prudential regulator on caps on interest rates
towards the latter part of the year. Further, a significant
deterioration in the credit matrices were seen through-out
the industry mainly due to high volume of gold backed
lending in delinquent status. These along with the
49. MSC-14-17-460 49
arduous business climate led to an overall decrease in the industry profit margins.
http://www.ft.lk/2014/10/30/doing-business-gets-worse-in-sri-lanka/
29. LEGAL MONEY TRANSFER ORGANIZATIONS LOSE OUT
ON PROFITS.
Worldwide, over USD400 billion is sent home by migrant workers every year, USD325
billion to developing countries. This money is used to support education, build homes and
provide the day-to-day essentials for millions of families. But many of the consumers who
send money home are paying high, and sometimes extortionate, rates for transferring their
money internationally. Although progress has been made in reducing costs between some
countries, consumers are still routinely charged more than 10%, and in some cases more than
20% to send their money home. This situation is not only a consumer protection issue, but
also a question of social justice.
With the money transfer pricing been high more and more migrant use illegal ways of getting
money across to their loved ones making the legal money transfer organizations lose out on
profits.
http://ir.westernunion.com/files/doc_presentations/2014/Western-Union-DB-090914-FINAL-
Webcast_v001_l7flkr.pdf
50. MSC-14-17-460 50
APPENDICES 2
30. SWOT
(strengths-weaknesses-opportunities-threats) analysis is a way of looking at a company's
strategic position in the market. Its origins lay in the work of business policy experts at the
Harvard Business School and other American business schools from the 1960s onwards.
Thus, Kenneth Andrews (Andrews,1971) claims that good strategy means ensuring a fit
between the external situation faced by a firm (its threats and opportunities) and its own
internal qualities or characteristics (its strengths and weaknesses).
The following SWOT analysis captures the key strengths and weaknesses within the
company and describes the opportunities and threats facing Western Union.
Strengths
Western Union uses the same system across the entire world. Standard operating
procedures maintain internal consistency and enhance brand consistency across the
globe
Local agents are allowed to customize the look, feel and location of the office to
regional tastes; Global advertising is tailored to each country or region .
Decentralized decision making allows regional leaders to tailor Western Union‘s
customer experience based on geographic and cultural variables. This also allows
for local business decisions to be made with greater haste and efficiency.
51. MSC-14-17-460 51
Weaknesses
US division holds central position for decision making. US business has a number
of product lines while the international component only handles money transfer
services ,US leaders were reluctant to give up control of product lines and there is a
skewed distribution of employees: 40% of the 10,000 WU employees were based
in the US, yet the remaining 60% are employed in 200 other countries
Need to recruit, train, and develop new leaders in the emerging markets, such as Sri
Lanka ,India, China, Eastern Europe, and Africa. Western Union has to recruit
individuals in other companies who can be loyal and trustworthy for the company
and who also know the culture of multiple countries
Opportunities
Three new business markets to explore: commercial services, website
(WesternUnion.com) and prepaid card (prepaid wireless and telephone cards as
well as prepaid debit cards). Promoting prepaid phone cards directly parallels
Western Union‘s primary objective by further promoting products that connect
loved ones together who are geographically separated.
Primary C2C segment are those who do not have bank accounts leaving open the
opportunity for reaching customers who do have bank accounts, presumably a
higher socioeconomic class of migrant workers other growth opportunities in the
consumer-to-business (C2B) and business-to-business (B2B) segments
Largest growth potential is in the international market as globalization has driven
the migration of workers all over the globe
52. MSC-14-17-460 52
Threats
Cultural barriers and Different time zones – Western Union operates in 200
different countries with multiple different time zones. This hinders the ability to
communicate between countries and also allows for more competition to slow
down business
Changes in corridor traffic due to immigration patterns, country-specific
regulations, and changing economic conditions – These changes influence the
money-exchanging corridors of the company which causes increases or decreases
in the amount of money exchanged between each country, uncertainty of foreign
exchange rates ultimately affects the profitability of the company
Western Union is growing quickly and growing around the globe with the intent to
keep the growth rate in ―double digits‖, maintain brand reliability, and develop the
business in Sri Lanka ,India and China. The company needs to be aware of the
threats of only focusing on profit and growth and not maintaining other aspects of
the company
53. MSC-14-17-460 53
APPENDICES 3
WU Product Portfolio (BCG Matrix)
Cash Pick up - Visit an agent location near you with your government-issued ID.
With the (MTCN).
Bank account deposit - Receive the money in your bank account.
Mobile wallet deposit -Available in certain countries only
Details
Market growth
Rate %
Relative
Market share
%
WU market
share %
Close
Competitor
market sare %
(Moneygram)
Cash Pick up 8 2.0 55 28
Bank account
deposit
3 1.9 15 8
Internet based
trnx
10 4.0 20 5
54. MSC-14-17-460 54
Analysis of the WU BCG Matrix
The combinations of Growth and Share, as seen in the BCG Matrix, provide four categories
of SBUs for a Corporate Portfolio:
1. The ‗STAR‘ enjoys large market share in a rapidly growing remittance industry –
important because of additional growth potential. Profits should be ploughed back
into the business for future growth and profits. Internet based transactions are visible
and attractive, hence to be nurtured and developed.
2. The ‗CASH COW‘ is a dominant business in a mature, slow-growth industry with a
large market share, hence heavy investments in advertising and expansion are no
longer required for Cash Pick up method. Profits to be invested in other riskier
businesses.
Most corporations have businesses in more than one quadrant, where circle size represents
the relative size of each business and revenue generated.
56. MSC-14-17-460 56
32. REFERENCES
"Catch-Line and Argument," The Book-Keeper, Vol. 15, February 1903, p. 124. Other
writings by E. St. Elmo Lewis on advertising principles include "Side Talks about
Advertising," The Western Druggist, Vol. 21, February 1899, p. 65-66; Financial
Advertising, published by Levey Bros. in 1908; and, "The Duty and Privilege of Advertising
a Bank," The Bankers' Magazine, Vol. 78, April 1909, pp. 710–11.
By Markus Koch and Michael Dunn : Marketing Accountability -
https://www.prophet.com/thinking/view/616-marketing-accountability
Hamel, G., 1996, ‗Strategy as a Revolution‘, Harvard Business Review‘, 74(4), July/August.
pp. 69-82.
http://blogs.salesforce.com/company/2014/04/measuring-sales-performance-gp.html
http://www.referenceforbusiness.com/management/A-Bud/Balanced-Scorecard.html
March/April, pp. 80-88.Hamel, G., 1996, ‘Strategy as a Revolution’, Harvard Business
Review’, 74(4), July/August. pp. 69-82.
McKinsey & Co., ―Half the World is Unbanked‖, October 2009;
McKinsey ―Perspectives on Worldwide Payments‖, February 2010 ***%=C2B Payments &
Consumer Purchases in Cash by Region
Raj Agrawal, EVP and CFO September 11, 2014 presentation
http://ir.westernunion.com/files/doc_presentations/2014/Western-Union-DB-090914-FINAL-
Webcast_v001_l7flkr.pdf
Simons, R., 1995, ‘Control in Age of Empowerment’. Harvard Business Review 73(2),
Simons, Robert L. (1 December 1994). Levers of Control: How Managers Use Innovative
control Systems to Drive Strategic Renewal: How Managers Use Control Systems to Drive
Strategic Renewal. Boston, MA.: Harvard Business School Press. ISBN 978-0875845593.
Stewart, T., 1997, ‘Brain Power: Who Owns It. How They Profit From It’. Fortune, 135(5),
March, pp. 65-68.
