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The scenario in business today, especially those concerned with the global community is ever as complex as before. Much attention has been given to matters such as niche opportunities, limited time periods, the perpetual increase in the likelihood of risk, and the need for dynamic business decisions. These matters reflect the fast-paced society which has eventually led businesses into corporate innovations which have brought them in the global landscape and empire of international success.
1 - INTRODUCTION
The core purpose of the existence of every company is to generate profit in the course of its business performance as it enable itself top provide service to the general public market and performs it function in accordance with the policies set by the authorities while assuring the existence of corporate social responsibility. Every business, at the start of its operation operates with a business plan as its foundation and to also give direction for what shall lie ahead on its future. Moreover, time is of utmost importance, and alongside with it aspects such as technology, human nature, and competition in the industry were inevitably affected. Such instances show the need for a company to be able to constantly revisit their strategies and to implement new ones which will better adapt with the changing circumstances and still put them on the spotlight of the business.
In the course of this paper, the researcher will study one company - Western Union - including its current operation and historical data and relevant information which were related to its business performance from the time it started up to the present. Factors such as it current financial status, its employees, the marketing and human resource strategies currently employed by the company, its managerial direction, and other aspects related to its operation will be revisited and analyzed. At the end of the study, the researcher will then make recommendations which will be geared towards better business performance. These recommendations will be supported by data and facts on the current operation of the business while studying both internal and external factors and its effect on the business.
2 - COMPANY BACKGROUND
With the perpetual trends in globalization, particularly in international business, the general public is in continuous search of business entities which will provide them with their basic needs. More and more people are working in different places and earning money on different locations globally. With this, there is also a growing need for money transfer business in order for them to easily send moneys to their families who are in need. Western Union has been in continuous quest to provide its market with such service in the best of the company and for the best interest of the global market. The financial services provided by Western Union have transcended borders and crossed limits as it expanded its horizons over a number of locations to be able to make financial transfers an easier task.
The almost 150 years today, the name which Western Union carries embody a trusted symbol for being able to connect friends, family, and businesses in the global landscape. Being popular nowadays as a leader and an innovator in global financial services, the company has increasingly become a world market leader in the field of global money transfer through its estimated 410,000 agent locations on different parts of the world across almost 200 countries. From what has officially started as a business with roots grounded on their signature telegram business, the company has then evolved after years to offer an innovation in the field of electronic money transfer. More than the services which were initially offered during its establishment, the company has now also ventured into other services such as money transfer, money order, payment and prepaid services. While the business of telegram has been buried as part of the company's history being its initial business, Western Union is still on its continued legacy of being able to connect people from all over the world with financial services which are known to be convenient, fast, and reliable.
To be able to fully understand how the company became known as to its status nowadays, it is also important that we take a look at the roots of the company from the time it started to the time that it has expanded and became what it is known today. It all started in the year 1851 when the company was founded and was initially known as being the New York and Mississippi Valley Telegraph Company. Having started in the business of telegraphs, no one could have predicted that the business will evolve into a financial transfer business with a diverse function. Furthermore, it was on the year 1856, 5 years after when the name of the company was changed into Western Union to be able to signify the consolidation of several telegraph lines in the western part which can be reached by the old American telegraph system. In 1861 the company made a name by completing the first transcontinental telegraph line across the North America. The first successful stock ticket was introduced by Western Union in 1869 and in 1871 it introduced its newest addition to the business, money transfer. In the year 1896, the company expanded its business horizon by offering its services to other parts of the world such as Europe, Africa, and Asia. 1914 marked another milestone in the company as it introduced the world's first consumer charge card and in 1943 it marked another milestone as the company pioneered the first commercial inter-city microwave communication systems. In 1974, it introduced its first commercial satellite in the US and it was in 1980 where the company experienced greater revenue from money transfer services as compared to the telegraph services. In 1993, they introduced the first prepaid disposable telephone card. In the celebration of their 150 years in the business on 2001, they expanded to more than 100,000 agent locations on different parts of the world. Through the years, the company continues to innovate and provide a better service to the public to etch a legacy in the business of global money transfer more than anything else.
The values which adhere to their everyday operations can be assumed as the backbone of the global success that the company is currently enjoying. These values which they live daily who they are and what they stand for as an international business. At the heart of their operations, they live with these values as they interact with their consumers, colleagues, and the international market. These values which guide their principles include integrity, partnership, opportunity, passion, and teamwork. Business is done with absolute commitment to the principles of ethics, credibility, and honesty in their operations. They build a strong sense of partnership which enables them to have a better understanding of consumers and also enables them to deliver market services that could either meet or even exceed consumer expectations. They are also geared towards taking advantage of every opportunity that comes their way and thinking of it as ways in which they could establish a better company. They have an undying passion on what they do helping the public achieve their dreams. And most importantly, they operate on the basis of teamwork which enable them to establish a more inclusive and dynamic working environment where they all share the desire to serve and succeed.
Western Union also believes in the strength of their brand, size and reach of their global network, and convenience and reliability of their consumers being the key of the perpetual growth of the business in the global landscape. As they continue their quest of providing the public with money transfer services which are convenient, reliable, and fast, they also continue to expand their portfolio of business to give the consumers more of the service which they deserve. With revenue generated from two principal activities, money transfer and payment transactions, they derive their income from two segments: consumer-to-consumer segment and the consumer-to-business segment. In the consumer-to-consumer segment, the company provides the public with multi-currency and real time money transfer processing systems and provide physical infrastructures and staff which are essential in providing the transactions for money transfer in their numerous agent locations. The agents are generally paid on commission-based revenue which are shared by the sending agent and the receiving agent. Furthermore, in the consumer to business segment, the company processes electronic and cash payment to different organizations receiving consumer payments such as those which are related to utility services, finance companies, and even government agencies. These billing services are processed through the used of credit cards, debit cards, or bank accounts.
In the Asia Pacific Region, one of the countries in which Western Union has been exercising business is Singapore. Being a place of diverse culture having people from different parts of the world, most of which were overseas employees, there has been a recognized growing need in the place for money transfer services which are fast, convenient, and reliable. And with this need, Western Union has been in the quest to provide it. In response to this need, western Union has already established more than 70 agent locations in Singapore where their customers can send money to anyone abroad or transact other forms of financial services and payments. Another innovation of Western Union in Singapore is the introduction of the Gold Card where they enjoy different benefits such as reward points, insurance coverage, phone time, shopping sprees, shopping coupons, and discounts on partner establishments.
3 - MARKET PROFILE
Currently, Western Union is already considered as the world's largest money transfer company in terms of the volume of transaction with a share of 17% n the global market as of 2007.
3-1. Market Risk
Like in any other business, the performance of Western Union be it in the global market or in Singapore alone has been associated with several risks which treaten their market or their economic situation in the industry. Risks are but normal in every business, and in Western Union they were able to develop certain strategies in order to combat these risks and to perform business at their best despite the existence of internal and external risks. One of the risks faced by the business is the foreign currency exchange rate. Other risks associated with their business performance include interest rates, credit risks, and regulations or policies set by the government which is beyond the control of the management of the company.
3-2. Organizational Structure
After the retirement of two of Western Union's highest officer, it's CEO, Christina Gold revamped the management structure of Western Union as she sees fit in the current situation. The CEO decided to realign the streamline of the operation of the company into two global regional structures - the Americas and the EMEA-APAC. The establishment of these two new regions is said to be done with hopes to potentially accelerate growth and to be able to provide a much stronger linkage between the company's global services and the consumer base. Such is geared towards continuous provision of the best management structure which could quickly respond to the needs of the market. By changing the management structure, they also believed that they were able to add synergy while learning more effectively from each other and growing their business more effectively as well.
3-3. Marketing Strategy
With the continuously booming global market as brought about by migration and overseas employment, there has also been growth in money transfer services. With that, Western Union's marketing strategies have been geared towards their local market or what has been known as marketing strategy for ethnic consumers. This ethnic marketing strategy of Western Union provides focus on working around the many complexities of its customer base and the many segments of its target market. Being in operation in the global landscape, it is of utmost importance that the marketing strategy of Western Union be geared towards adapting to the local market depending on local tradition and culture to gain better acceptance in the location. As part of its marketing strategy, the company is also in its way towards introduction of new technology and innovation in the field of global money transfer. To sum up the marketing strategy of Western Union, it has been said to be a matter of yellow and black branding which could be aptly described as the "Coca Cola" of the global money transfer market.
3-4. Competitive Analysis
Just like any international business, Western Union does not stand alone in the industry. It has a number of competitors which are either directly or indirectly in the performance of the business Western Union provides. The industry to which Western Union competes includes electronic payment systems, financial services, and transaction, credit and collection. Furthermore, aside from Western Union, what has been considered as the major player in the consumer-to-consumer money transfer aside from Western Union is the MoneyGram International, a much smaller company. If Western Union holds 17% of the global market, it's competitor, MoneyGram International holds only 6% of the market. Obviously, in terms of financial services and money transfer what perhaps could be the primary competitor in this are the banks which basically do the same. The only problem with banks is that customers are required to have their respective bank accounts in order to transfer money. Moreover, in the consumer-to-business industry the competitors which can be considered are those electronic payment systems which include the offering of eBay and PayPal of Internet-based alternative towards money transfer.
3-5. Financial Performance
In the year 2009, the company is estimated to have generated 5.1 billion dollars in revenue and 85% of this revenue was generated from the consumer-to-consumer segment of the company which refers to money sent between two individuals from separate locations through local agents of the company. Moreover, consumer-to-business segments account to 14% of the said revenue. More than that, the company is also dedicated in expanding its international reach from which 65% of its revenue was from international money transfers, what has been referred to as the core of the business of the company.
3-6. Economic Condition
It is undeniable that the global economic crisis has already inflicted business pain among international companies. The economic condition and the global condition have prompted many businesses to redirect and revisit their strategies with hopes that they will still succeed. It is said that the industry of money transfer in the global market is susceptible to the fluctuations in the condition of the economy. Being an international business, the sluggish conditions of the economies in the United States, Canada, and Mexico has also led to decline in revenues in the regions mentioned. However, revenue in the Asia pacific region grew by an estimated 40% showing the potential of the region as part of the emerging markets. Globally, there has been an increased demand for the money transfer services provided by Western Union which was also confronted by increased competition with the emergence of other businesses which exist with the same purpose and service.
3-7. Market Trends and Forces
It is quite unfortunate that the condition of the global and domestic economy is being sluggish in the past periods. This sluggish economic trend has also led to lesser money transferred into different locations, which in the end, will turn into lesser revenue for Western Union which is the global leader for money transfer. Certain regions such as the United States and Mexico have shown a dramatic decline in terms of revenue because of this trend. Moreover, although revenue from these regions have decreased, the company still holds these areas as two of their most important regions that is why they are on a conscious effort of redirecting their strategies to be able to regain revenue on the said areas. Moreover, although the trend is slowing and dropping on the American region, other places in the Asia Pacific registered double-digit increase which prompted the emergence of new markets and forced the company to pay extra and full attention to this region in order to continue their reign in the market. Another trend in the business of Western Union is the increased in competition with the continued increase of entities existing for the same purpose and service. The existence of these competitors has forced prices to be lowered in order to match the competition.
4- . CHANGING THE WAYS
In order to improve the service which was currently provided by Western Union in Singapore and in other parts of the world, is only essential that the strategies be revisited and to implement new policies which will be geared towards improvement in business performance. The succeeding paragraphs will present various recommendations by the researcher as he sees as viable for the company and as the researcher perceives to be an effective move.
Risk management is very essential in the success of a company. Previously, the researcher has identified the risks associated with Western Union including risks associated with foreign currency exchange rates, interest rates, credit, and government regulation. These risks are inevitable but then they are manageable. In order to be able to manage these risks, preparedness for whatever economic turn-down is necessary. A pre-determined risk management plan authored by the company's best minds is recommended by the author so that when confronted with the situation, they can easily manage the threat and go on with business performance. This risk management plan will help them set a direction towards where they should be headed in order to at least minimize the risk.
One of the strategies which the researcher recommends is another revamp in the organizational structure. As mentioned before, the CEO Christina Gold divided the management structure into two regions, the Americas and the EMEA- APAC which includes the Asia Pacific Region like Singapore and Philippines. The company has more than an estimated 400,000 agent locations world wide. For the researcher, it is not enough that the highest of the management be divided into just two regions. They should be divided into a per continent basis. For example, Asia Pacific would be a stand-alone region, separate from the EMEA - APAC so as Europe and Africa. Through an establishment of these smaller custodial regions, higher level managers could be able to provide more focus on what has been happening on a per country account. This would give them more focus and dedicated attention into local operations. Moreover, a decentralized management is also recommended by the researcher in terms of the organizational structure. There are good leaders in the regional level of management; however most of the decisions were coming from those who were situated in the United States for they have control of the regional levels. What is only vital and essential in implementing a decentralized organizational structure is thaty the CEO should see to it that only the right and intelligent people were placed on regional levels to be able to be assured to yield the best result out of their performance. The regional level is very important in the business function of Western Union because this level is the one which will be more closely associated with agent locations on different countries in the region.
Moreover, competition is another problem which poses a threat in the business performance of business. Although Western Union is the current leader in the market, it should be emphasized that competitors are slowly emerging and they are slowly tapping the market which used to be served by Western Union. In order to combat this problem, the researcher recommends that the company plan out on strategies that could lower the level of competition in the global market. A more aggressive advertising campaign is necessary in order to keep the word on their existence and to perpetually make the world aware that they exist to provide the service that the public deserves. The company also needs to revisit its pricing strategy against competition. If there is a great relevance between the price of the service and their standing in the market, they might as well consider the need to offer more reasonable prices to the public in order to capture a greater share of the public. Moreover, in the restructuring of their pricing strategy, they must see to it that the given price is right without them operating on a loss. Furthermore, to also potentially combat competition especially in the consumer-to-business segment, Western Union must be able to utilize the use of technology and also use internet-based money transfers which will make the process easier for the clients and also for the agent locations.
The financial performance has also been discussed. As what has been shown, in some areas particularly in the American region, revenue showed a dramatic decline while it showed dramatic increase in the Asia Pacific region. To be able to achieve a more stable financial status in all locations, the researcher recommends cost minimization and resource allocation to be able to hold control of the money the business is earning. It is very important that the business minimize the cost associated in the performance of the business to yield the most from what they earn. The cost structure can be improved by relocating, outsourcing, and consolidating certain operations especially among local agents which are not quite performing well in terms of the revenue it generates.
Being a global business, marketing is also a very important aspect. It is very important that the marketing strategies undertaken should be in line with the business performance and in line with their targeted goals. Currently, Western Union employs a great marketing strategy with focus on ethnic marketing and bringing about mobile marketing as well. Nonetheless, other areas should be improved as well. In Singapore for instance, as part of their marketing strategies they have introduced the existence of the Gold Cards which entitles the bearer with some benefits. However, such card is only available in Singapore and selected countries. As part of their intensified marketing campaign, they should introduce the cards into other locations as well so that the consuming public can enjoy the same benefit. The introduction of this card to other countries will also motivate the customers to transact with Western Union because they are aware that each transaction completed is equated with corresponding reward points. A rural marketing strategy should also be implemented. The company is in operation on rural areas in global locations. Not all agents are situated on urban areas where there has been easy access to new media therefore more facets for advertising. The rural areas, on the other hand, are depressed and poor areas but still have needs for money transfer services. With that, it is recommended by the researcher that special marketing strategies should be formulated with key focus on rural areas and rural market especially in the Asia Pacific.
Aside from the specific strategies which were presented above, the company should also address strategies in order to combat other problems which they would eventually face in the future like those associated with migration laws and government policies depending on their locations, liquidity of their assets, changes in technology, lost of confidence of the general public, and catastrophic events among others. Some of these instances are unpredictable yet they are inevitable. The researcher recommends that they propose strategies which will make them strong despite the coming of the mentioned problems. Again, it must be stressed that preparedness is the key so that the very moment the company is confronted with the problem; they are prepared with a set of viable solutions.
Singapore, just like any other global location of Western Union has a market with growing demand for money transfer. More than that market, it has a technologically-advanced environment and intelligent consumers. With that, it must be taken into account that the strategies must reflect intelligent moves to take its full effect in the Singaporean market.
The strategy which should be implemented by Western Union needs logic driven, strong, and good decision making tool which can formulate and evaluate various practices geared towards a better financial performance and provision of a more satisfying customer service. These strategies should be easily referable, and in common language, could be applied to all their global locations with standard and common parameters accepted independently.