A term paper on College Assurance Plan and the pre-need Industry

Date of Publication

2001

Document Type

Oral Comprehensive Exam

Degree Name

Master of Business Administration

College

Ramon V. Del Rosario College of Business

Department/Unit

Decision Sciences and Innovation

Defense Panel Member

Enrico L. Cordoba

Abstract/Summary

College Assurance Plan is the country's leader in the pre-need industry. It started operations in February 1980 offering pre-need educational products to the market. Two years later, the company started offering pension products and currently offers a full line of insurance products aimed at improving the welfare of the Filipino family. Education and pension plans however remain to be firm's core products.

The industry is composed of over 80 pre-need firms, as listed by the SEC. However, the industry is unbalanced in the sense that majority of the activities of the industry can be attributed to the top 10 to 15 firms. The industry skewed highly in favor of the top firms. CAP has remained to be the industry leader while Pacific, Phil-Am and Prudential remain close competitors.

As the industry is highly concentrated among the top firms, competitive rivalry is high. The major players are industry veterans such as Prudential and Pacific. Phil-Am on the other hand is relatively new to the industry yet has gained a significant foothold due to its multinational affiliations and media savvy advertising. However, CAP has maintained its number one ranking in the industry and ranked 146th among the Top 5000 list of SEC in 1999. The strategies proposed in this paper are aimed at maintaining the market leadership of CAP amidst heightened competition.

Pre-need firms in general need to have three key factors in place, which would help them achieve success in a highly competitive industry. A pre-need firm must have a competent sales force deployed the firm must have a trust fund in place that is managed accordingly and finally the firm must have the structure necessary to be able service the benefits of maturing plans. The weights of these building blocks are sequential since they build on one another. To a great degree, the sales force will dictate the success of the pre-need firm. A portion of the firm's sales is allocated to the trust fund, which is managed by trustee banks. It is from the earnings of the trust fund that the firm will now draw on to deliver the financial benefits guaranteed by the plan.

In essence, CAP's vision is that of seeing the next generation of Filipinos having access to equal opportunity trough education. With its current strategies, CAP has fundamentally attained this vision. The proposed strategies therefore are crafted with the aim of maintaining and sustaining CAP's processes of attaining its vision of providing Filipino parents the means to send their children to college as well as improving the welfare of Filipino families. The proposed strategies are also meant to defend CAP's leadership of the industry by heightening the sales of the firm through alliances with other firms by recruitment of more effective sales force tapping other marketing channels that will compliment the drive of the sales force as well as training initiatives aimed at improving the sales force's current level of effectiveness. It is conservatively estimated that collectively, the strategies proposed will result in an annual increase of the firm's gross revenues by 15%.

CAP's present strategies are aimed at generating sales, ensuring sufficiency of the trust fund, projecting an image of stability through its buildings and fostering closer ties with the community through its Community Development Center and Barangay Development Program.

The proposed strategies are aimed at increasing gross revenues as well thereby preserving the firm's leadership status. They are proposed to further reinforce CAP's main strength, which is its sales force. The desired impact of the proposed strategies is improvement in terms of sales through strategic alliances as well as through reinforcement among the ranks of the sales force. The implementation of these strategies is of the utmost urgency due to the increased activities among major players in the industry. The battlefield has been taken to the malls as well as other public places by competitors as well as heightened advertising blitz evidenced by numerous television commercials and billboards.

Historically, CAP has shied away from employing advertising and media blitz preferring to rely on the efforts of its sales force. Such a strategy has proven successful in the past. However the recent upsurge of Phil-Am is evidence of the impact of advertising. This is a concern CAP is addressing through its present strategy of employing a celebrity endorser. However CAP's thrust must still be in employing strategies, which will supplement and reinforce the efforts of its sales force since sales, is the main battleground among pre-need firms.

Based on selected ratios and financial statements, CAP is gauged to be stable, profitable and liquid. However improvements can still be made in terms of increasing revenues relative to the firm's expenses. It is noted in the financial analysis that while the firm's expenses increased, increases in revenues were not as dramatic. Heightened competition within the industry would account for the variance.

It has been the vision of the firm to play a vital role in ensuring that Fiipino children are able to enter college by helping parents set aside funds for this future need. This vision has expanded as well to include the whole family particularly those who are about to reach retirement. The proposed strategies will allow CAP to heighten its marketing activities and to facilitate for a deeper penetration of the market thus maintaining market leadership.

Abstract Format

html

Language

English

Format

Print

Accession Number

OCE1091

Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

1 v. (various foliations) ; ill. (some col.) ; 28 cm.

Keywords

Insurance companies--Philippines; College Assurance Plan

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