From customer desires on intangible resources to improved goal achievement:
QFD put into practice
Thesis on the possibilities for Abank ABC to more effective and efficient goal realisation, by means of an improvement of the product via the intangible resources. This improvement follows from an inquiry into the desires of the customers using Quality Function Deployment.
This research has been conducted at a (part of a) Dutch bank. In this thesis confidential information can be found on that bank. To respect this confidentiality the names of the bank
and its units have been altered. ABC is the unit on which behalf the research has been conducted. ABC is part of Abank Lease, on its turn part of Abank (or: Abank Group).
Mischa Weijers Utrecht, June 2004
From customer desires on intangible resources to improved goal achievement:
QFD put into practice
Thesis on the possibilities for Abank ABC to more effective and efficient goal realisation, by means of an improvement of the product via the intangible resources. This improvement follows from an inquiry into the desires of the customers using Quality Function Deployment.
Research by:
Mischa Weijers Melissekade 57 3544 CT Utrecht The Netherlands +31306703773
drmischa@hotmail.com s1013688
Research supervisors:
R.D.W. PRMan (Program Manager, Abank ABC)
Ir. T.H.B.G. BDMan (Business Development Manager, Abank ABC)
Dr. P.C. Muller (Faculty of Management and Organisation, University of Groningen) Ir. J. Slagter (Faculty of Management and Organisation, University of Groningen)
Copyright ©2004 by Mischa Weijers. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, without prior written permission of the author. Abank ABC and the faculty of Management and Organization (University of Groningen) as well as the University of Groningen do not assume any responsibility concerning the content. Although this report is drawn up with the utmost care, the author does not assume any responsibility for damage caused by imperfections and mistakes in this report.
Contents
Preface... 4
Introduction ... 5
1 An introduction into leasing ... 7
1.1 Leasing ... 7
1.2 Financial lease ... 8
1.3 Operational lease ... 9
1.4 Vendor lease ... 9
2 Diagnosis ABC... 10
2.1 Analysis essential process ... 11
2.1.1 Organisational charts... 11
2.1.2 The product... 11
2.1.3 Financial profile ... 12
2.1.4 Systems (Process scheme)... 13
2.1.5 Structure ... 15
2.1.6 Strategy ... 15
2.2 General outline ... 16
2.2.1 ABC story and critical incidents ... 16
2.2.2 Positioning within an organisational typology... 18
2.3 Limited diagnosis business units... 19
2.3.1 Abank Lease España ... 19
2.3.2 Abank Lease Nederland ... 19
2.3.3 Abank Lease Belgium... 21
2.3.4 Abank Lease France ... 21
2.3.5 Abank Lease Polska... 21
2.3.6 Abank Lease UK... 21
2.3.7 Abank Lease Italia ... 21
2.4 Reflection ... 22
2.4.1 Summary of problems and constraints ... 22
2.4.2 Explanation of main research subject ... 23
3 Research set-up ... 24
3.1 Research strategy ... 24
3.2 Research design ... 24
3.2.1 Problem formulation ... 24
3.2.2 Theoretical concepts ... 25
3.2.3 Data sources ... 28
3.2.4 Measuring and observation methods ... 28
3.2.5 Method of analysis and reporting ... 29
3.2.6 Limiting conditions ... 29
3.2.7 Assumptions ... 29
3.3 Interview design ... 29
3.3.1 General interview methodology ... 29
3.3.2 Research population and sample ... 30
3.3.3 Interview processing ... 30
4 An introduction into Quality Function Deployment ... 31
4.1 Realisation of QFD ... 31
4.2 QFD in practice ... 32
5 Results and analysis of the interviews ... 34
5.1 Business units’ desires... 34
5.2 Design requirements ... 35
5.3 Establishing connections... 36
5.4 Evaluation... 38
6 Recommendations... 40
7 Conclusions ... 44
References and sources ... 46
Appendix 1: Overview ABC vendor lease programs February 2004 ... 49
Appendix 2: Financial data ... 49
Appendix 3: Process scheme ... 50
Appendix 4: Justification use of ISO process scheme... 51
Appendix 5: Interview protocol... 517
Appendix 6: Interview report Abank Lease Nederland ... 54
Appendix 7: Interview report Abank Lease Belgium... 57
Appendix 8: Interview report Abank Lease Deutschland... 60
Appendix 9: QFD matrix – House of Quality... 63
Preface
The text in front of you is a thesis on Abank ABC B.V.1 (further on: ABC). This thesis contains my graduation research, which I carried out in order to bring my study Management and Organisation at the University of Groningen, specialization Business Development, to an end.
ABC offered me the possibility to do so.
Aim of the research was to investigate for ABC the possibilities to more efficiently and more effectively realisation of the goals in the coming year and years to follow. This report presents the design and execution of the research as well as a number of recommendations to ABC.
By implementing (some of) these recommendations ABC is supposed to be able to realise its goals more efficiently and effectively.
Hopefully this report shows the interest and enthusiasm I had when writing it. The past months have been very eventful for ABC and myself. It was sometimes hard to keep up with all the changes around us. It is to be hoped this research proves to be precursory to very prosperous years to come.
My gratitude goes out to everyone who helped me in the course of this research project. I would like to thank especially the Business Development Manager and the Program Manager of ABC. Not only did they share their insights, they also have continuously motivated me. In addition I want to thank my university supervisors Dr. P.C. Muller and Ir. J. Slagter for their directions and pleasant co-operation.
Mischa Weijers Utrecht, June 2004
1 ABC is a private company with limited liability.
Introduction
In this introduction the organisation for the benefit of which the research was carried out and the research itself are presented to the reader.
The organisation
In its present form, ABC only exists for four years. It is part of Abank Lease Holding. Within Abank Lease Holding, part of Abank Group, a distinction is made between general leasing (including ABC) and car leasing. Abank Lease Holding is present on the European market.
Leasing is a generic term for all forms of object specific financing and (possible) additional services (e.g. insurance and maintenance), by which a lessor enables a lessee to make use of assets for a long-term period. Two main types of leasing can be distinguished, namely financial lease and operational lease. Whatever the type of leasing, in all cases the lessor has made investments in or invests in the asset, to which the lessee takes on payment obligations towards the lessor (Van Hees, 1997).
ABC is involved in, as suggested by its name, vendor lease (also called sales aid leasing). ABC provides short-term and long-term financing solutions as well as client portfolio management. It offers innovative and effective lease programs for manufacturers and suppliers of capital goods. Vendor lease is an instrument for these manufacturers and suppliers to offer products including a financing solution, nationally as well as internationally.
With vendor leasing the co-operation between lease company and manufacturer or supplier (further on: vendor) is directed towards supporting the sales possibilities of the vendor by means of financing solutions. The role of ABC is to develop an international vendor lease program, close a (framework) contract and introduce and implement the vendor lease program in the nine European general lease companies of Abank Lease Holding. The programs are then executed between the local Abank Lease Holding offices and local vendor offices. ABC its role then shifts to co-operating with the vendor in terms of client portfolio management, for example by providing reports on payments due by lessees (reporting on payment behaviour) or by indicating which lessees draw near to the final term of the lease agreement.
The background
The inducement for the research was a number of uncertainties and problems to ABC. To a certain level uncertainties existed with regard to local circumstances of influence on a lease program. Another example was the distribution of power and control, making it often difficult for ABC to introduce and implement lease programs. Another important issue of concern to ABC were the goals to achieve. More precisely how to achieve those goals in the best possible manner. The strategic goal pronounced by Abank Lease Holding indicated that ABC in the year 2004 needed to make up ten percent of the production2 of Abank Lease Holding (excluding car leasing). ABC has formulated two goals in 2002 to address this strategic goal of the holding. Realisation of the goal can be done by achieving a yearly growth in production of 15% after 2004 and achieving an absolute value of the production of 350 million Euros by the end of 2004. Less evident is how to achieve those goals more effectively and efficiently than done in the previous years.
The problem
Performance of the organisation is directly connected to the extent to which goals are achieved. Abank Lease Holding assesses the performance of its affiliate and thereby decides on the right of existence of that affiliate. This assessment is naturally done in the light of the strategies of Abank Lease Holding and its parent companies. At the start of the research it became clear ABC was not going to be able to materialize the goals formulated in 2002. The goals to realise for 2004, as specified by Abank Lease Holding, were not precisely known at that time. However, it was obvious that these goals will be related to the strategic vision of ABC and Abank Lease Holding. Not performing in accordance with the goals set by the
2 Production being defined as the investment value of the underlying assets financed by means of leasing.
holding threatened the existence of ABC. How to optimise the realisation of the goals for 2004 and years to follow was therefore the true and most significant problem of ABC.
The assignment
One can relate this problem to many causes. It is easy to formulate several causes that hinder the realisation of the goals, a number of which are already mentioned. Most described possible causes can be related to the co-operation of ABC with the business units and Abank Lease Holding. Gaining insight in the precise form of co-operation with these business units and the holding is a prerequisite for being able to try to realise the goals in the coming years.
Or, an increase in the knowledge of for example what processes and structures are active between ABC, the holding and the business units supports ABC in the pursuit of achieving the goals. The assumption is that provision of relevant knowledge of and insight in the operating of those forms of co-operation clears a barrier for ABC to achieve the goals.
The assignment as formulated and agreed upon comes down to carry out a research for ABC into the possibilities to more efficiently and more effectively realisation of the goals (“doelstellingen”) in the coming year and years to follow. On the basis of the preliminary examination (which contained a diagnosis of ABC; see the concerning chapter) a choice was made to investigate how ABC can improve its intangible resources in order to improve its product to the business units3. An improvement of (parts of) ABC its product is believed to lead to improved goal realisation. As ABC has indicated to disapprove of disclosure of company information, the research will produce a confidential company report and a scientific public report (thesis).
The context
ABC is as mentioned before active for about four years. A young organisation that can be characterised by a great many uncertainties. An organisation with enthusiastic employees willing to do something about these uncertainties. To give an example: ABC is currently involved in structuring a part of its business processes in combination with developing standard documents. It is in this context a contribution can be made by the research. From a different background with a different perspective, the researcher is an extra input of value in the process of improving ABC. By means of the research the researcher is actively striving for making a contribution to the functioning and the performance of ABC.
The intention
This thesis serves three purposes. First of all is it intended to aid ABC. By presenting the research and its findings to all ABC employees, ABC is enabled to improve its organisation. In the long run should this help ABC to carry out their various duties and of course is supposed to aid ABC in improving its performance as well as to expand its business. The second purpose is to demonstrate to the faculty of Management and Organisation sound and well- thought out ‘practising’ of Management and Organisation. This thesis depicts a research executed according to scientific and faculty standards. Finally, this report enables me to graduate and thereby ending my student days at the University of Groningen.
The structure
The first chapter provides an introduction into leasing. This chapter is to familiarise the reader with the basic product of ABC. Chapter two comprises the diagnosis of ABC. This chapter draws extensively from the preliminary examination. The complete research set-up is presented in the third chapter. In chapter four the theoretical background is presented. The paradigm connected to the conceptual model of the research, Quality Function Deployment, is presented to the reader. Chapter five goes into the collection of the research data and subsequent analysis of that data. Chapter six on its turn deals with the recommendations following from that fifth chapter. The final chapter summarizes the research conclusions.
3 An explanation on this choice is presented to the reader in the second chapter.
1 An introduction into leasing
In June 2003 Leaseurope presented the results of the 2002 survey of the Leaseurope affiliated leasing companies. From this survey stems a ranking by which becomes clear that over 200 billion of value of assets has been financed by leasing4 by the end of 2002 (Leaseurope, 2003). Obviously leasing as a way for companies to finance assets has become as regards volume more than substantial, especially considering the absence of non-affiliated companies in the survey and the limited European angle taken.
Despite this growing importance of leasing, common and clear-cut definitions of leasing and lease5 are hard to find. Many countries lack a legal definition and even in literature on leasing agreement on the exact meaning of the subject is exceptional. The concept of leasing is mainly clarified in daily business practice by considering transactions and agreements with a number of common features.
In the following paragraph a summary of the common features of leasing is presented6. It is meant as an introduction into leasing, as to familiarise the reader with the basic product of ABC (next to client portfolio management services). The second paragraph deals with financial leasing, one of the two main types of leasing. The other main type (operational leasing) is at issue in the third paragraph. The chapter is then concluded with a paragraph on vendor leasing, a form of leasing specifically carried out at ABC.
1.1 Leasing
In his book on leasing Van Hees (1997) explains that leasing usually is seen as a generic term for a number of agreements bearing resemblance with renting agreements. However, leasing differs to a large extent. Leasing is a general term for all forms of object specific financing and (possible) additional services (e.g. insurance and maintenance), by which a lessor enables a lessee to make use of assets for a long-term period, usually for more than one year. Whatever the type of leasing, in all cases the lessor has made investments in or invests in the asset, to which the lessee takes on (financial) payment obligations towards the lessor. Leasing essentially differs from renting if there is a connection between the length of the agreement and the economic life span of the assets in question (Van Hees, 1997).
Leasing relates to all sorts of durable capital goods with few exceptions. Naturally only goods of which economic value can be determined are of interest. Leasing relates to new goods and goods already in use: by entering into a leasing agreement, the lessee already making use of an asset, can gain (some of) the advantages that (can) accompany leasing. A leasing agreement can be settled between at least two parties, but in more complicated lease agreements multiple parties will be involved. As is the custom, most lessors exclude assets of small value (the cost of setting up and carrying out the lease agreement in certain case outweighs the advantages) and fixed assets such as elevators and air-condition systems (uncertainty can arise with regard to who owns the equipment).
Two other distinct aspects of lease agreements can be mentioned. First of all, the lease agreement usually contains a minimum term. In this term it is impossible for the lessee to terminate the agreement. The maximum term of any lease agreement is always bound by the economic life span of the lease(d) asset. Secondly, the lessee always initiates the lease.
The lessor will only proceed to invest in an asset when in possession of a lease agreement or really certain of closing such an agreement. Apart from the question of which party actually invests in the asset at hand, it is the lessee who selects the lease object (Abank Lease Nederland, 2002).
As a type of financing, leasing offers a number of advantages to a lessee7. For instance the absence of the need of finding a large sum of cash to buy an asset outright. By leasing the lessee retains other financing possibilities. Leasing also enables the lessee more
4 The leased assets are valued after depreciation for contracts issued before December 31, 2002.
5 The terms leasing and lease are used interchangeably in literature as well as in daily practice. This text will not stand apart in that respect.
6 The description of leasing in the following and subsequent paragraphs is based on leasing in the Netherlands.
7 The advantages mentioned pass over the alterations that exist between particular advantages of different forms of leasing in different circumstances.
easily to set costs against benefits of using an asset. Most of the documentation is very straightforward and a leasing agreement can easily be tailored to a specific lessee. Normally, the lessor his security is primarily the leased asset. Another advantage can be the lower cost of acquiring the asset on account of tax benefits. Moreover, leasing offers the possibility to make use of an asset, without having to account for that asset on the balance sheet. An improvement of solvency ratios can instigate the use of leasing. In case of cross-border leasing the possibility exists to exploit fiscal differences between countries.
Two main types of leasing can be distinguished, namely financial lease and operational lease. This distinction is based on indicating to whom the lease(d) asset belongs;
under whose business property the asset can be shared. In bearing resemblance with business reality, the difference between financial and operational lease subsequently has its implications for instance regarding legal and fiscal regulations (Van Hees, 1997). An overview of the two types of leasing is given below in figure 2.
Figure 1. Overview financial lease and operational lease
1.2 Financial lease
In case of financial lease, the financing of the asset is the first matter of importance. Financing is the all-embracing dominant characteristic. The lessee wants to make use of a certain asset and does not want to spend the purchase price at once. The lessor (provider of the lease) enables the lessee (buyer of the lease) then to make use of the asset, in exchange for periodic payments (Van Hees, 1997). The lessor lays out the purchase amount, but the lessee assumes economic ownership. The lessor retains legal ownership until the lessee makes the final payment. This way the asset serves as certainty for the lessor to regain his investment. If a purchase option exists at the end of the lease agreement, this can only be of symbolic value. By way of illustration: the asset belongs to the lessee and the lessor puts up the initial investment.
Financial lease is also called full pay out-lease, meaning that the periodic payments (further on: rentals) are done according to a complete write down of the asset (Ingelbrecht, 2000). The length of the leasing agreement is therefore related to the economic life of the asset. In this context a connection between the rentals paid by the lessee and the depreciation of the asset in question is assumed when considering financial lease.
Several implications stem from the lessee carrying economic ownership and obtaining complete ownership after payment of the last rental. For instance, the lessee accounts for the asset on his balance sheet, the lessor is only responsible for justifying the periodic payments received from the lessee. Matters like maintenance and insurance are
Financial Lease Operating Lease
Objective of lessee "Financing" "Use"
Pay out within lease period Use of asset for certain time
Also called Full pay out-lease Non full pay out-lease
Who owns the asset(s)? Economic ownership of lessee Full ownership of lessor
Who accounts for asset(s)? On-balance (lessee) Off-balance (lessee)
Duration of contract Economic life of asset Shorter than economic life of asset
Risk-bearing Lessee runs risk of value reduction of
asset Lessor runs residual value risk
Relation rentals/depreciation Relationship between rentals and depreciation
No relationship between rentals and depreciation
Options at end of term Full ownership (of lessee) after final
payment Purchase option
Renewal option Return option
clearly at the expense of the owner, the lessee. In case of financial lease the lessee runs the risk of value reduction of the asset.
1.3 Operational lease
The objective of operational lease is not, as was the case with financial lease, the financing of the asset, but the use of the asset. The lessee is not interested in owning the asset, solely in making use of the asset for a certain time. The term of an operating lease is with that in mind always smaller than the economic life of the asset. A relationship between the rentals and the depreciation of the asset is as is the custom non-existent. Ownership of the asset is completely possessed by the lessor.
Because the lessor owns the asset, he accounts for the leased asset on his balance sheet. The lessee states the rentals on his profit and loss account. The lessor as owner runs the residual value risk. At the end of the lease agreement the asset automatically returns to the lessor. On occasion the lease agreement may include a renewal option and a purchase option to the lessee (only at fair market value).
An operational lease agreement can be seen as a provision of a service, whereas a financial lease is more of a monetary arrangement. Exactly because of this distinction the operational lease is a non full pay out-lease, meaning that the lessee does not repay the lessor his complete initial investment. Operational leases sometimes include additional services such a maintenance and insurance.
1.4 Vendor lease
Leasing can also be distinguished by the way the lease product is offered to customers.
According to Abank Lease Nederland (2002) direct lease and vendor lease can be discerned.
Direct lease means that the asset is directly offered by the lessor to the lessee. In case of vendor leasing an intermediary offers the asset to the lessee8. Intermediary stands for the manufacturer or supplier (further on: vendor) of the asset(s) at issue.
Vendor lease offers a number of distinct advantages to a vendor9. Among other things, a vendor gets involved in vendor leasing to improve on the quality and quantity of his sales. The lessor enables the vendor to offer its customers apart from the product itself a way of financing that product. This could increase sales by making it easier for customers to compare benefits and costs of use of the product. By co-operating with a lessor, the vendor bears no credit risk on his customers in case the vendor considers offering a finance plan to his customer himself. Vendor leasing offers the possibility of off balance financing of customers. The lessor has access to low-priced funding and can offer next to this the booking, billing and collecting that stems from a leasing agreement. An internationally operating lessor also brings in local market expertise with regard to legal, fiscal and accounting aspects. Additional revenue can possibly be generated for example from maintenance agreements and insurance activities (Ingelbrecht, 2000). Another benefit to the vendor lies in gaining customer loyalty. The vendor for instance has insight in the expiration of the lease agreement and can take advantage of this knowledge by staying ahead of his competitors (for example by offering a secondary term). Entering into a lease agreement saves the customer time and effort negotiating with his bank along with his supplier. An international vendor lease program comes down to a uniform pricing agreement in multiple European countries, one contact address and one party offering monthly reports desired by the vendor (for example with turnover statistics).
8 Note that vendor lease can imply financial lease as well as operational lease. The binding element of vendor lease is approaching the lessee indirectly via the vendor.
9 With reference to footnote 6.
2 Diagnosis ABC
The diagnosis depicted in this chapter is derived from the preliminary examination10. The problem formulation of the preliminary examination was drawn up using De Leeuw (2000). De Leeuw (2000) divides the formulation of a problem in three parts, namely the research objective, research question and partial questions. The research objective of the preliminary examination was closely linked to the assignment formulation. This assignment formulation came down to making a contribution to ABC with the research by enabling ABC to more efficiently and more effectively realisation of the goals in the coming years. The research objective of the preliminary examination was to be part of that contribution.
The research objective of the preliminary examination was stated as follows:
Aim of the preliminary examination is to diagnosing ABC and the business units, in order to shed light on and insight in the (possible) problems both are encountering. The preliminary examination should result in drawing up a problem formulation of the main research.
The research question:
Which of the distinguished problems encountered by ABC are the most indicative of possibilities to realise the goals (laid up by Abank Lease Holding or developed by ABC) more effectively and efficiently?
The partial questions:
9 What constitutes ABC?
9 What constitutes the other general lease business units of Abank Lease Holding?
9 What problems does ABC encounter internally?
9 What problems does ABC encounter relating to the other general lease business units of Abank Lease Holding?
9 How can the distinguished problems be related to the realisation of the goals of ABC?
As said, the diagnosis depicted in this chapter is derived from the preliminary examination.
The design of the preliminary examination was based upon diagnosing ABC. De Leeuw (2000) indicates that diagnosing11 an organisation comes down to modelling and assessing the functioning of that organisation. It involves describing an organisation and by doing so determining the main (most significant) problem. The aim of the diagnosing research is on indicating and clarifying problems within an organisation, and it is for this reason that this technique was chosen. Diagnosing ABC is in this case of value for three reasons, namely providing an overview of the organisation, indicating (possible) problems of the organisation and establishing references to (possible) causes. This definition of diagnosing was chosen because of the indication that it should be able to provide sufficient input for the main research, while not being too time-consuming as the broad definition would be.
Ramondt (2002) states in his book on organisation diagnosis that the preliminary examination serves to enable the researcher to develop an image of the organisation under investigation. In order to do so, two subjects had to be dealt with in that regard. First, a general outline of the organisation had to be drawn up. After this, a rough analysis of the essential process of the organisation should follow. Together these two would be the filling-in of the diagnosis conception of De Leeuw (2000) and thereby make up the preliminary examination.
The overall tendency of both diagnosing notions as presented by De Leeuw (2000) and Ramondt (2002) is that a diagnosis is to provide the researcher with an image of the current state of the organisation and the problems it is encountering. There is no such thing as the best method to diagnose as well as a perfect diagnosis. A diagnosis is so-called complete if it provides a picture of an organisation, on which a researcher can build his or her
10 The preliminary examination resulting in the diagnosis depicted in this chapter was realised mainly by holding unstructured conversations. Needless to say, all kinds of (in-)tangible documents provided input as well.
11 The narrow definition of diagnosing is described here. The broad definition of diagnosing includes the tracing of causes of the identified problems and the identification of possible solutions to those problems.
research. The correspondence of this with the position of the preliminary examination within the overall research is apparent. The preliminary examination served by means of the diagnosis as input in the main research.
The diagnosis portrayed in this chapter is formulated with the help of the model of Weggeman (Weggeman, 2001). This model is an aid in describing an organisation and provides a comprehensive overview over all that makes up an organisation. The essence of this model is a revision of the celebrated 7-S model of Peters and Waterman. Both give a representation of all aspects making up the functioning of an organisation. The distinguished aspects are:
strategy, structure, systems, culture, staff and style. Peters and Waterman mention skills as the seventh aspect of their model. Weggeman combines this aspect with staff.
CONFIDENTIAL
Figure 2. Organisational chart Abank Lease Holding12
2.1 Analysis essential process
This paragraph will go into the essential process of ABC. Its aim is to set out what makes up ABC. In this paragraph only the so-called hard aspects of the model are treated. These aspects are systems, structure and strategy. The so-called soft aspects will be featured in the next paragraph.
2.1.1 Organisational charts
Figure 2 represents the position of ABC within Abank Lease Holding. ABC can be distinguished from the business units present throughout Europe. ABC uses these business units to execute the vendor lease programs. Recognisable in this graphical depiction is the separate position of ABC next to the business units. This separation is not only graphical but also easily noticeable in daily business practice.
Further on Abank Lease Holding is positioned within Abank Group. The profile of Abank Group can be seen as a matrix. Abank Group consists of three divisions, one being Executive Committee (further on: EC) Europe. EC Europe on its turn is divided in several divisions among which Wholesale. Under Wholesale resides Wholesale Netherlands, which also has to give account to the Management Committee Netherlands. Wholesale Netherlands is the first part of Abank Group by which becomes visible that the organisation can be typified as a matrix organisation. To conclude, Abank Lease Holding is part of Wholesale Netherlands.
CONFIDENTIAL
Figure 3. Positioning Abank Lease Holding within Abank Group13
2.1.2 The product
In offering its product ABC co-operates with a number of parties. Next to this a number of lease variants exist of influence on the way ABC co-operates with these parties. To shed light on the product offering of ABC these two aspects (parties and variants) will be illustrated.
A number of parties are involved in the set up and execution of the various lease arrangements. The lessor and lessee are already mentioned. Considering vendor leasing at ABC, the lessor will naturally be (a part of) Abank. The lessor normally invests in the asset at issue and usually this is done by the business units. The lessee can for the sake of convenience be called customer and this customer is sometimes backed by a parent. With vendor leasing a third group of parties can be introduced, namely the group around the vendor. The vendor affiliate is distinguished, as is the parent vendor and the Original
12 Note that this is a stylized representation, not intended to be complete. Parts of the organisation outside the scope of the diagnosis (e.g. departments of Abank Car Lease) are not depicted.
13 Note that this is a stylized representation, not intended to be complete. Parts of the organisation outside the scope of the diagnosis are not depicted.
Equipment Manufacturer (OEM), in case the vendor is a mere supplier. This and that is represented in the following picture.
CONFIDENTIAL
Figure 4. Involved parties vendor leasing
There are four basic variants of vendor lease at ABC. These lease structures are currently practised at the various business units of Abank Lease. It would get too far off the subject to go into each of the lease variants in depth, however the main characteristics of each variant are represented below.
Structure Conditions
A. Standard Vendor to negotiate with the customer the equipment to be leased; vendor to sell the equipment to Abank; Abank and customer to sign a lease contract;
Abank shall bear the collection risk14 and the residual value risk; Abank to be disclosed to the customer; Abank shall bill and collect.
B. Back-to-back Vendor to sign a lease contract with the customer; and back-to-back a separate lease contract with Abank by which the equipment is sold to Abank;
Abank shall bear the collection risk and the residual value risk; Abank to be undisclosed to the customer; vendor shall bill and collect.
C. Assignment Vendor to assign lease contracts to Abank; Abank to become the owner of the equipment; Abank shall bear the collection risk and the residual value risk; Abank to be disclosed or undisclosed to the customer; either Abank or vendor shall bill and collect.
D. Receivables Vendor to assign lease contracts to Abank; Abank to become the owner of the rentals only; Abank shall only bear the collection risk; Abank to be disclosed or undisclosed to the customer; either Abank or vendor shall bill and collect.
The role of ABC is among other things to close a (framework) contract in which in several countries vendor lease is practised (by means of the four above described vendor lease structures) between vendor affiliate and Abank affiliate. That makes the actual product of ABC not solely arranging for a contract with a vendor, but also representing the business units. The purchasers or customers of ABC are in this context not only the vendors but also the business units.
In the (framework) contract (further on: Operating Agreement) the main features of the commercial agreements and procedures between the vendor and ABC are laid down. The local Abank Lease offices are required to settle to the Operating Agreement, but will in many cases sign Local Addenda with vendor affiliates with respect to local legal and fiscal aspects.
The main commercial features are nevertheless non-negotiable. All activities relating to the actual lease agreement between a customer and a business unit, like financing the asset, booking the agreement into the system, notifying the customer of possible arrears and accounting for the profit stemming from the agreement, are done by the local Abank Lease offices. ABC is only facilitating.
2.1.3 Financial profile15
The financial data considered relates to the years 2001 until 2003. The earnings received from developing the programs are completely collectable by the business units. ABC does not have direct income other than yearly commitment fees from vendors. This income though is
14 This is the risk of a lessee not fulfilling its financial obligations as agreed upon in the lease agreement.
15 Financial information on Abank Lease Holding related to ABC is presented in the subsequent paragraph on strategy.
marginal and of no interest when ABC is reviewed by the holding. Nevertheless, ABC is judged on the production of international vendor lease programs developed by ABC.
A financial statement of the various programs in the last three years is presented in appendix 2. From this appendix becomes clear that the vendor lease programs differ greatly on several aspects. Obvious is the strong variability in the production per vendor per month.
To illustrate: the Cisco Systems program generated 3,606,000 in July of 2003. The production of August decreased to 370,000. In the following months the production varied from 1,823,000 via 418,000 and 116,000 to 1,814,000. The vendor lease programs also differ greatly between one another. In the year 2002 the total production under the Cisco Systems programme amounted to 36,325,000, to which the other four programs could not come up to (total combined production of 30,133,000). In addition to all this comes the difference between the production per business unit, which varies distinctively. Some business units are financially spoken of more importance to ABC than others, for instance business unit Abank Lease Nederland (processing 42,209,000 in the years 2001 till 2003) compared to Abank Lease Deutschland (financed production in the respective years of only 7,645,000). In 2001 the total production of all business units combined added up to 65,700,000. 2002 meant an improvement to 66,458,000. Yet, in 2003 the total production fell over forty percent to 38,916,000.
The programs form the backbone of ABC when the organisation is assessed financially. For that reason it is desirable to consider the programs slightly more profoundly.
During the years 2001 till 2003 the programmes did not attain the levels expected at the start.
Quite a few factors were of (negative) influence on the performance of the programmes. In part all programmes were influenced by the economic downturn, which certainly affected companies like Cisco Systems, EMC Corporation and Sun Microsystems on account of their line of business. In the appendices a summary of the various programs is presented. Specific reasons will be presented relating to the performance below par of the various programs16. The current state of a program is given as well as the programs its expectations.
2.1.4 Systems (Process scheme)
Weggeman means to say by systems the methods and guidelines by which the daily co- operation and planning and control of the activities of employees is regulated and facilitated.
ABC uses an ISO process scheme as a base of its operations and this scheme forms the point of departure of practically all methods and guidelines. The primary (business) process and supporting processes are not directly included in the conception of Weggeman. On account of this diagnosis the primary process will nevertheless be described and attention will be given to the methods and guidelines indicated under systems by Weggeman (Weggeman, 2001). This is done by means of the by ABC shaped overview of the business processes using an International Organisation for Standardisation (ISO) format17. ABC drafted this overview with the help of the ISO format, but this is not to be interpreted as being an attempt to comply with ISO standards. The ISO format served as a structuring method to discuss thoroughly the business processes with all employees with the intention to reach an ideal arrangement. An arrangement supported by all employees and about which can be communicated.
The complete (business) process from the realisation till the conclusion of a vendor lease program consists of a maximum of seven steps (represented in subjoined scheme).
ABC distinguishes ‘qualifying, offering, approving, contracting, roll-out, managing and terminating’. The first four steps can be grouped as acquisition (further on: business development) and the remaining steps as asset- and lease management (further on: program management). The seven steps consist of a great number of activities (tasks) and are accompanied with a great number of documents. For the complete scheme the reader is referred to appendices, the seven business process steps are depicted below.
16 Please note that reasons relating to the co-operation between ABC and the business units are not included at this stage of the diagnosis but will be further on.
17 A justification for including the ISO process scheme of ABC in this report is presented in the appendices.
Figure 5. Business process steps
Qualifying is the first step in the process and contains everything till bringing out an offer.
Bringing out an offer falls under the second step, Offering. In these first two steps ABC is in close contact with the (potential) vendor. ABC has to sell, so to speak, its product to an external partner. Approving (step three) relates to getting permission within Abank Lease Holding (Krediet Comité Lease) to execute the transaction suggested in the former step, Offering. The promotion of the product shifts in this step to promoting to an internal party. In Contracting (step four) the vendor lease program is officially agreed upon. Roll-out (step five) is the execution of that which is agreed upon under Contracting. In this step among other things the vendor lease program is carried over to the involved business units, and they become the most important parties to ABC. After Roll-out the step Managing follows. Within this step activities can be grouped under which mainly taking care of a good execution of the operational process of the program. Also analysing the portfolio and reporting on that portfolio are tasks that are part of this business process step. Finally, Terminating is the ending of the program.
The business process can also be described by mentioning the various process steps and the involved employees that go with each step. In the following a general reflection is given, omitted from specific details. The Director and the Business Development Manager are the first to be in contact with a potential vendor relation. If these contacts gain significance after a while, the Credit and Risk Manager gets involved. This person deals with the structure of the program and checks in how far the program is internally acceptable (fiscally, legally, as well as fitting within the policies of Abank Lease Holding and that of the local business units).
One of these three employees in co-operation with the other two then proceeds with bringing out the program as a proposal to the credit committee (Krediet Comité Lease: KCL). After approval the Operating Agreement is drafted in close collaboration with the vendor. The Director is, combined with the Business Development Manager, responsible for the commercial part of the Operating Agreement. The Credit and Risk Manager is mainly responsible for the legal and internal aspects of the Operating Agreement. The Credit and Risk Manager does so with the co-operation of a legal department within Abank. After finally agreeing on the program, roll-out of the program over the business units follows. ABC does not have a standard methodology for this roll-out and sometimes parts of the vendor lease program are already active in a country or in countries before formal implementation. The Program Manager then becomes responsible for the proper execution of the agreed upon vendor lease program. He receives co-operation from local Abank Lease employees, dedicated to vendor leasing. The Program Manager and the Director are both involved with the last process step, Terminating.
The ISO process scheme functions as an umbrella under which can be shared the methods and guidelines by which a part of the daily co-operation and planning and control of the activities of employees is regulated and facilitated. All standard documents employed by ABC serve a similar purpose. Working with these documents implies all parties should adhere to the same guidelines drawing up these texts (regarding the outline, not the specific content).
These documents and the sequence they are in serve as a sort of planning function. Through the help of the documents the whole planning structure is clear-cut. The individual employees operate within this structure making their own planning, indirectly guided by the social relationships within the organisation by means of deliberation. In other words, the overall structure is apparent to everyone and all activities are geared to one another this way.
The social system operating within ABC is very important in light of the subject of this paragraph. As said, informal consultation between employees contributes to the co-ordination of their activities. Practically everyone works in the same area and that is why everyone is well informed of the functioning of one another. Formal communication takes place at least once a week. The weekly discussion of progress (“werkoverleg”) acts as a sort of direct way
Business Development
1.
Qualifying
3.
Approving 2.
Offering
4.
Contracting
Program Management
5.
Roll-Out
6.
Managing
7.
Terminating
of steering and controlling. Current affairs are discussed combined with the specific progress employees have made as well as their plans of action.
2.1.5 Structure
Structure is the result of the way in which tasks and their accompanying authorities and responsibilities are divided within the organisation as well as the result of the organisation of the co-ordination of those tasks (Weggeman, 2001). In the previous paragraphs of this writing attention is already given to most of this. Responsibilities and co-ordination of tasks are by now dealt with. In this part authority will be discussed.
The ISO scheme offers the framework in which employees can operate. It indicates what employees can be occupied with. It is typical though that practically all employees have the power to sign documents, even if it concerns documents related to a part of the process in which an employee is not directly involved. This is illustrative of the nature of ABC: authorities and responsibilities are whenever possible and necessary shared.
Formal authority lies with the Director. In the end, the Director is the one who can act officially authoritatively. In real terms, authority is derived from expertise. The Director of ABC will indicate what he would like to see being done, but does not steer the employees completely. The employees can be seen as professionals, making out their own duties. Even more than the Director, the social group creates the framework (and grants the authority) for each employee to operate in.
2.1.6 Strategy
According to Weggeman strategy is the way in which (how) and the means by which previously drawn up objectives can be realised, partly recorded in a time phased action plan.
The broad definition of strategy also includes mission, vision and goals (Weggeman, 2001).
The sections of this paragraph will first go into the historic strategic developments in the years 2001, 2002 and 2003. The subsequent sections will deal with the strategy discussions of the present-day.
At the start of ABC in 2001 the only clear-cut objective was to focus solely on vendor lease and to do away with all other activities that could not directly be classified as vendor lease. ABC started off quite successfully and expanded the production towards 65,700,000.
In the following year the production grew slightly to 66,458,000. During 2002 the Director and Credit and Risk Manager formulated the intentions of ABC in a strategy paper. In this paper three scenarios were presented, based on different economical circumstances. The scenarios were all founded on the in 2001 formulated strategic goal. The authors in addition proposed to add two activities to ABC, namely transacting one-off international deals and developing treasury-based18 relationships with European lease brokers.
The strategic goal pronounced by Abank Lease Holding in 2001 indicated that ABC in the years following 2001 needed to make up 10% of the production of Abank Lease (excluding car leasing). To indicate: the production of the holding for the year 2001 amounts to 2,7 billion (with reference to the figure below). ABC has formulated two goals in their strategy paper to address the strategic goal of the holding. Realisation of the goal of the holding by ABC can be done by achieving a yearly growth in production of 15% (annual production growth requirement of shareholder Abank Lease Holding, Wholesale Netherlands) after 2004 and achieving an absolute value of the production of 350 million by the end of 2004.
In the autumn of 2002 ABC had thus a long-term objective, filled in with three scenarios. All in common agreement with the management of Abank Lease Holding. Soon it became clear that the worst-case scenario took on: the economic climate worsened. On account of these depressed market circumstances the goal of ABC became to produce a mere 125 million by the end of 2003. This scenario assumed an additional employee in order to be realised.
CONFIDENTIAL
Figure 6. Production Abank Lease Holding and ABC
18 Treasury comes down to the management of financial resources and flows of money and the consequent risks; all tasks stemming from the financial (logistical) process.
Unfortunately the production fell short badly and this was acknowledged during 2003 by the management of the holding. The problems encountered by ABC in the past years like understaffing, bad market conditions and disappointing performances of existing programs, all made the holding draw up a different goal for ABC for 2003. Bringing out four vendor lease program proposals to KCL used to be sufficient for 2003. In spite of this easing up by the holding, ABC did not succeed to reach the goal. One single program proposal was submitted to KCL and the production of 2003 amounted roughly to a humble 38,916,000. In this light, strategy discussions started off.
In December 2003 Abank Lease Holding expressed its plans regarding the development of its strategy. Abank Group, Executive Committee Europe and Wholesale Netherlands are developing their strategies and should finalise this process in May 2004. Meanwhile Abank Lease Holding is to develop its own strategy on three areas, namely car lease, general lease and holding. Concerning the holding the strategy has to revolve around the added value of the holding and the ideal role of the holding. Concerning general lease three issues are at stake, namely the roll-out of ABC, the development of small ticket lease and the development of so-called Centres of excellence.
Within ABC the Director instigated discussions in December 2003 on the strategy to follow in the future. Noticeable was the renewed abandoning from the sole focus on vendor leasing. The sole focus on vendor leasing was initially at issue at the start of ABC in 2001.
Abandoning from this concentration on vendor leasing was also the case in the 2002 strategy paper.
In January 2004 Abank Lease Holding presented its plan for the coming medium long period and in addition made some remarks on the strategy development. Noticeable was the mentioned 8% growth rate Abank Lease Holding has to achieve and the lacking of ABC in the text. The roll-out of ABC and the development of Centres of excellence were mentioned a month before. Naturally all this was taken along by ABC, as were conversations between the Director and Deputy General Manager General Lease of the holding.
In the beginning of 2004 ABC had reached agreement internally on how to formulate the strategy. Stemming from the internal discussions, strategy considerations of Abank Lease Holding and the direct manager of ABC (“ABC 2004: the year of truth”), a strategy proposal will be formulated and submitted to the management of the holding for approval. The strategy proposal of ABC comes down to develop and submit to KCL five vendor lease programs.
2.2 General outline
Ramondt (2002) calls this part of the diagnosis a genetic sketch. The genetic sketch is one of the two subjects (next to the analysis of the essential process, dealt with in the preceding paragraph) that needs to be dealt with in order to come to proper embedding of the main organisational problem. In the subsequent subparagraphs the remaining aspects of the model of Weggeman are interwoven with the text. The soft aspects culture, staff (and skills) and style are treated in the successive description of ABC.
2.2.1 ABC story and critical incidents
ABC emanates from Abank European Vendor Lease (EVL). EVL was involved (like ABC) in vendor leasing, but engaged in more activities, among which were marketing, writing articles on Abank Lease Holding activities and accidental financial occurrences with an international character. In 2001 Abank Lease Holding was of the opinion that EVL lacked a clear focus on few activities and aimed at too many enterprises. The assignment was given to concentrate on and develop international vendor leasing.
In 2001 EVL narrowed its focus and accordingly changed its name into ABC. This change of name marked the sole concentration on international vendor lease and was accompanied by a modification of part of the work force, instigated by some of the current employees. Abank Lease Holding decided among other things to replace the director by the present-day director for a number of reasons, for instance because of promises not lived up to and an inability to develop vendor lease to a substantial and satisfactory level. In the years following ABC set up a number of vendor lease programs, although often hindered in the process as will be explained hereafter.
Obstacles
A great deal of the obstacles encountered by ABC in the development and management of the programs can be related to the co-operation with the business units. A centrally drafted vendor lease program is depending on the compliance of the decentralised operating business units, which often oppose to carry out their part of the Operating Agreement. ABC addressed these difficulties, according to which the management of the holding responded by composing the memo depicted on the following page.
By drafting this memo the management of the holding aroused the hope to support ABC more explicitly, but did not live up to that implied promise. The following example regarding the Sun Microsystems program illustrates this. KCL approved all business units to
CONFIDENTIAL
Figure 7. Memo Abank Lease Holding19
assume (substantial) residual value positions. The business units on their turn refused to do so, on which the management of the holding practically told the business units not to struggle and proceed as ABC and Abank Lease Holding desired. Still the business units resisted, finally leading the holding to decide to officially declare that whatever the consequences of a ABC action, the local business units would be guarded against financial setbacks.
Uplifts
It is a matter of course that ABC during the past years not only experienced difficulties. Uplifts and victories were part of daily practice as well. The above represented memo serves as an example, although the pursuit of the tenor of the memo by the management of the holding fell short. ABC sometimes proposed vendor lease programs to KCL, knowing that certain issues within that proposal usually did not meet with approval. For instance under the Sun Microsystems program and also under the EMC Corporation program, KCL allowed to run relative high risks. Open residual value positions were allowed to be taken by the business units and losses were calculated in case a lessee failed to make substantial payments. This permission by KCL was and is very exceptional.
A one-off international deal
In the course of the second half of 2003, XYZ Incorporated (XYZ) dominated all operations at ABC. XYZ was a specialty finance company for healthcare providers and XYZ was in financial trouble. Abank Lease UK was approached as to whether they would be interested in taking over (part of) the European lease portfolio of XYZ. Soon, by request of the management of the holding, the Director of ABC became head of the project to take over XYZ. Many of the occurrences during the course of “Project Chicago”, as the take-over was called, were illustrative for the troubles ABC runs into.
At the beginning of the project the Director of ABC and company indicated that this take-over would only be worthwhile if the activities of XYZ would be continued after the purchase. Gradually it became clear that Abank Lease Holding was only interested in taking over the lease portfolio of XYZ and had no intentions to continue the activities of XYZ. Abank Lease Holding motivated this decision by pointing out that the business units were not interested in a continuation of the purchased local XYZ parts.
In the first months of the process Abank Lease UK had clear difficulties to hand over Project Chicago. Abank Lease UK frequently urged ABC to give account of the progress made and this complicated the take-over process severely. Also the differences existing between business units regarding the participation in the process disturbed that same process. Some countries were happy to assist with whatever request made, others tried to wriggle out relentlessly. From these examples emerges the difficulty of ABC to motivate the business units. That it is difficult for ABC to guide the business units well. Abank Lease Holding does not enable ABC to direct the take-over centrally and that way chooses to go along with the desires of the business units.
19 This text is adapted to fit this diagnosis (names are for example omitted).
Another example revolves around a due diligence20 investigation. When explained the purpose of that investigation, all local business units saw the point and started off their research. However, at the completion of the take-over, the local business units did not want to confirm their own due diligence research. This confirmation and successive signing was important to address the issue of accountability. Again the management of the holding did not force them to do so, thereby confirming the authority each business unit had, and more importantly has.
The one-off international deal, as was the take-over of XYZ, put great pressure on the normal activities and employees of ABC. Of course the involved employees where faced with new activities next to their usual ones, but also the other employees had to take on more work. It proved difficult to combine the normal operational activities with such a project: quite a few tasks had to be postponed until after Project Chicago was completed. Possible explanations for this could be the interdependence of certain tasks (for example of the Business Development Manager having to confer in certain cases with the Credit and Risk Manager) or the specific knowledge an employee has compared to others (for example the Director with respect to occurrences in the past).
2.2.2 Positioning within an organisational typology
In this paragraph ABC is characterised using well-established theoretical concepts. This characterisation not only rounds off the diagnosis but also serves as a setoff against the casuistical tenor of the diagnosis up so far. It is decided upon to characterise ABC in two settings, namely ABC individually using Mintzberg and ABC having relations with Abank Lease Holding and the local business units using Van Aken.
Mintzberg
Mintzberg has drawn up a number of characterisations of organisations in so-called configurations. Each of the by Mintzberg distinguished configurations consists of a certain composition of structure variables, hence the name configuration (Paul, 1999). Although a typification like the undermentioned can be challenged, it still forms a valuable theoretical contemplation.
ABC displays in terms of Mintzberg the greatest resemblance to the adhocracy configuration.
Key features of this configuration are the coordination mechanism of mutual adjustment. Like ABC an adhocracy is usually a relatively young organisation. ABC its mere five employees communicate extensively on a diversity of subjects. Practically all decisions are taken after collective deliberation. Informal communication takes place within the entire organisation. An adhocracy can also be characterised by little formalisation of behaviour, bearing resemblance with the daily business practice of ABC. Mintzberg (1979) indicates that grouping within an adhocracy is both functional as well as around markets. Within ABC practically each employee has its part of the overall business process and is thereby responsible for its own functional area. On the other hand a rough distinction can be made as to who deals with the different customer groups (new and existing vendors and business units). The Business Development Manager and Director mainly manage new vendor relations, while the other employees of ABC usually deal with existing vendors. The Program Manager and Credit and Risk Manager are in contact with the business units more that the other co-workers. All characteristics of the environment, for instance regarding Abank Lease Holding, the business units and the competitors, can be seen as dynamic and complex, similar to an adhocracy configuration.
Van Aken
Caluwé and Vermaak (2002) present in their book on organisational change several models by which an organisation can be diagnosed. One of those models is an interpretation of the ideas of Van Aken. Van Aken sketches five representations of networks and goes into the nature of the relations and the intensity of the relations. ABC, Abank Lease Holding and its business units will further on be positioned in the model of Van Aken. Once again, the reader
20 Due diligence boils down to an investigation into whether all material facts with respect to the entity being either sold or bought have been disclosed.
is reminded that a typification like the undermentioned can be challenged, but can still form a valuable theoretical contemplation.
The representation of Van Aken looking mostly like ABC is called network organisation. Van Aken describes this characterisation in Caluwé and Vermaak (2002) as follows. The units collectively making up the network, all fall within the same legal entity. Within this network connections can be identified by means of which the units try to achieve their goals. Van Aken indicates that the uniformity remains guaranteed at the top, but that the units underneath develop their own subcultures, premise their own financial results (before the results of the network) and compel a certain level of independence. The resemblance of this to the positioning and acting of ABC and the business units within the legal entity Abank Lease Holding is striking.
2.3 Limited diagnosis business units
Striking peculiarities of Abank Lease business units can be read below. Much of the text arises from questionnaires filled out by the respective business units.
2.3.1 Abank Lease España
The Business Development Manager of ABC composed a questionnaire to obtain a picture of the requirements and restrictions of the specific business units. In three weeks time only Italy and Belgium sent back a filled out five-page questionnaire. Abank Lease España responded with an email that can be read below. The tenor of the email is at the very least not very co- operative. Another example of such difficult co-operation between ABC and Abank Lease España bears upon the JLG program. ABC made a mistake on a Guarantee Addendum (GA).
This incorrect GA was subsequently signed by JLG. In approximately two to three weeks after this signing Abank Lease España had to negotiate a lease with a lessee on the basis of this GA. In this GA JLG acts as a guarantor for that lessee and the mistake ABC made concerns a relative small amount. Abank Lease España refused to close the deal with the lessee (JLG its customer) until it received the correct GA. This despite the assurance ABC its Program Manager gave Abank Lease España that JLG is notified and will aid ABC in correcting this mistake. Moreover,
CONFIDENTIAL
Figure 8. Email Abank Lease España21
the mistake ABC made is obviously a typing error, implying JLG has no legal ground to refer to the mistake. The hands of the Program Manager are tied: JLG has always lived up to the expectations created in the many addenda agreed upon in the past and now has to be let down, while at the same time Abank Lease España cannot be forced to proceed and close the deal.
This demeanour of Abank Lease España can partly be explained by their desire to determine the exact content of their aggregate lease portfolio. JLG sometimes brings in customers (lessees) that cannot meet their (financial) obligations and even go bankrupt.
Although JLG offers a comprehensive guarantee for such customers, indemnifying Abank Lease España completely in case a customer defaults, Abank Lease España rather determines its list of customers itself.
2.3.2 Abank Lease Nederland
One of the posed questions is how does ABC contribute or how can ABC contribute to the mission and strategy of the business units at issue. Abank Lease Nederland addresses in its answer one of the unique selling points of Abank Lease, namely its European network.
Central co-ordination of large programs is a key issue in the opinion of Abank Lease Nederland. Apparently ABC can contribute to Abank Lease Nederland its mission and strategy by simply working at that central European co-ordination. A subsequent answer confirms this idea once again. In order to become a bigger player in the vendor leasing business, ABC can support Abank Lease Nederland by organising the European network.
21 With reference to footnote 17.
2.3.3 Abank Lease Belgium
Recently the General Manager of Abank Lease Luxembourg contacted the Business Development Manager of ABC. He explained to ABC that Abank Lease Luxembourg is part of Abank Bank Luxembourg. This turned out to be completely new information to ABC. ABC simply was not aware of the existence of Abank Lease Luxembourg. Abank Lease Luxembourg stated that it operates completely independently from Abank Lease Belgium, whilst ABC always thought that Belgium represented Luxembourg as well, as proclaimed by Abank Lease Belgium.
Another remarkable issue is the different interest calculation methodology employed by Abank Lease Belgium. Differences like these complicate the standard offering presented to a vendor by ABC and they outreach beyond Abank Lease Belgium to the other business units as well. Two other identified peculiarities relating to Abank Lease Belgium are the reproach Abank Lease Belgium made to ABC to hear too little from ABC, while expecting a great deal.
The second idiosyncrasy stems from the questionnaire. Noteworthy is the answer Abank Lease Belgium gave when asked to specify which part of their production in 2003 refers to ABC programs. Abank Lease Belgium simply forgot 6,700,000.
When asked how ABC can contribute to Abank Lease Belgium its strategy, the answer given relates to the way Abank Lease Belgium sees ABC. The strategy of Abank Lease Belgium comes down to extend its business primarily in reproduction, information technology, medical and heavy machinery product areas. The contribution ABC can made as expressed by Abank Lease Belgium is developing small ticket lease within the Abank Lease organisation on a larger scale.
2.3.4 Abank Lease France
One of the current prospect programs is ECS Group. As is many times the case, an international vendor lease program develops out of a local lease program between a vendor and an Abank Lease business unit. Abank Lease France demonstrated in this instance a common problem ABC encounters trying to set up an international vendor lease program.
Abank Lease France had a rough time to delegate its interests in ECS and tried to keep itself on top of ECS.
2.3.5 Abank Lease Polska
Via the questionnaire Abank Lease Polska requests ABC to address specific issues on its behalf to KCL, next to solely providing Abank Lease Polska with vendors and lessees.
2.3.6 Abank Lease UK
Two answers Abank Lease UK gave to the questionnaire were noteworthy. The first remarkable answer refers to the question of how ABC can contribute to the strategy of Abank Lease UK. Abank Lease UK did not ascribe a role to ABC it usually does not carry out, as was done by Abank Lease Belgium. Instead, Abank Lease UK answered that it considers ABC as an integral conduit (channel) to the approach of Abank Lease UK and that ABC offers numerous opportunities to compliment the new business offering of Abank Lease UK. The other remarkable answer by Abank Lease UK is for ABC to communicate better. By simply communicating better ABC can support Abank Lease UK to become a bigger player in vendor leasing.
2.3.7 Abank Lease Italia
Better communication by ABC is much sought-after by the respondents of the questionnaire.
Abank Lease Italia is not an exception in that respect. Through continuous communication ABC helps Abank Lease Italia with its mission and strategy. ABC also needs to improve on its flexibility. If ABC becomes more flexible (apart from the fact that Abank Lease Italia does not explain how this needs to be interpreted), Abank Lease Italia can develop itself with regard to vendor leasing.
