A CASE STUDY ON
THE RURAL BANK
To be submitted
to Mrs. Dina Wong-Remoto
in partial fulfillment of the requirement in Management 12-D
Earl Adrian C. Aseñas
Gil J. Buenavista
Georgette Mae P. Dineros
Christine Y. Lu
Ma. Nathalie D. Refamonte
Divina Mari A. Tubat
January 24, 2014
I. Central Problem
Major Problem: Should Rural Bank of Suares (RBS) expand and open a new branch in the city?
Minor Problem: If they choose to do so, what is the best way to expand the bank in the capital city?
II. Alternative Courses of Action
1. Do not expand – continue with normal operations
2. Expand in the capital city
a. Do a full expansion by buying land and constructing its own building b. Do an extension counter expansion by renting a space at the business center
III. Advantages and Disadvantages
It is more secure to concentrate their efforts in the existing bank because of the sure income as evidenced in the 35% increase in profit from 1994-1995. RBS can save up funds for future expansion plans.
There is no significant growth for the bank
The bank has already reached their limit in expansions within Suares.
City clients can be served better because we will be physically closer to them. Market for loans and deposits are perceived to be larger in the capital city. The population is 10 times bigger than Suares, therefore has more potential clients.
The expansion will cause the bank to apply for a loan thus increasing its liabilities. There is a high risk due to existing competition (national banks, preexisting rural banks, etc). It is hard to generate a breakeven volume with respect to the expenses that would be incurred.
The business center in the capital city is close to their current city clients. There would be no more problems in finding a good location, since it...
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