Term Paper: Army &amp Air Force Exchange Services Aafes

Army & Air Force Exchange Services

AAFES is a publicly owned organization which strives to improve the living standards of the military personnel and their families. In order to best understand its features, it is first necessary to comprehend the organization from two distinctive angles: (1) the situation in which it currently finds itself, and (2) the issues which can be improved to increase the firm's chances of attaining its objectives.

Summary of the situation

Army & Air Force Exchange Service envisions itself as the first choice of consumers. The organization retails a wide array of products and uses the funds to support morale, welfare and recreation. In their own words:

"It is the dual ensuring mission of AAFES to provide quality merchandise and services to its customers at competitively low prices and to generate earnings which provide a dividend to support morale, welfare and recreation (MWR) programs" (Website of the Army & Air Force Exchange Services).

The company is run in a military fashion and its purpose is that of generating sufficient earnings. Yet, they redistribute two thirds of their revenues in the form of MWR programs. Other costs -- congressionally approved -- include salaries, utilities, logistics and operational expenditures. The organization supports the improvements in the quality of life for the American soldiers and their families, and it also funds operations of the Department of Defense.

Additionally, AAFES uses its own funds to generate improvements in its facilities and to build new facilities, without generating as such governmental expenses. During 2006, the company raised revenues in the total amount of $7 million and their sources of income include the following:

Direct sale of merchandise

Finance revenue

Concessions on revenues.

Aside from its role as an economic and public agent, AAFEA also serves as a noteworthy member of the community by generating employment opportunities for over 47,000 individuals. In terms of actual size, AAFES operates a total of 117 retail stores and over 2,200 fast food stores. The organization is present in numerous locations and it supports the life of the military personnel through not only retail and fast food facilities, but also through specialty facilities, such as movie theaters. The specialty stores are run in concessionary contracts, highly similar to the franchise contracts in the private sector. Specifically, the specialty stores operators manage the stores under the license of the AAFES and share the profits with the firm.

1.2. Summary of the problems

The term of problems might be a bit too strong to describe the issues with which AAFES is currently confronted. Nevertheless, in order to create an action plan for improvement, it is first necessary to identify the organizational elements which could be subjected to improvements. These refer specifically to the following:

Financial stability

Customer awareness, and Living standards for the military personnel.

2. Proposed action plan

Based on the issues previously identified, the organization seems faced with the need to attain three specific goals, as follows:

An increased financial stability

Incremental levels of customer awareness and demand, and Increasing the living standards of the military personnel and their families.

In order to attain these objectives, the actions below could be implemented:

a) Organizational development

b) Promotion of the company, and c) Enhancement of the MWR support programs

a) Organizational development

The development of the firm would specifically be based on territorial expansion as well as expansion through the development and introduction of new products and services. In this order of ideas, the development through the penetration of new markets would be supported by thorough the research of the markets in which a demand for the company's products and services existed. Emphasis would be placed on the military locations as well as any other locations in which defense operations are completed. The research process would be focused on the identification of locations in which the needs of the military personnel and… [END OF PREVIEW]