by Ferlyn Joy Cargullo.Riozaldy Cuyson.Elfermin Mallari.Sarah Jane Mendoza.John Lester Roque.Jeneva Yvette Rosales.Jessica Sta Barbara
I. Nature of Service Centers
To fully grasp the idea behind a repair service center, we look at the general idea behind service centers. Service centers exist in response to specialized needs of consumers. This is exactly the reason why the types of services they extend to their target markets are surprisingly diverse.
Panatek Service Center exists as a response and as a supplement to our electronics-dependent living. Ours is an era where convenience is technology, and because technology is still not on its perfect stage, we have to face electronic glitches more often than not. Panatek Service Center exploits this reliance on technology as it goes about its operations and providing service to the community. In here we highlight the symbiosis between Panatek and the community within which it exists, that is, San Pablo City, Laguna and, technically, the whole of Southern Luzon.
II. Objective of the Discussion, ‘Panatek Service Center’
This discussion on the nature and operations of Panatek Service Center is aimed at helping the reader appreciate the inner workings of electronics service centers and their economic value within particular communities. This we do through an elaborate analysis of the contracts they’ve committed their selves into and how such commitments translate into their daily operations.
III. History of Panatek Service Center
Panatek Service Center was put up in 1996 by Mr. Porferio Cargullo of San Pablo City, Laguna. Prior to establishing the business, he was the service supervisor of Panasonic Philippines Southern Luzon branch. However, due to personal and more entrepreneurship-oriented reasons, he decided to take an early retirement and used his retirement package as his initial capital for Panatek Service Center.
Today, Panatek Service Center has expanded its business reach with its two branches in San Pablo City, Laguna. It is an authorized repair center for well-known electronic products which include the following:
1) Sharp
2) Hitachi
3) Whirlpool
4) Sanyo
5) Panasonic
6) Eurotek
7) Sapoe
8) Carrier
Aside from being authorized to repair the aforementioned products, Panatek currently holds referral, although these referrals are not concretized by contracts, from major appliance centers such as:
1) SM Appliance Center
2) Robinsons Appliance Center
3) ESLA
4) Abenson
IV. An Overview of How Panatek Service Center Earns
1) Repair of appliances under warranty
2) Repair of appliances out of warranty
3) Installation and maintenance of air conditioning unit
4) Sale of spare parts
V. Focus of the Discussion: Panatek-Panasonic Phils. Business Relationship
The operations of Panatek Service Center are vast and diverse in terms of issues and technicalities. For this paper, we limit our discussion to the business dealings between Panatek and Panasonic Philippines Incorporated.
First justification is on the share of Panasonic product repairs done by Panatek. The graph here shows a 33.48% share of product repair services on Panasonic products for the month of September 2009, which falls within its average range of 30%-49% percentage of the total monthly repair services done by Panatek.
Second, we take into account Panasonic’s strong business reputation in the Philippines, its being a major player in the local electronic industry. Panasonic Manufacturing Philippines Corporation (PMPC) is a manufacturer, importer and distributor of electronic, electrical, mechanical, electro-mechanical appliances, other types of machines, parts and components, battery and ralated products bearing the brand name, "Panasonic".
According to the current head of Panasonic Manufacturing Philippines Corp., Mr. Konosuke Matsushita, the goal of the company is:
“To manufacture items of good quality for daily use in abundant supply, thereby enhancing and improving the life for everyone”
But in a nutshell, what is the general relationship between Panatek Service Center and Panasonic Philippines? We summarize it as having the following key characteristics:
1) Panatek serves as a channel between Panasonic and its customers for after-purchase services
2) Through service centers, Panasonic establishes its presence in the area of coverage
3) Panatek earns income through its service to Panasonic customers
VI. How Panatek Operates
One source of the Panatek’s earnings is the repair of out of warranty products. Repairs are made either at the shop or at the customer’s respective houses. They are given a service report in which their contact information, defective unit information, action taken, and breakdown of service charge are written. This may also serve as the contract between the two parties and a proof that the repair was made. This is essential because the customer is given a three-month warranty with the repaired unit if the defect is the same.
Another source of its income is the installation and maintenance of air conditioning units. The quotation letter that was given to the customer, when accepted, serves as the contract between the customer and Panatek. It contains the contact information of the customer, the materials used, type and model of the air conditioner, prices, and terms of payment.
We further expound on this by analyzing the following articles of the service contract between Panatek Service Center and Panasonic Philippines:
Article V. SPARE PARTS
This article discusses about the responsibilities and rights of Panatek and Panasonic. It is stated here that Panatek must submit a regular order of its parts requirement and it is given a 30-day credit period. All charges incurred in the shipment and transportation are borne by the service center and if it has not paid for its on due accounts, Panasonic has the right not to accept the order. Panasonic also has the right to evaluate the parts returned by Panatek for claiming the payment for those. The service center, on the other hand, has the right to be given updated price lists of the spare parts.
Article X. NPP RESPONSIBILITIES
A specified uniform for technician shall be provided on a 50-50% sharing between the service center and Panasonic. This is for the technician of the authorized service center be identified and trusted by the customers. NPP shall also provide the forms such as service reports, rebates report and service quality report, and the like. This is to facilitate the keeping of records of the two parties.
VII. The Specifics of Panatek-Panasonic Business Relationship
We examine the specifics behind the contractual dealings of Panatek Service Center and Panasonic Philippines through the following articles taken from the service contract between them. Particularly, this deals with the conditions surrounding Panasonic’s authorization of Panatek as a legitimate service center.
ART. IV SEC. B states the performance of responsibilities by NPASC at its own expense including maintaining qualified and competent personnel, training programs, and maintaining adequate tools, inventory of spare parts, and suitable shop facilities. Basically, these responsibilities are in line with Panasonic’s vision of providing quality service. Panatek is required to allow its personnel attend the Technician Course for them to be equipped with adequate knowledge and latest innovation in servicing the products to address customers’ needs. They are also trained to build a good relationship with the customers by being accommodating and pleasing.
In terms of servicing the product itself, adequate tools, equipment, and inventory spare parts are maintained to ensure that they are always available when needed. The mission of Panasonic is very much reflected under this article. Furthermore, the company considers the safety of NPASC as well as the customers by requiring Panatek to have fire extinguishers, fire alarm system and storage area for flammable/combustible materials.
The term of the contract, its termination and renewal is stated in ART. XI General Patronage. The term of the contract is one year and maybe renewed for a similar period upon mutual agreement of both parties. However, NPASC accreditation can be terminated before its expiration if the NPASC committed Class A and Class B offense.
Some of the Class A offense are substituting spare parts with another for warranty units without NPP approval, usage of NPP materials, parts, and equipment for any purpose other than for which is intended, not following the Panasonic standard prices for labor and spare parts, and disrespect to or utter disregard of customer complaint. Class A offense is composed of issues concerning safeguarding Panasonic’s assets and protecting the customers. The accreditation will be terminated at third offense.
In Class B offense, first offense terminates the accreditation. It is composed of acts that destroy Panasonic’s reputation, authenticity, and privacy such as modification or alteration of product design without approval, committing any act in representation of the company which jeopardizes its reputation, giving away restricted company information, and being accredited as an authorized shop of a competitor. The last one is very important because it will ensure that Panasonic is the sole service center provider. But this is not what the real situation in Panatek. It is also authorized by other competing brands namely Whirlpool, Eurotek, Sanyo, Sharp, etc. Nevertheless, Panasonic is aware of this and there is neither warning nor termination of accreditation. Panatek has just “assumed” that Panasonic is waiving this act. This implies that Panasonic is not strict in enforcing its policies and requirements.
What benefits, then, does Panatek expect to get from Panasonic Philippines? This is outlined through an explanation of Article X.
Panasonic will provide enough technical support (i.e. Technical seminars, Technical materials such as manuals and technical guides, adequate supply of spare parts) to ensure that Panatek is providing quality performance. Aside from that, Panasonic shall also provide a 4.5’x6’ billboard showing the name of the service shop to inform
Lastly, the contract between Panatek Service Center and Panasonic Philippines outlines the conditions upon which the authorization given to Panatek gets cancelled.
The provision upon expiration or early termination of the agreement is set forth under Article XII. It asserts that upon cessation of appointment as an Authorized Service Center, NPASC’s right will immediately cease without its liability being release for any breach of any terms and conditions under the agreed contract. Furthermore, NPASC is required to immediately return all goods that were supplied free of charge by NPP during appointment, to refrain from servicing or selling spare parts or acting in any manner that would exploit the Intellectual Property of NPP, and to seek consent to NPP before continuing services or carrying out repairs on the products for the purpose of meeting orders, inquiries and complaints for such products accepted prior to the date of termination.
However, it must be noted that even though it is stated in its contract with Panasonic Philippines that Panatek cannot be the authorized repair center for other electronic products, Panatek has nonetheless entered contracts with products as mentioned above. This fact, did not however, set the grounds for Panasonic to cancel the authorization it has previously given to Panatek.
VIII. Lease Contract
There is nothing much interesting about Panatek’s lease contract. Panatek’s only lease contract is a residential area located M. Paulino st. San Pablo City. The contract includes: the object, the terms, and covenants of the contract.
The terms of the contract renders the lease effective for a period of three years, and must be subsequently renewed 60 days before contract expired. Panatek must pay 4,400 Php per year, with a subsequent 10% increase every year. Payment must be made every 15th of the month.
Moreover, the contract states that Panatek shall pay for its electricity, water and other expenses related to the maintenance of the lease property at its own cost. The only expense the lessor shall be responsible for is the property tax. Also, Panatek cannot sublet the leased property to anyone else and the service center must keep the property in “good, clean and liabitable conditions”.
In expiration of the said contract, any improvements made by the lessee within the leased promises shall revert to the use of the lessor if such improvements will cause damage or destruction on the leased property.
XI. Summary
The inner workings of businesses is a jungle of technicalities and legal know-hows. We believe that one of the best perspectives to take in appreciating the economic value behind businesses such as service repair centers is the contract approach, a critical examination of how contractual stipulations affect the business in general.
This is because we recognize how much the law protects the ‘spirit of business’ and entrepreneurship, and that by examining how the law seeks to protect these economic entities, we are then able to see what these entities are there for to begin with.