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CONTACT REPORT
SUBJECT: AAA AAA
This contact Report covers the visits made to the following companies:
1. XYZ , Inc. (XYZ) DATE
2. ABC, Inc. (ABC) DATE
A. XYZ Shipyard, Inc.
XYZ Shipyard, Inc. (XYZ) is a member-company of the Shingdao Group of Companies whose
flagship company is the Top Corporation. It is located in _________, ______________. It currently
provides various services related to shipping industry, namely: ship repair, ship conversion (increase
in size and capacity, and modification of current use and configuration), ship design and building,
turbo-shaft repair, repainting, and other repair services that may or may not require dry docking.
It started its operations in 1998 by providing services to the fishing vessels of Top Corporation, Inc.,
an affiliated company. It then expanded by providing its services to other fishing and shipping
companies.
The daily operations of XYZ are managed by its General Manager, Engr. __________________.
XYZ has a current manpower complement of ________________ (xx) regular employees and
___________ casual workers.
During the visit, my observations are as follows:
Observations

Recommendations/
Comments

1. Service/ Facility Capacity


The total dry docking capacity of XYZ is xx bays.
Currently, it caters from Y to Z clients per day (includes
short duration repairs (a few hours).
It is worth mentioning also that XYZs turn-around for ship
repair is xxx (y) days while its competitors average is five
(5) to seven (7) days by its competitors.
It is currently, it is in the middle of a US$_____ million
construction project to improve and increase the total dry
docking bays to YY6.

Observations

The capacity of the current


dry dock bays can still
accommodate the current
customer volume by a safe
margin.
However, this
capacity was barely noted
because due to the processes
and procedures were not
properly streamlined and
integrated.
The
Company
should
review, analyze and integrate
its processes and procedures.
Recommendations/
Comments

2. Compliance to Environmental Laws


a. The Company gives little regard to the adverse
environmental impacts of its operations. It operates
along a shoreline that was classified as an
environmentally-protected area. However, its facilities
are not designed and built to protect the environment
from the wastes generated by its economic activities.

The
Companys
top
management must change its
outlook in its relationship
with its environment to
ensure the sustainability of
its operations

The wastes, particularly paints and oils from the ships


being repaired flows directly into the sea due to the
absence of waste (with water) impounding or holding
area or facility.

The Company should take


into its plans and operations
the
protection
of
environment from the ill
effects of the wastes
generated by its operations.

b. Buildings and infrastructure were already or being


constructed within the prohibited areas of the
shorelines. Such constructions were started without the
necessary government permits.

This is a manifestation of the


Companys total disregard of
government
rules
and
regulations. The Company
should consider compliance
to laws and regulations in its
corporate
governance
activities.

c. The (Government Agency) that a Pollution Control


Officer (PCO) designated for their shipyard. Sad to
say, the PCO did not function as such resulting to
practices that are not compliant with environmental
laws, practices and policies.

The
Company
should
consider compliance to laws
and regulations in its
corporate
governance
activities.

3. Organizational Structure
a. No clear management structure. Organizations
function better if authority and responsibility are
distributed to different levels of responsible officers.
For XYZ, the power is centralized with the General
Manager (GM) who acts as the head of all operating
units in the company, namely, Operations, Human
Resource Management, Marketing and Accounting.
The GM micro-manages the operations of the
Company.

The
Company
should
consider setting up the Table
of Organization (TO) to
ensure the smooth flow of
communication
and
authority
within
the
company. The TO would aid
in
maximizing
the
effectiveness of management
controls and enhance the
efficiency of operations.

Recommendations/

Observations

Comments

b. No management succession plan. Being a closed and


family-owned business, all the decisions emanates
from the head of the family, Mr. XXX. As such, his
successor was not yet trained or being prepared to take
over. In the event of the untimely demise of the
patriarch, the Company will definitely suffer the same
fate.

The Board of Directors and


shareholders should consider
establishing a succession
plan for the Companys
management
to
ensure
continuity and sustainability
of operation.

c. No career path for specialized workers. Specialized


workers, like welders, are not provided with a chance
to go up the ladder in the Companys management. As
a matter of fact, the Company assists a welder who
worked for more than three (3) years to find a job
abroad. This was done due to the absence of a career
path for worker (and to minimize labor cost).

With the implementation the


Table
of
Organization,
Management may consider
the career path (growth) of
its employees and workers.

d. In adequate medical services for employees. The


(Government Agency) requires employers with more
than fifty (50) employees and has hazardous
workplaces, to provide a full time registered nurse.

It is recommended that a full


time registered nurse be
deployed during working/
operating hours to ensure the
health and safety of workers
and employees.

e. Good employee benefits. The benefits of regular


employees include house and lot and profit sharing.

This is a good practice.


Nevertheless, it is suggested
that
Management
may
consider expanding their
regular plantilla of workers.

f.

It is suggested that the


Company should follow the
(Government
Agency)
regulations
to
avoid
incurring high costs due to
accidents.
Providing
personnel with protective
equipment should not be
viewed as cost, but rather as
an investment.

Precarious Working Conditions. It was observed


during the visit that there are workers painting the side
of a ship who are not wearing shoes. The said workers
are not also wearing harness which could prevent their
falling to the ground.
Workers are exposed to great risks during the dry
docking process of ships due to the absence of
appropriate tools and equipment, especially in keeping
the ships upright.

Recommendations/

Observations

Comments

4. Financial Management
The Company has no formalized Capital Expenditure
(CAPEX) Budgeting procedures that serve as guidelines in
undertaking capacity expansion. This is evidenced by the
absence of a proper Financial Feasibility Study for their
ongoing US$____ million dry dock expansion project. The
Company Accountant said that their projected Return on
Investment (ROI) for this expansion is only Y%, which is
precariously low.
This expansion was being undertaken because the
Company was able to pay-off its first US$___ million loan.

The Company may consider


setting a more rigorous
CAPEX
guidelines
or
criteria
in
evaluating
expansion projects to protect
its investments.
Actual financial feasibility
study should be prepared to
calculate and project the
financial risks involved in a
project.

5. Marketing Strategy
The Company relied mainly on word of mouth (referrals)
of its existing clients to reach new customers.
It cannot market abroad yet since it has no local or
international certifications as shipbuilder or as an
accredited ship repair facility. The Company is still
planning to get an ISO certification.

To sustain its operations, the


Company should acquire the
necessary
international
accreditations
from
certifying
bodies
and
organizations.
Such
activities
should
be
integrated
with
the
Companys strategic plans,
objectives and processes.

B. ABC, Inc. (ABC)


ABC is the flagship company of the BBBB Corporation (BBBB). It was established on (CDATE). In
(YEAR) , it shifted its operation to Cavendish banana production due to the shrinking market for
(current product). Today, it is one of the countrys biggest producers of Cavendish bananas in
(Country). It exports its products to USA, Europe, Japan, Hong Kong, China, Korea, Middle East,
Russia and Singapore under the brand XXXXX and YYYYYY. It has about ________ acress of
plantation. It has more than _______ workers, almost all sourced locally.
The presentations at ABC were professionally made and delivered by company officers who have a
significant understanding of ABCs total operations.
The overall impression on ABC are as follows:
1. ABC has a well-established organizational structure supported with adequate resources, policies
and procedures.
2. ABC has incorporated its Corporate Social Responsibility into its operations.
3. ABC employs the best practices in the industry.

The detailed observations during the visit are enumerated in the table below.

Observations

Recommendations/
Comments

A. Corporate Social Responsibility


1. ABC has integrated its Corporate Social Responsibility
activities into its core operations. In addition to its own
corporate social projects, it also implemented various
community development projects and services in
cooperation and partnership with (FOUNDATION).

ABC should continue and


make even more CSR
programs, as these are very
good for their marketing and
branding efforts.

By helping the community where it belongs, ABC was


able to maintain industrial peace through the company
and in the communities where it operates. Because of
this, ABC was able to integrate its social concerns and
activities with the need of different stakeholders in the
surrounding communities. In so doing, ABC also helps
its employees and their immediate family members.
As a result of it its CSR activities, ABC was awarded
with various recognitions, XXXXX in 2013.

Observations

Recommendations/
Comments

B. Plantation Operations Management


1. In the presentation, one of the criteria used by ABC in
measuring the productivity of plantations is the average
total annual boxes produced per hectare. It was noted
that the average number of boxes per hectare started to
decrease from year yyyy up to YYYY. No explanation
was given during their presentation as to the causes of
the decrease.

Management may consider


reviewing the cause of the
decrease in the average
annual boxes per hectare.
The causes of the delay
might be due to other factors
other than climate changes
or weather conditions.

2. ABC measures or monitors the fruit losses from the


time of harvest until the bunches are de-handed. This
gives the data on how to prevent or minimizes loses.

ABC may consider including


in its monitoring the volume
of the actual field fruit loses
and
their
causes
for
corrective and preventive
actions, thereby increasing
output or yield.

However, the field or at plantation loses of fruits (from


budding until just before harvesting) are not monitored.
As a result, the volume of such loses, and their

preventable causes are not identified and subsequently


not prevented, which affected yield.
3. With its top of the line agricultural practices, along with
it commendable CSR efforts and good people
management, ABC is the only recipient from the
(country) of the prestigious XXXX Award. It has also
acquired certification from a local certifying body like
ISO.

ABC may consider acquiring


additional certifications that
may add value to its
Cavendish bananas, like
those certifications that its
products meet or exceeds the
standards set for the
acceptable
minimum
residual level of certain
chemicals.

4. ABC adopted best agricultural practices with the help


of its local and foreign technical experts. In addition, it
employs a factual approach to decision making based
on the actual data it gathers from its production
facilities. It is well-equipped with chemistry, tissue
culture, and plant pathology laboratories. It invests on
research and development to improve its overall yield
and minimize wastage and losses.
5. The manpower efficiency of a banana plantation is
measured by man-day per hectare. This measures the
number of days a worker spends per hectare. Currently,
ABCs average man-days per hectare is A.BC. This
ratio is already better than the Y.YY man-days average
of other banana plantations.

Observations

Recommendations/
Comments

C. Sustainability of Operations
2. ABC ensures the long-term sustainability of its
operations by minimizing or controlling pollution in its
area of activities. This is done with the adoption and
implementation of waste and pollution management
system.
3. ABC ensures that the soil in its plantations can sustain
the operation the requirements of the planted bananas
by rehabilitating its plantations. This is done with the
application of certain organic and in-organic fertilizers
and materials.
D. Human Resource Management

ABC
recognized
the
importance of resources to
its continued existence. As
such, it has undertaken
various activities to maintain
and
rehabilitate
such
resources (land).

1. ABC provides compensation and benefits package that


are better than other companies to its employees.
2. ABC recognizes that its employees and workers are its
biggest asset. Thus, it gives recognition and rewards
to top performing employees with production and
quality incentives.

ABC excels in providing


training to its employees and
labor force to equip them
with the appropriate skills
and knowledge needed to
accomplish their tasks and
obligations.

3. ABC provides periodic (e. g. quarterly) training and


educational enhancement activities to its employees to
ensure they are adequately equipped in meeting the
demands and requirements of their positions.
E. Marketing Management
1. ABC exports Cavendish banana under purchase and
marketing agreements with multinational companies
that own well-known brands like ABCD and EFGH.

This arrangement assures


ABC of a ready buyer and
stable market for all of its
produce.
ABC must continuously
produce Cavendish bananas
that meet the quality
standards set by the buyers
to ensure continuity so
supply.