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I.

Problem
How will RPN Channel 9 effectively pay its 5 billion worth of debts without
foreclosing the company? How will they successfully privatize their
network station? How will they increase the market value of their network?

II.

Objectives
General:
The objective of the case study is to determine the best action of RPN to
fully recover to increase its value in terms of stocks and market value; to
determine the benefits of privatization.

III.

Specific:
To determine the strengths and weaknesses of a private firm
To critically assess the companys operation
To effectively implement policies to maintain profitability
To successfully know what actions to avoid to prevent bankruptcy
To strategically regain its market value
To choose what is the most effective strategy to use in terms of
compromising the debts
Areas of Consideration (SWOT ANALYSIS)
Strengths:
Under the management of the government, the employees has all
the benefits and grants from the government
It has an allocated budget since it is state-owned
Strong name/image/company reputation since it is in the industry
for almost 3 decade
Weakness:
Potential corruption of RPN employees
Low priority in terms of company evaluation, innovation (Research
and Development)
The use of outdated and obsolete technology
Low parity value
Lack of competencies and human capital
Opportunities:
Increase market value through privatization
Diversify into new markets like advertising, creative and informative
shows
Technological advancement
Increase market value through increasing ratings and viewers
Threats:

New Direct and indirect competitors


Risk of Poor investment

IV.

Limited and inefficient budget


Further worsen the companys debt and mismanagement

Alternative Courses of Action


The company should consider a joint venture with bigger company
like ABS-CBN
o Pros:
Considering the 5B debt, it is effective to enter into a joint
venture considering all the terms and conditions to writeoff the debts of the other company. It is an opportunity for
the two networks to venture into new marketing outputs,
products and strategies. They could also expand their
operation since they are bigger and can dominate the
industry. It can also provide new capacity and expertise. It
can also issue stocks to welcome new investor.
o

Cons:
Success in a joint venture depends on thorough research
and analysis of the objectives. It may be a big risk to the
other company because it might drag down their
profitability and operation. There is an imbalance in levels
of expertise, investment or assets brought into the
venture by the different partners. It takes time and effort
to build the right relationship and partnering with another
business can be challenging.

The company favors liquidation


o Pros:
Liquidating all assets can be a smart to move to pay the
debts of the company. Since it is not generating enough
profit, the operation must be stopped and liquidate high
value assets. Once your company is in liquidation, its
creditors cannot take any further action against you.
Unsecured debt is written off, including any tax liabilities
o

V.

Cons:
Some when assets might be obsolete thus assets are low
in value. Liquidation also provides little opportunity for the
recovery of funds for creditors; it may lead to more severe
problems.

Recommendation

We recommend that RPN Channel 9 will enter into a joint venture since
this is the most efficient way to manage their debts and maintain their
operation as TV network. The burden is shared among the other company
thus it not hard for RPN to recover. It can also provide new opportunities
to RPN since venturing into a bigger network means bigger profit, newer
technology and advance methodology. Strategic joint ventures allow
companies to pursue larger opportunities than they could alone, establish
a presence in a foreign country or gain a competitive advantage in a
particular market. They can also help companies to lower costs, gain
access to another company's technology, increase revenues, increase
their customer base or expand product distribution, among other
possibilities. RPN can then regain ground to further eliminate their debt
and ensure profitability in their TV network operation. At the end of the
day, running a successful joint venture is a matter of give and take.