Introduction

With the fluctuations in activities that an economy experiences overtime, businesses and
industries will eventually have to take their toll. When a business outlook becomes dim and non-
essential, companies will have no resort but to give up these units for a better purpose - to regain focus
on its core business. This process of selling off peripheral businesses is most commonly known as
divestment or divestiture.

San Miguel Corporation (SMC) intends to identify which businesses are contributing the least
value to their overall group operations. Industries under SMC, e.g., food, beverages, packaging,
infrastructure, fuel and oil, power, and properties, will have to be assessed to identify a potential
divestible business segment.

Economic Condition
The Philippine economy has grown at rate of 6.9% surpassing the majority of the countries in the
ASEAN. The economy can be analyzed in two perspectives: the demand side and the supply side.

On the demand side, private consumption continues to be the main driver for growth for 2016,
with expenditure on food and non-alcoholic beverages being the largest of all expenditures. For the year
2016, SMC generated sales of about 4.7% of the Philippine gross domestic product. Within private
consumption, the population size, consumer confidence, and OFW personal remittances have been
fueling dominance in the economy.

On the supply side, the service sector constitutes over 56.7% of the total GDP in 2016, with the
information technology and business process outsourcing (IT-BPO) industry being a major contributor.
The sector employed a great number of people, helping the employment rate grow. As a result, this
industry has significantly contributed to the increasing disposable income per capita, ultimately leading
to greater buying power.

The countrys current growth is however at risk of Government slow and cautious spending. The
slow spending helps prevent the misuse of funds as seen in the previous administration, but in turn, drags
down economic growth. But despite these risks, both local and international confidence have continued
to be strong because of sound macroeconomic fundamentals.

Recommendation
The teams research and analysis found out that San Miguel Super Coffeemix Co., Inc. (SMSCCI)
has suffered losses since 2013 and has not paid dividends since then. SMSCCI also has a capital deficiency
(negative equity) that has been going on since 2014. SMSCCI has been displaying symptoms of a failing
business, thus the team considered SMSCCI a candidate for divestiture.
Industry Players
*insert market share pie chart