Introduction Strama

TAGUIG CITY UNIVERSITY
School of Graduate Studies

Master in Business Administration Program
STRATEGIC MANAGEMENT
A Research Paper
Presented to Prof. Marlon B. Raquel, LPT, MBA
Taguig City
In Partial Fulfillment
Of the Requirements for the Course
ENTERPRISE RISK & STRATEGIC MANAGEMENT
By
Arvin Libutan
Hazelene Manalo
Gie-Ann P. Obusan
Kevin Petalio
Master in Business Administration Student
AUGUST 25, 2019

CHAPTER I
Introduction
For many Filipinos, pawning jewelry at a neighborhood pawnshop has
been the most common and quickest way to address an urgent need for
relatively small amounts of cash. Compared with banks, pawnshops do not
impose as many documentary requirements before releasing cash to customers.
Moreover, the latter are more accessible, as they may be found even in remote
areas where banks do not operate.
Pawn shops accept items as collateral for a short-term loan. When you
bring an item to a pawn shop, the pawnbroker assesses the item's value and
offers you a loan equal to a certain percentage of the value. You have a short
time period to repay the loan with interest. If you do, the pawnbroker returns the
item. If you don't, the pawnbroker owns the item and tries to sell it for a profit.
Because the loans offered are usually small, pawn shops require a low amount of
start-up financing from entrepreneurs.
Pawning jewelry for money is not typically an ideal situation since pawn
shops offer high interest rates and price jewelry at a fraction of its true value.
However, if you need a quick loan, pawning jewelry might be the best option. By
taking the time
to have your jewelry appraised, shopping around for the best loan deals, and
getting your loan paid back on time, you can safely get the money you need and
still get your jewelry back.
G.Y. Lopez pawnshop was established on February 2017 and its founder
is Gilbert Lopez and family. The business is located at Km 21 Alabang-Zapote
Road, Almanza Uno Las pinas City. The business offers financial services
usually customer focused, giving due regard to costs, liquidity and maturity
considerations. There are only 3 employees in the pawnshop. The Financial
Manager, cashier, and security guard. Every employee help each other
contributing reliable pawning experience to its customers.

CHAPTER II
Research Design and Methodology
SWOT analysis
SWOT analysis was popularised by Andrews (1965) who combined the ideas
of Peter Drucker, Philip Selznick, and Alfred Chandler. Drucker (1946) searched for the
source of the company’s success. He found out that successful organisations should
have external purposes and objectives that were directed to determiningcustomer
needs and satisfying them. Selznick (1957), on the other hand, proposed two terms-
“distinctive competences” and “environmental uncertainty”. The former dealt with unique
capabilities and values possessed by particular organisations that put emphasis on
giving them a “sustained competitive advantage”. The latter pointed up that in early
times firms did not necessarily respond rationally to their environments, but rather
they internalized cultural norms and values of the wider system or society in which
they operate. Lastly, Chandler (1962) analysed four multinational companies’ growth
processes and their injection into their managerial structures. He implied the
significance of strategic thought and comprehension in organisations. In light of these
views, Andrews (1965) formulated SWOT analysis that proposed that a firm could
generate its strategy after cautiously evaluating the components of its internal and
external environments. This allowed companies to use long range planning approach
based on qualitative analysis rather than

quantitative forecast (Learned, et al., 1965; Barca, 2005). SWOT matrix, in theory,
presents a mechanism for facilitating the
linkage among company strengths and weaknesses, and threats and opportunities in
the marketplace. It also provides a framework for identifying and formulating
strategies. SWOT matrix helps managers develop four types of strategies: SO
(strengths-opportunities) strategies, WO (weaknesses-opportunities) strategies, ST
(strengths-threats) strategies, and WT (weaknesses-threats) strategies. SO strategies
use a firm’s internal strengths to take advantage of external opportunities. WO strategies
improve internal weaknesses by taking advantage of external opportunities. ST
strategies use a firm’s strengths to avoid or reduce the impact of external threats. WT
strategies are defensive tactics directed at reducing internal weaknesses and
avoiding environmental threats (Weihrich, 1982).
Internal-External (IE) Matrix
Internal-External (IE) Matrix positions an organisation's various divisions in a nine
cell display through plotting them in a schematic diagram. The size of each circle
represents the percentage sales contribution of each division, and pie slices reveal the
percentage profit contribution of each division in IE Matrix (David, 2007).
IE Matrix is based on two key dimensions: IFE total weighted scores on the x-
axis and EFE total weighted scores on the y-axis. On the x-axis of the IE Matrix, an
IFE total weighted score of 1.0 to 1.99 represents a weak internal position; a score of 2.0
to 2.99 is considered average; and a score of 3.0 to 4.0 is strong. Similarly, on the y-
axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99
is medium; and a score of 3.0 to 4.0 is high. The IE Matrix can be divided into three
major regions that have different strategy implications.
First region gives the prescription of grow and build for divisions that fall into cells
I, II, or IV. Intensive (market penetration, market development, and product
development) or integrative (backward integration, forward integration, and
horizontal integration) strategies can be most appropriate for these divisions. Second
region gives the prescription of hold and maintain for divisions that fall into cells III, V,
or VII. Market penetration and product development are two commonly employed
strategies for these types of divisions. Third region gives the prescription of harvest or
divest for divisions that fall into cells VI, VIII, or IX. Liquidation, retrenchment and
divestiture are appropriate strategies for these divisions. Successful organisations
are able to achieve a portfolio of businesses positioned in or around cell I in the IE Matrix
(David, 2007).
CHAPTER III
Company’s Mission and Vision
In a recent review of strategic management models, the mission statement
was noted as being an essential first step in the strategic management process
(David, 1984; Staples & Black, 1984). A mission statement can be defined as an
enduring document of purpose that distinguishes one business from other firms
of its type (Pearce, 1982). A mission statement is a declaration of an
organization's business or "reason for being." A clear statement of a company's
mission is essential to effectively establishing objectives, formulating strategies,
setting goals, devising policies, allocating resources, and motivating employees.
A mission statement is thus an integral component of the strategic management
process. As evidenced in the following quotation from Peter Drucker's classic
book entitled Management: Tasks, Responsibilities, and Practices, a good
mission statement makes strategy formulation, strategy implementation, and
strategy evaluation much easier.
The importance of a mission statement to effective strategic management is well
supported in the management literature (Staples & Black, 1984). A mission
statement may be the most visible and public part of a strategic plan. As such,
steps should be taken to insure that the statement includes all of the essential
components and attributes. In addition, a company mission should be evaluated
to insure that it
communicates clearly the desired feelings that will guide and motivate
employees to action.
G.Y. Lopez Mission and Vision:
VISION
To be the most reliable pawnshop in the Philippines offering exellent and
delightful pawning experience.
MISSION
To provide our customers with superior quality products and services that will
help improve their financial needs.
https://www.strategicmanagementinsight.com/tools/pest-pestel-
analysis.htm
EXTERNAL ANALYSIS GUIDE
1. PESTEL ANALYSIS
2. Translate the above terms of what it means for your business identifying
opportunities and threats that may affect the following:
a) Market demand and opportunities

b) Types of products and services offered
c) Intensity of competition
d) Suppliers and distributors
e) Costs of doing business
f) Other aspects of the business
B Industry and Competitor Analysis
1. Analyze the industry’s situation and prospects by looking into the

following:
a) Market size and/or growth rate and stage in the growth cycle
b) Number of Players and their relative sizes; Market share analysis
c) Market aspects (Products or service, price, promotion and channels
of distribution)
d) Buyer/Customer Profile
e) Factors affecting costs of doing business
f) Operations/Productions aspects
g) Technology developments
h) Industry financial analysis (growth, profitability, liquidity, leverage,
efficiency)
i) Problems in the industry
j) Critical success factors in the industry
2. Analyze your industry using Porter’s Five Forces framework of

competitive analysis and based on the preceding analysis, state your
conclusion for each force.
3. Do a competitor analysis
C. Summary and Conclusion

CHAPTER IV
EXTERNAL ANALYSIS
OVERVIEW OF EXTERNAL ANALYSIS
A. General Government
Gold has emotional, cultural and financial value and different people across
the globe buy gold for different reasons, often influenced by a range of national
socio-cultural factors, local market conditions and wider macro-economic
drivers.
Beginning in 1972, The Bangko Sentral ng Pilipinas’ (BSP), known as the Central
Bank in 1973.was given the authority and responsibility to regulate pawnshops.
Presidential Decree 114 (29 January 1973) and the Central Bank Circular No.
374 (13 July 1973) set out specific regulations covering the operations of
pawnshops.
Pawnshops are still among the least regulated businesses that fall under
the authority the BSP. Under the BSP‘s regulations pawnshops are authorized to
lend, but cannot accept deposits and are required to submit regular financial
reports. The BSP has financial audit authority over pawnshops and can inspect
book records and general business practices. It also has the authority to sanction
a pawnshop. Although in 2009, the BSP did issue a new, more stringent, set of
rules that will govern all pawnshops operating throughout the country. The new
rules will replace the existing implementing rules and regulations of Presidential
Decree No. 114 also known as the Pawnshop Regulation Act issued in 1973.
The new rules are designed to enhance consumer protection and foster
confidence in the pawnshop industry by the pawning public. For instance,
proprietors, partners, incorporators, directors, stockholders and officers of
pawnshops must meet certain “fit and proper” standards to ensure that
pawnshops are owned and run by people without any derogatory record and to
promote good governance. Pawnshops are now required to maintain a minimum
level of capital or net worth in relation to their loan portfolio as the existing
statutory capital of P100,000 has become too small and it is susceptible to the
proliferation of “fly-by-night” operators additionally the management of
pawnshops allows 25% of the gross operating income to flow to the bottom line
as net profits.
PEST ANALYSIS
Political:
 No price regulation policies by government, because prices largely
driven by international forces
 Current law and order situation of the country The Philippine Mining
Act of 1995 is the main policy/ legislation which governs all
mining operations in the country and includes various measures to
protect the environment and defines areas in which mining can be
allowed in selected areas.
 The practice of smuggling gold to other bullion markets has existed for
long time and there is not much being done about it, despite the
knowledge of the lost official revenue.
 The political instability also lead people to reduce demand for the luxury
item and invest in more ‘solid’
 Imports of raw materials and equipment for the production of fine jewelry
were heavily taxed.
Economical:
 With the rising prices of gold jewellery buyers have started purchasing
less of it.
 Trade was a long time largely informal and underground.

Social:
Technology:
 The pawnbrokers should endeavor to acquire modern tools or equipment
that will aid the appraisers in detecting the genuiness of gems pawned to
protect them from being victims of fraudulent pawn.
 Also technology saves costs, time and wastage. It increases efficiency
and productivity of the sector.

External Factor Evaluation (EFE)
Weighted
Key External Factors Weight Rating
Score
Opportunities
1. Service / product diversification .05 4 .20
2. High Unemployment .10 4 .40
3. Hand-to-mouth lifestyle of most
.10 3 .30
Filipinos
4. Technological advancements .03 3 .09
5. High credit needs .06 2 .12
6. Financial Leverage .04 2 .08
7. Fragmented Market .02 2 .04
8. Most Filipinos belong to the middle
.07 3 .21
and working class.
9. Philippines is prone to calamity .07 3 .21
10. Demographic setting .03 2 .06
Threats
11. Many competitors .09 4 .36
12. Competitors are closely located .09 4 .36
13. Fluctuation rates of items .07 2 .14
14. Government Regulations .06 2 .12
15. Unstable Economy .03 2 .06
16. Staff turnover (retiree to newly
.09 3 .27
hired)
TOTAL 1 3.02
 Smuggling
 Limited availability of credit and financial schemes
 * Burglary/robbery
 * Competition from huge chain outlet
 * Unsafe surroundings / environment
 * Many competitors
 * Economic stability
Opportunities
* Add-on service
* Improvement of faciliies
* Additional branches
* Increasing number of customers
* Economic crisis
COMPETITORS
Table IV. 1
Primary Competitors
Competitors Background
17 August 1985, Puerto Princesa
Established in Cebu in early 1980's by

Michel Lhuillier, eldest son of Henry
Lhuillier. Henry Lhuillier is a French
national who came to the Philippines in
1930 and married a Filipina named
Angelita Escaño Jones. They engaged
in jewelry and money-lending business.
Cebuana Lhuillier Pawnshop -

established in Pasay, Manila in mid-
1980's by Philippe Lhuillier, also a son
of Henry Lhuillier.
INTERNAL /COMPANY ANALYSIS GUIDE
A. Review the Company’s performance in terms of key

performance indicators
1. Revenue/Sales in the Past 3 Years
2. How the Company’s growth with industry growth or vis-
à-vis the others players
3. Profitability, other relevant performance indicators
4. Applicable financial ratios
5. Value-Chain Analysis
B. Do an organization diagnosis using
1. David’s functional audit to assess the different
functional areas of the organization
2. Mckinsey’s 7S Model or Galbraith’s Star Model
C. From the above, Identify the company’s major strengths and
weaknesses
D. Use the IFE MATRIX to evaluate the overall internal strengths
and weaknesses of the company
E. Summary and Conclusion
1. Identify the major financial and internal strategic issues
that the company must address.
2. Identify key organizational elements that may hinder or
promote growth and productivity
Threats
 High operating costs
 Lack of register-based inventory system
 Inaccessibility of the location
 High interest rate
 Slow processing
 Lower value for the pawned items
 Poor service
Strength
* Accessibility of the location
* Low interest rate
* Quick processing
* Provide higher value for pawned items
* Quality service
CHAPTER V
INTERNAL /COMPANY ANALYSIS
An internal analysis is an exploration of your organization’s competency, cost
position and competitive viability in the marketplace. Conducting an internal analysis
often incorporates measures that provide useful information about your organization’s
strengths, weakness, opportunities and threats – a SWOT analysis. The data
generated by an internal analysis is important because you can use it to develop
strategic planning objectives to sustain and grow your business.
The internal analysis focuses on identifying and evaluating a firm’s strengths and
weaknesses in the functional areas of business, including management, marketing,
finance/accounting, productions/operations, research and development, and management
information systems.
A. G.Y PAWNSHOP Performance in terms of key performance
indicators:
1. Revenue/Sales in the past three years:
Table V. 1
G.Y PAWNSHOP Gross Income for the Past Three Years
Gross Income or Net Premium or Profit for the Year

Revenue Net Sales (after tax)
2017 1,307,792
2018 1,555,674
2019 1,609,921
5 VALUE CHAIN ANALYSIS

2. Mckinsey’s 7S Model
McKinsey 7S Framework is a strategic

planning tool designed that analyzes
firm’s organizational design by looking at 7
key internal elements: strategy, structure,
systems, shared values, style, staff and
skills, in order to identify if they are
effectively aligned and allow organization
to achieve its objectives.
McKinsey 7s model was developed in 1980s by McKinsey consultants Tom

Peters, Robert Waterman and Julien Philips with a help from Richard Pascale
and Anthony G. Athos. Since the introduction, the model has been widely used
by academics and practitioners and remains one of the most popular strategic
planning tools. It sought to present an emphasis on human resources (Soft S),
rather than the traditional mass production tangibles of capital, infrastructure
and equipment, as a key to higher organizational performance. The goal of the
model was to show how 7 elements of the company: Structure, Strategy, Skills,
Staff, Style, Systems, and Shared values, can be aligned together to achieve
effectiveness in a company. The key point of the model is that all the seven
areas are interconnected and a change in one area requires change in the rest
of a firm for it to function effective
Below you can find the McKinsey model, which represents the connections
between seven areas and divides them into ‘Soft Ss’ and ‘Hard Ss’. The shape
of the model emphasizes interconnectedness of the elements.
 Strategy is a plan
 Structure represents the way business divisions and units are organized
and includes the information of who is accountable to whom. In other
words, structure is the organizational chart of the firm. It is also one of the
most visible and easy to change elements of the framework.
 Systems G.Y Pawnshop has 2 employees who are
 Skills
 Staff refers to the quality of people who assist the Business Operations,
Customer service, Flexible work environment, lower employee turnover.
 Style represents the way the company is managed by top-level
managers, how they interact, what actions do they take and their symbolic
value. In other words, it is the management style of company’s leaders.
 Shared Values are at the core of McKinsey 7s model. They are the norms
and standards that guide employee behavior and company actions and
thus, are the foundation of every organization
 https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-
framework.html
The model can be applied to many situations and is a valuable tool when
organizational design is at question. The most common uses of the framework
are:
 To facilitate organizational change.

 To help implement new strategy.
 To identify how each area may change in a future.
 To facilitate the merger of organizations.
6 G.Y PAWNSHOP. Major Strengths and Weaknesses.
STRENGTH
 Expertise and skills of employee

 Solid financial capital
 Trusted employee
 Collaboration of independent sales agent
 Business network connection
 Customer loyalty
 High liquidity
 Straight interest rate
 Feasible location
WEAKNESSES
 Old System
 Micromanagement
 Appraisal deficit
 Human Errors in terms of updating accounting books
 Limited service offered
 No presence in social media.
D. Use the IFE matrix to evaluate the overall internal strengths and
weaknesses of the company.
Table V.
Internal Factor Evaluation (IFE)
Weighted
Key Internal Factors Weight Rating
Score
Strengths
1. Expertise and skills of
.08 3 .24
employee
2. Solid financial capital .10 4 .40
3. Trusted employee .10 4 .40
4. Collaboration of
.07 3 .21
independent sales agent
5.Business network connection .06 2 .12
6. Customer loyalty .09 3 .27
7. High liquidity .04 2 .08
8. Straight interest rate .06 2 .12
9. Feasible location .05 2 .10
Weaknesses
10. Old System .06 3 .18
11. Micromanagement .08 2 .16
12. Appraisal deficit .04 2 .08
13. Human Errors in terms of
.07 3 .21
updating accounting books
14. Limited service offered .05 3 .15
15. No presence in social
.05 3 .15
media.
Total 1 2.87
Above ratings were based on the following:

VII. Objectives, Strategy Recommendations and Action Plans.
ABSTRACT
Pawnshops have recently become a permanent fixture in the
lives of ordinary Filipinos. Jewelries, appliances and other properties are
pawned every day to temporarily augment the expenses of those who
otherwise cannot borrow from banks and other financial institutions. In
fact, some of these pawnshops have expanded into the provinces thus
taking a new role as exponents of development. But despite its popularity,
very little importance has been given to the study of pawnshops. Thus,
this paper tries to fill this void by presenting in a new light some facts
associated with the pawnshops' continued existence in the financial
system. To do this, a review was made regarding the regulatory
framework by which pawnshops in the Philippines operate. It then
discusses the role of pawnshops in the financial system. This is followed
by an analysis of the performance of pawnshops with special emphasis on
the following: a) sources and uses of funds, b) interest rates on loans, c)
profitability and operating efficiency of pawnshops, and d) linkages
between pawnshops and banks. In order to know whether pawnshops can
still improve their competitive advantage by increasing their size, tests
were made on the economies of scale.
In short, what all the analysis and results point to is that pawnshops can
and will be a good alternative source of credit for small borrowers and
society, in general.
Definition of Terms – Financial
To facilitate better understanding of this study, the following terms are
operationally and contextually defined.
Activity Ratios. These measure the effectiveness of management’s
use of the firm’s resources. An activity ratio is one of several accounting
ratios that measure how quickly a company can convert certain of its
assets into cash, or revenue. Three commonly assessed activity ratios are
the asset turnover ratio, the inventory turnover ratio and the receivables
turnover ratio. An activity ratio, along with other accounting ratios, is used
in fundamental analysis to determine the relative strength of a company
compared to its competitors. The information used to calculate
an activity ratio is found on a company’s balance sheet or income
statement (http://www.wisegeek.com/what-is-an-activity-ratio).
Balance Sheet. These are snapshots in time; that is, they show the
values in peso of assets and liabilities as of a given date. They are valid
only for that specific point in time (Tuller, 2008).

Current Ratio. This refers to the current assets divided by current
liabilities (Penman, 2010).
Debt Ratio. This refers to the total liabilities divided total assets
(Penman, 2010)’ Debt-to-assets ratio or simply debt ratio is the ratio of
total liabilities of a business to its total assets. It is a solvency ratio and it
measures the portion of the assets of a business which are financed
through debt (http://www accountingexplained.com/financial/ratios/debt-
ratio, retrieved April 8, 2013).
Financial Performance. This refers to the relationships among three
reports - balance sheet, income statement, and cash flow schedules which
enable the business firm to analyze its complete financial performance.
These relationships are usually expressed as ratios: profitability, stability,
solvency, liquidity and growth prospects (Tuller, 2008).
Financial Ratios. These are significant relationships between items in
the financial statements expressed in mathematical form.
Financial Statements. These refer to the income statement, cash flow
statement and balance sheet.

Income Statement. It shows a series of transactions that have
occurred over a period of time-specifically, the period between two
balance sheet dates. This maybe a month, a quarter or a year. All
transactions that have occurred during the period show up in the income
statement - sales, cost of materials and labor operating expenses, taxes,
and interest paid on loan (Tuller, 2008).
Leverage Ratios. These measure the extent to which a firm relies on
debt financing. The degree to which an investor or business is utilizing
borrowed money which refers to leverage
(http://www.investorwords.com/1952/financial_leverage.html#ixzz2Q2BPb
xyy, retrieved April 8, 2013).
Liquidity Ratios. These measure the firm’s ability to meet its short-
term obligations when they must be aid. The degree to which an asset or
security can be bought or sold in the market without affecting the asset's
price. Liquidity is characterized by a high level of trading activity. Assets
that can be easily bought or sold are known as liquid assets
(http://www.investopedia.com/terms/l/liquidity.asp, retrieved April 8, 2013).
Long-term Debt to Equity. This refers to the long-term debt divided
by stockholders’ equity (Penman, 2010).

Net Profit Margin. This refers to the net profit divided by revenue
(Penman, 2010).
Pawned Value. It refers to the estimated value of the pawner actually
received from the pawnbroker based primarily on the appraisal value.
Profitability Ratios. These measure the organization’s overall
financial performance by evaluating its ability to generate revenue in
excess of operating costs and other expenses. Profitability ratios show a
company's overall efficiency and performance. We can divide profitability
ratios into two types: margins and
returns. Ratios that show margins represent the firm's ability to translate
sales dollars into profits at various stages of measurement. Ratios that
show returns represent the firm's ability to measure the overall efficiency
of the firm in generating returns for its shareholders (http://www
bizfinance.about.com/.../Profitability, retrieved April 8, 2013).
Quick (Acid-Test) Ratio. This refers to the current assets (minus
inventory) divided current liabilities (Penman, 2010).
Return on Equity. This refers to the net profit divided by average
stockholders’ equity (Penman, 2010).
Statement of Cash Flows. It is a statement showing the sources and
uses of cash during a period of time.

The Proposed Operational Strategies. The proposed operational
strategies refer to the growth strategy of the firm and the corresponding
policy directions which are intended to help promote the growth of the
firm’s market positions for the next five to ten years. It also includes
specific branch location strategy, service line strategy and sales promotion
strategy. It is a detailed plan that shows how the firm can achieve its
growth objectives.
Total asset turnover. This refers to the revenue divided by total
assets. (Penman, 2010)
Trend Analysis. These determine the percentage changes for several
successive periods.
Financial Management. The statement on financial management
says: It is not enough for a manager of a company to know the situation of
the firm and to have an analytical skill in managing a firm’s finances, but
one must have a comprehensive knowledge of the techniques and means
of financial analysis. He has to know how to apply this skill and
knowledge in a given situation, and able to interpret the results. This
makes financial management both art and science. Accordingly, the main
reason for the failure of businesses is the inadequate skills and the
inability to handle the funds. Inversely, knowledge on financial
management of the firm gives a vantage point in the overall management

of the company. Knowledge on the financial management is the
backbone of the business firms, the national economy and the world.
(Cordero, 2003)
Jorion (2007) states that Value at Risk (VAR) has become the
industry standard in risk management. He mentions the most current
information needed to understand and implement VAR as well as manage
newer dimensions of financial risk. Featured updates include an increased
emphasis on operational risk using VAR for integrated risk management
and to measure economic capital applications of VAR to risk budgeting in
investment management. Discussions of new risk-management
techniques, including extreme value theory, principal components, and
copulas are presented. Extensive coverage of the recently finalized Basel
II capital adequacy rules for commercial banks, integrated
throughout his thoughts. He outlines the use of VAR to measure and
control risk for trading, for investment management, and for enterprise-
wide risk management. He also points out key pitfalls to watch out for in
risk-management systems.
Business need to decide and prioritize an overall set of goals from all
of the varying demands from stakeholders. Many companies present their
aims in two ways: mission and objectives. Mission is usually stated in
general terms. It explains the firm’s reason and what it hopes to achieve
in the future. It articulates the firm’s essential nature, values and activities.
The objectives identify the target that the company will try to meet to better
achieve the mission. Company’s mission and objectives vary depending
on the firm’s priorities.
Hence, financial management is a firm’s priority that plays a critical role
in business survival, sustainability, growth and long-term viability. In
today’s rapidly changing business environment, financial management is
more complex than in any time of history. This makes its understanding
not only important and exciting but also challenging and sometimes
bewildering. The theory and practice of financial management continue to
advance at an uncommonly rapid pace in response to shifts in economic
conditions. Those involved with financial management in business
organization must run just to keep in place. The core principles underlying
financial management have changed relatively little over time.
Financial management entails planning for the future of a person or a
business enterprise to ensure a positive cash flow. It includes the
administration and maintenance of financial assets. Besides, financial
management covers the process of identifying and managing risks (Gupta,
2011). The primary concern of financial management is the assessment
rather than the techniques of financial quantification. A finance manager
looks at the available data to judge the performance of enterprises.

Accordingly, financial management is the science of money management.
The primary usage of this term is in the world of financing business
activities. However, financial management is important at all levels of
human existence because every entity needs to look after its finances.
Taking into consideration the company’s financial management is
associated with financial management planning and control. Financial
planning seeks to quantify various financial resources available and plan
the size and timing of expenditures. Financial control refers to monitoring
cash flow. Inflow is the amount of money coming into the company, while
outflow is a record of the expenditure being made by the company.
Managing this movement of funds is relation to the financial plan is
essential for the company.
The reality is that much of the financial data available in many
non‐profits is worrisome. While the information on revenues tends to be
fairly robust, organizational knowledge about costs tends to be weak. The
literature suggests that without an understanding of the relationship
between specific expenses and
organizational goals, non‐profits cannot make informed, productive
financial decisions. When organizations have a true understanding of the
all‐in costs of running programs and services, they possess powerful

information that can allow them to allocate resources to those that have
the greatest impact (Colby & Rubin, 2003).
Accurate cost data also makes it possible to look at program
finances from a strategic perspective, and assess the flow of funds within
the organization as a whole. This full understanding can provide a clear
view on which programs are covering their own costs
or even generating surplus funds, and which programs are actually
producing a deficit. Organizations that possess strong financial
management capabilities are able to make resource‐related decisions
intelligently, all in the pursuit of maximizing impact and promoting its
mission. The concept of “mission match” and financial health is critical in
the organizational balancing act. There is no question that organizations
have to maintain financial health if they are to remain viable. However,
viability loses its meaning in the absence of mission (Colby & Rubin,
2003).
Financial capacity can be defined as “available organizational
resources and relationships (both external and internal) that enable
organizations to pursue their mission and fulfill their roles”. Others have
defined financial capacity as “the resources that give an organization the
wherewithal to seize opportunities and
react to unexpected threats” (Bowman, 2011). Financial capacity has also

been simply defined as “an ability to do things and withstand unexpected
shocks.” Financial capacity is complex – it includes the ability to generate
and administer funds, while on the other hand including the instruments
and mechanisms that structure the relationship between the organization
and the funder. The concept of resources are arguably the most central
aspect of financial capacity, because it can affect so much of what an
organization is able to undertake and achieve. Traditional efforts to build
non‐profits capacity have typically focused on expanding an organization’s
resources. Simply providing more resources, however, is not always the
answer to the challenges faced by non‐profits. How resources are used is
a critical factor. In a rapidly changing environment, upgrading skills,
revamping procedures, and improved technology are some of the ways
that help to stretch limited resources.
Good financial management is connected to every facet of the
organization’s operations – and it’s essential to success. Solid financial
management plays a critical role in the development and maintenance of
effective organizations. In the past decade, there has been heightened
interest in this area due to changes in the funding environment and
availability of resources. Good financial management practices are critical
elements of any non‐profit organization and demand careful attention in
capacity building efforts. Financial

management includes the competence to manage organizational
resources, as well as the capability to ensure efficient financial operations
(TCC Group, 2010).
While much of the literature on financial management concentrates
on accounting cycles and risk management, financial management is
much more than that. Good financial management links together the
organizational mission with the deployment of financial resources in
pursuit of that. Focusing solely on the importance of programming without
ensuring adequate finances short changes the ability of the organization to
meet its mission. Financial management supports the creation of systems
through which the program staff and financial staff can work together to
set priorities and agree on the most effective and efficient ways of meeting
organizational objectives (The Wallace Foundation, 2011).
Organizational/Financial Performance. Organizational
performance comprises the actual output or results of an organization as
measured against its intended outputs (or goals and objectives).
Specialists in many fields are concerned with organizational performance
including strategic planners, operations, finance, legal, and organizational
development (http://www.businessdictionary.com/.../organizational,
retrieved April 8, 2013). In recent years, many organizations have
attempted to manage organizational performance using the balanced
scorecard methodology where performance is tracked and measured in
multiple dimensions such as:

- financial performance (e.g. shareholder return) – customer service –
social responsibility (e.g. corporate citizenship, community outreach) –
employee stewardship. Performance measurement is the use of statistical
evidence to determine progress toward specific defined organizational
objectives.
There are many types of measurements. In school, exams are
graded to establish the academic abilities; in sports, time is clocked in split
seconds to verify the athletic abilities. Similarly in teams and
organizations, there are various tools and measurements to determine
how well it performs. Gamble, Strickland and Thompson (2007) provide a
comprehensive method for measuring performance of organizations. How
well each company performs is dependent on the strategic plan. Some of
the measurements include basic financial ratios such as debt-to-equity
ratio and if the levels are an issue with creditworthiness.
The daunting task of measuring performance for organizations
across industries and eras, declaring the top performers, and finding the
common drivers of their success did not occur to anyone until around
1982, when Tom Peters and Bob Waterman got down to work researching
and writing In Search of Excellence. This publishing sensation challenged
industrial managers’ actions and attitudes, and inspired researchers and
scholars to further pursue the theory of high performance – the holy grail
of any competitive business organization. This task becomes more
complex as corporations diversify into multiple
industries. A researcher must take this into consideration when conducting
a comparative analysis of companies.
As defined by Crosson and Needles (2005), financial statement
analysis comprises all the techniques users of financial statements employ
to show important relationships in a firm’s financial statements and to
relate them to important financial objectives. He declares that horizontal
analysis, trend analysis, vertical analysis and ratio analysis are the more
widely used tools in financial analysis. Horizontal analysis computes
changes from the previous year to the current year in both peso amount
and percentages. The base year in any set of date is always the first year
to be considered. Trend analysis is a variation of horizontal analysis, in
which percentages changes are calculated for several successive years
instead of two years. Its long-run view will point to basis changes in the
nature of business. Vertical analysis shows the relationship of the
different parts to a total in a single statement using percentages.
Common-size balance expresses assets and liabilities as a percent of
total assets. Common-size income statement expresses expenses and
profits as a percent of sales. Ratio analysis is a technique of the financial

analysis that identifies meaningful relationships between components of
the financial statements.
On the other hand, Gitman (2006) explained that there are two
popular approaches to a complete ratio analysis for a global look at the
company’s financial performance and condition. The DuPont system of
analysis is used by
management to dissect the firm’s financial statements and to assess its
condition. The DuPont system acts as a diagnostic tool with which to
assess the key areas responsible for the firm’s financial condition. The
other approach is the summary analysis of large number of ratios. This
tends to view all aspects of the firm’s financial activities to isolate key
areas of responsibility. Financial ratios can be divided for convenience
into four basic categories: liquidity ratios, activity ratios, debt ratios and
profitability ratios. Liquidity, activity and debt ratios primarily measure risk
and profitability ratios measure return.
Aduana (2009) stresses out that the financial statement analysis
involves the processes of selecting related financial data, making relevant
mathematical computations, comparing the performance of the business
firms with other firms within the industry and evaluating trends in the
operating performance of the business firm. The focus of the evaluation is
to determine the tendencies on the company’s liquidity, solvency,

profitability, and efficiency of management performance. The result of the
studies may also assist the management in identifying deficiencies and
then take actions to improve operating performance. Though financial
statements are historical in nature, they serve as the fundamental material
in financial analysis. Hence, the three traditional tools in analyzing the
financial statements are horizontal, vertical and trend analyses.
Penman (2010) noted that the financial statements are the lens on
a business. They draw a picture of the business that is brought into focus
with
financial statement analysis. The analyst must understand how the picture
is drawn and how she might then sharpen it with analysis. Two features of
the statements need to be appreciated: form and content. Form describes
how the financial statements are organized. Financial statement analysis
is an organized way of extracting information from financial statements,
but to organize financial statement analysis, one must first understand
how the financial statements themselves are organized. The form of the
financial statements sketches the picture. Contents fill out the form, it
colors the sketch. Content describes how line items such as earnings,
assets, and liabilities, dictated by form are measured, thus quantifying the
message. Thus, financial statements explain the accounting principles
that dictate the firm’s operation and performance.

According to Orcullo (2007), business organizations have to
produce at least three financial documents to prove the soundness and
competitiveness of the business. These financial documents include
balance sheet, income statement and cash flow. Using these documents
and other finance related on record including short and long-term external
obligations, the next thing to do is to do a ratio analysis. To the best
possible, applicable ratios should be computed and applied in the course
of monitoring and evaluating the performance of the firm based on the
strategy crafted and implemented.
While it is true that monitoring and evaluating the performance of
the business for parties concerned to know the results or impact or results
of the
strategy upon the competitiveness and profitability of the firm, the other
critical component of the sixth strategic management task is to provide an
opportunity to learn from shortcomings and failures. Hence, by knowing
the setbacks encountered as parties concerned monitor the progress of
the business guided by the strategic plan, concerned managers can
develop options or corrective measures to put back the business on
stream and on the right course. The setback or negative factors
constraining the business or affecting the full implementation of its plan
may be too costly for the firm but it has to be accepted that planning and
executing the plan is a learning process by itself. That is why, assessing
or evaluating the business performance and taking corrective measures
are just as important as any of tasks in strategic management if only to
pursue specific courses of actions leading to the realization of the stated
vision-mission statement.
With this, Anastacio, et al. (2010) pointed out that ratio presents
relationships between two variables. Financial ratios, therefore, refer to
the relationships between financial statement items or accounts expressed
in mathematical fashion. In using ratios, the task is to interpret them as
favorable or unfavorable. To do so, some standards that would determine
the favorableness or unfavorableness of the outcome will be followed.
Some of the standard ratios used are based on company budget for the
same period; those used by the industry to which the firm belongs; those
used by the firm’s
successful competitors; those used by the firm using prior periods; and
those used by the analyst in the past.
Industry ratios are averages developed by a group of experts
involved in research. These empirically-based ratios are used as
standards in financial statement analysis. Industries have their own
peculiarities hence, experts developed ratios that are suitable for that
industry. Since this task is too tedious, analysts resort to using ratios of
competitors, which are readily available.
There should be consistency in the computation as well as usage of
ratios to ensure comparability between results and prevent their
misinterpretations. Just like any financial analysis technique, financial
ratios are subject to limitations. Results from financial ratio analysis are
indicators of a firm’s weakness or strength but are not themselves, good
or bad. This is understandable since the ratios spring forth from financial
statements, which have subject to limitations.
Gupta (2011) identifies how to interpret financial statement.
Accordingly, ratio analysis is not merely the application of a formula to
financial data to calculate a given ratio. More important is the
interpretation of the ratio value. A meaningful basis for comparison is
needed. The most informative approach to ratio analysis is one that
continues cross-sectional and time-series analyses.
Cross-sectional analysis involves comparison of different firm’s
financial ratios at the same point in time. Benchmarking is a type of cross-
sectional
analysis in which the firm’s ratio values are compared to those of a key
competitor or group of competitors, primarily to identify areas for
improvement.
Comparing a particular ratio to the standard should uncover any
deviations from the norm. The analyst must also recognize that ratios with
large deviations from the norm are only the symptoms of a problem.
Further analysis is typically required to isolate the causes of the problem.
Once the reason for the problem is known management must develop
prescriptive actions for eliminating it. The fundamental point in this ratio
analysis merely directs attentions to potential areas of concern: it does not
provide conclusive evidence as to the existence of a problem.
Time-series analysis evaluates performance over time.
Comparison of current to past performance, using ratios, allows the firm to
determine whether it is progressing as planned. Developing trends can be
seen by using multiyear comparisons, and knowledge of these trends can
assist the firm in planning future operations. A cross-sectional analysis,
any significant year-to-year changes should be evaluated to assess
whether they are symptomatic of a major problem. The combination of
cross-sectional analysis and time-series analysis permits assessment of
the trend in the behavior of the ratio in relation for the industry.
Organizational Strategy. Organizational strategy is related to
organizational studies, an academic field that analyzes organizations and

what makes them succeed or fail. It provides overall direction for the
organization. Formulating a strategy combines the following three main
processes. The first process is performing an analysis of the
organization’s situation--internal and external, micro- and macro-
environmental. This means asking both what is going on with its
competitors and with each part of the organization. The second process
involves setting objectives--both short-term and long-term. This means
creating vision and mission statements. The final process is developing a
strategic plan that provides details about how to achieve the organization’s
objectives (http://www.ehow.com/Business, retrieved April 8, 2013).
An expression of how an organization needs to evolve over time is
needed in order to meet its objectives along with
a detailed assessment of what needs to be done. Developing an
organizational strategy for a business involves first comparing its present
state to its targeted state to define differences, and then stating what
is required for the desired changes to take place.
Systems theory is a relatively new discipline which tries to describe
phenomena by using concepts in several disciplines. Because of the
holistic and multidisciplinary perspective, systems concepts have been
found to be useful in describing complex activities including organizations
(Kurtz, 2010). A system is defined as a set of elements which are related
to each other in a certain way. It

has both structure (consisting of its elements) and process (i.e., the way
the elements interact to produce a given outcome or result).
Bateman and Snell (2011) affirmed that all systems are input–
throughput–output mechanisms wherein the system takes in inputs from
the environment in the form of energy, information, money, people, raw
materials and all other valuable resources. Leaders of an organization
have to do something to the inputs via throughput, conversion or
transformation processes that change the inputs; and then export products
to the environment in the form of output. The outputs of an organization
become inputs of other systems. Meanwhile, Trist Emery spelled out that
all organizations are principally composed of two independent systems:
the social system and the technical system where relevant changes that
occur in one system produce effects to the other system (Lewis, et al.
2005).
People who work in groups comprise the social system, while the
technical system is composed of people who use knowledge and
techniques systematically in establishing and accomplishing mutually
agreed process. Principles such as optimization of social and technical
system, formation of autonomous work groups, training group members in
multiple skills, giving information and giving feedback to the people doing
the work, and identifying the core tasks to be accomplished are the
components of the Socio-Technical System (STS).
Furthermore, Lorenzana (2007) reveals that system theory is
basically concerned with problems of relationships, of structures, and of
interdependence, rather than with the constant attributes of object.
Webster defines a system as a regularly interacting or interdependent
group of items forming a unified whole, which is in, or tends to be in,
equilibrium. Negandi, as cited in the book of Katz and Kahn, said that a
system's attributes, which are the interdependence and interlinking of
various subsystems within a given system, and the tendency toward
attaining a balance, or equilibrium forces one to think in terms of multiple
causation in contrast to the common habit of thinking in single-cause
terms.
In addition, an organization must be an open system that includes
interaction between subsystem and its external environment. Open
systems can be defined as a system of interdependent activities, that is,
systems are neither a formal structure nor an organic entity. As described
by Lorenzana (2007), the parts of systems join and leave or engage in
ongoing exchanges with the organization depending on the bargains they
can strike. Some of these activities are tightly connected; others are
loosely coupled. That is, all of the parts must be continuously motivated to
produce and reproduce in a system. Scott also emphasized that systems
are interdependent activities linking shifting coalitions of participants; the
systems are embedded in - dependent on continuing exchanges with and
constituted by - the environments in which they operate.
The salient characteristic of an open system is a self-maintenance
based on a process of resources from the environment and interaction
with the environment. Lorenzana (2007) summarized the essential
characteristic of open systems as follows: “The open-system approach
begins by identifying and mapping the repeated cycles of inputs,
transformation, output and renewed inputs which comprise the
organizational patterns. Organizations as a special class of open systems
have properties of their own, but they share other properties in common
with all open systems. These include the importation of energy from the
environment, the through-put or transformation of the imported energy into
some product form, the exporting of that product into the environment, and
the re-energizing of the system from sources in the environment. Open
systems also share the characteristic of negative entropy, feedback,
homeostasis, differentiation, and equifinality. The law of negative entropy
states that systems survive and maintain their characteristic internal order
only as long as they import from the environment more energy than they
expend in the process of transformation and exportation."
A system is a functional whole composed of set of subsystems and
components, when coupled together, generate a level of organization that
is fundamentally different from the level of each individual subsystem.
General systems’ theorists believe that, in spite of the obvious differences
among the many kinds of living and non-living systems, they share very
general
characteristic and that it is important to discover what these are. The
study of systems is by definition concerned with change. More so,
subsystems or parts of a system are systems at the level below the one of
which they are parts. Each of a living system's subsystem, like the system
as a whole, keeps a number of variables in steady state. A system's
function and structure may be studied, analyzed and described through
basic subsystems.
The roles and importance of middle managers have been studied in
research into strategy implementation, and strategy-making processes
(Pappas and Wooldridge, 2007). The reason why middle managers are
becoming key actors in strategy making is that they are "uniquely
positioned" to gain insights into key stakeholders. The involvement of

middle managers in the strategy making process is very beneficial for
organizations. Therefore, the middle managers are positioned as key
strategic actors necessary for the success of contemporary organizations.
In the literature, many positive outcomes of the involvement of middle
managers in the strategy making process have been identified such as:
providing valuable "soft information" on key stakeholders, improving the
quality of strategic decisions, generating a sense of ownership; enhancing
organizational performance, being more strongly attached to the
organization and to their job and ensuring a better implementation of the
strategy. Also, empirical research has greatly emphasized the role of
middle
management involvement in improving organizational performance
(Kumarasinghe and Hoshino, 2010).
The field of strategic management is largely concerned with how
companies generate and sustain competitive advantage. The resource-
based view (RBV) argues that resources that are simultaneously valuable,
rare, imperfectly imitable and imperfectly substitutable are a crucial source
of competitive advantage, and contribute to sustained performance
differences between companies. Recent developments of the resource-
based view have emphasized the importance of dynamic capabilities to
organizational performance particularly in an environment that is more and

more complex and changing. Organizational capabilities or as many
authors call it today “dynamic capabilities” is defined as the capacity of an
organization to purposefully create, extend, or modify its resource base
and as the understanding of how companies can shape, reshape,
configure and reconfigure their resource base in order to respond to
demands stemming from their changing environments. Nonetheless, very
few empirical researches have examined the processes inside
organizations which lead to develop dynamic capabilities or attempt to
define their performance effects (Macher and Mowery, 2009).
CHAPTER VIII: PRESENTATION, ANALYSIS AND INTERPRETATION
OF DATA
This chapter deals with the presentation, analysis and interpretation of
data gathered from the study.
1. What is the financial performance of the company from January –
October 2019?
2. How may the financial performance be characterized in terms of:
2.1 profitability;
2.2 stability;
2.3 solvency; and
2.4 liquidity
Financial Performance of the Company from January 2019- October
2019
With the income statement and cash flow statement, the effects of
absolute peso amounts had been considered. The performance of the
company in a given period was better determined and understood.
Interpreting the data in these financial statements, the company performed
better in terms of revenue, efficient in controlling its operating expenses,
posting a higher net income because of cost-cutting measures and fast
transaction turnovers which resulted to favorable financial ratios.
On the other hand, with the balance sheet and statement of retained
earnings, the increased in property, plant, and equipment reflected a
favorable preparation
of the business for its long-term existence and business activities, an
increase in retained earnings could be read as a healthy ability of the
business to generate internal financing for its long-term growth and
commitments. However, individual account such as cash, receivables,
and liabilities should be interpreted in relation with other accounts in the
same financial statements.

Cash increased on top of the optimum cash balance, would mean
excess cash, a productive resource, and would give a good business
return. Increase in
receivables would mean more investment extended to customers through
a credit line, higher costs of credit and collections and increase in the
occurrence of pawnshop auctions. Without liabilities means less
resources entrusted to suppliers of the business in running its normal
business operations and more cash inflows for current assets to sustain
working capital requirements.
Therefore, the company has the highest net profits and operating cash
flows. The company was able to maintain increases of revenues relative
to expenses. They were able to invest substantial amount on capital
investments and long-term debts over the period covered with the excess
funds from operations resulting to favorable return on investment. The
income statement presents the revenues and expenses for the periods
January – June 2019. Gross revenues consisted mainly of interest income
on loans, past due loans and advances, and gains on auctions.
STATEMENT OF INCOME AND EXPENSE

For the period ended OCTOBER 31, 2019
RECORD NO. PARTICULARS AMOUNT
A. INCOME
1. Interest Income on:
135 a. Loans and Advances 1,350,000.00
136 b. Loans/ Advances to Director, officers/
137 Tstockholders/
A G U I G Cpartners/
I T Y U Nproprietors
IVERSITY 222,313.00
134 c. Past-due Loans and Advances
138 d. Investments
130 e. Deposit with Banks
f. Total
140 2. Services Charges / Fees

145 3. Gain / (Loss) on auction sale 117,250.00
147 4. Dividends – Equity Investment
5. Other Income, specify if more than 10% of item
A-5
Liquidated Damages 155,884.00
100 6. Gross Income 1,845,447.00

B. EXPENSE
210 1. Interest on Borrowed funds
220 2. Compensation / Fringe Benefit 340,000.00
230 3. Management and other Professional Fees 7,000.00
240 4. Fines, Penalties and other Charges
250 5. Taxes and License 51,262.00
260 6. Insurance -
270 7. Depreciation / Amortization -
8. Provision for:
310 a. Probable Loss -
320 b. Year-end expense -
330 c. Income Tax
300 d. Subtotal
9. Other Expense:
a. Rent Expense 155,000.00
b. Security Services Expense 155,000.00
c. Advertising Expense 9,577.00
d. Utility Expense 40,243.00
e. Total Expense 758,082.00
C. NET INCOME / (NET LOSS) 1,087,365.00
Financial statements for fiscal the month of January – October
2019 that included balance sheet, income statement and statement of
cash flow and responses of the respondents on the questionnaires were

the sources of all relevant data for the study. Relevant data were culled
and entered in the computer using Microsoft excel for tabulation and
processing of the raw data.
Finally, sorting out of data, tabulation, analysis and interpretation
automatically follow and using the most appropriate financial analysis.
Data Analysis and Interpretation
The data collected were examined, categorized, tabulated, recombined
and concretized into the evidence required for financial institution.
Relevant data were computed using the following formulas in the book of
Penman (2010):
Category Ratio Description
Liquidity ratios Current ratio Current assets

divided by current
liabilities
Quick (acid-test)
Current assets
ratio
(minus inventory)
divided by current
liabilities
Solvency ratio Total asset Revenue divided

turnover total assets
Stability ratios Debt ratio Total liabilities

divided by total
assets
Long-term debt to Long-term debt
equity divided by
stockholders’
equity
Profitability ratios Net profit margin Net profit divided

by revenue
Net profit divided

Return on equity by average
stockholders’
equity
In computing the trend, the base period (oldest year) amounts are written
as 100 percent. The percentage relationship of each in the statements is
computed by dividing each amount by the base year figure. A trend is
then determined by comparing percentage relationships. Based on the
trends, interpretation, conclusions, and implications are drawn (Anastacio,
et al. (2010).
These were used to determine the financial performance of the
company from January – October 2019.

REFERENCE
https://www.jstor.org/stable/25830269?seq=1#page_scan_tab_contents
https://www.investopedia.com/articles/personal-finance/112415/how-pawnshops-
make-money.asp
http://www.thefinanceresource.com/free_business_plans/free_pawn_shop_busine
ss_plan.aspx
RECOMMENDATION
In the light of the foregoing conclusion, the following

recommendations are forwarded by the researcher:
1. The minimum capital requirement of the pawnshop industry be

increased from 100,000 to 300,000 for the business to operate
profitably and competitively with other pawnshop and finance
intermediaries.
2. Pawnshops should be organized on a more scientific basis of
management to be ableT AtoGgive
U I G the
C I Tmaximum
Y U N I V E Rhelp
S I T Yto the community.
a. Seminars for those interested to venture into a business.
b. Publications of newsletters for the members of the Pawnbrokers

Association to give information about the trend in the business.
3. The pawnbrokers should endeavor to acquire modern tools or

equipment that will aid the appraisers in detecting the genuiness of
gems pawned to protect them from being victims of fraudulent pawn.
4. With the intricacies pointed out in connection with the seemingly

simple business, the pawnshop owners should have a sound
knowledge of the key functions of the business, ike bookkeeping and
safe keeping.
5. For the future investor he should be prepared to invest more than

the required minimum capital prescribed for more profit, better
chance of survival and to operate competitively with other
pawnbrokers.
More pawnshops to be established would create employment

opportunities for the unemployed and additional revenues to the
government.
DEFINITION OF TERMS
Appraise – to make or give an estimate of how much money
something is worth.
Auction - a sale of goods or property at which intending buyers bid

against one another for individual items, each of which is sold to the
bidder offering the highest price.
Collateral – property or goods used as security against a loan and

forfeited if the loan is not repaid.
Counterfeit- made as a copy of something, especially money, in order

to defraud or deceive people.
Credit- an arrangement by which a buyer can take possession of

something now and pay for it later or over time.
Interest- a charge made for a loan or credit facility, or a payment

made by a bank or other financial institution for the use of money
deposited in an account.
Lending- allowing a person or a business to use a sum of money for a

particular period of time, usually on condition that a charge interest is
paid in return
Loan – an amount of money given to somebody on the condition that

it will be paid back later.
Pawn – brefers to an item of value which the pawner leaves as

security with the pawnbrokerin return for a loan.
Pawnee – refers to a pawnshop or pawnbroker.
Pawner – refers to the borrower from a pawnshop.
Pawnshop/Pawnbrokerage – refers to establishment engaged in the

business of lending money on personal property delivered as security
for loans.
Core Values
INTEGRITY
Honesty in dealings with customers, colleagues and owners/stakeholders.
PROFESSIONALISM
Conducting oneself with the highest level of professionalism, keeping matters
confidential, and behaving in such a way that
the company’s reputation is enhanced.
CUSTOMER SERVICE
Putting all customers at the top of our minds, giving them the best service,
satisfying their requirements and making them
customers for life

CONCERN FOR THE COMPANY
Taking care of the company’s property, reputation and image.
OWNERSHIP
Thinking like an owner, loving one’s work, making decisions that count and being
accountable for its consequences.
CONTINUOUS SELF-IMPROVEMENT
Seeking opportunities for growth, providing for opportunities for growth and self-
improvement, and living within one’s means.
INNOVATIVENESS
Being ahead of what everyone else is doing as well as investing in technology.
RESPECT
Being obedient to the leaders of the organization, respecting the rights of
colleagues, giving what they deserve and being
supportive of Management.

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TAGUIG CITY UNIVERSITY

School of Graduate Studies

Master in Business Administration Student

AUGUST 25, 2019

For many Filipinos, pawning jewelry at a neighborhood pawnshop has

relatively small amounts of cash. Compared with banks, pawnshops do not

impose as many documentary requirements before releasing cash to customers.

areas where banks do not operate.

start-up financing from entrepreneurs.

still get your jewelry back.

is Gilbert Lopez and family. The business is located at Km 21 Alabang-Zapote

considerations. There are only 3 employees in the pawnshop. The Financial

contributing reliable pawning experience to its customers.

Research Design and Methodology

have external purposes and objectives that were directed to determiningcustomer

capabilities and values possessed by particular organisations that put emphasis on

significance of strategic thought and comprehension in organisations. In light of these

based on qualitative analysis rather than

presents a mechanism for facilitating the

the marketplace. It also provides a framework for identifying and formulating

strategies. SWOT matrix helps managers develop four types of strategies: SO

(strengths-opportunities) strategies, WO (weaknesses-opportunities) strategies, ST

(strengths-threats) strategies, and WT (weaknesses-threats) strategies. SO strategies

use a firm’s internal strengths to take advantage of external opportunities. WO strategies

improve internal weaknesses by taking advantage of external opportunities. ST

strategies are defensive tactics directed at reducing internal weaknesses and

avoiding environmental threats (Weihrich, 1982).

Internal-External (IE) Matrix

Internal-External (IE) Matrix positions an organisation's various divisions in a nine

percentage profit contribution of each division in IE Matrix (David, 2007).

major regions that have different strategy implications.

I, II, or IV. Intensive (market penetration, market development, and product

development) or integrative (backward integration, forward integration, and

divestiture are appropriate strategies for these divisions. Successful organisations

Company’s Mission and Vision

In a recent review of strategic management models, the mission statement

of its type (Pearce, 1982). A mission statement is a declaration of an

organization's business or "reason for being." A clear statement of a company's

mission is essential to effectively establishing objectives, formulating strategies,

setting goals, devising policies, allocating resources, and motivating employees.

A mission statement is thus an integral component of the strategic management

process. As evidenced in the following quotation from Peter Drucker's classic

book entitled Management: Tasks, Responsibilities, and Practices, a good

mission statement makes strategy formulation, strategy implementation, and

strategy evaluation much easier.

The importance of a mission statement to effective strategic management is well

supported in the management literature (Staples & Black, 1984). A mission

G.Y. Lopez Mission and Vision:

To be the most reliable pawnshop in the Philippines offering exellent and

delightful pawning experience.

help improve their financial needs.

EXTERNAL ANALYSIS GUIDE

a) Market demand and opportunities

B Industry and Competitor Analysis

1. Analyze the industry’s situation and prospects by looking into the

2. Analyze your industry using Porter’s Five Forces framework of

C. Summary and Conclusion

OVERVIEW OF EXTERNAL ANALYSIS

socio-cultural factors, local market conditions and wider macro-economic

Bank in 1973.was given the authority and responsibility to regulate pawnshops.

confidence in the pawnshop industry by the pawning public. For instance,

proprietors, partners, incorporators, directors, stockholders and officers of

promote good governance. Pawnshops are now required to maintain a minimum