Alaska Milk Corporation (Body Paper) PDF

CHAPTER 1
INTRODUCTION
This chapter discusses the nature of the company as well as the dairy or milk
industry.
1.1 Nature of the Business/Products and Services
1.1.1 Nature of the Business
Being one of the front-runners in the milk and dairy industry in the Philippines,
Alaska Milk Corporation (AMC) continuously offers wide range of nutritious and high
quality products to its consumers. Due to its longevity in the market, it has already built
emotional attachment and appeal to the general Filipino masses, bringing them closer to
victory year after year.
In 1972, Holland Milk Products, Inc. (HOMPI) was established. It was a joint
venture between AMC’s former parent company, General Milling Corporation, and
Holland Canned Milk International B.V. (now FrieslandCampina). HOMPI initially
manufactured canned liquid milk (evaporated milk and condensed milk). It eventually
expanded to manufacture powdered milk and Ultra-High-Temperature (UHT) milk.
Eventually, HOMPI was spun off from General Milling Corporaion (GMC) and
incorporated as Alaska Milk Corporation under the control Wilfred Uytengsu, Sr. Shortly
after its incorporation, the company was listed in the Philippine Stock Exchange in 1995.
Wilfred Steven Uytengsu, Jr., eldest son of Wilfred Sr., assumed the position of President
and CEO recently. Meanwhile, the elder Uytengsu died in April 2010 at the age of 82.
Moreover, Alaska Milk Corporation acquired the canned milk business
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of Nestlé Philippines, Inc. The acquisition included the Alpine, Liberty and Krem Top
trademarks, as well as the trademark license for Nestle’s Carnation and Milkmaid brands.
Then in 2012, FrieslandCampina acquired majority control of AMC from the Uytengsu
family. In the same year, Alaska Milk Corporation was delisted from the PSE after
FrieslandCampina completed its tender offering for 98.1% ownership of the company.
Prior to this, FrieslandCampina held an 8.1% interest in Alaska Milk
Corporation. Meanwhile, Wilfred Steven Uytengsu Jr. remains as President and CEO.
Come the year of 2016, Alaska Milk with Royal FrieslandCampina provides
consumers in the Philippines with Friso powder milk for kids and pregnant women.
FrieslandCampina organizes its activities into four business groups: Consumer Products
Europe, Consumer Products International, Cheese & Butter and Ingredients. The product
range consists of consumer milk, milk in powder and concentrated form, dairy drinks,
yoghurts, desserts, cream, coffee creamers, baby and infant food, cheese, butter and
ingredient.
For forty years, the Alaska brand has always been associated with quality and
nutrition. The company’s first generation of milk products are Alaska Evaporated Filled
Milk and Alaska Sweetened Condensed Filled Milk. Collectively known as the Classic
Line, product usage has since expanded from a nutritional beverage to a multi-purpose
cooking ingredient. To address the needs of the lower-income earners for more affordable
products, the company developed a value line of evaporated and sweetened condensed
creamers in the market. Priced competitively and with the same Alaska Milk seal of
quality, Alaska Evaporada and Alaska Condensada are the perfect enhancers for various
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food and beverage preparations. The Alaska brand is the undisputed market leader in
both the Evaporated and Condensed Milk Categories.
1.1.2 Products and Services
Alaska Evaporated and Condensed Milk
Each can of Alaska
Evaporated Filled Milk has the
creaminess and taste housewives
look for. It is ideal for creaming
that daily cup of coffee and the
breakfast’s regular fare of chocolate porridge. Alaska Sweetened Condensed Filled Milk
has just the right sweetness highly suited for even the most ordinary dessert, for cooking
and baking. Alaska liquid canned milk is packed with 40 vitamins and minerals, plus 10
amino bodybuilders that give every Filipino family a dose of daily nutrition when used in
their everyday meals.
Alaska Evaporated and Condensed Creamer
Alaska Evaporada and Alaska Condensada are
the perfect partners in enhancing the taste of
various food and beverage concoctions.
Packaged in new and attractive modern designs,
Alaska Evaporada and Alaska Condensada are
the “value line” alternative to the classic Alaska
Evaporated Filled Milk and Alaska Sweetened
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Condensed Filled Milk. Priced competitively in the market, Alaska Evaporada and
Condensada offer the same high-quality of products for the value-conscious homemaker,
and are ideal for food entrepreneurs and restaurateurs who would like to offer high-
quality, value-for-money products to customers.
Alaska Powdered Milk
Alaska Powdered Milk Drink is highly
nutritious powdered milk. It is rich in vitamins and
minerals for growth, energy and mental
alertness.
Alaska Ready-To-Drink Milk
Alaska offers a line of Ready-to-
Drink milk products that come in both plain
and flavored milk. Alaska’s Ready-to-Drink
milk products use the Ultra Heat
Temperature (UHT) process combined
with aseptic packaging; to ensure the products’ quality, hygiene and longer shelf life.
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Alaska All Purpose Cream
Alaska Crema All-Purpose Cream brings gourmet
goodness at home. Alaska Crema enhances the taste of a
variety of food preparations. It is ideal for soups, salads, pasta
dishes, dips and dressings. It is a cooking and baking ingredient
that certainly turns ordinary recipes into fabulous gourmet meals.
Alaska Krem Top
Krem Top is a non-dairy coffee creamer that gives all the rich taste which best
complements your coffee. Relish the creaminess and savour the wonderful aroma which
will make your coffee experience more enjoyable.
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Alaska Sterilized Milk and Nutritionals
Alpine Sterilized Milk Drink is a specialized’ milk
packed with high-level of nutrients for the people on the go.
Alaska Nutribuild 345 is a
nutrient-rich milk to help
support the brain and body
development of children ages 3 to 5 years old. It is scientifically formulated as a
supplementary food. With proper diet, health care, and exercise, your children can grow
active in mind and body.
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1.2 Current Revenue Size and Profit
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8
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Figure 1 Gross Profit of Alaska Milk Corporation
1.3 The Current Asset Size
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Figure 2 Current Asset Size of Alaska Milk Corporation
1.4 Major Markets
PRIMARY TARGET MARKET
MOTHERS
GEOGRAPHIC All regions in the Philippines
DEMOGRAPHIC
Age Group ü Ages 30 and above
ü PHP100,000 (average monthly

Income
income)
Lifestyle
ü Wise spender and always want
what’s best for their kids.
ü Medium-sized families (2 to 4
Family Size
children)
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PSYCHOGRAPHIC ü Skilled professionals
ü Loving housewives
BEHAVIORAL Alaska Milk mothers are very loving and
caring to their children. They won’t sacrifice
health for a cheap price. Hoping only for
what’s best for their kids, they are very
meticulous when it comes to the things that
they buy for their families.

Table 1 Primary Target Market
SECONDARY TARGET MARKET
CHILDREN
GEOGRAPHIC All regions in the Philippines
DEMOGRAPHIC
Age Group ü Ages 3 to 21 years old
ü Male and Female

Gender
ü Pre-school to High-school
Education
ü Medium-sized families (2 to 4
Family Size children)
PSYCHOGRAPHIC ü Active and energetic
ü Fast learner
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BEHAVIORAL An Alaska kid is someone with an active
personality and knows how to mingle with
his/her playmates. Having disciplinarian
parents, he/she sure knows how to have fun
and be healthy at the same time.

Table 2 Secondary Target Market
1.5 Number of Employees
Alaska Milk Corporation has more than 1,000 employees in the Philippines. 727
employees come from the company’s corporate office, and the remaining are from its
manufacturing plant in San Pedro, Laguna.
The following are the senior management team of Alaska Milk Corporation, which
shares the same mission, vision and values driven by a sense of accountability to be
successful individuals and as a company.
Wilfred Steven Uytengsu Joselito J. Sarmiento, Jr.
President & Chief Executive Officer Executive Vice President & Chief Financial
Officer
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Arnold L. Abad Ma. Belen M. Fernando
Vice President Accounting & Controller Vice President, Marketing
Francisco T. Idian Atty. Santiago A. Polido
Vice President, Sales Vice President, Corporate Affairs
Hendrik H. Pijffers Thomas Nilsson
Operations Director Director, UHT Operations
Reycelle M. Rodriguez Alfredo B. Javier
Director, Materials Management Assistant Vice President, Internal Audit
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Maria Joanna L. Gamboa Fernando S. Yabut
Assistant Vice President, Information Assistant Vice President, Engineering

Systems Services
In addition, company’s organizational chart or structure is shown below:
Table 2 Alaska Milk Corporation’s Organizational Chart
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1.6 Other Basic Information
This includes the current trends, prospects and other basic information of the
company as well as the industry.
1.6.1 Trends
ü Development of Current Value and Volume
Drinking milk products posts 3% current value growth and 3% volume growth to
reach Ps42.2 billion and 172,000 tonnes in 2016.
- Considering that most of the Filipinos are non-milk drinkers, this progression
has become a surprise to the industry. Alaska Milk Corporation should take this
opportunity, and further increase their efforts in delivering healthy and nutritious
drink to its consumers.
ü High Consumption of Milk Products
The increasingly busy lifestyles of the Philippines’ urban dwellers boost growth in
drinking milk products.
- Given the fact that most Filipinos are workaholic, sometimes, they tend to eat
food on time. This became the reason why there is an increasing growth of
drinking milk product among them. Most of them used milk products as an
alternative for a snack or an energy drink.
ü Price of Milk Products Increased
The average unit price of drinking milk products increases by 1% in current terms
during 2016.
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- Due to the increasing demand of milk products among Filipinos, different
companies in dairy or milk industry decided to raise prices of these products.
Also, according to the Department of Trade and Industry (DTI), the main reason
of price hike is the declining prices of raw materials.
ü Nestlé as the Market Leader in The Industry
Nestlé Philippines Inc leads drinking milk products with a value share of 50% in
2016.
- The milk and dairy market in the Philippines as well as in global, is
predominated by a handful of players considering Nestlé as the market leader.
Nestlé offers a narrow product portfolio that’s why there’s a big possibility that
they can dominate the market share.
ü Healthy Energy Drinks for Adult Drinkers
The soy milk brand Vitamilk has been successful in attempts to encourage adults
to consume soy milk by positioning it as a healthy energy drink. The promotions of
Vitamilk uses the hashtag #pagudtom, which is a portmanteau of the Filipino words
pagod (tiredness) and gutom (hunger). It highlights how Vitamilk can perk up tired
office workers or boost one’s energy prior to a sports game.
- Since most of the Filipinos are workaholic, they tend to allot time to eat snack.
Instead, they oftentimes drink milk products to quench their thirst or hunger.
The consumers also treat milk products as their energy drink to boost their
natural energy. Thus, this will be a trend to the industry as well as to the
company since the population of Filipinos who are drinking milk products is
starting to increase.
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ü Milk as a Substitute to a Snack or Energy Drinks
Increased consumption of drinking milk products as an alternative to a snack or an
energy drink.
- Aside from the growing health consciousness which continues to drive
Philippine consumers to make better food choices, another lifestyle trend that
is boosting growth in drinking milk products is the increasingly busy lifestyles
being led in the country, especially among urban dwellers. Consumers are
more engaged in drinking milk than eating snack due to their engagement in
different activities.
ü Sales of Fresh Milk Products Adversely Affected
Drinking milk products recorded current value growth of 3% in 2016, which was
marginally slower than the 4% current value growth recorded in the category in
2015. During 2015, sales of fresh milk was adversely affected by the withdrawal of
the leading brand Nestlé and the unavailability of the Darigold brand for six months.
- Based on research, contributing to the slowdown in growth in 2016 was the
ongoing contraction of sales of fresh milk. It is also adversely affected by the
shift towards shelf stable milk, which is much more extensively distributed in
the country and offers consumers a wider range of brand options.
ü Shelf Stable Milk as the Most Dynamic Drinking Milk Products
The most progressive milk product among others is the shelf stable milk. It is due
to rising milk consumption in general, especially among older consumers. While
the consumption of milk is common among children, adults typically stop drinking
it after their childhood years.
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- With the health and wellness trend combined with the increasingly hectic
lifestyles of urban dwellers, there is increased demand for shelf stable milk as
a quick and healthy way of addressing hunger.
ü Dependability on Imported Milk Products
The Philippines is highly dependent on milk imports, with more than 95% of the
local dairy requirement being supplied by other countries. As such, the country is
exposed to fluctuations in milk prices at global level. With demand for milk imports
weakening in China, the price of milk at international level was on a downward
trend at the beginning of 2015.
- This has been favorable to local dairy manufacturers as their production costs
are now lower. Companies present in drinking milk products, however, are
unlikely to pass on any cost savings to end consumers by reducing the unit
prices of the products. In general, the average unit price of drinking milk
products is expected to remain stable despite fluctuations in the prices of raw
materials, with price increases undertaken as and when needed.
ü Longer Shelf Life
All major brands in flavored milk drinks in the Philippines can be stored at ambient
temperatures. This is due to the ease with which shelf stable brands can be
transported and stored given the tropical climate which prevails in the country.
- Inventory management for ambient flavored milk drinks is less challenging due
to its longer shelf life. Employees or workers from the different companies in
the industry will no longer allot time to prolong the shelf life of milk products.
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Thus, this might affect the labor market since companies will no longer hire
numbers of employees.
ü Narrow Product Portfolio
Grocery retailers outlets tend to offer a wider range of brand options in shelf
stable milk compared to fresh milk.
- This results in the higher patronage of shelf stable milk, while fresh milk caters
only to a niche audience. The difference between shelf stable milk and
fresh milk is also unclear for many Filipinos since some shelf stable milk brands
such as Nestlé Fresh Milk and Magnolia Purefresh use the word “fresh” in their
brand names. In lieu with this, companies should think of on how they would
position their product by creating a new product name and by strongly
promoting it to the mass market. If a company would be successful, this would
create a word-of-mouth marketing among the consumers.
ü Ready-to-drink Milk Products as an Alternative
The milk alternatives available in grocery retailers outlets in the Philippines are
mostly in ready-to-drink format. Soy milk is the most widely available of these
products in grocery retailers outlets, although some retailers selling several brands
of almond milk as well. Health food retailers such as Healthy Options sell wider
ranges of milk alternatives, including hazelnut milk, oat milk, rice drinks, seven
grains drinks and coconut milk, among others. Purchases of milk alternatives are
driven by various motives. Some favor these products so because of health issues
such as lactose intolerance or dairy allergies. The leading soy milk brand Vitamilk,
meanwhile, has attained success by promoting the brand as a healthy energy
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booster. Sales of Vitamilk has grown significant enough to drive its importer to build
a local manufacturing facility, which is set to be operational during 2016, in an
attempt to better meet rising demand.
- It has been evident that consumers now prefer the ready-to-drink products to
save their time and energy. Companies in the milk industry are now
emphasizing the product benefits and are continuously being aggressive to
come up with a campaign that will boost consumers’ health. This is a good sign
to the industry as consumers are now shifting back on preferring to buy
products that have high nutritional value that will boost their immune system to
combat diseases such as malnutrition. The industry in addition, should continue
on promoting milk and associate it on fighting diseases to ensure having an
appeal to target market.
ü Sari-sari stores (traditional neighborhood stores) as the key distribution
channel for drinking milk products
Other grocery retailers outlets such as sari-sari stores (traditional neighborhood
stores) are the key distribution channel for drinking milk products, accounting for
47% of value sales in the category in 2016.
- This is mainly due to the proximity of these outlets to the homes of consumers
as the range of drinking milk products available in these outlets is mostly limited
to economy shelf stable milk brands. Supermarkets provide wider ranges of
options in terms of products and brands, meaning that this remains a significant
distribution channel for drinking milk products, with a value share of 37% in
2016.
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1.6.2 Prospects
ü Increasing Number of Potential Consumers
Improvements are set to come as the consumer base for drinking milk products
has sufficient room for expansion.
- More adult Filipinos are likely to consume milk products, especially among
older consumers, that drink more regularly as a way of conveniently nourishing
themselves in between main meals. This will help the industry as well as the
company increase their GDP which will contribute to the country’s economy.
ü Potential to Open Up Impending Legislation
The impending legislation proposing to increase taxes on sugar-sweetened
beverages has the potential to open up opportunities for drinking milk products.
- Carbonates, energy drinks and artificially sweetened fruit juices are among
products likely to witness an increase in price should the legislation be enacted.
Healthier beverages such as milk and 100% fruit juices, meanwhile, are
exempted. Opportunities also exist for milk alternatives given the high
prevalence of lactose intolerance among East Asian people. Awareness of the
symptoms of lactose intolerance, however, is low in the country, making
educational campaigns essential in improving consumer appreciation for
lactose-free brands in milk and milk alternatives.
ü Shifting of Theme for Promotion
The promotion of drinking milk products is likely to shift somewhat over the forecast
period as the emphasis moves away from the health benefits of these products
towards the ability of them to provide sustenance on-the-go.
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- This is expected to be focused on quite heavily, especially as part of attempts
to encourage more adults to consume drinking milk products. Thus, companies
nowadays are already starting to promote their product with sustenance on-
the-go theme. Moreover, this will challenge each company to formulate and
plan strategically to come up with a well-integrated campaign.
1.6.3 Category Data
Tables shown below are the data collected by the researchers from the
Euromonitor International. All of the tables discusses the percentage of each factor
from year 2011 to year 2016.
Table 3 Sales of Drinking Milk Products by Category: Volume 2011-2016

'000 tonnes 2011 2012 2013 2014 2015 2016
Flavoured Milk Drinks 33.75 34.08 34.53 35.08 35.82 36.35
- Dairy Only Flavoured Milk Drinks 33.75 34.08 34.53 35.08 35.82 36.35
- Flavoured Milk Drinks with Fruit Juice - - - - - -
Milk 32.62 32.94 33.35 33.66 35.81 38.37
- Cow's Milk 32.62 32.94 33.35 33.66 35.81 38.37
-- Fresh Milk 0.69 0.70 0.72 0.44 0.22 0.15
-- Shelf Stable Milk 31.93 32.23 32.63 33.22 35.60 38.22
- Goat Milk - - - - - -
Powder Milk 72.04 74.20 75.09 76.07 77.13 78.29
Milk Alternatives 6.62 8.15 10.17 18.02 18.23 18.78
- Soy Drinks - - - - - -
- Soy Milk 6.62 8.15 10.17 18.02 18.23 18.78
- Other Milk Alternatives - - - - - -
Drinking Milk Products 145.02 149.37 153.14 162.82 166.99 171.79
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store
checks, trade interviews, trade sources
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Table 4 Sales of Drinking Milk Products by Category: Value 2011-2016
PHP million 2011 2012 2013 2014 2015 2016
Flavoured Milk Drinks 3,159.67 3,254.46 3,384.64 3,536.95 3,713.80 3,892.06
- Dairy Only Flavoured Milk Drinks 3,159.67 3,254.46 3,384.64 3,536.95 3,713.80 3,892.06
Milk 2,478.12 2,605.09 2,745.23 2,862.34 3,144.08 3,482.90
- Cow's Milk 2,478.12 2,605.09 2,745.23 2,862.34 3,144.08 3,482.90
-- Fresh Milk 70.62 75.05 79.89 49.60 25.26 18.44
-- Shelf Stable Milk 2,407.51 2,530.04 2,665.34 2,812.73 3,118.82 3,464.46
- Goat Milk - - - - - -
Powder Milk 28,176.79 29,303.86 30,446.71 31,664.58 32,614.52 33,429.88
Milk Alternatives 482.15 595.46 744.92 1,322.97 1,346.79 1,393.93
- Soy Drinks - - - - - -
- Soy Milk 482.15 595.46 744.92 1,322.97 1,346.79 1,393.93
Drinking Milk Products 34,296.74 35,758.87 37,321.50 39,386.84 40,819.19 42,198.76
Table 5 Sales of Drinking Milk Products by Category: % Volume Growth 2011-2016

% volume growth 2015/16 2011-16 CAGR 2011/16 Total
Flavoured Milk Drinks 1.50 1.50 7.72
- Dairy Only Flavoured Milk Drinks 1.50 1.50 7.72
- Flavoured Milk Drinks with Fruit Juice - - -
Milk 7.14 3.30 17.65
- Cow's Milk 7.14 3.30 17.65
-- Fresh Milk -28.40 -25.87 -77.62
-- Shelf Stable Milk 7.36 3.66 19.70
- Goat Milk - - -
Powder Milk 1.50 1.68 8.68
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Milk Alternatives 3.00 23.20 183.83
- Soy Drinks - - -
- Soy Milk 3.00 23.20 183.83
- Other Milk Alternatives - - -
Drinking Milk Products 2.87 3.45 18.46
Table 6 Sales of Drinking Milk Products by Category: % Value Growth 2011-2016

% current value growth 2015/16 2011-16 CAGR 2011/16 Total
Milk 10.78 7.04 40.55
- Cow's Milk 10.78 7.04 40.55
-- Fresh Milk -27.01 -23.55 -73.89
- Goat Milk - - -
Powder Milk 2.50 3.48 18.64
- Soy Drinks - - -
- Soy Milk 3.50 23.65 189.10
Table 7 NBO Company Shares of Drinking Milk Products: % Value 2012-2016

% retail value rsp 2012 2013 2014 2015 2016
Nestlé Philippines Inc 50.21 50.05 49.34 49.65 49.60
Alaska Milk Corp 23.93 23.83 23.51 23.10 22.85
Fonterra Brands (Phils) Inc 11.86 11.81 11.62 11.66 11.74
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AB Nutribev Inc - - - - 2.72
Mead Johnson Philippines Inc 2.13 2.12 2.09 2.11 2.12
RFM Corp 1.33 1.33 1.28 1.36 1.40
Magnolia Inc 1.28 1.27 1.24 1.25 1.27
United Dairymen Holland 1.19 1.14 1.09 1.07 1.04
Ace Canning Corp Sdn Bhd 0.20 0.26 0.30 0.32 0.33
Green Spot Co Ltd 1.23 1.48 2.80 2.73 -
Hershey Philippines Inc - - - - -
Others 6.62 6.69 6.71 6.76 6.92
Total 100.00 100.00 100.00 100.00 100.00
Table 8 LBN Brand Shares of Drinking Milk Products: % Value 2013-2016

% retail value rsp Company (NBO) 2013 2014 2015 2016
Bear Brand (Nestlé SA) Nestlé Philippines Inc 31.04 30.54 33.57 36.12
Alaska (Royal FrieslandCampina NV) Alaska Milk Corp 23.83 23.51 23.10 22.85
Nido (Nestlé SA) Nestlé Philippines Inc 6.80 6.83 7.51 7.92
Anchor (Fonterra Co-operative Group Ltd) Fonterra Brands (Phils) Inc 6.63 6.50 6.50 6.54
Anlene (Fonterra Co-operative Group Ltd) Fonterra Brands (Phils) Inc 5.18 5.12 5.15 5.20
Chuckie (Nestlé SA) Nestlé Philippines Inc 4.26 4.27 4.35 4.42
Vitamilk (Green Spot Co Ltd) AB Nutribev Inc - - - 2.72
Sustagen (Mead Johnson Nutrition Co) Mead Johnson Philippines Inc 2.12 2.09 2.11 2.12
Magnolia (San Miguel Corp) Magnolia Inc 1.27 1.24 1.25 1.27
Selecta RFM Corp 1.18 1.14 1.21 1.26
Nestlé (Nestlé SA) Nestlé Philippines Inc 1.13 1.05 1.06 1.13
Birch Tree United Dairymen Holland 1.14 1.09 1.07 1.04
Soyfresh (Lam Soon Group) Ace Canning Corp Sdn Bhd 0.26 0.30 0.32 0.33
Vitamilk Green Spot Co Ltd 1.48 2.80 2.73 -
Alaska Alaska Milk Corp - - - -
U-Care (Fonterra Co-operative Group Ltd) Fonterra Brands (Phils) Inc - - - -
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Hershey's (Hershey Co, The) Hershey Philippines Inc - - - -
Sustagen (Bristol-Myers Squibb Co) Mead Johnson Philippines Inc - - - -
Others Others 13.66 13.51 10.06 7.06
Total Total 100.00 100.00 100.00 100.00
Table 9 Distribution of Drinking Milk Products by Format: % Value 2011-2016

% retail value rsp 2011 2012 2013 2014 2015 2016
Store-Based Retailing 100.00 100.00 100.00 100.00 100.00 100.00
- Grocery Retailers 100.00 100.00 100.00 100.00 100.00 100.00
-- Modern Grocery Retailers 42.50 42.50 42.80 42.90 43.10 43.30
--- Convenience Stores 0.50 0.50 0.50 0.40 0.40 0.40
--- Discounters - - - - - -
--- Forecourt Retailers 0.10 0.10 0.10 0.10 0.10 0.10
--- Hypermarkets 5.10 5.10 5.30 5.40 5.50 5.60
--- Supermarkets 36.80 36.80 36.90 37.00 37.10 37.20
-- Traditional Grocery Retailers 57.50 57.50 57.20 57.10 56.90 56.70
--- Food/drink/tobacco specialists - - - - - -
--- Independent Small Grocers 10.00 10.00 9.80 9.80 9.70 9.60
--- Other Grocery Retailers 47.50 47.50 47.40 47.30 47.20 47.10
- Non-Grocery Specialists - - - - - -
-- Health and Beauty Specialist Retailers - - - - - -
-- Other Foods Non-Grocery Specialists - - - - - -
- Mixed Retailers - - - - - -
Non-Store Retailing - - - - - -
- Vending - - - - - -
- Home shopping - - - - - -
- Internet Retailing - - - - - -
- Direct Selling - - - - - -
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Total 100.00 100.00 100.00 100.00 100.00 100.00
Table 10 Forecast Sales of Drinking Milk Products Products by Category: Volume 2016-2021
'000 tonnes 2016 2017 2018 2019 2020 2021
Flavoured Milk Drinks 36.35 36.79 37.26 37.94 38.81 39.82
- Dairy Only Flavoured Milk Drinks 36.35 36.79 37.26 37.94 38.81 39.82
Milk 38.37 40.73 43.16 45.54 47.76 50.07
- Cow's Milk 38.37 40.73 43.16 45.54 47.76 50.07
-- Fresh Milk 0.15 0.12 0.11 0.10 0.09 0.09
-- Shelf Stable Milk 38.22 40.61 43.05 45.45 47.67 49.99
- Goat Milk - - - - - -
Powder Milk 78.29 79.50 80.92 82.68 84.70 86.92
Milk Alternatives 18.78 19.65 20.86 22.28 23.90 25.73
- Soy Drinks - - - - - -
- Soy Milk 18.78 19.65 20.86 22.28 23.90 25.73
Drinking Milk Products 171.79 176.67 182.20 188.44 195.16 202.55
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade
sources
Table 11 Forecast Sales of Drinking Milk Products Products by Category: Value 2016-2021
PHP million 2016 2017 2018 2019 2020 2021
Flavoured Milk Drinks 3,892.06 3,958.48 4,028.45 4,122.78 4,237.03 4,368.86
- Dairy Only Flavoured Milk Drinks 3,892.06 3,958.48 4,028.45 4,122.78 4,237.03 4,368.86
Milk 3,482.90 3,730.90 3,989.75 4,249.91 4,499.21 4,762.97
- Cow's Milk 3,482.90 3,730.90 3,989.75 4,249.91 4,499.21 4,762.97
-- Fresh Milk 18.44 15.11 13.15 12.03 11.37 10.98
-- Shelf Stable Milk 3,464.46 3,715.79 3,976.60 4,237.88 4,487.85 4,751.99
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- Goat Milk - - - - - -
Powder Milk 33,429.88 34,180.53 35,131.78 36,318.90 37,713.38 39,271.80
Milk Alternatives 1,393.93 1,445.04 1,519.79 1,607.59 1,708.44 1,821.97
- Soy Drinks - - - - - -
- Soy Milk 1,393.93 1,445.04 1,519.79 1,607.59 1,708.44 1,821.97
Drinking Milk Products 42,198.76 43,314.95 44,669.76 46,299.17 48,158.07 50,225.59
sources
Table 12 Forecast Sales of Drinking Milk Products Products by Category: % Volume Growth 2016-2021
% volume growth 2016/17 2016-21 CAGR 2016/21 Total
Milk 6.15 5.47 30.49
- Cow's Milk 6.15 5.47 30.49
-- Fresh Milk -19.66 -11.09 -44.44
- Goat Milk - - -
Powder Milk 1.55 2.11 11.03
- Soy Drinks - - -
- Soy Milk 4.64 6.50 37.03
sources
Table 13 Forecast Sales of Drinking Milk Products Products by Category: % Value Growth 2016-2021
% constant value growth 2016/2017 2016-21 CAGR 2016/21 TOTAL
30
Milk 7.12 6.46 36.75
- Cow's Milk 7.12 6.46 36.75
-- Fresh Milk -18.06 -9.85 -40.45
- Goat Milk - - -
Powder Milk 2.25 3.27 17.48
- Soy Drinks - - -
- Soy Milk 3.67 5.50 30.71
sources
31
CHAPTER 2
RESEARCH DESIGN AND METHODOLOGY
This chapter discusses the sources of information, data gathering methods and
scope and limitations researchers used to formulate data.
2.1 Sources of Information
In completing this strategic management paper’s requirements, data and
information were gathered to be evaluated and analyzed. Research journals, articles and
news about the industry were used for analysis.
Related websites such as those of the competitors and the company itself were
maximized provide the researchers with direct information from the company. Social
media sites of the same were utilized to assess the online presence and strategies of
each company. Online published journals found in ebsco.com and data from
euromonitor.com were also used to obtain data from the industry.
Surveys were also conducted among the internal and external audiences of the
company. Employees were provided with survey questionnaires to obtain credible and
first-hand information about the internal situation of the company for analysis and target
audiences like households were surveyed in order to understand how the company is
perceived by their audience.
Audited financial statements of the company for the past five years from the
Security and Exchange Commission (SEC) were also used for financial analysis and for
the financial situation comprehension of the company.
32
2.2 Methods of Data Gathering
The type of research design that will be used in this study is a qualitative type of
research. This type of research will be suitable to the study since qualitative research is
ideal for studies that aim to assess a situation in a deeper sense in order to adequately
grasp the ins and outs of the study and thus provide appropriate and beneficial
recommendations.
The procedure that will be used in collecting data involves the utilization of different
mediums of sources like online and offline research, government organizations and
consumer responses through survey questionnaires.
The target population of this study are from the households especially mothers
residing in Metro Manila where the patronization of Alaska products proliferates. The
sampling design for the study will be a quota sampling in order to efficiently obtain
sufficient and unbiased information within a short period of time.
2.3 Scope and Limitations
This research study is meant to determine the current standing of Alaska Milk
Corporation and its organizational strengths and weaknesses. Through this academic
endeavour, the researchers will gain ample amount of knowledge as to the internal and
external operation of the company and how they strategically respond the certain
marketing situations. This research culminates the important organizational factors which
summarize and evaluate distinct strengths and weaknesses according to their importance
to Alaska Milk Corporation’s overall business and marketing strategies. In relation to the
general purpose, the researchers aim to gather information as to the company’s process
33
of strategizing with regards to particular marketing occurrences and its magnitude of
impact to their regular and potential consumers.
Since this research study will be using random quota sampling, the researchers
have restricted their respondents to twenty (20) urban households residing in Metro
Manila. Being the company’s primary target market, they are considerably more
knowledgeable and fit to answer the queries. Since Internal Evaluation Matrix must be
answered by one of the employees, researchers decided to have a phone call with one
of their Sales Associate. Moreover, aforementioned respondents are easily accessible
and can give a portion of their time to provide more accurate information for this research
study. The respondents will be chosen randomly and will be given five (5) to ten (10)
minutes each to answer the survey questionnaire.
34
CHAPTER 3
COMPANY’S VISION AND MISSION
This chapter discusses the current vision and mission of the company and its
evaluation using David’s framework. Also included in this chapter is the recommended
and revised vision statement formulated by the researchers for the company.
3.1 Vision and Mission of the Company
VISION STATEMENT
To be the leading providers of affordable nutrition by offering families and children
with a wide range of nutritious and high quality dairy products.
Alaska Milk Corporation’s valued commitment is to bring nutrition to every Filipino
home across all stages and occasions of their life.
Alaska Milk faces up to the challenge of pursuing the efforts to help raise milk
consumption levels in the country. Today, the Philippines remains to have lower per
capita dairy consumption levels when compared to our Asia neighbors. By providing dairy
products in the right formats and price points, Alaska Milk helps to bring health to every
child in every Filipino home and contributing to bring down malnutrition levels in the
Philippines and in the world.
35
MISSION STATEMENT
Product Development
We will continue to build on the strengths and competitive attributes of the ALASKA
brand and develop its full marketing potential. We will develop new products and identify
market opportunities, mindful of our task to be responsive to the ever changing and
growing needs of our consumers.
Customer Service
Customer relationship is an integral part of building the Alaska business. We aim
to provide our partners in trade the best and most efficient service, making use of leading
edge technology to ensure timely product availability and accessibility. We strive to know
and understand our customers fully to bridge the gap between what they need and what
we can give.
Quality
Ultimately, the consumer whom we serve and their level of satisfaction with our
products become our final judge and jury. We are committed to deliver high quality milk
and other consumer food products from production to consumption. We will respond to
the call to deliver higher quality nutrition to every Filipino home.
People
We recognize that our people, the Alaska Team Members, are one of our most
important assets and we are committed to promote their safety and welfare. Their wealth
of experience, ideas, dedication and strong work ethic laid the foundation for the
36
company’s continued success. It is our goal as much as it is theirs, to pursue and reach
their full potentials through continuing education, training, and skills-enhancement
programs. We challenge each individual by providing the opportunity to contribute to the
company’s endeavors.
Profitable Growth
Growth that creates value for our shareholders is paramount. We will deploy our
resources on investment opportunities that are within our core competence and yield
excellent returns relative to its risks and which are consistent with our growth objectives.
Social Responsibility
We recognize our role in nation building by promoting the protection of the
environment and taking part in various community-building projects that help enhance
and uplift the quality of life of the underprivileged and the marginalized sectors of our
society.
37
3.2 Evaluation of the Current Vision & Mission Statement
Figure 4 Evaluation of the Current Vision & Mission Statement
3.2.1 Orientation Process
The individuals in an organization play a significant role in formulating the
company’s vision and mission statement. They are indeed a vital part in creating them
because they are the people who experience the internal and external strategic processes
of the company first hand. In order to devise an effective vision and mission statement,
people in the organization has to be well-informed, amply oriented and thoroughly aware
as to the development processes in the organization.
38
As stated in their mission statement, Alaska Milk Corporation puts enough
attention to the training and development of the skills of their human capital and
resources. They challenge each to provide quality service that would significantly
contribute to the betterment of the company at large. As one of the market leaders in the
industry, one of Alaska Milk Corporation’s goals is to make their employees put their own
strategic ideas into action. For every company, it is a tough job and a big risk to hire
employees. It requires a long tedious process of filtering their skills and capacities since
they are basically the people who craft and sell the brand to the end consumers. In Alaska
Milk Corporation, training and skills-enhancement is not confined within the walls of the
employment process but instead, employees are continuously being trained and
educated as long as the company sees the need to improve in order to easily achieve the
desired output – the mission statement itself.
3.2.2 Component Analysis
COMPONENTS ANALYSIS DESCRIPTION
Customers YES Alaska Milk Corporation
believes that their first
responsibility is targeted to
the following:
(a)primary target market –
children; (b)secondary target
market – mothers.
39
Products or services YES The company’s first
generation of milk products
are Alaska Evaporated Filled
Milk and Alaska Sweetened
Condensed Filled Milk.
Collectively known as the
Classic Line, product usage
has since expanded from a
nutritional beverage to a
multi-purpose cooking
ingredient. To address the
needs of the lower-income
earners for more affordable
products, the company
developed a value line of
evaporated and sweetened
condensed creamers in the
market. Priced competitively
and with the same Alaska Milk
seal of quality, Alaska
Evaporada and Alaska
Condensada are the perfect
enhancers for various food
40
and beverage preparations.
The Alaska brand is the
undisputed market leader in
both the Evaporated and
Condensed Milk Categories.
Markets NO The Alaska brand is
dedicated to dominate the
market share of the milk and
dairy industry.
Technology YES Alaska Milk Corporation uses
technologically advanced
machineries and equipment in
order to produce the finest
quality milk and dairy
products.
Concern for survival, growth YES The company establishes its
and profitability assurance of survival on
investment opportunities that
are within the scope of their
brand competencies. They
only invest on prospects that
guarantee returns relative to
41
its risks that are in line with the
company’s profit objectives.
Philosophy YES Alaska Milk Corporation
continues to further its
mission of nourishing Filipino
dreams, bringing in affordable
nutrition across different life
stages to every Filipino home.
It is committed in providing
nutrition to Filipino
households, ensuring high
quality standards in its
products.
Self-concept NO Alaska Milk Corporation is the
leading milk company in the
Philippines. It has consistently
maintained its leadership in
the canned liquid milk
category (evaporated and
sweetened condensed), thus,
paving the way into growing
Alaska into a mega-brand by
42
competing in the powdered,
ready-to-drink, and creams
market, among others.
Concern for Public Image YES The company is responsible
in bringing better lives to the
communities through their
CSR programs that help
strengthen the quality of life of
the underprivileged and
marginalized.
Table 14 Component Analysis
3.2.3 Communication Analysis
The level of comprehensiveness of the vision and mission statements mainly
depends on how they are written. The choice of words and construction of sentences
must compliment the level of understanding of your target audience in order to
communicate the message to them effectively. In the forty years of producing quality milk
and dairy products and selling nutrition to every Filipino home, Alaska Milk Corporation
has evidently proven that they are one of the pioneers in the industry. This is achieved
through the company’s vision and mission statement as well as their main objectives.
How these statements are communicated contributes a big chunk on the organization’s
success in achieving them. According to (Baird, 1983), since written communication
involves denotative as well as connotative meanings, both are suggested as part of the
43
communication analysis for mission statement development which will be further
discussed on the succeeding topics.
3.2.4 Denotative Analysis
Fog Index will be used to analyze the vision and mission statement of Alaska
denotatively. The fog index is a readability test designed to show how easy or difficult a
text is to read. Below is the formula for the Fog Index.
Figure 5 Formula of Denotative Analysis
The result of Alaska Milk Corporation’s Vision and Mission Statements’ Fog Index
are as follows:
ü Vision = 18.94
ü Mission = 18.39
§ Product development : 18.76
§ Customer service : 16.00
§ Quality : 16.93
§ People : 17.84
§ Profitable growth : 25.86
§ Social responsibility : 25.00
The above results shows that the grade level of readability of Alaska Milk
Corporation’s vision and mission statements range from a College Senior to above the
utmost level in the index which is the College Graduate.
44
Based on the Fog Index, the researchers therefore conclude that the level of
readability of Alaska Milk Corporation’s vision and mission statements is too high for its
target audiences. That is why the researchers recommend reconstructing the denotative
form of the vision and mission statements in order to communicate it better with its
audiences.
3.2.5 Connotative Analysis
The connotative analysis includes putting into words the felt emotion in reading the
vision and mission statements and measuring how the audiences agree or disagree to
the expressed feelings. As for Alaska, the researchers will use the following
words/concepts suggested in David’s Framework.
The results shows that connotatively, Alaska Milk Corporation’s mission and vision
has been able to relay its positive intentions to it audiences. Therefore, the researchers
recommend that they should bank on these attributes when reconstructing their vision
and mission statements.
45
3.2.6 Applicability Analysis
Examining the capability of the vision and mission of Alaska Milk Corporation being
applied, it is easily identifiable that the statements are indeed of high probability to be
fulfilled. In fact, some of the statements are already accomplished by Alaska Milk
Corporation during certain situations, may it be good or bad. Their vision and mission tells
which direction is best for the company during difficult situations. This attribute of Alaska
speaks highly of how well these ideals are inculcated and integrated in the business.
RECOMMENDATIONS
It may often be disregarded but a simple vision and mission statement has such a
big impact in a company. It leads the company to where it is going and becomes their
constant guide and reminder to look at for every endeavor they choose to take.
As for Alaska, in order to effectively communicate their vision and mission to their
employees and stakeholders, it is important that the vision and mission statement is clear
enough to be understood by the audiences.
Analyzing Alaska’s vision and mission, it involves unnecessary information and
seems too vague and long to be easily understood and visualized by the audiences. Its
mission is divided to different categories when a simple statement could be enough.
It would be better if the statements were concise and straightforward not only for
the employees and stakeholders but also for the company to know the direction it is
headed to.
46
3.3 Revised Vision & Mission Statement
To be the lead in the industry by building a brand that seeks to uplift every Filipino’s
quality of life, by providing a line of highly valued dairy products that is nutritious and
available to consumers at anytime of the day.
To keep on nourishing dreams by bringing nutrition to every Filipino home, building
stronger relationships and bridging the gap between what they need and what we can
give, one glass of milk at a time.
3.4 Recommended/Evaluation VM Statements
3.4.1 Orientation Process
In an organization, the employees are a vital part of the formulation of a vision and
mission statement. One way or another, they have to embody what the focal and end
point of the company is. Currently, the employees of Alaska Milk Corporation are well-
trained and oriented and they are not bounded by the bricks of their employment process.
In the revised vision and mission statement, the individuals working for the
organization are challenged to live up to its goal of uplifting and improving the way of life
of, not only children, but every Filipino through a brand, a brand they are creating. Being
on the front line and personally conversing with the consumers, employees will have to
be oriented well with regard to the rules and regulations in order to personify and
represent the company well. Indeed, it is a big risk to put the brand image of your company
to other people but by putting enough preparation and training to your own people, you
will successfully achieve you vision, mission, goals and objectives smoothly.
47
3.4.2. Component Analysis
COMPONENTS ANALYSIS DESCRIPTION
Customers YES Alaska Milk Corporation
sticks to its core of providing
quality dairy products to its
target market: (a) mothers
and; (b) children.
Products or services YES Over the years, Alaska Milk
Corporation’s core
competitive advantage
amongst its competitors in the
industry is its various product
lines that cater QUALITY
AND AFFORDABLE dairy
products to different market
segments.
Markets YES In the revised vision
statement, Alaska Milk
Corporation is more than
determined to finally dominate
the market share by providing
48
dairy products to market
segments that is not restricted
to mothers and children alone
but instead, by making it
available to every Filipino,
whatever age bracket he/she
belongs to.
Technology YES Alaska Milk Corporation will
have to use technologically-
advanced machineries In
order to provide quality
products to consumers,
Concern for survival, growth YES Being on the top brands that
and profitability are dominating the industry
now, Alaska Milk Corporation
assures its growth and
survival by investing on
companies that will surely get
back to them and by
preventing outsourcing from
third party integrators.
Instead, they manufacture
49
their raw materials such as
cans and other materials.
Philosophy YES One thing that will never
change in the vision of the
company is to provide ounces
and barrels of nutrition to
every Filipino home.
Self-concept YES Alaska Milk Corporation is a
brand that seeks to improve
the lives of every Filipino, one
glass of milk at a time.
Concern for Public Image YES By making the product
available at any time of the
day, Alaska Milk Corporation
will serve as everyone’s go-to
milk drink that will accompany
Filipinos in their every
journey, every time and
everyday.
Table 15 Component Analysis for Revised Statement
50
3.4.3 Communication Analysis
As observed in the revised vision statement, the communication message of the
company was clearly stated which is to uplift the quality of life of every Filipino by providing
a valuable line of dairy products. As opposed to the current vision and mission of Alaska
Milk Corporation, it is very direct to the point. Through these words, the message of the
brand will be easy to comprehend by the consumers and eventually, will be successfully
transferred to the receiver because, as stated, choice of words is very significant in getting
a message across to whoever you are talking to.
3.4.4 Denotative Analysis
According to the Fog Index, the result of the revised version of Alaska Milk
Corporation’s Vision is 16.00. The fog index of the current is 18.94 which readability level
is too difficult for Alaska’s audiences. The revised version has a lower score which implies
that its readability is much easier for the audiences.
Readability is important for it is related to communication. The current statements
with higher fog indexes also indicate that it is harder to communicate it with the audiences.
The vision and mission statement stands to translate the purpose of the company’s
existentialism to the people inside and outside the company but with the vision and
mission’s current readability level, it will be hard to fulfil main purpose of it.
3.4.5 Connotative Analysis
The connotative analysis of the revised vision statement of Alaska Milk Corporation
wants to translate emotions across its audiences. As for this version, same
51
emotions/concepts which are suggested in David’s framework will be used to validate it.
The revised version of the vision statement is created to make all the emotions present
in the statement. Thus, the table will be as follows.
3.4.6 Applicability Analysis
The newly crafted vision statement of Alaska Milk Corporation is ideated with the
probability of fulfilling it in mind. Since the datum gathered tells that Alaska has yet to
dominate and be the leader in the industry, the vision statement lives by this goal.
The statement speaks of the all-around goal of Alaska; not just to dominate the
market but also how Alaska plans to execute it. It goes around the whole plan of Alaska
Milk Corporation, describing its purpose of existentialism at its very core which is to
provide valuable products to its consumers.
52
CHAPTER 4
This chapter discusses the PEST Analysis of Alaska Milk Corporation. PEST
Analysis is a business analysis technique which takes into account six groups of external
factors that can affect businesses. The five categories included are: (1) Political; (2)
Economic; (3) Socio-cultural; (4) Technological and ; (5) Environmental.
4.1 Political, Governmental and Legal Forces
These factors refer to the forces upholded by the state and its entire governing
body that affects the process of production, distribution and selling of dairy products in
the country.
Food and Safety Act of 2013
“The law primarily adheres to the Philippine Constitution’s declaration to protect
and promote the right of the people to health and keep its populace from the threat
of trade malpractices and substandard and hazardous products. With these as
pronouncements, the country shall support and advocate for a farm-to-fork food
safety regulatory system which guarantees high level food safety, promotes fair
trade and fosters the competitiveness of the country’s food and food products.”
This political force mainly concerns the security and protection of regular and
potential consumers from possible intake of unsafe and hazardous food products. Its
objective is to filter the processes and procedures of different food manufacturing
companies and to make the people feel harmless with regard to the edibles that the take
into their systems. The magnitude of competition amongst the companies within the
industry as well as their trading systems is also under the scope of the Food and Safety
Act of 2013.
53
Opportunity: This gives the organization an opportunity to further improve the
procedures that they do in their existing food products. In addition, better
procedures will lead to better quality of products which will eventually result to a
better brand perception and credibility from the target consumers.
Threat: The passage of this law might affect or adhere to the current operations
management, production and processes of the products of the company. The
process of transportation of raw materials from the plant to the area of
manufacturing might be affected.
Philippine Food Fortification Act of 2000
“Section 15 of Article II of the Constitution provides that the State shall protect and
promote the right of health of the people and instill health consciousness among
them.
State recognizes that nutritional deficiency problems in the Philippines, based on
nutrition surveys, include deficiency in energy, iron, vitamin A, iodine, thiamin and
riboflavin. To a minor extent, the Filipino diet is also deficient in ascorbic acid,
calcium and folate.
The State recognizes that food fortification is vital where there is a demonstrated
need to increase the intake of an essential nutrient by one or more population
groups, as manifested in dietary, biochemical or clinical evidences of deficiency.
Food fortification is considered important in the promotion of optimal health and to
compensate for the loss of nutrients due to processing and/or storage of food.
54
Food fortification, therefore, shall carry out to compensate for the inadequacies in
Filipino diet, based on present-day needs as measured using the most recent
Recommended Dietary Allowances (RDA).”
The Philippine Food Fortification Act of 2000 envisions a world without
malnutrition; hence, the governing body in the Department of Justice have decided to
formulate an Act that aims to eliminate such disease in the country. It is stated in the law
that one of its purposes is to educate and persuade the people to live a healthy lifestyle
by eating food with proper components of nutrition that they need in order to decrease
the growing number of people having such sickness.
Opportunity: Being one of the pioneer companies that are known for providing
proper nutrients for kids and kids alike, this helps the company in building a better
brand image for them. This would give the company an opportunity to further
enhance their brand reliability by creating advertising tools that emphasizes the
facts about the company passing the food standards created by the national
government and that they are eligible to distribute across the country.
Threat: Since this is a nationwide occurrence, there is a higher tendency that
competing companies might also take advantage of the passage of this law.
Considering how creative and innovative other companies can be, it is already
considered that competition will be high in terms of attracting consumers from
competing entities through a variety of advertising and marketing efforts.
National Dairy Development Act of 1995
“It is hereby declared the policy of the State to strive for national self-sufficiency in
milk and dairy products as a vital feature in the attainment of a self-reliant and
55
independent Philippine economy in the provision of proper nutrition and the
generation of more employment opportunities for the people
The State shall create an agency tasked to help the private sector accelerate the
development and growth of the Philippine dairy industry under the spirit of
cooperativism in all stages of dairy production, processing, distribution, marketing,
and other dairy-related activities, in such a way that market viability of livestock
and dairy products shall be ensured, focusing on developing breeds adapted to
Philippine conditions.”
The National Dairy Development Act of 1995 is indeed one of the most valuable
laws created by the national government in relation to the milk and dairy industry in the
country. The law basically encourages the people to continue patronizing these products
because, same as the Philippine Food Fortification Act of 200, it helps in improving and
providing a healthier lifestyle for all.
The impending legislation proposing to increase taxes on sugar-sweetened
beverages has the potential to open up opportunities for drinking milk products.
Carbonates, energy drinks and artificially sweetened fruit juices are among products likely
to witness an increase in price should the legislation be enacted. Healthier beverages
such as milk and 100% fruit juices, meanwhile, are exempted. Opportunities also exist for
milk alternatives given the high prevalence of lactose intolerance among East Asian
people. Awareness of the symptoms of lactose intolerance, however, is low in the country,
making educational campaigns essential in improving consumer appreciation for lactose-
free brands in milk and milk alternatives.
56
Opportunity: The passage of this law has opened more doors for dairy
companies, including Alaska Milk Corporation, to further improve their products
and building a better brand image considering that the government will create a
private sector that focuses on giving ample amount of attention to giving Filipinos
a better and healthier lifestyle by developing and accelerating dairy production in
the country.
Threat: This is considered as a threat to Alaska Milk Corporation since it is stated
in the law that it also encourages its competitors to continue developing innovative
products that people will surely go after in order to increase competition in the
market.
Political Dynasties and Dairy Farms
Our local dairy industry, despite the absence of enough government support,
seems to be carrying on, largely because of the entrepreneurial fervor among some of
our cattle raisers who have spread to parts of the country’s verdant pasturelands
conducive to this kind of business.
Severino Flores, a member of a political family, once uttered his own personal
thoughts about the struggling dairy industry in the country and how they are contributing
to its reboot and revival. He said that, “I can safely say that some media channels have
also been touching a responsive chord among our business leaders including the semi-
commercial cattle raisers who are already engaged in dairy farming. As a reaction to this
matter, I was informed that Laguna famous for its kesong puti, is fast becoming a province
where not only the dairy cooperatives are working hard to contribute to the dairy
57
development of the country but more so the commercial and semi-commercial dairy
entrepreneurs.
“We have not only the Hacienda MaCalauan owned by businessman Ed Soriano
which has its dairy farm and dairy plant existing for the last decade. Very recently, The
Laguna Creamery based in Bay, Laguna is now operational a few years after a group of
businessmen led by former Senator Ramon Magsaysay, Jr., put up their Real Fresh dairy
farm in the same area.”
Opportunity: The continuous growth of political dynasties that have good and
pure intentions of uplifting different industries in the Philippines, including the dairy
industry, significantly contributes to the development of dairy companies. This will
help Alaska Milk Corporation in elevating the brand value and promoting the
habitual intake of dairy products that is good for the health of every Filipino.
Threat: Since political dynasties are the one responsible of the revival and
continuous growth of the dairy industry in the country, there is a higher tendency
for them to take over entire industry and sooner or later, control every operation of
dairy entities in the Philippines, whether it is privately owned or not.
Government Sectors Merge to Improve Dairy Industry in the Philippines
Official Development Assistance (ODA) and civil society support were important
enabling factors. ODA, for example, was over twice the level of budget support for the
National Dairy Authority. Seven new dairy zones established in the last five years were
funded through ODA. The Dairy Confederation of the Philippines, the third level national
organization of cooperatives has been doing the advocacy work on behalf of the sector.
58
Opportunity: The merger of different government entities in the country
contributes a lot to the growth of the dairy industry at large. Considering how
powerful the government is, it is a wise move for the country’s governing body to
do such act so as to promote the health and welfare of the all the citizens of the
country.
Threat: Along with the high position of the government personnel is, sometimes,
abuse of power. The fact that government sectors are starting a joint force towards
a certain cause might create a negative notion to the citizens. The possibility of
this might lead to the downfall of some dairy companies or even the entire dairy
industry itself.
4.2 Economic Forces
These include factors that determine the competitiveness of the environment in
which the firm or the industry operates. Thus, this might contribute to the success or
failure of the company, distinguishing the different economic forces that have a
tremendous impact on the firm or industry.
Generates Revenue Annually
Despite the fact that most of the Filipinos are non-milk drinkers, the Philippine dairy
market, including the market for imported milk, progressively generates more than a
billion dollar annually which has been resulted to 44% demand of milk concentrated in
Metro Manila only.
Opportunity: Since there’s already a high demand of milk products in
geographical area of Metro Manila, there’s a possibility that the industry, especially
59
the company of Alaska Milk Corporation, can generate more sales per year
considering that it is the second highest in terms of market share. Tapping
consumers from different locations, especially regions near Metro Manila, could be
an advantage for the industry as well as to the company of Alaska Milk Corporation
to dominate the market share and penetrate the target market. From tapping
different locations, Alaska Milk Corporation can improve their Research and
Design (R&D) and employ the data collected for the company’s next new and
innovative product introduction.
Threat: Considering that there is a high demand of milk products, there’s a
possibility that it might resulted to a stiff competition. Thus, the competition in the
industry deals not only with actual competition, but also in potential competition.
Since there’s only few companies that offer dairy or milk products, there’s a
potentiality that a number of companies would enter the market. Furthermore, the
labels of domestic dairy or milk products made from specific raw materials do not
imply that these products are different from imported dairy or milk products made
from other raw materials.
Slow Growth of Global Dairy Industry
The global dairy industry has seen slow growth over the past two and a half
decades, with only 32% increase in production in over 24 years. On a per capita basis,
this corresponds to a 9% decrease, which means that milk production cannot keep up
with global population growth.
60
Opportunity: While markets in developed countries have become more or less
saturated, economic growth and population growth in developing countries like the
Philippines can lead to an increase demand for dairy products. This would be an
advantage for the dairy or milk industry especially to Alaska Milk Corporation as
the company offers a narrow product portfolio that ensures Filipino that most of
their offerings are beneficial and nutritious to their health.
Threat: The slow growth of the global dairy industry might continue in the following
years especially in the country of Philippines considering that many Filipinos are
non-milk drinkers. This might affect the whole industry and the company of Alaska
Milk Corporation. Hence, companies offering dairy or milk products should
strategically plan on how they will survive on the industry and market. Thus, they
should further strengthen their advertising campaigns and marketing efforts in
order for them to be known by the market and not met the decline stage of the
product life cycle.
Local Production Sufficiency
According to the National Dairy Authority Philippines (2013), the Philippines’ local
production sufficiency (which is defined as the percentage of local production’s
contribution to the net local supply) for dairy products has been pegged at 1% for the last
5 years. This implies that 99% of the local dairy consumption has been continually
sourced from overseas, and that the dairy production supply is more or less growing at
the same rate as the local demand. Most of the imported milk utilized for consumption
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and further processing are sourced from New Zealand (46%), USA (29%), Australia (8%),
and France (3%). Eighty-five percent of these imports are in the form of powdered milk.
Opportunity: Since the consumption has been continually sourced from the other
countries, this can be an advantage to the different companies offering dairy or
milk products to have a connection among those countries to tap business partners
and other foreign investors. The companies offering dairy or milk products,
especially Alaska Milk Corporation can use their networks along with other
countries to distribute and export products around the globe. Thus, the company
can also have an extensive distribution network to capture both off-trade and on
trade channels.
Threat: Businesses or companies which sourced raw materials and other
production supply to the dairy or milk industry in the Philippines might open a
business or store and introduce same quality of products market. Considering that
these business entities or companies have an idea about the method of the
company and how it strategizes, consumers might shift their preferences
disregarding the local company. This indicator can’t be avoided since business
partners are one of the stakeholders.
The Demand for Domestic Liquid Milk
According to the National Dairy Authority Philippines (2010), 40% of the domestic
liquid milk demand was currently being met by local producers. From the National
Domestic Authority’s roadmap, this domestic liquid milk demand or ready-to-drink milk
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demand accounts for 4.8% of the total milk demand. Thus, the 2021 target for 100%
domestic supply sufficiency for liquid milk translates only to less than 6% local production
sufficiency.
Opportunity: The industry is currently facing a stiff production of liquid milk or
ready-to-milk products based from the demand of the consumers because of
insufficiency of raw materials. In lieu with this, domestic companies should
outsource or contract outside the company in order to meet the demand of the
market. Thus, they must also strategically plan on how they will resolve the issue.
Threat: If the company and industry exceeds the demand of the consumers or
market, there’s a possibility that they will loss. When it suddenly happens, the only
choice of the industry especially the companies, is to liquidate their sources.
Furthermore, it can be said to be a poor indicator of the whole dairy or milk
industry’s growth.
Growth and Employment for the Dairy Processing Industry
While the Philippines may still be heavily import dependent for raw material
requirements, this can still translate into growth and employment for the dairy processing
industry, as small, medium, and large scale processors can still provide substantial
employment.
Opportunity: This indicator shows that growth and employment for labor market
will further increase even though Philippine Dairy Market is highly reliable on import
materials or products. Like in production, even though majority of products or
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materials were imported, companies can hire more labor market to repack, restore
dairy products and alike. Thus, it can be generated to a substantial employment.
Threat: If the industry or most of the companies are highly reliable on import
products, there’s a possibility that they will rely on it for a long period of time.
Furthermore, this can be resulted to a success of the company’s business partners
due to a high dependability. Companies must formulate a plan and strategy on
how they can reduce it.
Local Production Gradual Increase
With the slow increase in local production, dairy processing is expected to source
its raw materials from imported sources within the next decade or so. Cold chain transport
and storage systems need to be strengthened, as the current dairy processors often start
with dry milk rather than liquid milk as raw material.
Opportunity: Dairy processing industry can have a strong sources of raw
materials since it is projected that they will start importing sources from the other
countries within the next few years. This would be an advantage for the different
companies to produce more milk products considering that they already have
business partners in different countries that produce more materials or milk
products.
Threat: Efficiencies with respect to transport cost may also post a disadvantage in
handling locally produced milk because of bulk and perishability. If this happens,
there’s a possibility that a company will loss a large number of milk products.
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Companies such as Alaska Milk Corporation should further strengthen their
transport and storage systems in order not to squander milk products.
Fluctuation of Prices
The Philippines is highly dependent on milk imports, with more than 95% of the
local dairy requirement being supplied by other countries. As such, the country is exposed
to fluctuations in milk prices at global level. With demand for milk imports weakening in
China, the price of milk at international level was on a downward trend at the beginning
of 2015.
The average unit price of drinking milk products increased by just 1% in current
terms during 2016 as the wide range of brands available in retail outlets make it easy for
consumers to switch brands, generally towards more affordable ones.
Opportunity: This has been favorable to local dairy manufacturers as their
production costs are now lower. Companies present in drinking milk products,
however, are unlikely to pass on any cost savings to end consumers by reducing
the unit prices of the products. Moreover, consumers will shift from one brand to
another if the company will lessen the price offering. Thus, the company can gain
the retention or satisfaction of a consumer if they will like the quality of the product.
Threat: There’s a general possibility that the average unit price of
drinking milk products is expected to remain stable despite fluctuations in the
prices of raw materials, with price increases undertaken as and when needed.
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4.3 Socio-Cultural, Demographic, and Natural Economic Forces
These factors refer to those that affect the production, distribution and selling of
dairy products in the country in terms of the behavioral and psychological factors of
consumers.
High Consumption of Milk Products Among Older Consumers
Improvements are set to come as the consumer base for drinking milk products
has sufficient room for expansion, especially among older consumers. More adult
Filipinos are likely to consume drinking milk products more regularly as a way of
conveniently nourishing themselves in between main meals.
Opportunity: This is an advantage for the companies offering dairy or milk
products. Hence, they should not only promote healthy and nutritious drinking milk
products, but also products that are conveniently nourishing to the consumers.
Threat: If the dairy or milk industry doesn’t meet the demand of the market, there’s
a possibility that it will face insufficiency of materials. Thus, companies that has
only few materials and stakeholders, will not continuously produce consumers’
demand.
Consumer Health Benefits from Health Being a Priority in The Philippines
Economic stability and a heightened lifestyle status has made it possible for
consumer health to push forward. Filipinos continue to demand products that improve
their health in 2016, as they look for preventive measures rather than for treatments.
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Health remains one of the top priorities of a huge section of the population and the
consumer health industry is benefitting from the increased incomes of consumers.
Opportunity: This is a good opportunity for the industry to promote a healthy
lifestyle. Companies such as Alaska Milk Corporation should grab the opportunity
to promote products and campaign on social media platform considering that most
of the Filipinos are tech-savvy. Thus, they should also inform their consumers
about the benefits and advantages that they will get if they drink milk products.
Threat: If all of the companies offering dairy or milk products know that consumer
health benefits is the priority of Filipinos, there’s a tendency that most of the
companies will settle only in promoting health and wellness, not considering other
theme or factors.
High Consumption of Milk Due to Human Population Growth Rate
In past years, milk consumption has risen by 10 to 20 million tons per year, one
driver being human population growth. A global population growth rate of 1.2 to 1.3
percent per year means 75 to 80 million more people each year. This population growth
rate helped each companies boost their sales and known in the market.
Opportunity: Using the world average per capita milk consumption, this would
mean that population growth accounts for an increase in milk consumption of 7 to
9 million tons per year. The second driver of milk consumption is increasing per
capita consumption. However, this driver in turn depends largely on per capita
income developments, especially in developing countries.
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Threat: If the population growth rate continues to increase, companies might not
meet the the demand of the market. Thus, consumers’ preference might change,
they can shift from drinking milk products to eating healthy food or products. When
it happens, non-milk drinkers will continually increase.
Filipino Consumers are the Most Optimistic in the World
Filipino consumers emerged as the most optimistic in the world, posting the highest
consumer confidence index score for the country and besting optimism of consumers
from around the globe for the first time. In the second quarter of 2016, optimism of Filipino
consumers soared to 132, registering the biggest quarter-on-quarter increase among
countries included in the survey with a 13-point surge according to the latest Nielsen
Global Survey of Consumer Confidence and Spending Intentions.
Opportunity: Companies even small entities offering dairy or milk products should
think of a campaign that will let Filipino consumers relate and engage. Since
campaign should be creative and optimistic, companies cannot avoid spending
more time, effort and resources. Thus, they cannot offer to their market a high price
offering because Filipino nowadays, continue to be the world’s most ardent savers
that habitually save spare cash.
Threat: If the formulated campaign by the company or industry is somehow similar
to other unconventional campaign, Filipinos might patronize it. Companies might
loss consumers’ attention as well as their interest. Instead, they should formulate
a conventional and powerful strategy that will surprise Filipino market in order to
gain awareness and word-of-mouth marketing.
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Filipino Consumers Like Healthy Products and Activities
Fun runs, exercise and other physical activities have been promoted and practiced
more by Filipinos in recent years. In addition, Filipinos are now choosing the healthier
lifestyle as shown in their food product choices. On food purchase over the past 5 years,
there has been an increase in cereals (17%), yoghurt/cultured milk (9%), canned
vegetables (6%) and biscuits (6%). For beverages, purchase increases have been seen
in soy milk (20%), bottled water (12%), energy/sports drink (10%), fruit/vegetable juices
(7%) and powdered milk (6%). These patterns in purchase behavior have been observed
more in North Luzon and Mindanao across socio-economic classes AB, C and E and in
mixed and adult homes.
Opportunity: Since most of the Filipinos are likely to engage in health and
wellness activities, companies such as Alaska Milk Corporation can invest more in
this theme to promote their products and other company’s offerings. They can
have a series of activities like fun runs, exercise and other physical activities that
can encourage Filipinos not only eat and drink healthy food products, but also
being physically active. This will help companies raise awareness among
consumers about the brand.
Threat: If there’s a company in the industry that’s already doing these series of
activities, there’s a possibility that few consumers will patronize the other company.
Hence, companies should create a unique idea or event that is beyond the
expectation of the consumers. They should always consider the fast-phase
lifestyle and optimistic mood of the Filipino market.
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4.4 Technological Forces
Technological factors are one of many external factors that can affect businesses,
and are an integral part of the PEST Analysis. They can be defined as factors which relate
to the presence and development of technology, on either a local or global scale.
Technical Expertise Accessed to Uplift Milk Quality Program
Private mainstream technical expertise was accessed to augment milk quality
program and enhance product development capacity. The Dairy Development
Foundation of the Philippines, Inc. (DDFPI) was instrumental in building linkages for the
industry. This phenomenon began the emergence of dairy products that are of higher
quality because of the maximization of technological advancements around the globe.
Opportunity: Letting companies in the dairy industry use the technological
advancements in milk production, made possible by the DDFPI, is an opportunity
for Alaska Milk Corporation to improve its line of products. Especially that it is
approved by the technical committee of the said foundation, the company is
assured of its capacities.
Threat: Alaska Milk Corporation should still take into consideration the risks of
using technology. Some companies do not use this because the quality of the
product might sacrifice if they change their production process.
PCAARRD lays out plan to pump up dairy industry
The Philippine Council for Agriculture, Forestry and Natural Resources Research
and Development (PCAARRD) introduced its Industry Strategic Plans (ISP) for dairy
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aimed at boosting production to meet local demand and reduce import requirements by
2020. PCAARRD focuses on technology transfer through the promotion of genetically
improved dairy buffalo, commercialization of food safety compliant milk handling and
community-based technology promotion and transfer for increased milk production. It
provided P24 million funding support to technology transfer projects across four regions.
Despite continuous efforts at improving production, milk yield remains low.
In 2014, total milk produced on a once-a-day milking scheme, rose to to an average
of only 5.13 kilograms per buffalo. PCAARD has approved the implementation of a project
that seeks to eventually increase milk production by 40 percent. This is done through
verification of the phenotypic expression of genetic characteristics related to milk
production and application of gene marker technology in breeding and selection.
Field testing and application of assisted reproduction technologies will be implemented to
eventually help milk production at the farm level.
With the implementation of these assisted reproduction techniques in 30 percent
of farms, an additional 50 percent calf production and 50 percent cows in the milk line are
expected.
Opportunity: This act that is initiated by the Philippine Council for Agriculture
creates a positive brand value, not only for Alaska Milk Corporation, but for all
companies in the dairy industry. This particular process secures the production
and distribution of the products, making it easier for the companies to attract
consumers considering that they are already assured of its quality.
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Threat: The rise of local demand in the dairy industry might lead to loss and risk if
not strategically planned. Although this is a wise move the government sector, they
must also take into consideration the magnitude of people who will come after this
act and they have to make sure that they are well-prepared in terms of demand.
Internet as a Very Powerful Promotional Tool
The observed decline in aggressive, offline promotional activities from the top
brands and companies within consumer health in 2016 was compensated for by their
maximum utilization of the internet as a powerful tool to connect with consumers. As a
cheaper and more convenient promotional tool, the internet is increasingly empowering
companies to reach an even larger consumer base. As shown by the top brands and
companies in the industry, social media platforms are the most convenient way to
communicate with consumers.
Opportunity: Due to the emergence of technology and cyber world, there are
more and more ways to advertise products. Since Alaska Milk Corporation lacks
advertising efforts because they are only being seen on traditional media, it would
be an opportunity for them to make use of digital or internet marketing.
Threat: As noticed, the internet is a free world and anyone can do whatever they
please. Therefore, advertising efforts are also incredibly high so Alaska Milk
Corporation has to be wise enough before doing a marketing effort online because
in the cyberworld, it is either you make or you break it.
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DOST to Boost Goat Milk Production
The Department of Science and Technology (DOST) through the Philippine
Council for Agriculture, Aquatic, and Natural Resources Research and Development is
set to spur the local dairy goat industry via its National Dairy Goat Science and
Technology (S&T) Program. Compared to cow’s milk, goat milk is said to have higher
nutritional value, is highly digestible, and causes less allergenic reaction because it lacks
alpha-s1-casein protein. Found in cow’s milk, alpha-s1-casein protein is linked to allergic
response in some individuals. Goat milk is also popular as an ingredient in beauty
products because of its naturally occurring alpha-hydroxyacids—a good skin exfoliant.
To maximize these benefits, the National Dairy Goat S&T Program will address
the issues that hinder the full growth of the dairy goat industry in the Philippines, namely,
limited access of smallholders to good dairy goat breeds, absence of feeding guides for
milking goats, increased prevalence of mastitis or intra-mammary infections in dairy
goats, and the lack of standards on the production of goat milk-based products. By
selecting the best performing dairy breeds suited to the country and by providing
appropriate nutrition for them, the program aims to increase milk production to 150% by
2017. Smallholders shall be given access to these breeds via artificial insemination to
local goats and buck loan program.
In addition, an effective control protocol against mastitis will be developed.
Considered as one of the greatest problems faced by the industry, mastitis can reduce
milk volume and alter its composition, lower its hygienic value, and impair the processing
of quality milk.
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Opportunity: The situation at hand gives Alaska Milk Corporation an opportunity
to outsource raw materials from different sectors and not getting tied to one
supplier only. This will serve as a buffer and their Plan B just in case things do not
go as planned.
Threat: Outsourcing raw materials from other private entities might affect the
quality of the product. Companies try to preserve the taste and texture of their
products and outsourcing from various sectors might give their dairy products
different taste and quality.
Philippines Approve Defense Equipment Transfer
In an article published at ABS-CBN News, Ex-President Noy Aquino stressed his
gratitude to the country of New Zealand. He expressed his utmost appreciation for New
Zealand’s assistance in developing the Philippine dairy industry through the
establishment of focus farms and infusion of dairy animals.
Aquino said the Philippines hopes the project can be expanded to bolster the
development of the Philippine dairy industry.
Opportunity: The bilateral agreement of the Philippines with its alliances in foreign
countries such as New Zealand does not only contribute to the growth of the
economy but also, it gives an opportunity for companies to take advantage of the
growth and boost their sales and profit. In this case, Alaska Milk Corporation gets
the chance to maximize the establishment of focus farms and dairy animal infusion
across the country by outsourcing which will significantly cut their costs.
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Threat: These alliances with foreign countries might affect the operations of the
dairy industry as a whole because of the threat that it might take control of the
production and operations.
4.5 Environmental Forces
These factors refer to the natural scenarios or events that occur within the scope
of environment of the industry and how affect it significantly affects the production and
distribution of the companies.
Dairy Cows Produce Greenhouse Gas Emissions
Millions of farmers worldwide tend approximately 270 million dairy cows to produce
milk. Milk production impacts the environment in various ways, and the scale of these
impacts depends on the practices of the dairy farmers and feed growers. Moreover, the
dairy cows and their manure produce greenhouse gas emissions.
Opportunity: Greenhouse gas emissions which contribute to climate change.
WWF envisions a global marketplace in which all dairy is produced as sustainably
as possible. By working to engage dairy farmers, co-ops, companies and others in
promoting the use of sustainable practices, WWF aims to transform the milk
production industry.
Opportunity: Unsustainable dairy farming and feed production can lead to the
loss of ecologically important areas, such as prairies, wetlands, and forests. Poor
handling of manure and fertilizers can degrade local water resources.
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Land Production Over Conventional Production for Organic Milk
Organic milk production appears to require less energy input but much more land than
conventional production. While eliminating pesticide use, it also gives rise to higher emissions
of greenhouse gases, acid gases and eutrophying substances per unit of milk produced.
Opportunity: While life cycle global warming potential is strongly dominated by
agricultural production for fluid milk, energy inputs are also most significant at the
agricultural stage for these products. The high energy demands of drying milk to
produce milk powder may make processing much more significant for dairy
products that have high milk powder content.
Threat: Due to the technology advancement, other companies can have a technology
that requires not too much effort. Thus, the production of organic milk requires more
time and effort in land as compared to others. This shows that companies should hire
workers that can fill in the needs of the company to work industriously.
Climate Change Affects the Production Costs of the Dairy Industry
The extent to which farmers will be affected by climate change depends upon the level
of response of crop yields, energy prices, and heat stress to climate change. Thus, it is
expected to negatively impact the whole industry in the future. Climatic events such as rising
temperatures and atmospheric carbon dioxide concentrations will change the prices of dairy
farms’ inputs, including feed, fuel, and electricity.
Opportunity: The companies as well as the industry can improve better their
Research and Design (R&D) through data gathering. In order to have valuable
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product or offering output, companies must invest more on their Research and Design
considering that there’s a fast phase lifestyle and changes nowadays.
Threat: When these events happen, there will become a sudden change in terms
of the prices of the dairy inputs. Thus, prices are expectedly to increase due to the
insufficiency of raw materials or destruction of other resources.
Goat and Milk Production
The loss of goats due to parasites has become a problem. Parasites cause
problems for goat farmers since they kill goats, lower their market value, reduce their body
weight, reduce the amount of wool and milk productivity, and reduce dung output. These
parasites are prevalent in hot, humid climates and grassy areas. To prevent infection,
goats should be taken care of and cleaned.
Opportunity: Since this has already destroyed the value of natural milk directly
pumped out of dairy animals, this environmental occurrence will give Alaska Milk
Corporation an opportunity to distract and attract consumers to shift from getting
natural milk from goats to their own processed milk products.
Threat: One of the raw materials of producing milk are goats and this natural
occurrence will affect the production of some companies.
The Effect of Goat Predation in the Dairy Industry
Goats live in abundance in the Philippines and all over the world. The main threat
to goats is predation. They make an easy target for coyotes, dogs, mountain lions, foxes,
eagles, and bobcats. The best protection for goats in domestication is fences; however,
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this does not eliminate the predators. In the wild, goats stay in herds as a form of
protection; some use their horns to fight off predators.
Opportunity: This is an opportunity for companies, including Alaska Milk
Corporation to outsource their raw materials from well-established entities. This
will not only improve the quality of products but it will also give them the chance to
build a more fruitful strategic alliances.
Threat: The goat predation impacts will pose additional burden on dairy farmers
who operate on small profit margins and eventually, it will create an effect on the
production of milk products considering that they serve as one of the industry’s
distribution channels.
POLITICAL ECONOMIC SOCIO-CULTURAL TECHNOLOGICAL ENVIRONMENTAL
Food and Generates High Consumption Technical Expertise Dairy Cows

Safety Act of Revenue of Milk Products Accessed to Uplift Produce
2013 Annually Among Older Milk Quality Greenhouse Gas
Consumers Program Emissions
Philippine Slow Growth of

Food Global Dairy Consumer Health
PCAARRD lays out Land Production
Fortification Industry Benefits from
Act of 2000 Health Being a
plan to pump up Over
Priority in The dairy industry Conventional
Philippines Production for
Local
Organic Milk
National Dairy Production
Development Sufficiency Internet as a Very
Act of 1995 High Consumption Powerful
of Milk Due to Promotional Tool
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The Demand Human Population Climate Change
for Domestic Growth Rate Affects the
Of Political Liquid Milk Dost To Boost Goat Production Costs
Dynasties and Milk Production
Dairy Farms of the Dairy
Filipino Consumers Industry
Growth and are the Most
Employment Optimistic in the Philippines
Government for the Dairy World Approve Defense Goat and Milk
Sectors Processing
Merge to
Equipment Transfer Production
Industry
Improve Dairy
Industry in the Filipino Consumers
Philippines Like Healthy
Local Products and The Effect of
Production Activities Goat Predation in
Gradual the Dairy
Increase Industry
Fluctuation of
Prices
Table 16 Summary of PESTE Analysis
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CHAPTER 5
INDUSTRY AND COMPETITOR
This chapter presents the overview of the industry by comprehensively discussing
the market systems, market segments, the Porter’s 5 Forces, competitors’ profile,
competitive profile matrix (CPM) and external factor evaluation (EFE) that will help the
company to formulate strategies on intensifying competitive advantage.
5.1 Market Systems
Alaska Milk Corporation’s current standing the market is considerably impressive,
claiming the second spot in the ranking of the companies having the highest percentage
of market share.
NUMBER
MARKET MARKET ROS/OR
OF COMPETITIOR GS P/D
SYSTEM STRUCTURE BOS
PLAYERS
Low Cost
HIGH
• Nestle – Direct
Market
Leader HIGH
Blue Focus
Monopolistic • Alaska –
Market High Ocean LOW
Competition MEDIUM
Challenger Strategy
Indirect
• Magnolia –
Market LOW
Differentiation
Follower
MEDIUM
Table 17 Market Systems
Monopolistic competition is a system that defines a market as a type of imperfect
competition such that many producers sell products or services that are differentiated
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from one another (e.g. by branding or quality) and hence are not perfect substitutes. In
monopolistic competition, a firm takes the prices charged by its rivals as given and ignores
the impact of its own prices on the prices of other firms. In the dairy and milk industry in
the Philippines, there are quite a number of players each of them getting a special spot
in the market structure. According to recent statistics, Nestle, Alaska and Magnolia are
the market leaders in the dairy and milk industry. Evidently, Alaska Milk Corporation’s
advertising strategies are tagged as blue ocean strategies since they focus more on
traditional advertising such as TV, Radio and Print. The barrier to entry ranges from low
to medium pressure since it is considered a commodity and only requires minimal
business processing such as: (a) business permit in the local government; (b) tax permits
in BIR; (c) BOC import clearance and; (d) FDA licensing. After accomplishing these
requirements, enterprises are now free to operate anywhere across the country. Although
there are many sellers in the market, their products differ in terms of branding and quality.
A lot of people buy the products in this market since, as stated previously, it is considered
as a basic necessity and is needed in an ordinary day to day living.
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5.2 The Industry & Market Segments
5.2.1 Market Segments
Figure 6 Market Segment
Demographic Primary Market: Mothers Secondary Target: Children
AGE 30 years old and above 3 to 21 years old

SOCIO-ECONOMIC CLASS Class B to D Class B to D
GENERATION Generation X and Y Generation Y and Z
EDUCATION Primary School, High school Pre-school to High school
Psychographic Primary Market: Mothers Secondary Target: Children
LIFESTYLE Loves to prepare foods for the Active on doing physical

family and is very meticulous about activities
the nutritional facts.
VALUES Concerned with health. Finds Concerned on having strong
fulfilment with her family and bones and muscles. They also
career choose milk that has a great
taste.
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PERSONALITY Caring, Organized, Family- Fun, Strong, Active, Confident,
oriented, tight budget Enthusiast, Energetic
Behavioral Primary Market: Mothers Secondary Target: Children
USAGE RATE Medium to High usage High usage

BENEFITS SOUGHT For cooking High in Nutrients, Stronger
bones, muscles, teeth
USER STATUS Regular Users, Potential Users Regular Users, Potential Users
Geographic Primary Market: Mothers Secondary Target: Children
SCOPE Nationwide Nationwide

TYPE OF COMMUNITY Urban and Rural Urban and Rural
Table 18 Comprehensive Market Segment
Opportunity. Alaska Milk Corporation, with the help of having detailed and properly
accurate segmentation, can create marketing strategies towards the target audience. As
a repercussion, the company can guarantee that all their marketing efforts will have an
appeal to both primary and secondary target market making the company to earn profit
and to continue its operation.
Threat. Alaska should have a keen eye on its direct competitors that offers the same
products to the same set of target audience. It can be minimized through product
differentiation where the company should be able to offer its unique selling proposition in
order to gain customer loyalty.
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5.2.2 Market Structure
Figure 7 Market Structure
The market structure is an illustration that shows where the company currently
stands in the market arena. It analyzes the market share of all players in the industry in
order to know who the market leader is, the market challenger, the market follower, and
the niche market.
In the given figure, Nestlé company appears to be the market leader, having
dominated its competitors in terms of brand image, distribution coverage and customer
loyalty. Next to the market leader is the market challenger played by Alaska Milk
Corporation. The challenger continuously seeks to test the market leader in the industry
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thus, shaping the competition. Magnolia Philippines is the market follower which only
innovates according to the trends that the leading brands are currently implementing.
Opportunity. Alaska can surpass the market leader by continuously being
aggressive on promoting its products in order for the consumers to become aware
about the offerings of the company.
Threat. If Alaska won’t be able to innovate its products, consumers may perceive
Alaska as the company who is not worthy of their money and time making its
competitors to have the chance to increase market share.
5.2.3 Growth Rate and Stage in the Growth Cycle
Figure 8 Growth Rate and Stage in the Growth Cycle
The product growth cycle helps the company to track the growth rate of the firm. It
also helps top level managers to plan and strategize alternative marketing strategies that
will be executed to address the challenges that the company is more likely to face.
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Moreover, it is helpful to monitor sales results over time and to compare them in the near
future.
Based on the 5-year total comprehensive income of Alaska Milk Corporation, the
company is currently on the stage of maturity or stabilization level. This means that the
company is currently at the peak where sales are extremely high and more consumers
are aware of the brand with the help of promotions and advertising.
Opportunity. Alaska Milk Corporation should grab this opportunity to maintain its
market share and to extend the product life cycle by creating strategies and
decisions on the marketing mix which may include but not limited to:
a. Product –Modifications and added features in order to differentiate itself from its
competitors and incoming new entrants
b. Price – To stay on giving competitive pricing strategy to avoid having price war
c. Place – Strengthening the distribution channels and giving incentives to boost
inventory velocity turnover
d. Promotion –To highlight the strengths of the product and to build customer
loyalty to get rid of customers’ switch.
Threat. Alaska Milk Corporation is at its peak and that would mean that decline
would be the next stage on the life cycle. In order to stay alive in the industry, the
company should be able to do innovation that will be offered to the consumers so
that they can extend the life of the product.
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5.3 Porter’s Five Forces Analysis
BARGAINING POWER OF BUYERS BARGAINING POWER OF SUPPLIERS
Low pressure Low pressure

COMPETITIVE RIVALRY
Low To Medium High Pressure

Pressure High Pressure

THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTION

Figure 9 Porter’s Five Forces Analysis
The concept of Porter’s Five Forces helps determine the competitive intensity and
attractiveness of a market. Porter’s five forces aids to diagnose where power lies in a
business situation. This is useful both in understanding the strength of an organization’s
current competitive position, and the strength of a position that an organization may look
to move into.
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5.3.1 Competitive Rivalry
High Pressure
The industry where Alaska is currently in has numerous competitors which makes the
rivalry between the players high. The degree of competitiveness has a direct impact on
the profitability of the company as having a large number of firms competing increases
competition when it comes to customers and product resources. This also dictates on
who is going to become the market leader in the industry and who is going to become the
market follower.
Opportunity. In this kind of competition where the rivalry is high, innovation
will really create a difference. The company should continue seeking for
innovation in order to differentiate itself among its competitors and to gain
more market share. Through innovation, company can give with variety of
choices to the consumers and can provide better quality products.
Another opportunity is set competitive prices. Knowing the Filipino market,
they pick brands who can offer great quality at a competitive price. Alaska
is already proven to provide more for its consumers at the competitive price.
This will help the company’s profitability and will make the target consumers
to patronize Alaska’s products.
Moreover, the company should focus on maximizing its strengths and
develop a strategy towards the rivalry’s weaknesses. This will allow the
company to do better and to continue on dominating the market share.
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To focus on the key customer will help the company on identifying on what
kind of market really brings profit to the company. Key customers will play
the vital role on bringing the huge chunk of profit for the business and this
is what Alaska should focus on creating strategy.
Lastly, the company should be able to identify the threat on the market
arena. Dealing with many competitors, the company should have a keen
eye on any plans, strategies, technology, or products that the competitor
may offer to the market that may lead to new problem.
Threat. The higher the competition, the more that the company should
invest on Research and Development. This will make Alaska to shell out
more money in order to stay in the battle arena and to continue dominating
the market share. The repercussion on investing on R&D would be better
quality products, innovation, and strong relationship to customers.
When the market is highly saturated, there is a slow growth and high exit
barriers thus, it needs to have a constant focus on the environment and
competitor moves as well as be consistent on product innovation and
development.
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5.3.2 Threat of New Entrants
Low to Medium
The threat of new entrants shapes the competition in the industry. Barriers to entry serve
as a defensive mechanism that imposes a cost element to new entrants. Having low entry
barriers would pose a threat to the firms already competing in the industry. Several factors
such as economies of scale, money, government policy, capital requirements, access to
distribution channels, and slightly regulated market making the threat of new entrants
from low to medium.
Opportunity. Alaska Milk Corporation is seen not only as a milk product but also
as a brand. The company should also be able to strengthen its product
differentiation through creating awareness to their new campaigns. They also have
to maintain and enhance their branding by incorporating their long-established
image to its modern marketing campaigns. This will create a barrier to entry by
forcing entrants to incur expenditure to overcome existing customer loyalties.
Threat. The advertising campaigns of Alaska’s competitors are being influential on
the purchasing behavior of consumers as the campaigns solely focus on capturing
the emotions of the viewers thus, increasing the probability of availing products of
other brands. On the other hand, Alaska can improve on conceptualizing and
executing campaigns that would establish relationships with its existing and
potential consumers therefore captivating its market.
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5.3.3 Threat of Substitute Goods
High Pressure
The pressure for the threat of substitution is high because there are lots of companies
producing if not the same, are indirect substitute for milk. Substitute refers as a product
offered by other industry that has the similar benefits to the consumers as the product
produced by the firms within the industry. The availability of substitute products can make
the industry more aggressive and might affect the profit potential of the firms to decrease.
On the other hand, the absence of having substitute products makes the industry less
competitive thus increasing the profit potential for the firms within the industry.
Opportunity. As the company continues to become one of the leaders in the
industry, Alaska Milk Corporation should do product development by modifying its
goods offered to make switching cost of consumers high. Alaska could try offering
products like soy milk that is highly profitable for the Filipino masses. Secondly,
the company should offer products on a competitive price to eliminate the risk of
substitution. Lastly, the company should invest on its research and development
to boost the products attributes, functions, and performance to achieve higher
competitive advantage.
Threat. For the milk industry, vitamins and supplements rich in calcium and
building muscles can serve as a substitute. Moreover, many companies that are
offering products substitute to milk are now promoting aggressively on tri-media.
The low consumption of Filipinos on having breakfast also threatens the industry
as milk is mostly consumed at the start of the day.
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5.3.4 Bargaining Power of Suppliers
Low Pressure
Alaska Milk Corporation has its own plant in the country where they manufacture their
own milk products. It means that they do not have to import raw materials for production
which leads on having a low bargaining power of suppliers. The company has the power
to dictate on the price without sacrificing the quality.
Opportunity. Having low supplier power makes the profit potential of the company
to increase. The company can show dominance to the supplier which would
encourage them to provide good quality raw materials. This will make the company
serve the target market with the best quality products at low cost.
Threat. Environmental factors can make the suppliers domineering as they can
dictate the price of the raw materials. Natural disasters such as floods,
earthquakes, or hurricane can greatly affect the business especially when the raw
materials needed are tremendously damaged.
5.3.5 Bargaining Power of Buyers
Low Pressure
Alaska as the second most profitable company in the dairy/milk industry should ensure
that their consumers are being loyal on patronizing their product offerings that has a direct
impact on dictating their bargaining power making the pressure low. One of the factors
that make the bargaining power low is that buyers under this industry are not sensitive
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when it comes to price. Moreover, one of their characteristics is that they purchase
product in low volume which makes the company competitive in terms of quality and price.
Also, the number of substitute products if not low, are, unavailable thus making the
bargaining power of buyers low.
Opportunity. Having low bargaining power makes the industry more attractive and
helps on increasing the profit of the company. Alaska can further increase its
profitability by making their products different to what the competitor is offering.
The key is to have a unique selling proposition that will capture the attention of
current and potential consumers leading to growth in sales.
Threat. The bargaining power of buyer increases if the company will not be able
to differentiate itself with other products offered in the market. Furthermore, the
possibility of new firms entering in the industry also affects the competition.
Increasing number of substitute products will also affect the buyers to switch from
buying the products of other brands.
SUMMARY OF PORTER’S 5 FORCES
Forces of Competition LOW MODERATE HIGH
Rivalry Among Competitors ü

Threat of New Entrants ü
Threat of Substitution ü
Bargaining Power of Suppliers ü
Bargaining Power of Buyers ü
Table 19 Summary of Porter’s
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5.4 Competitive Review
These are the top key players in dairy or milk product industry:
Date of
1905 1972 1981
Establishment
Magnolia is a food and
beverage brand owned
by San Miguel
Corporation (SMC) and
used by its various
Nestle is a multinational subsidiaries. The brand
Alaska Milk Corporation (AMC)
packaged foods and was commercially
is the leading milk company in
beverage manufacturer established by SMC as
the Philippines. It has
headquartered in an ice cream brand in
consistently maintained its
Switzerland. It is the leading 1925.
leadership in the canned liquid
Nutrition, Health and Over the years,
Brief milk category (evaporated and
Wellness Company and is Magnolia, in its Plant
Description sweetened condensed), thus,
widely considered to be the facility in General Trias,
paving the way into growing
world’s largest food Cavite diversified from
Alaska into a mega-brand by
manufacturer, with more than Butter, Margarine and
competing in the powdered,
2000 brands, operations in Cheese into one of the
ready-to-drink, and creams
197 countries and 150 years top manufacturers of
market, among others.
of service. Dairy, Fats and Oils in
the Philippines with its
new product line jelly,
jams, milk, specialty oils,
salad aids and cooking
oil.
Nestle is well known in the Alaska has already established Magnolia is the one of
industry for 150 years its brand to local consumers for the subsidiaries of San
ANALYSIS more than 40 years. Miguel Corporation that
offers diversified
products in the market
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DAIRY PRODUCTS
• Magnolia
Purefresh Natural
• Nestle Non-fat Milk Cows Milk
• Bear Brand • Alaska Evaporated Milk • Magnolia
• Nestle Fresh Milk • Alaska Condensed Milk Purefresh low fat
Milk
• Nestle Cream • Alaska Powdered Milk
• Magnolia Full
• Nestle Milo • Alaska All Purpose
Cream Milk
• Nestle Chuckie Cream
• Magnolia
• Nescafe • Alpine Sterilized Milk
Chocolait
• Nestle Bear Brand • Liberty Condensada
• Magnolia
Sterilized Milk • Alaska Condensed and
Chocolait Choco
• Nestle Coffee Mate Evaporated Creamer
Magic
• Nestle Fruit Selection • Alaska Fresh Milk
• Magnolia All
Yogurt • Krem Top Purpose Cream
• Nestle Premium Dairy • Alaska Nutri Builder • Magnolia Dairy
Milk • Carnation Evap Creme Classic
• Nido • Milkmaid • Magnolia Gold
• Nestle Pro Heart Butter
• Magnolia Yogurt
Cream
Nestle has the most number Magnolia offers products
Alaska is well known for its milk
ANALYSIS of dairy and milk products that is not limited on
products
compared to its competitors. milk/dairy alone.
Table 20 Competitive Review
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5.4.1 Nestlé’s Strengths and Weaknesses
STRENTGHS
Nestle Corporation has been in the industry for more
• ESTABLISHED BRAND NAME than a century offering good quality products for
better life.
As a multinational company, the product portfolio of
• HIGHLY DIVERSIFIED Nestle already has a wide product portfolio that can
be offered to the market of all ages.
Nestle has the most grounded research and product
• RESEARCH AND designing teams with great capabilities. They
DEVELOPMENT introduce new products through the year, which
fortifies Nestlé’s competitive advantage.
As a multinational company, the company is able to
• MARKET LEADER dominate the market share being one of the market
leaders in the industry.
Nestlé is successfully operating in more than 100
countries which gives a real strength to its
• DISTRIBUTION CHANNELS
distribution channel. Including direct and indirect
channels, it has operations in 197 countries.
One of the reasons why consumers are choosing
Nestlé’s products is because the company promotes
• PROMOTES AGGRESSIVELY
itself in all platform – TV, Radio, Internet, Mobile and
on Print.
Because of the company’s strong Research and
• QUALITY PRODUCTS Development, the company is able to produce
products in good quality.
Consumers are continuously patronizing Nestlé’s
• EFFECTIVE CAMPAIGN
products because of well executed campaigns.
WEAKNESSES
• COMPANY SALES ARE This will make the company to be vulnerable if
DEPENDENT ON ITS consumer preferences will suddenly change.
RECOGNIZED PRODUCTS
Table 21 Nestlé’s Strengths and Weaknesses
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5.4.2 Magnolia’s Strengths and Weaknesses
STRENTGHS
• DOMESTIC MARKET Magnolia has a strong appeal to Filipino market.
Being under the subsidiary of San Miguel
Corporation, employees of Magnolia Philippines are
• SKILLED WORKFORCE highly equipped when it comes to skills which helps
the company to grow.
Due to technological advancement, Magnolia is able

to reduce costs because it does not have to invest
• REDUCED LABOR COSTS
on huge manpower.
Magnolia Corporation is being consistent when it

• HIGH GROWTH RATE comes to growth rate in the market.
WEAKNESSES
One of the weaknesses that Magnolia have is it
lacks when it comes to promotional efforts. This
• PROMOTIONAL EFFORTS
makes their target market unaware of its products
offered.
When it comes to dairy products offered, Magnolia’s
• PRODUCT PORTFOLIO variety of products are not sufficient to cater the
needs of the consumers.
Table 22 Magnolia’s Strengths and Weaknesses
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5.5 Competitive Profile Matrix
The use of Competitive Profile Matrix helps the company to compare itself amongst
its competitors. It helps the company to create strategies that will help increase its
profitability. Each factor has a corresponding weight from 0.0 (low importance) to 1.0 (high
importance) and has a rating of 4 as the major strength and 1 as the major weakness.
ALASKA MILK NESTLE MAGNOLIA

CORPORATION
Key Success Factors Weight Rating Weighted Rating Weighted Rating Weighted
Score Score Score
1. Brand Image 0.13 4 0.52 4 0.52 2 0.26
2. Product Range 0.05 2 0.10 4 0.20 3 0.15
3. Product Innovation 0.14 2 0.28 4 0.56 3 0.42
4. Market Share 0.09 4 0.36 4 0.36 2 0.18
5. Price Competition 0.04 3 0.12 3 0.12 3 0.12
6. Financial Position 0.12 3 0.36 4 0.48 3 0.36
7. Sales Distribution 0.10 4 0.40 4 0.40 4 0.40
8. Global Presence 0.11 4 0.44 4 0.44 1 0.11
9. Advertising 0.07 3 0.21 4 0.28 2 0.14
10. Social Responsibility 0.15 4 0.60 4 0.60 4 0.60
TOTAL SCORE: 1.00 3.39 3.96 2.74
Table 23 Competitive Profile Matrix
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5.5.1 Analysis of Each Factor
Brand Image
Rating Weight Analysis
Alaska 4 Alaska’s Brand Image is one of its major

strength especially it is considered as the
leading milk company in the Philippines.
Nestle 4 0.13 Nestle also has already a strong brand image

to its target market.
Magnolia 2 Magnolia’s brand still lacks appeal to the

consumers.
Table 24 Analysis of Brand Image
Product Range
Alaska 2 The company should further develop

products that will be offered to the market to
increase profitability.
Nestle 4 As a multinational company, Nestle indeed

0.05
has a wide range of product portfolio.
Magnolia 3 Magnolia has enough products to offer to the

market thus it is considered as one of its
minor strength.
Table 25 Analysis of Product Range
Product Innovation
Alaska 2 Alaska should seek innovation for the

0.14
consumers to stay on top.
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Nestle 4 Because of strong Research and
Development, Nestle continues to innovate
on its products offered to the market.
Magnolia 3 Product innovation is one of Magnolia’s

minor strengths as it invests on technology.
Table 26 Analysis of Product Innovation
Market Share
Alaska 4 Alaska Corp. is the leading milk company in

the country making it one of the market
leaders in the industry.
Nestle 4 Nestle continues to be dominant on the

0.09
industry eating the huge chunk of the market
share.
Magnolia 2 Magnolia still has to be aggressive to be able

to have a huge market share
Table 27 Analysis of Market Share
Price Competition
Alaska 3 Due to monopolistic competition, the three

companies have the same share especially
Nestle 3 0.04 that consumers are price sensitive.
Magnolia 3
Table 28 Analysis of Price Competition
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Financial Position
Alaska 3 Alaska has enough resources that

compensate their liabilities making the
company stable on financial aspect.
Nestle 4 Nestlé’s assets continues to grow that they

0.12 do not have to worry about their financial
position but to stay consistent.
Magnolia 3 Same as the first two companies, Magnolia

also has enough resources to balance its
liabilities and assets.
Table 29 Analysis of Financial Position
Sales Distribution
Alaska 4 As per sales distribution, all companies

consider it as their major strength. As a
Nestle 4 0.10 result, the companies are able to have a
Magnolia 4 smooth flow within the distribution channel in
the supply chain.
Table 30 Analysis of Sales Distribution
Global Presence
Alaska 4 Having a global presence will help the

company to be known on the international
market making Alaska have the opportunity
0.11
to penetrate new market.
Nestle 4 Nestle is known to be a strong company on

national and international market making the
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company have the credibility when it comes
to good quality products.
Magnolia 1 Magnolia is not strong enough to enter the

international market.
Table 31 Analysis of Global Presence
Advertising
Alaska 3 Alaska promotes its products on both

traditional and non traditional media.
However, other products of Alaska are not
being advertised making the market unaware
about it.
Nestle 4 Nestle has always been aggressive when it

0.07
comes to promotions. One of its strengths is
creating infomercials that have a very good
jingle and event promotions.
Magnolia 2 Magnolia should continue to promote its

products so that the market will be able to
remember the brand.
Table 32 Analysis of Advertising
Social Responsibility
Alaska 4 All companies have CSR activities that boost

their PR appeal. It helps the company to
Nestle 4 make the target market be informed that they
0.15
Magnolia 4 are not solely focused on having high profit
but also they care for the social issues that
increases their brand appeal.
Table 33 Analysis of Social Responsibility
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5.6 External Factor Evaluation (EFE) Matrix
Key External Factors Weight Rating Weighted

Score
OPPORTUNITIES
1. Global Markets (ASEAN Integration) 0.11 2 0.22
2. New Technology 0.13 2 0.26
3. Economic Growth 0.09 2 0.18
4. Potential Markets 0.08 2 0.16
5. Income Level 0.08 4 0.32
Total 0.49 1.14
THREATS
1. Rising Cost of Raw Materials 0.10 3 0.30
2. Competitors’ Products 0.10 3 0.30
3. Rising Cost of Utilities 0.12 2 0.24
4. Increase in Labour Costs 0.10 3 0.30
5. Market Preferences 0.09 3 0.27
Total 0.51 1.41
TOTAL WEIGHTED SCORE 1.00 2.55
Table 34 External Factor Evaluation (EFE) Matrix
The External Factor Evaluation Matrix (EFE) assesses the external factors that
affect the company. The external factor evaluation shows that there are various
opportunities for the company and that it varies in terms of aspects such as markets and
technology. However, external forces that threat the company are also present. These
threats are mostly about the rising costs that are not anymore under the company’s
control.
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As seen from the above figure’s result, the company’s threats slightly weighs
heavier than the opportunities. The outcome of the evaluation implies that Alaska Milk
Corporation should make efforts in stopping or at least, minimizing the present threats
and maximize the opportunities enough to outweigh the impact of the threats. Alaska Milk
Corporation should continue to strategize and craft new ideas that would turn around the
situation of the factors that threat and the factors that give opportunities for the company.
Opportunity: The many opportunities available for Alaska Milk Corporation is
really something that gives them an advantage to surpass their competitors. Once
these opportunities are maximized and well utilized, with Alaska’s established
brand, limitless possibilities will be present for the company.
Threats: Even though the company has a lot of opportunities they can venture to,
the weight of the threats being heavier than the opportunities is somewhat alarming
for Alaska Milk Corporation. It is somehow an indicator for Alaska to start
strategizing to stop these threats from affecting their company.
Opportunities
The upcoming ASEAN integration contributes

numerous possibilities for Alaska Milk
Global Markets 0.11 Corporation to continuously grow and expand
(ASEAN around the ASEAN region which will open the
Integration) 2
doors for global markets as well.

Table 35 Analysis of Global Markets (ASEAN Integration)

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The advancement in technology in today’s

society presents a huge potential for Alaska
Milk Corporation. Not only does it provide a
0.13
New Technology 2 platform for Alaska to be widely known by its
audiences but technology can also be used
for better production and distribution.
Table 36 Analysis of New Technology
The continuous growth in the economy of the

Philippines creates a higher demand for the
Economic Growth 2 0.09 market and this increasing demand
contributes to the potential growth of Alaska
Milk Corporation.

Table 37 Analysis of Economic Growth
Throughout the years, Alaska Milk

Corporation has been able to serve different
Potential Markets 2
markets and provide valuable products for
0.08 them. However, in this modern society and
age, a lot of potential markets are emerging in
which Alaska can enter into to further expand
the company’s success.

Table 38 Analysis of Potential Markets
Threats
Rising Cost of The cost of raw materials is under the variable

Raw Materials cost; thus, it is expected to increase/decrease.
3 0.10 However, the rising expense of Alaska’s raw
materials imposes a threat on the company’s
profit. This threat affects how Alaska prices
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their products and with the cost’s increase, the
prices tend to increase as well which is not
good at how the company will be perceived by
its audiences.

Table 39 Analysis of Rising Cost of Materials
Competitors’ Alaska’s main competitors, Nestle and

Products Magnolia, has comparatively a wider set of
3
products than Alaska and is continuously
producing more products for the consumers.
0.10
In addition, a lot of the competitors’ products
are well recognized in the market. This
threatens Alaska for it falls behind in terms of
their product variety and product awareness.

Table 40 Analysis of Competitors’ Product
Rising Cost of The scarcity of resources causes the inflation

Utilities of utilities such as crude, oil and water,
affecting not only the daily lives of the people
2 but the businesses as well. Same goes for
0.12
Alaska, this escalating cost of utilities
negatively affects the company from
production to distribution which poses an
alarm for the company.

Table 41 Analysis of Rising Cost of Utilities

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Increase in Labor It is impossible for a company to function

Costs without people and a company as big as
3
Alaska requires a lot of people to work for
0.10
them. Thus, the growing expense incurred by
the company greatly influences the
company’s state and places them at risk.
Table 42 Analysis of Increase in Labour Costs
Market The constant change in the society and how

Preferences the people live significantly affects the
consumers’ preference and buying behavior.
This jeopardizes the company for the
0.09
changing preferences implies a change in the
3 patronized products as well; leaving Alaska
the challenge to keep up with the changing
needs and wants of its consumers.
Table 43 Analysis of Market Preferences
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5.6 Strategic Issues Based on External Factors
Alaska Milk Corporation was able to establish its name for the past years that it has
been existing in the market. From then and until now, it is still one of the most patronized
and trusted products used by Filipinos. However, Alaska Milk Corporation still faces
difficulties. One of these difficulties is their strategic issues based on external forces.
Issues like these springs out when Alaska fails to respond to them efficiently. As for
the opportunities available for Alaska, it is quite evident that they are not yet able to use
it ultimately to their advantage. The present opportunities bring about huge potentials for
the company.
Firstly, global markets, for example, since Alaska is already established here in the
Philippines, expanding to other countries are a good opportunity for them. Besides, today,
globalization is one of the trends in the industry. Another opportunity that hasn’t been
maximized is the opportunity given by new technology. Nowadays, Millennials and even
Gen Xers are coping up with technology, social media to be exact. That’s why companies,
even established brands, should make themselves active in online platforms. Not doing
so may harm the company in the long run. As for new markets, growing population and
demands, it would be best for Alaska Milk Corporation to invest in researching about
these demands and create a product that would suit the findings of the said research.
Innovating will always be a good idea however, it must have its basis and purpose for
doing so.
Since the threats weighs a little more than the score of the opportunities, it implies that
the company should start creating actions against those present threats. Even though it
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seems that Alaska Milk Corporation is not being affected by these threats, they must act
on it before it does. These threats can be minimized, stopped or even used to the
company’s advantage by meticulously analyzing the situation and strategically making
the right decisions based from the results of the analyzation.
On the other hand, it is quite evident that opportunities are not yet fully used for
Alaska’s advantage. This is why Alaska Milk Corporation should search for ways to utilize
them before it becomes useless for the company.
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CHAPTER 6
INTERNAL ANALYSIS
This chapter includes the company’s performance through McKinsey’s
Framework, Internal Factor Evaluation (IFE) Matrix, BCG Matrix and the company’s
strategic issues.
6.1 McKinsey’s 7S Framework
The 7S framework of McKinsey is a value based management model that
describes how one can holistically and effectively organize a company. Together, these
factors determine the way in which a corporation operates. It helps in aligning the
company’s long-term goals with how they plan to reach and accomplish it.
Figure 10 7s Framework of McKinsey
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6.1.1 Hard Elements
• Strategy – Beyond its products, Alaska provides emotional benefits to its
consumers. Its brand voice of being caring, trustworthy and good for the whole
family is visible in their advertising efforts. Then and now, the brand has always
stood for health and nutrition.
In sports marketing, the brand was able to establish a reputable brand
image that is encapsulated in the brand line “Sa sustansya’t lasa wala pa ring tatalo
sa Alaska”. The creation of the Alaska Aces, the basketball team carrying the
brand name, further intensified and solidified the image of the brand. In the aspect
of strategic marketing, Alaska Milk Corporation was able to build fruitful alliances
with well-known brands, such as Carnation and Milkmaid, which contributed in
boosting company’s sales and profit. Over the years, Alaska Milk Corporation has
been allotting most of their marketing and advertising efforts to traditional media
(TRIMP – Televeision, Radio, Internet, Mobile, Print). Now that Alaska Milk
Corporation is in the process of rebranding, the company is now maximizing the
use of social media by publishing a series of advertising promotional materials
(photos and videos) that has a humorous attack in order to get attention from the
Filipino netizens.
In the heart of consumers, the picture of a healthy and happy boy on the
pack is still the most well-known brand symbol. It embodies what Alaska is all about
and the role it plays in the lives of consumers. The competitive pressure in the
dairy industry is indeed high considering the number of established brands and
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their well-developed strategies but Alaska Milk Corporation sticks to its core
competitive edge and brand voice which differentiates them from the rest.
Opportunity: Given that they are currently using traditional media (TRIMP –
Televeision, Radio, Internet, Mobile, Print), they can further intensify their
marketing efforts by conducting an EMC or engagement marketing campaign. This
will help the company to have a direct and personal contact with the people they
want to talk to. It has been proven as an effective marketing tactic since interaction
is actually taking place.
Threat: Tagged along with the rise of manifold platforms for marketing and
advertising is the number of competitors who are also making use of this innovation
and technological advancements, making the competition in the industry high,
even in the cyber world.
• Structure
Figure 11 Structure of Alaska Milk Corporation
112
Highlighting the benefits of functional and divisional structures to exist in
one organization, Alaska Milk Corporation is considered as a company that attains
a matrix organizational structure. Employees in a matrix organization report on
day-to-day performance to whoever is above him/her whose authority flows
sideways (horizontally) across departmental boundaries. They also continue to
report on their overall performance to the head of their department whose authority
flows downwards (vertically) within his or her department.
Opportunity: Having a matrix organizational structure alone is considered an
opportunity to maximize employee capability. Aside from the fact that it would
lessen the work and manpower required by human resource, it would also
decrease costs since the company wouldn’t have to outsource people for
manpower.
Threat: Since matrix organizational structure is a hybrid of functional and divisional
structure, there might be confusion as to the designation of job description and job
orders.
• Systems – One of their key advantages among their competitors is that they have
an exception sales program for their employees. Their KPI for this internal strategy
is that other companies tend to pirate their salespeople.
Alaska Milk Corporation also manufactures all of their own canned and
powdered products. They also supply canned products to other companies such
as Nestle. The company is also known for their strong negotiation skills. Unlike
other companies, they directly interact with their target market which makes it their
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own competitive edge. This strategy makes it easier for them to manipulate their
clients.
Opportunity: The company’s excellent employee training program is an
opportunity for them to develop the next leaders of the organization who will take
the company’s top positions.
Threat: Currently, competitors are pirating Alaska Milk Corporation’s employees
because of their outstanding organizational performance.
6.1.2 Soft Elements
• Shared Values – As a working culture guide for all its management team, Alaska
Milk Corporation has formulated their core values and these are as follows:
INTEGRITY AND TEAMWORK.
Like any other companies, in order to succeed, everyone must be participative and
must abide by the rules to bring about success in the organization.
Opportunity: Excellent employee training program results to an efficient
management processes and teamwork. The company should continue to develop
employees and filter them according to their capabilities in order to figure out the
next leader of the company.
Threat: Overtraining of employees might lead to unwanted circumstances
concerning their loyalty and honesty to the company.
• Skills – In Alaska Milk Corporation, skills and being monitored and assessed
through an organizational element called “STIP”. The managers will set an
objective which the employees need to achieve within a specific timeframe. In
addition, employees are also instructed to set their own personal objectives and
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forecasted personal objectives which they will impose on themselves. The
forecasted personal objectives are set on a five-year time frame. Once achieved,
employees will get an incentive every May of the succeeding year.
Opportunity: The company should continue to develop specialized training
programs for employees similar to “STIP” in order to motivate and encourage them
to push for greater heights.
Threat: Being to controlling on the employees every move in the organization
might create a different notion in them that might affect their work performance,
and eventually, the performance of the company as a whole.
• Style – Over the years, Alaska Milk Corporation has been known for its outstanding
and effective leadership style. Because of efficient organizational management of
those in power, the company is able to create a more fruitful relationship amongst
the employees in the company. This is indeed one of the requirements in
succeeding and dominating the entire industry. Moreover, the company’s
exceptional leadership style contributes to an effective and efficient management
operations. In every organization, fluidity in organizational processes and
procedures are very important in order to attain long-term and short-term goals.
With Alaska Milk Corporation, they allot ample amount of time and attention in
developing and nurturing their employees to become the company’s next
generation leaders.
Opportunity: Being one of the pioneers in the dairy industry, the company
wouldn’t have stayed long if not because of their excellent management and
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leadership style. Moreover, Alaska Milk Corporation can and should stick to its
core of training employees to the best that he can be.
Threat: Competing firms might copy the company’s employee training programs
which is why they should implement a protocol that limits the employees’ ability to
share internal information.
• Staff – employees in Alaska Milk Corporation easily gets along with other people,
whether he/she is an employee or a client. It is somehow one of their own
competitive cultures as compared to competing companies. Their staff are very
hardworking, cooperative and puts trust in their work with full integrity and
optimism.
Opportunity: Known for their people who are very heart-warming, the company
should emphasize their staff and project a notion on the consumers that their staff
are actually one of the company’s main assets.
Threat: These traits are way too normal and common that it would be easy for the
competing firms in the industry to do the same tactic for their front-liners (staff).
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6.2 Internal Factor Evaluation (IFE) Matrix
Key Internal Factors Weight Rating Weighted

Score
STRENGTHS
1. Strong management team 0.11 4 0.44
2. Strong customer service support 0.10 3 0.30
3. Corporate culture 0.09 4 0.36
4. Distribution centers 0.08 3 0.24
5. Strategic alliances 0.12 3 0.36
6. High inventory turnover 0.09 3 0.27
Total 0.59 1.97
WEAKNESSES
1. Operating losses 0.07 1 0.07
2. Lack of Promotions 0.11 3 0.33
3. Number of suppliers 0.10 2 0.20
4. Market share 0.13 3 0.39
Total 0.41 0.99
TOTAL WEIGHTED SCORE 1.00 2.96
Table 44 Internal Factor Evaluation Matrix
The Internal Factor Evaluation Matrix (IFE) reveals that the employees of the
company as well its organizational management processes are indeed outstanding due
to its exceptional training program for its employees in developing the most successful
salesman in the country. It illustrates that through its strategic alliances, the company was
able to build a strong organizational team that supports the company’s corporate culture
which, as a result, contributes to the success of the organization at large. Meanwhile, lack
of promotion weakens the possible market domination considering that Alaska Milk
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Corporation is almost on top of the list, ranking third in the most profitable companies in
the dairy industry.
In summary, the company’s strengths weigh more than its weaknesses when it
comes to evaluating their internal operations. It is a testament that Alaska Milk
Corporation should continue to focus on maximizing and developing their key advantages
in order to become the number dairy company in the country.
Opportunity: Alaska Milk Corporation’s strong corporate culture and employee
training is considerably one of their competitive edges against their competitors. In
fact, their rival companies have been trying to pirate their employees due to their
exceptional organizational skills. In line with this, Alaska Milk Corporation can
formulate training programs/seminars that assure the employees’ loyalty to the
company in order to avoid them from getting pirated by the competing firms.
Threat: Although the company continues to strive harder to claim the top spot in
market domination, they still seem to fall short due to the high competition exhibited
by top competitors Nestle and Magnolia.
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Strong According to the survey that we have

Management conducted, Alaska Milk Corporation’s
Team excellent employee training is one of the main
4 0.11 foundations of their strong management
team. In fact, competitors are pirating some of
the company’s employee because of their
outstanding organizational skills.
Table 45 Analysis of Strong Management Team
Strong Customer Included in Alaska Milk Corporation’s

Service Support competitive edge is their ability to address
0.10 customer concerns which means that most
3 people trust the customer support team of the
company.
Table 46 Analysis of Strong Customer Service Support
Corporate Culture The company’s corporate culture contributes

a lot to the organization’s effectiveness and
4 0.09
efficiency. It continues to bring fluidity in the
management processes and procedures.
Table 47 Analysis of Corporate Culture
Distribution Center The fact that they have not reached the top
0.08 spot in market domination says that they
3 have yet to reach more people.
Table 47 Analysis of Distribution Center
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Strategic Alliances Over the years, Alaska Milk Corporation was

able to build fruitful alliances with other
companies. This gave birth to product
0.12
3 development and product acquisition which
contributed and continues to contribute to the
profitability of the company.
Table 48 Analysis of Strategic Alliances
High Inventory With the company’s variety of product lines,

Turnover most of them are considered as fast-moving
3 0.09
products, bringing the company closer to
market domination.

Table 49 Analysis of High Inventory Turnover
Operating losses Due to its strong and efficient management

team, Alaska Milk Corporation is able to
1 0.07
minimize losses including those in the
operations.

Table 50 Analysis of Operating Losses
Lack of Unlike their strong competitors Nestle and

promotions Magnolia, Alaska Milk Corporation’s
marketing/advertising/promotional efforts
0.11
3 seem to fall short. Lack of promotions might
contribute to the company’s possible decline in
the market.

Table 51 Analysis of Lack of Promotions
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Number of Alaska Milk Corporation is considered as a

Suppliers very independent company considering that
2 0.10
they manufacture their own raw materials
from the fresh milk to the cans that they use.

Table 52 Analysis of Number of Suppliers
Market Share As a thriving company in the dairy industry,

their focal point is to be a market leader.
Although they belong to the top three most
3 profitable companies in this industry, they still
0.13
aim to be on top of the list. Currently, they rank
third and strategically, the company should
start being aggressive in all business aspects
in order to reach the top spot.

Table 53 Analysis of Market Share
6.3 BCG Matrix
Figure 12 BCG Matrix
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The BCG matrix (growth-share matrix) is a corporate planning instrument, which is
utilized to depict the firm’s brand portfolio or SBUs on a quadrant along relative market
share axis (x-axis) and the speed of market growth (y-axis). Different products are
categorized based on profitability and cash usage. Moreover, its framework aids for
allocating resources among different business units and allows one to compare many
business units at one glance.
• Stars. Products that fall under this quadrant has a large market share in a fast
growing industry. The stars are both cash generators and cash users because it
needs to operate in high growth industries to maintain high market share. Based
from the illustration, the products of Alaska Milk Corporation under the stars
category are: Alaska Powdered Milk Drink, Alaska Fresh Milk, and Alaska Krem-
Top. As a strategy, the company should invest its money by penetrating the
market, horizontal integration, and product development. Stars are expected to
become the cash cows and generate positive cash flows.
• Question Marks. Are business units that has a small market share and has a
high cash usage. They hold low market share in fast growing markets consuming
large amount of cash and incurring losses. Carnation evaporated and condensed
milk, and Alpine Sterilized Milk are the products that are classified under this
category. Company’s strategic choices would be market penetration, product
development, and divestiture.
• Cash Cows. They are said to be the most profitable brands that should be
“milked” to provide cash on other brands for their operations. Cash cows are
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business units that have large cash profitability in a mature, slow growing
industry. Under this category lies the products of Alaska such as Alaska Nutri-
builder, Alaska Crema, Alaska Evaporated and Condensed Creamer, and Alaska
Evaporated and Condensed Milk. As a strategy, the company should do market
development, invest some of the money for divestiture, and do product
development.
• Dogs. The dog is where the products are in a small market share and has a low
cash usage. They are not worth the time for investing in because they generate
low or worse, negative cash returns. Products such as Liberty Condensada and
Milkmaid fall under this category. The best strategy for the company is to
liquidate its operations in order to have cash returns since there is a little
prospect for it to gain the market share.
6.4 Strategic Issues Based on Internal Factors
Operating Losses
Alaska Milk Corporation should invest on bolstering its up-to-date technology and
software to curtail the losses from its operations that will make the company’s financial
stability be uncertain when it continuously piled up. With its strong strategic alliances
and distribution centers, Alaska Milk Corporation should maximize all of its networks
to expunge the company’s operating losses.
High Inventory Risk
Having high inventory risk generally means that the company is struggling to turn
over inventory and make sales. When a company have a high risk of inventory, it
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confronts huge expenses and inventory management conditions. In order to eliminate
the high risk in inventory, Alaska Milk Corporation should take advantage of its high
inventory turnover by amplifying its strong strategic alliances and distribution center
that will in turn, help on having high revenue generation. Alaska Milk Corporation
should also utilize its technology to abolish the risk within the inventory.
Number of Suppliers
Alaska Milk Corporation has only one source of its raw materials which makes the
bargaining power of supplier high. Alaska Milk Corporation can diminish the
bargaining power through its strong management team that will seek on building
strong relationship amongst its supplier. Through this, the decrease on the expenses
of the company will be guaranteed.
Market Share
Alaska Milk Corporation currently has a good standing in the dairy or milk industry,
however, it has a slow growth when it comes to market share. With the guidance of
the company’s corporate culture, the management can guide its employees to stay
motivated to do work. With this, Alaska Milk Corporation can guarantee that the growth
of the company will boost making it one of the market leader in the industry.
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CHAPTER 7
STRATEGY FORMULATION
This chapter includes all the matrixes that the researchers formulate in order to
come up with a well-integrated and unconventional strategies.
7.1 SWOT Matrix
125

Table 54 SWOT Matrix
126

Alternative Strategies Frequency in SWOT Matrix
Market Penetration 8
Product Development 4
Market Development 2
Horizontal Integration 1
Backward Integration 1
Table 55 Frequency in SWOT Matrix
Analysis
The given internal and external factors from the previous chapter were used to
formulate the SWOT Matrix. As the repercussion, strategies were specifically drawn up
based on the company’s strengths, weaknesses, opportunities, and threats that are
intended towards intensifying marketing promotions and efforts that will help the company
differentiate itself amongst its competitors. Based from the strategies formulated, results
show that market penetration appears to have the greatest number of frequency. Market
penetration aims to promote the company’s products and increase its awareness in order
to boost the market share. Product development appears to be the second most frequent
strategy. In an industry where competition is extremely high, the company should be able
to continue to differentiate itself in order to make the market to continue patronizing their
products. Product development is intended on modifying, and/or improving current
127
products to the market that is geared on making the company to strengthen its unique
selling proposition resulting on increased sales.
7.2 SPACE Matrix
Figure 13 SPACE Matrix (QUADRANT)
128

Figure 14 SPACE Matrix (PLOT)
By quantitatively analyzing the internal and external strategic dimensions of Alaska
Milk Corporation, the researchers were able to identify which kind of strategy Alaska
should pursue. As seen from the figure above, the arrow indicating the strategic thrust is
towards the aggressive quadrant.
The result tells a lot about Alaska Milk Corporation. Aggressive posture occurs
when all the dimensions are positive and its implicit strategy is to raise the stakes for its
competitors. The set of strategies companies in the aggressive posture may opt to pursue
includes:
129
• Backward, Forward, Horizontal Integration
• Market Penetration
• Market Development
• Product Development
• Diversification
7.3 Internal-External (IE) Matrix
Figure 15 Internal-External Matrix
Hold and Maintain

Market Penetration & Product Development

It is shown in the matrix above that Alaska Milk Corporation falls under cell number
V, which suggests that the internal and external position of the company should hold
and maintain strategies such as Market Penetration and Product Development. Thus,
130
they should strategically create exceptional plan and action on how they could hold,
maintain and improve their current position as well as their image in the market.
Strategies under Market Penetration includes price penetrations, increase
promotions, increase reach, increase usage, and attract competition customers and
dealers. Thus, this aims to increase the awareness of the mass market while selling
current products to the current market. Meanwhile, Product Development may include
introduction of new product, replacement of packaging, increase product range and
so on. Researchers will further discuss the strategies chosen on the succeeding
chapters.
7.4 Grand Strategy
The grand strategy has become a popular tool for formulating alternative strategies.
All organizations can be positioned in one of the grand strategy matrix’s four strategy
quadrants. A firms division’s likewise could be positioned.
QUADRANT II
ALASKA MILK CORPORATION
Recommended Strategies:
QUADRANT I Market Penetration

Product Development
Market Development
Horizontal/Vertical Integration
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QUADRANT III QUADRANT IV
Figure 16 Grand Strategy
Evaluation:
Alaska Milk Corporation falls under the second quadrant because although the
industry is rapidly growing, the company’s strategic actions are ineffective and do not
meet the standards of the market. Thus, this proves to be consistent to the findings in the
previous matrices and research results in this study that Market Penetration is the most
appropriate and recommended strategy for the firm. This suggests that the company
should evaluate and conduct an intensive study as to the current status of their
approaches to the audience. Due to the growth of the industry, the company can do
intensive strategy as the first strategic option. Meanwhile, if the company doesn’t have a
competitive advantage, horizontal integration is a more advantageous option.
As stated in the SWOT Matrix, the company can take advantage of the opportunity
of the fast-growing population in the country. Alaska Milk Corporation can dissect and find
new markets that would potentially patronize and contribute in boosting company’s sales
and profit. Moreover, the company can do horizontal integration wherein they will acquire
companies within the same industry in order to increase sales and sooner or later,
dominate the market share.
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Tally of Alternative Strategies from Matching Stage Matrices
The following table exemplifies the tallying of strategies that came from evaluation
of SWOT, SPACE, BCG, IE and GS. This table features the matrices used and which
strategies became more prominent among them. It shall serve as a guide for the
succeeding chapters so as to come up with a more profound strategy implementation that
is best suited for the company’s current situation and standing in the market.
SWOT SPACE BCG IE GS TOTAL
Market Penetration 1 1 1 1 1 5
Product Development 1 1 1 1 1 5
Market Development 1 1 1 1 4
Horizontal Integration 1 1 2
Liquidation 1 1 2
Table 56 Tally of Alternative Strategies from Matching Stage

Matrices
Evaluation:
The table above indicates the result of the tally and its suggested overall strategy
taken from the matrices in this study. Upon evaluation, results showed that three types
of alternative strategies have been consistently influential in the company’s
organizational processes and these are: (a) Market Penetration; (b) Product
Development and; (c) Market Development. The said strategies are also a great match
with the company’s competitive market position and high growth industry. This will
significantly provide a direction for the strategy that shall be implemented in the
succeeding parts of this research study.
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7.5 Summary of Strategies
MATRICES EVALUATION
SWOT MATRIX The SWOT Matrix concludes that the
strategy that the company should take is
the one that is directed to the following: (a)
Market Penetration; (b) Product
Development and; (c) Market
Development. It is stated in the matrix the
particulars of the marketing tactic and how
the company should go about it.
INTERNAL FACTOR EVALUATION (IFE) The Internal factor evaluation matrix (IFE)
reveals that the employees of the company
as well its organizational management
processes are indeed outstanding due to
its exceptional training program for its
employees in developing the most
successful salesman across the country.
BCG MATRIX STAR: Alaska Powdered Milk Drink
This product is considered to have high
development in the market and high
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market share. This product generates
profit for Alaska Milk Corporation;
however, it also spends a lot of money.
CASH COW: Evaporated and Condensed
Milk
Evap and Condensed Milk is one of the
most recognized and trusted brands of
Alaska. Over the years, consumers have
not only been behavioral customers of
these products but also loyal ones too.
That is why even without much marketing
ads, efforts and spending, it is highly
patronized; implying that these products
bring in a lot of profit for Alaska without the
need to spend. Thus, it is considered as
Alaska Milk Corporation’s cash cows.
QUESTION MARK: Krem-top
Krem-top is a product that is somehow
new to the market. It challenges the market
leader in that type of product. Because it is
new, a lot of efforts are being done to
135
introduce it to the public. Thus, it spends a
lot of money but does not yet bring in a lot
of profit; belonging to the question mark
quadrant of Alaska Milk Corporation.
DOGS: Ready-to-drink Milk
Alaska Milk Corporation’s ready to drink
milk is considered to be a market follower.
This is why it is not known to a lot of
consumers. Alaska, on the other hand,
also lacks efforts in making this products
known to the public resulting to low profit
generation for Alaska Milk Corporation
SPACE MATRIX By quantitatively analyzing the internal and
external strategic dimensions of Alaska
Milk Corporation, the researchers were
able to identify which kind of strategy
Alaska should pursue. As seen from the
figure above, the arrow indicating the
strategic thrust is towards the aggressive
quadrant.
136
The result tells a lot about Alaska Milk
Corporation. Aggressive posture occurs
when all the dimensions are positive and
its implicit strategy is to raise the stakes for
its competitors. The set of strategies
companies in the aggressive posture may
opt to pursue includes:
• Backward, forward, horizontal
integration
• Market penetration
• Market development
• Product development
• Diversification
INTERNAL-EXTERNAL It is shown in the matrix above that Alaska
(IE)EVALUATION Milk Corporation falls under cell number V,
which suggests that the internal and
external position of the company should
hold and maintain strategies such as
Market Penetration and Product
Development. Thus, they should
strategically create exceptional plan and
action on how they could hold, maintain
137
and improve their current position as well
as their image in the market.
GRAND STRATEGY MATRIX Alaska Milk Corporation falls under the
second quadrant because although the
industry is rapidly growing, the company’s
strategic actions are ineffective and do not
meet the standards of the market. Thus,
this proves to be consistent to the findings
in the previous matrices and research
results in this study that Market
Penetration is the most appropriate and
recommended strategy for the firm. This
suggests that the company should
evaluate and conduct an intensive study
as to the current status of their approaches
to the audience. Due to the growth of the
industry, the company can do intensive
strategy as the first strategic option.
Meanwhile, if the company doesn’t have a
competitive advantage, horizontal
integration is a more advantageous option.
138
As stated in the SWOT Matrix, the
company can take advantage of the
opportunity of the fast-growing population
in the country. Alaska Milk Corporation can
dissect and find new markets that would
potentially patronize and contribute in
boosting company’s sales and profit.
Moreover, the company can do horizontal
integration wherein they will acquire
companies within the same industry in
order to increase sales and sooner or later,
dominate the market share.
QUANTITATIVE STRATEGIC It is shown in the above matrix that the
PLANNING MATRIX (QSPM) highly suggested strategy for Alaska Milk
Corporation is the Market Penetration.
Since most of their products are widely
known by their target market even the
mass market, it is suggested that the
company should develop campaigns that
has a clear and strong message which can
also be resulted for their market image.
With the increasing level of competition
and demand in their industry, what would
139
differentiate and positioned them in the
market is how they would promote and
advertise strategically their products as
well as their other offerings. This strategy
would also be a great response to the
company’s competitive position wherein
they’ve distinct competitive edge in the
market. Market penetration strategy also
corresponds to the external situation of the
firm wherein the number of competitors are
constantly increasing as well as the
innovations such as the fast paced
advancement in technology that are being
introduced in the market.
The details of the implementation of the
strategies will be further discussed in the
corresponding chapter.
Table 57 Summary of Strategies
140
7.6 Quantitative Strategic Planning Matrix (QSPM)
Table 58 Quantitative Strategic Planning Matrix
141
It is shown in the above matrix that the highly suggested strategy for Alaska Milk
Corporation is the Market Penetration. Since most of their products are widely known by
their target market even the mass market, it is suggested that the company should
develop campaigns that has a clear and strong message which can also be resulted for
their market image. With the increasing level of competition and demand in their industry,
what would differentiate and positioned them in the market is how they would promote
and advertise strategically their products as well as their other offerings. This strategy
would also be a great response to the company’s competitive position wherein they’ve
distinct competitive edge in the market. Market penetration strategy also corresponds to
the external situation of the firm wherein the number of competitors are constantly
increasing as well as the innovations such as the fast paced advancement in technology
that are being introduced in the market.
The details of the implementation of the strategies will be further discussed in the
corresponding chapters.
Alternative Strategy Ranking of the Total Attractiveness

Alternative Strategy Score
Market Penetration 1 5.97
Product Development 2 5.72
Table 59 Results of QSPM
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CHAPTER 8
STRATEGIC OBJECTIVES AND RECOMMENDED STRATEGIES
This chapter includes all the strategies that the researchers plan and
formulate for the betterment of Alaska Milk Corporation. Thus, this will help the
company achieve their short-term and long-term objectives.
8.1 Strategic Objectives
Based on the matrices used in the previous parts of this research paper, the strategic
objectives are divided into four (4) sub-categories classified as: (a) operation; (b) human
resource; (c) financial and; (d) marketing.
Operation
• To improve internal communications amongst employees in order to manifest
organizational productivity within six (6) months.
• To establish one new strategic alliance annually so as to expand internal and
external connection that can help build the brand in one year.
• To increase organizational efficiencies by maximizing the use of wireless or virtual
technology within a span of three years.
Human Resource
• To develop the leadership abilities and potential of the team by providing company
benefits such as trainings and seminars every month.
• To align incentives and staff rewards with the performance of the employees twice
a month during payday.
• To continually learn and adopt current best practices so as to consistently provide
exceptional products and services to the customers.
143
Financial
• To increase the company’s net income by 15% annually starting 2017.
• To expand sales to a wider marketplace by the end of 2020.
• To decrease expenses by 5% through internal manufacturing of raw materials and
other pre-production necessities.
Marketing
• To formulate and implement an engagement marketing tactic in order to improve
customer relationship with existing markets within a span of three years.
• To acquire products from well-established companies in order to provide new
products that will appeal to the existing market within a span of three years.
• To introduce existing products to potential markets by taking advantage of the
growing population in the country within a span of three years.
8.2 Product-Market Expansion Grid
Figure 17 Product Market Expansion Grid
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Market Penetration Strategy
Alaska Milk Corporation was able to maintain its market share in the competitive
industry throughout the years. This implies that Alaska is doing well in keeping up with
its changing market.
However, they shouldn’t be too complacent about their share in the market. Alaska
should continue to ideate and execute strategies that will keep them in the minds of
their consumers especially in today’s increasingly competitive industry.
Market penetration is all about creating new ways and strategies to promote Alaska’s
products with its existing market. Observing Alaska’s current strategy, what they can
improve on is reaching their consumers with the use of technology especially social
media. Alaska can craft online strategies that would make their brand engage with its
audiences.
Product Development Strategy
Alaska Milk Corporation has shown dominance when it comes to the milk industry
especially its liquid canned and powdered milk products. Clearly, the company is one
of the top choices that consumers will bethink when you ask them about their preferred
choice of milk brand. Thus, the risk of getting profit from its target market is solved as
it continues to be one of the market leaders on its current industry.
Alaska Milk Corporation should continue to pursue company growth from gaining
profit. And one of the strategies is to develop new products to its current target market.
This strategy fits as the company is able to establish brand loyalty amongst its current
market. Although there are risk when it comes of introducing new products, Alaska
should not be disturbed because it should make use of its strengths to eliminate risks.
145
Product development does not necessarily mean that Alaska should come up with
new product to offer to its current market. The company can develop new features to
its current products like enhancing its packaging, leveraging the company’s
technology that will help improve the quality of their products, and to mandate
developed strategy that will intensify their products. Moreover, Alaska can also extend
their product by developing different variants, or repackaging their existing products,
to develop related products or services, and improving its customer service.
Innovating products will not be successful without the help of its internal people.
Alaska should continue to invest on its Research and Development in order to come
up with the best products and strategies that will be offered to its target market.
146
8.3 Integration Growth Strategies
Horizontal Integration
SO4 Acquire rights to operate and manage factories on foreign countries
(S4,S5,O1,O5)
Alaska has been and is still one of the most recognized brands in the country. They
have been able to prove themselves as they excellently compete with their competitors,
providing them different opportunities such as opening up to global markets.
With today’s continuously improving transportation and communication technology,
globalization of local brands would be inevitable and Alaska Milk Corporation shouldn’t
fall behind.
Alaska should expand their brand throughout the globe and with Alaska’s
experienced management, going global wouldn’t be as difficult as it should. They just
have to take pre requisite measures in starting a business in foreign countries like
acquiring rights to start operations. Through globalization, Alaska will earn itself new
markets to serve and probably craft innovative products suited for those markets, carrying
the brands’ Filipino element across the nation.
Vertical Backward Integration
The company can produce their own products that will help enhance its quality.
(W1,W3,T1,T3,T4)
No one knows the company better than Alaska themselves. They are more
educated in terms of how they want their products’ quality to be like or how it should be
perceived by their market.
147
Therefore, manufacturing these products themselves rather than a third party
manufacturer may increase the products quality for those that are creating it are more
knowledgeable and determined to make the products of high value for their consumers.
8.4 General Attack and Counter Attack Strategies
General Attack and Counter Attack Strategies are the marketing strategies
adopted by the firms, either occupying the runners-up position in the market, to attack the
leader or the immediate competitor with the intention to capture a greater market share.
8.4.1 General Attack
Figure 18 General Attack
Frontal Attack – Matching the Enemy’s 8Ps
It is the direct attack wherein the market challenger matches with the competitor’s
product, price, place, promotion, people, physical evidence, philosophy and process.
148
A. Product
Alaska Milk Corporation has competitors that offer the same variant of products.
Since Filipino health conscious consumers are now growing, dairy or milk product industry
offers a wide variety of milk products considering that most of the consumers used it as
an alternative to a snack or energy drink.
One of the famous milk product that most of its competitors offer is the powdered
milk. Alaska Milk Corporation should strategize on how they can introduce their product
to the market. Furthermore, they should not only encourage children but also adults to
consume milk products by positioning it as a healthy energy drink or alike.
The following are the types of dairy or milk products Alaska Milk Corporation,
Nestlé and Magnolia offer to the market:
Alaska Milk Nestlé Magnolia
Corporation
Evaporated ü Alaska Evaporated
Milk Filled Milk 370 mL
(can)
ü Alaska Evaporated
Filled Milk 154 mL
(can)
149
ü Alaska Evaporated
Filled Milk 250 mL
(Tetra bricks)
ü Alaska Evaporada
370 mL (can)
ü Alaska Evaporada
154 mL (can)
ü Alaska Evaporada
250 mL (Tetra
bricks)
Condensed ü Alaska Sweetened
Milk Condensed Filled
Milk 300mL (can)
ü Alaska Sweetened
Condensed Filled
Milk 168mL (can)
ü Alaska Sweetened
Condensed Filled
Milk 250mL (Tetra
bricks)
ü Alaska Condensada
300 mL (can)
150
168 mL (can)
250 Ml (Tetra bricks)
Powdered Milk ü Alaska Instant ü Nestlé Nesquik
Powdered Milk Chocolate
Drink 33g (pouch) Flavored Powder
1.19kg
ü Nestlé Nesquik
Chocolate
Flavored Powder
48.7 oz.
ü Nestlé Bear Brand
Adult Plus 1kg
Adult Plus 600g
Adult Plus Choco
1kg
Adult Plus Choco
600g
151
Ready-to-drink ü Alaska Hi-Calcium ü Nestlé Chuckie ü Magnolia
Milk Non Fat Milk 1L Chocolate Drink Chocolait
ü Alaska Fresh 1L 110mL ü Magnolia
ü Alaska Slim 1L ü Nestlé Chuckie Chocolait Choco
ü Alaska Choco! Chocolate Drink Magic
236mL 250mL.
ü Alaska Choco!
185mL
ü Alaska Choco!
110mL
ü Alaska Sweet Milk!
236mL
ü Alaska Sweet Milk!
110mL
All-Purpose ü Alaska Crema All- ü Nestlé Cream ü Magnolia All-
Cream Purpose Cream (Tetra bricks) Purpose Cream
(Tetra bricks) ü Nestlé All-Purpose (Tetra bricks)
Cream 300g (can)
Coffee ü Alaska Krem-Top ü Coffee Mate
Creamer Non-Dairy Coffee Original Coffee
Creamer 5gm (stick Creamer 170g
sachet)
152
ü Alaska Krem-Top ü Coffee Mate
Non-Dairy Coffee Original Coffee
Creamer 20gm Creamer 450g
(pouch)
ü Alaska Krem-Top
Non-Dairy Coffee
Creamer 80g
(pouch)
ü Alaska Krem-Top
Non-Dairy Coffee
Creamer 180g
(pouch)
ü Alaska Krem-Top
Non-Dairy Coffee
Creamer 300g
(pouch)
ü Alaska Krem-Top
Non-Dairy Coffee
Creamer 500g
(pouch)
Sterilized Milk ü Alpine Sterilized ü Nestlé Non-Fat Hi- ü Magnolia Full
Milk Drink 155mL Calcium Fresh Milk Cream Milk
1L
153
ü Alpine Sterilized ü Nestlé Fresh Milk ü Magnolia
Milk Drink 200mL 1L Purefresh Low
ü Nestlé Bear Brand Fat Cows Milk
Sterilized Full 1L
Cream Milk 1L ü Magnolia
Purefresh
Natural Cows
Milk 1L
Nutritional Milk ü Alaska Nutribuild ü Nestlé Milo Activ-
345 350g Go High Malt 22g
ü Alaska Nutribuild
345 600g
345 900g
345 1.5kg
B. Price
The researchers found out that there’s a minimal difference between the prices of
Alaska Milk products and its competitors.
Based from findings, the following are the suggested retail price comparison of
some milk products between the three (3) companies.
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Alaska Milk Nestlé Magnolia
Corporation
Evaporated Milk Evaporated Filled Milk
- PHP 37.00 (370 ml.)
Evaporated Filled Milk
– PHP 26.50 (154 ml.)
Condensed Milk Sweetened
Condensed Filled Milk
- PHP 51.25 (300 ml.)
Sweetened
Condensed Filled Milk
– PHP 41.75 (168 ml.)
Powdered Milk Instant Powdered Milk Nestlé Nesquik
Drink - PHP 258.00 Chocolate Flavored
(900g.) Powder – PHP
750.00 (1.19kg)
Instant Powdered Milk
Drink - PHP 89.95 Nestlé Nesquik
(300 g.) Chocolate Flavored
Powder – PHP
549.00 (48.7 oz.)
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Nestlé Bear Brand
Adult Plus – PHP
369.00 (1kg)
Ready-to-drink Alaska Hi-Calcium Nestlé Chuckie
Milk Non Fat Milk – PHP Chocolate Drink- –
80.00 (1L) PHP 13.00 (110mL)
Nestlé Chuckie
Chocolate Drink –
PHP23.00 (250mL.)
All-Purpose Alaska Crema All- Nestlé All-Purpose Magnolia All-
Cream Purpose Cream - Cream – PHP 45.50 Purpose Cream –
PHP 41.65 (Tetra (Tetra bricks) PHP44.50 (Tetra
bricks) bricks)
Nestlé All-Purpose
Cream – PHP 66.50
(300g)
Coffee Creamer Coffee Mate
Original Coffee
Creamer –
PHP35.50 (170g)
Coffee Mate
Original Coffee
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Creamer –
PHP82.50 (450g)
Sterilized Milk Alpine Sterilized Milk Nestlé Non-Fat Hi- Magnolia Purefresh
Drink – PHP 20.50 Calcium Fresh Milk Low Fat Cows Milk –
(200mL) – PHP 84.00 (1L) PHP 78.00 (1L)
Nestlé Fresh Milk – Magnolia Purefresh
PHP 83.50 (1L) Natural Cows Milk –
PHP 77.00 (1L)

Nestlé Bear Brand
Sterilized Full
Cream Milk – PHP
79.00 (1L)
Nutritional Milk Nestlé Milo Activ-Go
High Malt – PHP
475.00 (22g) 12’s
C. Place
Alaska Milk Corporation
Corporate Office Address: 6th Floor, Corinthian Plaza Building, 121 Paseo de Roxas,
Makati City
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Plantation Address: Magsaysay Road, San Antonio, San Pedro, Laguna (6-hectare)
Nestlé
Corporate Office Address: 31 Plaza Drive Rockwell Center, Makati City 1200
Plantation Address: Barangay Niugan, Cabuyao, Laguna (25-hectare)
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Magnolia
Corporate Office Address: 21st Floor, The JMT Corporate Condominim ADB Avenue, cor.
Julia Vargas Street Ortigas Center, 1605 Pasig City
Plantation Address: Governors Drive, Barrio De Fuego, General Trias, Cavite (5-hectare)
D. Promotion
Today, Alaska brand is still best known for its tagline “Sa sustansiya’t lasa, wala
pa ring tatalo sa Alaska” (In nutrition and taste, nothing beats Alaska). Beyond its
products, the company also provides emotional benefits to its customers, such as caring,
trustworthy and good for the whole family. Then and now, the brand has always stood for
health and nutrition. This is encapsulated in the brand line “Sa sustansya’t lasa wala pa
ring tatalo sa Alaska”. Also, to promote a healthy lifestyle and the brand Alaska, the
company heavily invests in sports with its ownership of professional basketball team, the
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Alaska Aces. Alaska Milk Corporation is also maintaining the Alaska Power Camp, a
sports development program involving youth team sports like basketball and football.
These activities and program helped create an image of a healthy, active and sports-
oriented lifestyle for the brand.
One of the famous commercial of Nestlé is their centennial television commercial
“Kasambuhay, Habambuhay” (Companion in life – for life) which serves as a tribute to the
unique relationship between the company and the Filipino family. This TVC mirroring
scenes from the viewers’ own childhood and adolescence, courtship and marriage,
parenthood and grandparenthood. The scenes are endearing because they are familiar
to every Filipino family and individual of the past century – as real as the lump in the throat
and the tug at heart that come with each personal flashback moment. The company’s
global slogan, “Good Food, Good Life”, is a commitment honored by Nestlé Philippines
and well understood, appreciated and expected by Filipinos – not just the company’s
consumers but its employees and workers as well.
Magnolia serves only the finest products as it gives high quality, freshness,
delicious taste and pure wholesome goodness for generations. Their campaign “Pure
Fresh Natural Cow’s Milk” prepared the magnolia ways as it shows consumers enjoy its
premium creamy taste that have loved throughout the years. The company also wants to
share with their consumers that a glass of good health is in every Magnolia Purefresh
Natural Cow’s Milk. This is their way of promoting health and fitness.
In addition, all major industry players have also taken advantage of the growing
popularity of the digital medium, thus, these companies use social networking sites as
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alternative in promoting their products. Also, based from the observation, companies
aforementioned above are all using themes that were integrated to health and wellness
excluding Nestlé as it uses tribunal television commercial campaign.
E. People
Alaska Milk Corporation guarantees its customers that all of their products are
made with the best ingredients and delivered to the market in top quality. They continue
to further its mission of nourishing Filipino dreams, bringing in affordable nutrition across
different life stages to every Filipino home for over 40 years. Also, the company has a
new seal of quality signifying a renewed vigor in providing its customers with the best and
freshest products.
Nestlé, as one of the world’s largest nutrition provider, continually seeks to deliver
products that meet consumers’ changing requirements. They place a high value on
knowing their consumers, on a number of levels. The company identified the universal
concern that draw on their best customers to choose Nestlé brand products rather than
any other products. Nestlé has been successful for delivering safety and high nutritional
products, which has been the market-specific criteria of consumers on an individual basis.
Magnolia is committed to provide consumers with only the best quality products
through their constant research using only the best available technology. They ensure to
their customers that they will continue to live on their tradition of making each meal a
delightful one. More so, Magnolia guarantees its consumers to continuously provide high
quality foods that nourish generations through its adherence to utmost control of food
safety and quality management.
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F. Physical Evidence
The packaging of the products of Alaska Milk Corporation are alike in terms of color
schemes and theme used. Oftentimes, they are changing their packaging design
depending on the season or company’s marketing strategy. Moreover, consumers might
easily recognize that the product is under Alaska Milk Corporation since most of them
have a knowledge that the brand is using red, yellow and white as their color scheme. In
the heart of the consumers, the picture of a healthy and happy boy on the pack is still
well-known as the company’s brand symbol. It embodies and symbolizes what Alaska is
all about and the role it plays in the lives of consumers.
Meanwhile, since Nestlé holds different brands, the packaging of each milk
products are different - it depends on the brand of the product. The logo of Nestlé
embedded on each product's packaging signifies that the product is under the
conglomerate company of Nestlé.
On the other hand, Magnolia displays their product in a high quality packaging as
the company has an affiliate company that offers packaging materials or products. The
color scheme Magnolia using is Blue and White. Moreover, like the two other companies,
Magnolia also uses their logo in front of the packaging to let consumers know the product
is under the brand name of Magnolia.
G. Philosophy
Alaska Milk Corporation’s valued commitment is to bring nutrition to every Filipino
home across all stages and occasions of their life. They continue to build on the strengths
and competitive attributes of Alaska brand and develop its full marketing potential.
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Furthermore, they keep on developing new products and identify market opportunities, by
being mindful to their task to be responsive to the ever changing and growing needs of
the market. They also deploy their resources on investment opportunities that are within
their core competence and yield excellent returns relative to its risks and which are
consistent to the company’s growth objectives. In terms of their responsibility in society,
they promote the protection of the environment and take part in various community by
building projects that help enhance and uplift the quality of the underprivileged and the
marginalized sectors of the society.
Nestlé’s key competitive advantage is their Research and Development (R&D).
Without it, the company could not have become the food industry leader in nutrition, health
and wellness. Nestlé further strengthen its R&D capability through innovation
partnerships at each stage of the product development process – from the early stage
collaborations with start up and biotech companies to late stage partnerships with its key
suppliers. By bringing together all of its global R&D resources, the company is able to
provide high quality, safe food solutions for consumers worldwide. Furthermore, Nestlé
build a program, Corporate Shared Value, a resemblance of corporate social
responsibility program. The company truly believed that a successful business not only
infuses a nation with the economic means to prosper, but also contributes to a thriving
society.
Magnolia seek to nourish and nurture every Filipinos and families worldwide. In
spirit of malasakit, their core value is to strive to look after welfare and interests of their
customers as well as their stakeholders. As one of the country’s biggest food companies
with a business portfolio unparalleled in the industry, they believed that it is part of the
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social responsibility to extend their competence to those in need. This is the reason
Magnolia have chosen a feeding program as their flagship corporate social responsibility
activity, the Handog Lusog, Nutrisyon Para sa Nasyon.
H. Process
Alaska Milk Corporation aim to provide the best and most efficient service by
making use of leading edge technology to ensure timely product availability and
accessibility. Eventually, the consumer become their final judge and jury by analyzing and
measuring their level of satisfaction.
Nestlé has several manufacturing plants in the Philippines, which drive them to
become self-sufficient and not be dependent on other countries’ branch in terms of
production. They continue to invest in new technology and equipment upgrades to help
improve production capacity to meet increasing demand for the company’s products. This
creation of manufacturing plants dispelled rumors and reaffirmed Nestlé commitment to
the Philippines.
Magnolia, as one of the subsidiaries of San Miguel Corporation, holds several
production facilities in the Asia-Pacific region. The support of intermediate parent
company and partnerships with major international companies like Penderyn Pte Ltd.
have given the company an access to the latest technologies and expertise, allowing it to
deliver flavor, freshness, safety, quality and value-for-money to its customers.
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Encirclement Attack – Capture the Enemy’s Territory
Encirclement attack means attacking the market leader or a competitor from all the
fronts simultaneously. The market challenger launches several offensive campaigns such
as surrounding the competitor with a varied brand and forcing the competitor to defend
itself. This attack is the combination of both frontal and flank attack.
Considering that Alaska Milk Corporation is a market challenger, one of the
attacking strategies that the company can use to attack the market leader is the
encirclement attack. This attack or strategy involves launching a grand offensive and
finding the soft spot to enter the enemy’s territory. It makes sense when the market
challenger commands superior resources and believes a swift encirclement will break the
market leader’s will. Under this strategy, the challenging company considers both the
strategies and weaknesses of the competitor and then launch an attack or strategy
simultaneously. Thus, it is assumed that only those firms that are ten times stronger than
the competitors can launch the encirclement attack.
In order to launch a grand offensive on several fronts, Alaska Milk Corporation
must be adequate in its resources. Furthermore, the company may offer different types
of products with varied features and quality and may price these differently on the basis
of their utility.
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8.4.2 Counter Attack
Figure 19 Counter Attack
Position – Fortifying the 8Ps
Fortifying the 8Ps would help Alaska Milk Corporation protect and strengthen their
company, as well as their products. Thus, the company would be stronger and less fearful
in defending their strategies and attacks.
A. Product
Considering that the products of Alaska Milk Corporation contains nutritional
content, it would be a great advantage for the company to prove that the additives are
beneficial to the health of the Filipinos. Since Filipinos are considered as non-milk
drinkers, labelling each offerings correctly and accurately would help them realize that
milk contains the majority of main classes of nutrients that the body needs.
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This strategy would help the company strengthen the loyalty of their target market
since they would prove that their products are safe and beneficial to health. Thus, the
additives that the company used must also abide by all food and labelling regulations and
support nutritional rationale.
B. Price
Alaska Milk Corporation is seen as a market innovator since the company offers
affordable priced dairy or milk products in the local market. Furthermore, it has an
entrenched market leadership position as it offers products that is attainable even by the
mass market.
If the company would innovate products or new products, the price offerings must
always be attainable by their target market. Affordable prices would not only entice the
target market, but also the other segment since the product offers an array nutritional
content.
C. Place
Alaska Milk Corporation distributes a narrow product portfolio nationwide. By
collaborating with supermarkets, groceries, wholesalers, mini-groceries, market stalls and
convenience stores, they able to diversify products and tap more market segment even
those segments that are not their audience. Previously, the researchers discussed about
the increasing revenue of the Philippine dairy market due to the high demand of milk or
dairy products concentrated only in Metro Manila. By considering this information, the
company can extensively distribute products to Metro Manila and aggressively expand
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their distribution channels to the other geographical locations such as Luzon, Visayas and
Mindanao.
D. Promotion
Since Alaska Milk Corporation doesn’t have any solidify campaign, creating
advertisements and unconventional strategies would be the competitive advantage of the
company to the other dairy or milk product industry. Hence, Alaska Milk Corporation
should formulate a campaign or strategy that would be their deviation from the industry
practice of using children or parents as the main character.
In lieu with this, researchers formulate various campaigns that would help Alaska
Milk Corporation promote and advertise their products and other offerings. If the strategy
would become successful or has catch the attention of the mass market, the company
can penetrate more market and a chance to dominate the market share by boosting up
their sales.
E. People
One of the missions of Alaska Milk Corporation is to promote safety and welfare to
their market as the company consider them as one of their most important assets. By
providing dairy or milk products in the right formats and price points, Alaska Milk
Corporation helps to bring health to every Filipino especially in every child contributing to
bring down the malnutrition levels in the Philippines and in the world.
Furthermore, they also recognize the Alaska Team Members by providing each
individual the opportunity to contribute to the company’s endeavors and hone their talents
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as well as their skills. Thus, the Alaska Team Members wealth of experience, ideas,
dedication and strong work ethic lay is the foundation for the company’s continued
success.
By providing a valued commitment to the market, Alaska Milk Corporation can gain
the satisfaction of the customers as well as their loyalty.
F. Physical Evidence
Packaging is one of the important elements that makes potential consumer buy
the product. According to Terry Lane, a product’s package can be the selling point for
many consumers by delivering a sense of quality while also reflecting the product’s brand
image. Thus, a right packaging design can attract the consumer’s eye and make the
product stand out next to a rack of the competitor’s product.
By innovating and developing the packaging of the products of Alaska Milk
Corporation every season, the company would be able to inform their consumers that
their product can be used anytime. Furthermore, the packaging of their products must
provide information about the benefits and the nutritional facts that the consumers can
gain from each of it.
Using different seasonal events or occasions as their product’s image would be an
innovational strategy as they can inform adult consumers that their products are not only
catered to children but also to them. Thus, they can also include methods, procedure or
process on how consumers can use their product as an addition to the other food
products.
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G. Philosophy
As stated in the vision statement of Alaska Milk Corporation, the company’s valued
commitment is to bring nutrition to every Filipino home across all stages and occasions
of their life. The company faces the challenge of pursuing the efforts to help raise milk
consumption levels in the country. Since the Philippines remains to have a lower capita
dairy or milk consumption levels when compared to its neighbor in Asia, Alaska Milk
Corporation decided to provide affordable nutrition to different families and children by
offering them a wide range of nutritious and high quality dairy products.
H. Process
In the year 2013, the Philippine Marketing Association (PMA) bestowed the once-
in-a-lifetime 34th Agora Award for Marketing Company of the Year to Alaska Milk
Corporation. This singular recognition shows that the company achieved marketing
effectiveness of its advertising campaigns and reached its double-digit record growth from
2008-2012, coupled with excellent financial performance.
Alaska Milk Corporation made optimum use of its resources by being creative in
its marketing campaigns and investing in few but impactful initiatives. By continuing this
creative strategy, Alaska Milk Corporation would be able to gain more recognitions and
when the consumers know that the company has a lot of prestigious awards, there’s a
possibility that they can also gain customer loyalty.
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Pre-emptive – Guerilla Strategy
Guerilla Strategy or Guerilla Marketing is an advertisement strategy concept
design to promote brands as well as products in unconventional marketing tactics that
yield maximum results. This strategy involves high energy and imagination focusing on
gasping the attention of the mass market in more personal and memorable level. Thus, it
creates and develop word-of-mouth among the public.
By creating and formulating Guerilla Marketing, Alaska Milk Corporation can attract
a bigger audience since activities are done on the streets and other public places such
as parks, shopping centers and alike. Moreover, this strategy would take the attention of
the consumer by surprise to make a big impression about the brand and it a creates a
buzz about the product being marketed or promoted. Unlike typical marketing campaigns,
guerilla marketing involves the application of multiple techniques and practices in order
to establish direct contact with the consumers. Alaska Milk Corporation should take
advertising to the next level by creating guerilla marketing and promoting their products
in a sense that consumers wouldn’t expect. The company should collaborate with an
adequate advertising agency in order to have a successful campaign.
In order to make more people to try the product, it is a good way to built a billboard
that serves drink to thousands of consumers. The goal of the campaign must tap a wide
audience all over the country by creating a drinkable commercial. This drinkable
advertising creates an illusion that a consumer can actually tastes the campaign, and it
also help the audience enjoy an Alaska Milk product with the help of technology. By
collaborating with various mobile applications such as Shazam, viewers would see dairy
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or milk products pouring in the screen of their smart phones, filling a glass, which ends
up into an actual free Alaska Milk product that can be redeemed on selected retail stores.
This strategy would bring the product to a really wide audience and this can be proved by
the fact that the campaign would split on all the traditional and all media, targeting different
market segment, reaching everyone that either loves Alaska or milk, or simple is intrigued
by such a creative campaign and the way it is presented to the audience. The campaign
that will be used is also called Experiential Marketing.
Counter Offensive – Attacking the Weakest
Going after a competitor’s weaknesses is a popular tactic and strategy. By
examining the weaknesses, it would be a company’s competitive advantage to gain
knowledge about the reasons why their competitors fail in that circumstances. If they
would also study their rivalry’s true strengths, the company can also compare the
elements that makes their competitors ahead of them. By doing so, the company would
be able to formulate a well-grounded plan and strategy which can make them different
among other competitors. Thus, they can also position themselves in the market
considering that they gain information on how their competitors played in the industry.
Since most of the companies that offers milk or dairy products are using themes
incorporated with children and family, it would be a great advantage for Alaska Milk
Corporation to use other themes to differentiate themselves among others. Thus, this
tactic or strategy would a great deviation from the industry practice of using same and
habitual themes.
** Researchers didn’t include topics that are already discussed in the other chapters and strategies that aren’t related.
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8.5 Recommended Business Strategies
Market Penetration
Strengthen the brand image and increase profit through market penetration strategies like
developing customer service programs, production strategies, collaborations, and
aggressively promoting in different platforms.
a. ST1 To create a mobile app that is engaging and interactive and has different
features like recipes, news, product offerings, and the like for the consumers
(S2,T5)
b. ST3 The company could intensify its distribution centers by building long-
term partnership with restaurants, cafes, and other food businesses that will
help increase brand awareness. (S4,S5,T2,T5)
c. ST4 The company can organize events such as family day, marathon, and the
like intended for the target market that is aligned on the mission and vision of
the company to boost brand image (S3,S6,T5)
d. WO1 The company can intensify its promotions by penetrating the digital
landscape. It is where they can create campaigns online that educate
consumers about the product and its health benefits. (W2,W4,O2,O4)
e. WO2 The company can make use of the PBA club team of Alaska Aces on
promoting the brand (W2,O4)
f. WO3 The company can make use of technology by creating database of
potential and current customers and to keep them updated by sending them
newsletters both online and on ground that will boost the brand. (W2,O2)
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g. WO4 Amplify ATL advertisements like TV commercials, billboards and the
use celebrities and influencers that will affect the cognition of the consumers.
(W2, O2, O3, O4)
h. WT1 Tap and gather bloggers that will intensify the social media campaigns
of the company by writing and featuring the products of Alaska. (W2, W4, T1,
T2, T5)
a. ST1 To create a mobile app that is engaging and interactive and has different
features like recipes, news, product offerings, and the like for the consumers
(S2,T5)
The digital advancement of today provides businesses multiple ways to communicate
with their consumers. These platforms are highly cost efficient and effective especially
for tech savvy consumers. One of these digital trends is to create online strategies
that interact with consumers such as mobile apps.
Mobile apps are somehow like websites but it is different for it has a more direct
communication with the user. Gone are the days when online users spend time in
searching for websites and going through the whole page. That is why the app, being
a click away, is much preferred by its consumers.
Mobile apps are can be very beneficial for Alaska for they can include all the
information that they want for their consumers to see and understand. The app can
also include content that would engage the users to patronize Alaska. Through the
mobile app, Alaska can improve their brand’s image in the minds of their audiences.
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b. ST3 The company could intensify its distribution centers by building long-
term partnership with restaurants, cafes, and other food businesses that will
help increase brand awareness. (S4,S5,T2,T5)
Nowadays, businesses are no longer confined to their own; they tend to partner up
and create strategic partnerships with other businesses for the mutual betterment of
their businesses. This alliance trend has been continuously proving itself in the
market, creating success for different companies.
Strategic alliances has also been beneficial for Alaska throughout the years implying
that expanding Alaska’s network of strategic alliances may create more potential for
Alaska Milk Corporation.
Since Alaska’s products centers on milk products, partnering up with different
businesses as their supplier is favorable not only for Alaska but for the partner brand
as well because the reputation Alaska holds makes their product/brand more credible.
Alaska can partner up with restaurants, café’s or other food businesses that regularly
use their product. Alaska can be their direct supplier, cutting expenses for the
company involved, and in return, Alaska will be acknowledged as their partner.
Through the exposure gained by Alaska from their partners, Alaska will be able sustain
or even improve its excellent image in the minds of its consumers and may also lead
other consumers to patronizing Alaska.
c. ST4 The company can organize events such as family day, marathon, and the
like intended for the target market that is aligned on the mission and vision of
the company to boost brand image (S3,S6,T5)
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According to a study by the Event Marketing Institute in 2012, 58% of event marketing
participants purchased the product marketed during the event and 86% of them
became regular consumers. This statistic reveals the impact of events on consumers.
Holding events are one of the ways that a company can introduce itself to its
audiences on a personal level. It attracts and gathers groups and individuals and
enables the company to create interactive experiences for their audiences and lasting
impressions for their brand.
Companies usually hold events that are in line with the product they are marketing.
Since Alaska’s audiences are more on kids and parents, Alaska’s events should be
crafted in a way that would suit them. These events may be in a form of family day or
marathons that would be enjoyed by families and kids. Through creating events such
as this, Alaska will be able to establish and be consistent with their image in their
consumers’ perspectives and also promote the wellness of its consumers.
d. WO1 The company can intensify its promotions by penetrating the digital
landscape. It is where they can create campaigns online that educate
consumers about the product and its health benefits. (W2,W4,O2,O4)
The use of social media and other online platforms has been a way of life in today’s
digital age and almost everyone today thrive online. Thus, companies should be keen
in understanding the changing behavior of consumers and be present where their
consumers are at.
Most online users spend their time online in social media. This is why it would be
advantageous if Alaska will strengthen their online presence especially in social
media. However, competition online is very tough because of the higher volume of
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ads that are present online. Therefore, Alaska should be clever and creative about the
materials they’ll post online in order to stand out and be remembered by the users;
and since Alaska is a product for parents and kids, the online posts should also fit their
target market like educational campaigns and informational posts discussing what
Alaska is and its health benefits which is very much valued by parents.
e. WO2 The company can make use of the PBA club team of Alaska Aces on
promoting the brand (W2,O4)
Throughout the years that Alaska Aces has been playing in PBA, it has been able to
gather fans that support the team, spreading awareness for the brand of Alaska. This
support system gained by the team should be utilized by Alaska to market their brand
and their products.
With the help of the Alaska Aces, the company can create programs that would
engage the target audiences and lead them into patronizing the brand. These
promotional programs may be in a form of online or TV ads, billboards or even events
with the players like ABC or the Alaska Basketball Clinic.
ABC (Alaska Basketball Clinic) is a summer program that intends to teach kids basic
basketball skills. This training program will be special for the kids will be coached by
the players of Alaska Aces themselves. ABC (Alaska Basketball Clinic) aims to share
the knowledge of the players to the kids and encourage physical related activities to
improve the kids’ social interactions and physical wellness.
f. WO3 The company can make use of technology by creating database of
potential and current customers and to keep them updated by sending them
newsletters both online and on ground that will boost the brand. (W2,O2)
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Gaining new customers is more difficult than maintaining old ones and with the
number of Alaska’s loyal customers, it is very essential for the company to take good
care of them.
Maximizing the use of today’s developed technology; Alaska Milk Corporation
can make keeping their customers easier. By creating a database of potential and
current consumers, Alaska can constantly update them through sending them online
and offline news letters that will inform the people about Alaska Milk Corporation’s ins
and outs.
g. WO4 Amplify ATL advertisements like TV commercials, billboards and the
use celebrities and influencers that will affect the cognition of the consumers.
(W2, O2, O3, O4)
With the increasing competitiveness in the industry, even a well established brand
such as Alaska Milk Corporation shouldn’t be complacent. They should continually
compete and remind their consumers of who they are and what they do; and one way
to do this is through ATL (above the line) advertisements.
For its many years in the market, Alaska Milk Corporation is not anymore new to ATL
ads like TV commercials and billboards. However, in today’s increasingly creative
advertisements, Alaska Milk Corporation should make their promotion materials stand
out from the rest especially in ATL platforms.
Above the line advertisements is beneficial because of it communicates with large
audiences thus justifying its high cost. Thus, Alaska should maximize their exposure
time and the money spent on these kinds of ads by making it appealing to its
audiences.
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h. WT1 Tap and gather bloggers that will intensify the social media campaigns
of the company by writing and featuring the products of Alaska. (W2, W4, T1,
T2, T5)
Bloggers are one of the most trusted and sought off online influencers. Thus, Alaska
will partner up with selected bloggers/influencers like Team Kramer to represent
Alaska’s products.
Bloggers will help promote Alaska and will aim to tap potential consumers by plugging
the products in their respective social media accounts. This will also serve as a part
of the PR of the company to enhance the brand’s image.
Product Development
Keep up with today’s continuously changing demands and maintain or even exceed
the current market arena position of Alaska by developing and innovating products to
further serve the existing markets through different sources of formulating strategies.
a. SO1 Through the ASEAN Integration, the company can build fruitful alliances
with foreign brands in order to add value to existing products and to increase
product range (S4, S5, O1)
b. SO2 The company’s strong management and customer support team can
maximize technological resources in order to provide exemplary service on
providing best quality products for consumers. (S1, S2, O2)
c. SO3 The company could train employees especially on Research and
Development to formulate new products to the market. (S1,S5,O2,O4)
d. ST2 Integrate engaging activities or information in every Alaska products
encapsulated on the label. (S2, S6, T2, T5)
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a. SO1 Through the ASEAN Integration, the company can build fruitful alliances
with foreign brands in order to add value to existing products and to increase
product range (S4, S5, O1)
The upcoming ASEAN integration brings about many disadvantages and advantages
especially for businesses in the region. Because of the eradication of tariff and the
lowered barriers of entry of goods, brands will proliferate in the country and
competition will step-up to a new level.
The Filipino mentality that imported goods are better than local ones and the increase
of goods from different countries that will be available in the country will provide the
market a lot of choices to select from; leaving Alaska with a lot of rivals in its market
arena.
However, Alaska can use this to their advantage by creating alliances with the
upcoming brands that will be available in the country and craft new products with them
to expand the company’s product range and competence in the industry.
b. SO2 The company’s strong management and customer support team can
maximize technological resources in order to provide exemplary service on
providing best quality products for consumers. (S1, S2, O2)
Over the years, Alaska has been one of the most trusted brands in the market and
along with this; they were able to substantially improve their customer management
and support. With today’s technological advancement, Alaska’s customers’
management and support can further improve and bring more benefits to the
company.
180
Maximizing technology to further improve customer relations and provide exceptional
service to the market will set Alaska apart from its competitors. Providing excellent
customer service also enhances the brand’s image for it satisfies its consumers,
increases repeat business, creates potential and loyal customers and generates sales
for the company.
However, like any other company, Alaska has been having mishaps in operating and
inventory which is probably because of human error. However, again, with the rise of
technological advancements these can be avoided.
Using technology in production provides a lot of advantages for a company. It provides
accuracy that is far greater than human effort; it also increases the volume of
production and lessens the cost spent for employees.
c. SO3 The company could train employees especially on Research and
Development to formulate new products to the market. (S1, S5, O2, O4)
Research is considered to be the backbone of almost anything. Without research,
ideas and concepts, no matter how good they sound like, are just mere assumptions.
The strong team management of Alaska gives them the competitive advantage that
cannot be easily copied by their competitors. This strong team management can be
significantly used to train employees on research and development in crafting new
products for Alaska Milk Corporation.
d. ST2 Integrate engaging activities or information in every Alaska products
encapsulated on the label. (S2, S6, T2, T5)
In any brand or product, even the smallest detail should be integrated with the whole
brand itself and should not be disregarded especially when it comes to packaging.
181
The company is initially reflected by how their products are packaged and leaves the
consumers with a lasting impression about that certain product.
Thus, it would be helpful if Alaska would make efforts in designing their package that
would entice the consumers to patronize their products such as integrating engaging
activities like puzzles, tracing games and such for kids or information like health
benefits and nutrition facts for adults.
Market Development
Continue to be in the minds of the consumers by increasing brand awareness through
product and brand visibility and creative executions that will catch the consumers’
attention and turn them into potential customers.
SO5: The company can lease retailers to place products within the eye-level
and/or rent a huge section of the shelf to increase product visibility (S4,S6,O4)
SO6: To lease a part or section on supermarkets and install booths that will
capture the consumers attention (S4,S6,O4)
SO5: The company can lease retailers to place products within the eye-level
and/or rent a huge section of the shelf to increase product visibility (S4,S6,O4)
The competition between products is very much evident when it comes to retail stores.
It is easily identifiable that numerous brands compete to be bought by consumers.
However, in retail store, the competition revolves around product placement. Placing
of products in retail stores is also marketing. A lot of people may not notice it but it
does actually have a science. This is one of the subtle actions a company can do to
spread awareness about their product.
182
Alaska can transact with the retail stores to place them in the eye-level shelf of the
store. Being placed in the eye-level shelf brings a lot of opportunities for the company.
It increases the possibility of people preferring your products since it’s the most visible
for them. Visibility also heightens the awareness the consumers have for the
company.
SO6: To lease a part or section on supermarkets and install creative shelves
that will capture the consumers attention (S4,S6,O4)
If competition is small retail stores are already tough, the competition heats up more
when it comes to supermarkets since more products are present. Sometimes, in
supermarkets, even eye-level product placing doesn’t work as effective as it should;
which is why Alaska should not only settle for shelf visibility but execute creative
strategies to be noticed by its consumers.
Placing creative shelves in supermarket aisles is not anymore new to supermarkets
and somehow even these strategize are not noticed by the consumers. Thus, Alaska
should place highly creative shelves enough to catch the consumers’ attention and
lead then to patronize the product.
183
8.6 Financial Projections
This includes the financial statements of Alaska Milk Corporation and its Financial
Projection.
8.6.1 Comprehensive Income Statement
Table 60 Comprehensive Income Statement
The table above is the Comprehensive Income of Alaska Milk Corporation from
year 2011 to year 2015. The assumptions on each particular are discussed on the the
following charts:
184
NET SALES OF ALASKA MILK
CORPORATION
26.82%
15.08%
3.44%
1.84%
2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015
Figure 20 Net Sales of Alaska Milk Corporation
The revenue is projected to increase at 1.84% in the year 2015 from year 2014
with an amount of P327,400,179, 15.08% in the year 2014 from year 2013 with an
amount of P2,334,954,399, 3.44% in the year 2013 from year 2012 with an amount of
P514,122,586, 26.82% in the year 2012 from year 2011 with an amount of
P3,164,942,690 and so on.
COST OF SALES OF ALASKA MILK

CORPORATION
23.61%
17.04%
1.89%
2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015
-7.38%
Figure 21 Cost of Sales of Alaska Milk Corporation
On the other hand, in the cost of sales of Alaska Milk Corporation, it is projected
to decrease at 7.38% in the year 2015 from year 2014 with a negative amount of
185
P921,967,113. It projected from year 2013 to year 2014 with a percentage of 23.61%
and amount of P2,385,239,900. The researchers found out that the company’s cost
of sales continually increases from year 2011 to year 2013. From the year 2011 to
year 2012, it increases at 26.82% with an amount of P3,164,942,690 and from the
year 2012 to year 2013, it slightly increased at 1.89% with an amount of P187,842,009.
GROSS PROFIT OF ALASKA MILK

CORPORATION
51.69%
23.44%
6.46%
2011 - 2012 2012 - 2013 2 0 1-1.00%

3 - 2014 2014 - 2015
Figure 22 Gross Profit of Alaska Milk Corporation
It can be seen that there’s a fluctuation of amount when it comes to Alaska Milk
Corporation’s gross profit. In the year 2011 to year 2012, it increases at 51.69% with
an amount of P1,721,924,936. In the year 2012 to year 2013, it slightly increased at
6.46% with an amount of P326,280,577. In the year 2013 to year 2014, it suddenly
decreased at 1.00% with an amount of P50,285,501. However, it abruptly increased
at 23.44% with an amount of P1,249,367,292.
186
OPERATING EXPENSE OF ALASKA MILK
CORPORATION
40.03%
18.76%
16.96%
10.79%
2011 - 2012 2012 -2013 2013 - 2014 2014 - 2015
Figure 23 Operating Expense of Alaska Milk Corporation
In the operating expense of Alaska Milk Corporation, it can be seen that the
company stably spent their money and resources wisely. From year 2011 to year
2012, it increased at 40.03% with an amount of P834,253,252. On the following year,
2012 to 2013, it has a percentage of 16.96% with an amount of P494,922,252. By
year 2013 to year 2014, it has a percentage of 18.76% with an amount of
P640,283,559 and from year 2014 to year 2015, it only has 10.79% percentage with
a difference of P437,436,706.
INTEREST INCOME OF ALASKA MILK

CORPORATION
47.51%
19.08%
7.25%
2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015
-45.91%
Figure 24 Interest Income of Alaska Milk Corporation
187
When it comes to the interest income of Alaska Milk Corporation, it can be seen
that it is not stable and there’s a fluctuation. In the year 2011 to year 2012, it has a
percentage difference of 47% with an amount of P28,652,304. It was followed by a
negative percentage of 45.91% with an amount of negative P40,840,438. In the
following year, 2013 to 2014, it increased at 7.25% with an amount of P3,488,924.
However, in the year 2014 to year 2015, it increased at 19.08% with an amount of
P9,848,185.
TOTAL COMPREHENSIVE INCOME OF

ALASKA MILK CORPORATION
193.14%
58.02%
2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

-12.75%
-62.96%
Figure 25 Total Comprehensive Income of Alaska Milk Corporation
The total comprehensive income or net income of Alaska Milk Corporation is also
fluctuated as it has two (2) negative values or amount and two (2) large amount. In
the year 2011 to year 2012, it increased at 58.02% with an amount of P640,274,217.
In the year 2012 to year 2013, it decreased at 62.96% with a negative amount of
P1,097,867,386. In the year 2013 to year 2014, it unexpectedly and gradually
increased at 193.14% with an amount of P1,246,276,305. It was followed by the
decrease amount of P241,214,322 with a percentage of negative 12.75%.
188
8.6.2 Projected Comprehensive Income Statement
Table 61 Projected Net Sales of Alaska Milk Corporation
Table 62 Projected Cost of Sales of Alaska Milk Corporation
Table 63 Projected Gross Profit of Alaska Milk Corporation
Table 64 Projected Operating Expense of Alaska Milk Corporation
189
Table 65 Projected Interest Income of Alaska Milk Corporation
Table 66 Projected Total Comprehensive Income of Alaska Milk Corporation
190
8.6.3 Balance Sheet
Table 67 Balance Sheet
The table above is the balance sheet of Alaska Milk Corporation from year 2011 to
year 2015. The assumptions on each total resources are discussed on the the following
charts:
191
TOTAL ASSETS FOR ALASKA MILK
CORPORATION
29,458,563,131
26,643,895,995 27,447,448,200
11,385,660,480
9,308,277,007
2011 2012 2013 2014 2015
Figure 26 Total Assets of Alaska Milk Corporation
It can be see in the chart that in the year 2011 with a total asset of P9,308,277,007,
Alaska Milk Corporation had enough resources. Meanwhile, on the succeeding years,
the company’s total assets increased. However, during the year of 2015, the
company’s total assets decreased by P2,011,114,931 from its preceding year.
TOTAL LIABILITIES OF ALASKA MILK

CORPORATION
21,871,080,557
20,948,660,960
18,208,932,413
3,171,923,067 3,430,344,773
2011 2012 2013 2014 2015
Figure 27 Total Liabilities of Alaska Milk Corporation
192
The chart shows that in the year 2011 and 2012, the liabilities of Alaska Milk
Corporation is not that high as compared to the following year. By year 2013, liabilities
of Alaska Milk Corporation gradually increased with a total amount of
P20,948,660,960. It also increased by year 2014 with an amount of P21,871,080,557.
However, the total liabilities of the company decreased when it reaches the year 2015.
TOTAL EQUITY OF ALASKA MILK CORPORATION

9,238,515,787
7,955,315,707
7,587,482,574
6,126,353,940
5,695,235,039
2011 2012 2013 2014 2015
Figure 28 Total Equity of Alaska Milk Corporation
The graph shows that Alaska Milk Corporation has a fluctuated total equity. The
least equity with an amount of P5,695,235,039 falls under the year of 2013.
Meanwhile, the highest total equity is in the year 2015 with an amount of
P9,238,515,787.
193
8.6.4 Projected Balance Sheet
Table 68 Projected Total Assets of Alaska Milk Corporation
Table 69 Projected Total Liabilities of Alaska Milk Corporation
Table 70 Projected Total Equity of Alaska Milk Corporation
194
CHAPTER 9
STRATEGY EVALUATION AND PERFORMANCE METRICS
This chapter includes the evaluation and metrics that is needed in order to
measure the success of implemented strategies of Alaska Milk Corporation.
9.1 Balance Scorecard
20%
195
Table 71 Balance Scorecard
196
9.2 Contingency Planning
This topic discusses what the company should do for the possible outcome that is
most likely to happen. Contingency planning will give the company a backup plan of
actions when the risk emerges within the organization.
9.2.1 Downside – Potential Events
KEY CONCENRS ACTION PLANS

Through the ASEAN Integration, many Determine and identify the company’s
international and domestic companies strengths and weaknesses and formulate
carrying products under the same strategies that are geared on maximizing
industry might dominate the market the strengths and minimizing the
share. weaknesses.
Continue on offering products that are

modified and improved to the market to
boost competitive advantage.
Offer products on competitive price
Invest on Research and Development and

utilize the technological advancement
Be highly visible by promoting the

products on TRIMP platform and retail
stores to increase brand awareness.
Natural Calamities that can affect the Possible outsourcing shall be taken into
company operations consideration if the price of the raw
materials shoots up to avoid having huge
expenses.
Sudden issues that the company could Creation of PR Department that will handle
face in the future on the image and reputation of the
company.
Develop and implement rational actions

based on the company vision and mission.
197
Ensure that the Legal Department will
disseminate information that is well
researched and the company is complying
on the policy of the state.
Train employees on Risk or Crisis

Management.
Sales are getting low Ensuring that all departments are
exhausting all means especially on
research and development department to
come up with something new to the
market.
The finance department should coordinate

together with the logistics and operations
team in order to ensure that the company
is getting raw materials that are more
affordable but is on a good quality.
To gather creatives, marketing and sales

department to brainstorm on how the
company can go back on track.
To inform the HR department to come up

with a program on how the employees will
have the motivation to work for the
betterment of the company.
Table 72 Downside – Potential Events
9.2.2 Upside – Potential Events
KEY CONCENRS ACTION PLANS

Increasing number of potential Continue to be visible by intensifying
consumers online and on-ground promotions
To widen the number of customers by

doing B2B type of business.
198
Impending legislation proposing on Beverages such as milk are exempted
increasing the tax of sugar-sweetened from this tax increase. The company can
beverages. promote the brand aggressively to
increase its awareness especially that
consumers are assumed to shift their
preference to switch on healthier
beverages.
199

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CHAPTER 1

1.1 Nature of the Business/Products and Services

1.1.1 Nature of the Business

victory year after year.

Holland Canned Milk International B.V. (now FrieslandCampina). HOMPI initially

expanded to manufacture powdered milk and Ultra-High-Temperature (UHT) milk.

Moreover, Alaska Milk Corporation acquired the canned milk business

Prior to this, FrieslandCampina held an 8.1% interest in Alaska Milk

both the Evaporated and Condensed Milk Categories.

1.1.2 Products and Services

Alaska Evaporated and Condensed Milk

Each can of Alaska

Evaporated Filled Milk has the

creaminess and taste housewives

look for. It is ideal for creaming

that daily cup of coffee and the

their everyday meals.

Alaska Evaporated and Condensed Creamer

Alaska Evaporada and Alaska Condensada are

the perfect partners in enhancing the taste of

various food and beverage concoctions.

Packaged in new and attractive modern designs,

Alaska Evaporada and Alaska Condensada are

the “value line” alternative to the classic Alaska

Evaporated Filled Milk and Alaska Sweetened

quality, value-for-money products to customers.

Alaska Powdered Milk

Alaska Powdered Milk Drink is highly

nutritious powdered milk. It is rich in vitamins and

minerals for growth, energy and mental

Alaska Ready-To-Drink Milk

Alaska offers a line of Ready-to-

Drink milk products that come in both plain

and flavored milk. Alaska’s Ready-to-Drink

milk products use the Ultra Heat

Temperature (UHT) process combined

Alaska Crema All-Purpose Cream brings gourmet

goodness at home. Alaska Crema enhances the taste of a

variety of food preparations. It is ideal for soups, salads, pasta

dishes, dips and dressings. It is a cooking and baking ingredient

that certainly turns ordinary recipes into fabulous gourmet meals.

Alaska Krem Top

will make your coffee experience more enjoyable.

Alpine Sterilized Milk Drink is a specialized’ milk

packed with high-level of nutrients for the people on the go.

Alaska Nutribuild 345 is a

nutrient-rich milk to help

support the brain and body

development of children ages 3 to 5 years old. It is scientifically formulated as a

active in mind and body.

1.3 The Current Asset Size

1.4 Major Markets

PRIMARY TARGET MARKET

Age Group ü Ages 30 and above

ü PHP100,000 (average monthly

what’s best for their kids.

BEHAVIORAL Alaska Milk mothers are very loving and

caring to their children. They won’t sacrifice

health for a cheap price. Hoping only for

what’s best for their kids, they are very

meticulous when it comes to the things that

they buy for their families.

SECONDARY TARGET MARKET